Amendment No. 4 in the name of Deputy Carey has been discussed and the Minister of State reported progress.
Forestry Bill, 1988: Committee Stage (Resumed) and Final Stages.
Before we adjourned I was explaining the difference between the establishment of a State corporation and a company. I had said that the establishment of a State corporation was in response to the provision of a specific service covering very specific parameters and not given the kind of catch-all powers which are available to a company. In reply to Deputy Sherlock who was questioning me in relation to what "related activities" might mean, obviously these would cover nurseries, road making, research — a variety of different services associated with forestry activities.
There are two items on which I would like a comment from the Minister before we move from this section. When we ask a Minister to do something specific like the acquisition of land and he feels that that can be covered somewhere else and puts in a catch-all, portmanteau phrase like "related activities" into the Bill in the same section, it is hard to believe. This could mean anything. Does it mean that this company will be involved, as was done in Killykeen Park, in the creation of lovely houses in the forest area for letting and renting for, dare I mention it, fishermen and anglers and the like during the summer? All these things are activities related to forestry. If you create something in the area of forestry and can make some money out of it, I am sure a good commercial company will look at every aspect of it.
I am not against including related activities but I am asking the Minister to include one of the amendments suggested on this side of the House in relation to the acquisition of land because "related activities" could mean anything. The review group on forestry looked at the whole question of setting up an alternative to the Department of Forestry and they were still in favour of acquiring land. They urged that consideration be given to the problem of unused land held by absentee landlords and that some form of financial discouragement should be introduced with a view to securing the release of land for productive purposes, including forestry. That group was not made up of left wing Labour members or The Workers' Party many business people thought that aspiration should be in any new structure.
With regard to related activities, it is rather surprising that Deputies, in seeking to have specific requirements enshrined in the Bill, tend to object to an arrangement which gives the widest possible flexibility because related activities cover a wide range. It will be up to the company to decide, in the light of experience and advantage, to operate in the area where they will get the maximum advantage and the maximum return. Therefore, I cannot see why Deputies have a problem in relation to that sort of provision which should be helpful and acceptable to everybody.
I do not follow the logic of the Minister's argument. My amendment will not inhibit anyone and it is wrong to suggest that it will. I am seeking to include an aspiration and "related activities" can be aspirations. The Minister seems to think that we want to limit the scope of the company but nothing could be further from the truth. If a company in future decide that they will not pursue a planting programme, there would be something wrong.
One of the main aspirations of the company should be to continue planting and afforestation.
I explained this before lunch and covered almost the exact detail of the provisions in the memorandum and articles of association. I covered all these points. There is no argument and all the areas about which the Deputy expressed fears, including acquisition, planting and management, were covered comprehensively in the memorandum and articles of association. That is the normal practice when companies are established and we are not departing one iota from it.
I am disappointed that the Minister will not accept my amendment.
Amendments Nos. 6 and 12 may be discussed together, by agreement.
I move amendment No. 6:
In page 7, subsection (1), line 26, to delete paragraph (b).
The company now proposed are responsible for 70 per cent of the raw material production and, as things stand, probably in excess of 90 per cent of the stock of timber. My fear is that when a State company are developing forestry and in a position to sell their raw materials to their own manufacturing companies — if woodland industries are manufacturing companies — I foresee a difficulty in that the State would be able to underwrite the financial and commercial transaction of such a company and would be in an unfair trading position vis-à-vis the other people in the business who are probably responsible for making 30 per cent of plantings at present. If we are to develop the sawmilling and timber industries I would not like to see any such companies established under this Bill and being underwritten by the State because they would have an unfair advantage in terms of raw materials and supplies and, indeed, in the price which they might pay for them.
The amendments would not be in keeping with the normal scope of a commercial company to engage in activities relating to their business. The Minister for Energy already has specific powers under the Forestry Act, 1946, to establish and carry on woodland industries. Indeed, the forestry service operate two sawmills. It is quite proper, therefore, that new companies should be given similar powers. I do not propose to accept the amendment. However, it is not envisaged that the company would immediately be engaged in extending their role in this precise area. They are a commercial company and we should let them lead a life of their own and not impede them from the word go. I am sure the Deputy would have no objection to public funds being spent in private concerns and he should not rule out public participation where public funds are concerned.
There are other aspects to this in the sense that we have established contracts with a number of companies, Irish and international, in relation to the pulpwood sector where virtually all the supplies coming on stream are contracted for. These contracts were entered into for the purpose of getting these industries established and they have a considerable road to run.
In relation to the sawmill area, we have introduced also new systems of selling and quotas. Overall, there is a tight balance between existing supplies from Irish forests and the actual demands from the existing sawmill industry. The scope, therefore, for any immediate extension in processing is a couple of years away. We are now harvesting 1.4 million cubic metres and this will grow to 2 million cubic metres by 1993 and to 3 million cubic metres by the end of the century. A few years down the road there will be considerable room for expansion in that area, and I would not want to close off the possibilities for this new commercial company in this area. I would ask the Deputy to accept that we already have these powers under the 1946 Act, that we have two existing sawmills in operation that with the number of contracts with existing processors, the opportunities for further development will be there a few years down the road and that we should not head-lock the company.
I totally agree with the Minister on this. I certainly would not like to see the activities of the new company being reduced. If these amendments were accepted they would prove very negative. In many parts of the country forestry plantations are well removed from some of the private sawmills. If the company did not have the ability to set up sawmilling, it would certainly tie the hands of the new company.
If the amendment proposed by Deputy McCoy were accepted it would interfere with the proposal to set up joint ventures. That would be a very valuable new power for the forestry section to acquire. The Minister referred to current activities but he has not indicated whether he saw downstream industries being engaged in, especially in view of the proposals for a structural programme by the EC which are expected to be published and in which the grant-aid system for agricultural production might be extended to wood production.
Does the Minister see this objective as part of the aspirations of the company? People are concerned about the hidden subsidies in the forestry area being used in unfair competition but that aspect is covered by EC legislation relating to competition. Does the Minister intend allowing the private sector to tender for State planting in his efforts to ensure fair competition? Deputy McCoy feared that the State, having so much of the assets, would create a monopoly and that this developing industry would be monopolised by the State. I would like private and co-operative planting programmes to continue. Would the Minister say if he sees any role for the private sector in tendering for this company's planting and how does the Minister feel fair competition will be administered by the company?
In relation to the question of tendering for State planting, the position at the moment is that the bulk of this work is carried out by staff in the forest service. There has been a growing tendency to employ contractors for planting and harvesting. I see no likelihood that that general pattern will change after the establishment of the company.
In relation to the establishment of new industries, I hope in the next few weeks to be able to launch a new industrial and processing development for the timber industry, conscious of the opportunities particularly in the UK and Europe for exports and also conscious of the fact that we have a surplus of thinnings, particularly in the north-western area of the country, which would justify the establishment of another processing plant there. I am very conscious of the fact that we need to get some of our timber resources, particularly pine, into a higher added-value category. In all of these areas, whether due to the new company pushing existing processes or by new ones becoming involved, we are very conscious of the scope that is there and we will be supporting it to the maximum extent possible. We hope to launch a new programme in relation to the potential in the UK. The UK are at present importing 90 per cent of requirements and are likely to be doing so for a considerable time. Since we are on the doorstep of that market we need to exploit it.
Is Deputy McCoy agreeable to moving on?
In view of the Minister's assertions, I may have misunderstood parts of the Bill. I am happy to accept the Minister's explanation.
I move amendment No. 7:
In page 7, subsection (1), between lines 26 and 27, to insert the following:
"(c) to acquire land, on a compulsory basis if necessary, to carry on the business of forestry,".
As amendment No. 7 has already been discussed, is it withdrawn?
In view of the assurances that the 1946 Forestry Act and the memorandum and articles of association can be used for both purposes, I will withdraw the amendment.
I move amendment No. 8:
In page 7, subsection (1) (d), line 31, after "objects" to insert "provided that in respect of any leasing or licensing of any gaming rights the company shall give priority to applications from community or non-commercial groups".
This amendment is to enable the Minister to indicate to the House the position of gaming rights of the associations which are already involved in the forestry service, who have availed of the sporting facilities provided by the forestry service. Will they get the priority they enjoyed heretofore? These people have been very fair with the forestry service and have respected the bounties and the entire code that has been drawn up for them. I am interested in the Minister's comments in this regard.
Such a provision would not be in keeping either with the commercial mandate being given to the company or with the general practice to keep such detail of day-to-day activities out of the legislation. The company will be expected to use their resources effectively and efficiently and will, of course, be conscious of community interests in certain of their activities, and will take those into account. The company will be expected to use its resources effectively and efficiently and it will be conscious of community interests in certain of its activities and will take this into account. I have had a number of meetings with community groups regarding these problems. I accept the Deputy's point that over the years they have contributed considerably. At the same time there are situations where communities enjoy very good facilities and are paying virtually a pittance for them. If the Deputy has any influence, perhaps he would assist me to make the whole operation more interesting from a financial point of view for everybody concerned. I accept there are organisations who have played fairly fair, but I have to put on record that I am unhappy with certain developments in different parts of the country and I would like to see these improved. I would be expecting the company to be efficient and to have regard to community and traditional interests in this regard.
I am somewhat disappointed at the naked commercial tone of the Minister's reply. I can understand why he might be tempted in that regard, but it is disappointing. What the amendment is seeking to assist would be bodies such as the National Association of Regional Gun Clubs and their affiliate members throughout the country who depend for the exercise of their sport on obtaining grants, leases or licences of State forestry. It could well be that they pay only a pittance, but what the Minister is offering may commercially only be worth a pittance. I do not think the Minister or his Department, with respect to them, have put any substantial investment into game conservation or game procreation. Any activity that takes place in that regard is done entirely by these people on a voluntary basis. I caution the Minister very seriously not to go down the same road — or the same river — as his colleague, the Minister for the Marine, and attempt to impose charges, licences or fees analogous to the abortive rod licence. If he does, he will have on his hands a controversy just as great and as colourful, because among the shooting fraternity there is a feeling that it too is nearly a God given right as much as the right to cast a line into the waters of Ireland.
I am glad the Deputy saw it as a God given right.
I caution the Minister to be careful. I take his point that we are setting up a semi-State body which must act commercially. The amount of revenue proportionately that it can expect to get from leasing or licensing the gaming rights on the lands under its control in relation to its woodland and timber activities will be puny and should not prevent or inhibit the Minister or the new body from giving preference to community bodies or non-commercial bodies such as the local gun clubs affiliated to the national association. I can understand that the Minister cannot put the amendment as such into the Bill. It would be an unfair inhibition on the independence of the new Authority. What I would like the Minister to do is to assure the House that he has taken on board in a serious way the points we are making and that he will indicate to the new board, when they come to deal with the licensing or leasing of game rights, that preference be given to Community or non-profit groups.
It would be a bad day for Irish sport, and Irish wildlife generally, if these rights are put up for bidding and competition and if tenders are invited from mainland Europe. If those so-called sportsmen arrive here then very shortly anything that flies would not be left in this country. as has happened in their own countries. On the few occasions when they visited here local public opinion was so horrified that the local hoteliers who brought them in had to cease bringing them in because, literally, they fired at everything that flew. They would obviously pay a handsome premium for the rights. I would caution the Minister against that because that is a source of contention straightaway. I would ask him to indicate to the new board, when it is set up, that when they come to consider this aspect of their activities they give preference to local bodies (a) to ensure goodwill with the local community, (b) to ensure that people who are genuinely interested in conservation will be exercising the game rights and, above all, to ensure that the new body will not get into contention and that we do not have another rod licensing fiasco.
I am glad the Deputy, with his long experience in the House, has acknowledged that I cannot include this amendment in the Bill. If I am to be accused of naked commercial responses to queries in this House, I would merely ask him what he would do in relation to something if he were doing what the Land Commission were doing for years: sending letters for 12p and 9p throughout the country to individuals and after a few years deciding they would discontinue the practice in some instances. I was careful to say that in certain instances the amounts being paid compared to the facilities that are being provided are just a pittance. In my discussions with the very people referred to by the Deputy they agreed that in the context of being able to provide good facilities of that kind they would be prepared to look again at some of the tenders. I would be very conscious of the need to assist local communities and groups who have supported the development of game. I think, too, that the Deputy could have included the forestry service. To say they have not contributed would be very close to a naked untruth; but, nevertheless, we can agree to differ.
We are not unconscious of what has happened in the past. I merely wanted to indicate to Deputy Carey that as far as many of these services are concerned the best way to ensure that they can be improved and maintained is to have a certain amount of commonsense at our side and at the side of the communities with which we are dealing. There are many organisations paying what we would consider to be a fair amount for the facilities they are receiving and others, for one reason or another, have been able to travel down another road. I am anxious to encourage them away from that. That is the only sensible approach we can go about. I have no hesitation in discussing these matters with the board on the basis of meeting the general wishes of the House.
I move amendment No. 9:
In page 7, between lines 31 and 32, to insert the following:
"(e) to establish a trading company in co-operation with private forestry interests to spearhead an export drive for Irish forestry products,
(f) to maximise the domestic value added of the timber industry,
(g) to develop hardwood planting,
(h) to undertake the technological development of timber and timber products.".
The Minister has already indicated that he is interested in the export drive. The reason I put down this amendment was to ensure that there would be liaison in the entire forest sector and that this trading company, which would be able to discuss the future of the industry, might have an export led industry improving the balance of payments and take advantage of the opportunities which were outlined by the Minister. I believe that in a short time this country will become self-sufficient, and if the increased rate of planting continues we should be able to supply large quantities of good timber to mainland Europe. In order that there would be widespread confidence and fair competition in the industry, I would ask the Minister to consider this amendment.
As I indicated in response to the proposed earlier amendments on section 12, detailed activities of Coillte Teoranta will be specified, as is customary, in its memorandum and articles of association. These will be sufficiently wide in scope to allow the company to undertake all activities relevant to its business and to maximise its revenues. The extent of the company's involvement in particular activities will, of course, be a matter for the company as part of its normal commercial development.
Deputy Carey, in the course of his Second Stage contribution and today, expressed fears that the presentation of the new company was not orientated enough towards marketing. I should like to assure him that that is not the position. Most of the items he referred to will be covered in the memorandum and articles of association. After some years of research we have succeeded in evolving the SG11, the standard specification for stress graded softwood timbers. Some Irish companies are already engaged in marketing to the UK. We have increased the supply to the domestic market from 10 per cent seven or eight years ago to more than 50 per cent today.
In his amendment the Deputy referred to the need to develop hardwood planting and I should like to tell him that this year the acreage has been increased to 700 acres. Despite the financial constraints we have been able to increase grants to the private sector for broadleaf planting. We are trying to meet the needs of the industry as fully as possible within the financial constraints that exist. The Deputy can be assured that we will be giving full attention to the crucial area of marketing in an effort to improve income. We will be doing everything we can to improve sales at home and in the UK.
I understand that those involved in the industry are seeking an assurance that there will be a joint effort to boost exports. I am disappointed that the Minister has not decided to establish a trading company, even if it was to be established outside the scope of the Bill. Such a move was suggested by the review group who reported on forestry. It was their view that those involved in the industry should liaise in an effort to boost exports. I accept the Minister's point about maximising the domestic market and the development of hardwood. However, he did not refer to my suggested subparagraph (h), to undertake the technological development of timber and timber products. I am concerned about a group who have been working for many years in the Department with Eolas. That group produced the lodge pole pine task force and were providing a very useful service. Employees who had concentrated exclusively on the development of forestry and had carried out extensive research work should be engaged by the company. Is it the Minister's intention to commit the new company to take on those employees of Eolas? The research undertaken by that group has proved very valuable. There is no reason those people should not be given an opportunity to continue their research. I do not think we should leave this matter in mid-air or depend on the Minister for Finance to look kindly on Eolas. I have no doubt that with the cutbacks, research and development work on timber will be curtailed.
Reference to Eolas would be more appropriate to section 43. I am conscious of the time constraints in regard to this debate and I do not wish to be repeating myself so as to give all Members an opportunity to move their amendments. I have referred to the developments that have taken place in regard to the stress grading of software timber and the standard specification which has evolved. Obviously, I was indirectly referring to the work of Eolas because they carried out that work. I acknowledge the outstanding contribution of Eolas to timber research over the years and, in particular, to timber marketing. Their work is more important for the future as timber supplies from our woods increase and the opportunities for exports arise. We must continue with our research.
I am anxious to get an assurance from the Minister about this matter. Is it his intention to second staff engaged in research and development work with Eolas to the new company? I am concerned in particular about those who were on the lodge pole pine task force.
Will the Deputy agree that the matter to which he has referred is more appropriate to section 43?
At the rate we are moving I do not think we will reach that section because we are obliged to complete the debate on the Bill by 7 p.m. Will the Minister give us an assurance that he will second that staff to the new company? When staff were seconded to Teagasc and to other semi-State organisations there was no objection by this side of the House. I am asking the Minister to give us an assurance about 30 jobs in Eoals.
The Deputy will appreciate that the most expeditious way to deal with the Bill is to deal with everything as ordered. If we start moving from one section to another without a decision we will not make progress. If the Minister is prepared to give any indication to the Deputy or make a brief comment, that might keep Deputy Carey happy; but the Minister may wish to wait until later.
I do not have any reason to avoid the questions put by the Deputy. On Second Stage I indicated to the House, as I had indicated to the unions representing staff at Eolas, that the question of moving the research staff to the new company would not arise. It will be a matter for the new company to avail of those services, just as the forest service availed of them in the past.
Amendment No. 13 is in the name of Deputy McCoy and amendment No. 14 is related. With the agreement of the House we will discuss the amendments together. Agreed? Agreed.
I move amendment No. 13:
In page 8, subsection (1) (a) (ii), line 7, after "needs" to insert "and to be in a position to fund its capital programme after the initial 4 year period of support provided in this Act".
Section 13 (1) (a) (ii) states that the company shall "generate a reasonable proportion of capital needs". The amendment proposes that the company should be in a position to fund their own capital programme after the initial four-year period of support provided in this Bill. When we establish a company they will have a saleable asset from the outset and will require grants. The figure mentioned is £30 million but I do not know if that is cumulative for four years or for each year. They will also get £3 million by way of equality from Government investment plus £100 million in capital investment and guaranteed borrowings of £80 million. This company are starting off with a very generous legacy from the Government. In the interest of performance I would ask the Minister to consider inserting some kind of self-financing clause for the new company. After the four years of generous support which the State is proposing to give this company, if they are to make the type of progress that the Minister envisages and if they are to be the type of commercial animal which he requires them to be, and which I totally agree with, then this animal should be well trained.
It is not good enough just to put an objective in the Bill that this company will break even. That is why I put down this amendment. There should be some kind of legislative target which the company should reach, such as a real rate of return. The review body spent much time examining the matter of the rate of return. They suggested 2 per cent or 3 per cent over the rate of inflation but I put down a figure of 5 per cent. It now appears that the Minister would be satisfied with a break even situation. If this real rate of return is inserted it would mean that the company would have to justify borrowings and a real effort would be made to generate profits. It is for that reason that I put down this amendment. There is an onus on the company, in getting this huge asset which belongs to the taxpayer, to see that it is worked properly and that we get a real rate of return.
We will deal later with the valuation. Criticism of the forestry section is widespread, whether by employees in the Department or by people outside, in that they do not trade on a profitable basis. There is a need to examine critically the work practices and programmes to see if some means could be found whereby the State would benefit from the huge investment already made. The investment is valued at about £800 million. When the State is generous with a company and allows them to take certain controls, it should at least put down some guidelines for performance. We have asked that there would be a real rate of return of 5 per cent. Deputy Kavanagh spoke earlier about 1992. There is no doubt that if the companies who are operating in the State, taking into account the competition from abroad, are not slimmed down, are not efficient and cost effective, they will fall. The requirement is that the Minister would lay down some positive target and I believe that a 5 per cent rate of return is a reasonable target.
We in the Labour Party are very concerned about the absence of information on the financial structure of the company. There is a great deal in the Bill about capital advances, repayable advances and so on. The working capital amounts to £3 million according to section 27. Under section 24 the aggregate borrowings shall not exceed £80 million and the repayable advances amount to £100 million. Borrowings and repayable advances attract interest and therefore the company could be hung up, as indeed has been the case in the past, with high interest payments to banks or other institutions, as I said on Second Stage. I instanced the problems of B & I and the various activities of that company. If that company make a profit it will go back to the banks in interest repayments which have accumulated over many years.
This section concerns me. The company as they stand at present, before the real money starts rolling into the coffers and before sales are achieved in ten years or so, which will be a real benefit to the company, will have various duties imposed on them from day one. They will have to meet all charges properly chargeable, generate a reasonable proportion of capital needs and remunerate capital and repay borrowings. They will have to conduct their business at all times in a cost effective and efficient manner. We all agree with that, but the fact that they will have to remunerate capital, repay borrowings, generate sufficient moneys and meet all charges from day one is something that could be very difficult.
One of the reasons the review group on forestry are against setting up a State company and preferred a national forest enterprise was that from day one the company would not have the resources from their own activities to be able to pay for their outgoings. I am not opposing this section but I want to voice my concern about the structures and the financing of the company. I am concerned about the huge assets which the company hold — between £800 million and £1,100 million. At the same time there is a very narrow working capital base which will attract much heavy borrowings in the early years and repayments on those borrowings will have to be met. I hope the Minister can satisfy our fears in this regard. What borrowings will be allowed from day one? What is the equity base and what is the likely breakdown between share capital and Exchequer repayable advances? As I have said, I am concerned about this section. Only the Minister can assure us that the company being set up as a State company will not get into difficulty as a result of the heavy interest payments they might have to generate because of this structure imposed on them from day one.
May I assure the House that the words used in this section are the same as those dealing with, An Bord Telecom and other State companies with regard to remuneration of capital?
They had money coming in from day one.
I appreciate the reasoning behind these amendments, but it would be unwise to include such specific details in the Bill. Section 38 (7) allows the Minister for Energy in consultation with the Minister for Finance, to set financial targets for the company. This section has the advantage of allowing for a flexible approach. I can assure the Deputy that we intend to set realistic targets for Coillte Teoranta and to take a hard look at their financial performance to ensure that they quickly make real returns on our considerable investment in forestry and reach profitability at the earliest possible date. I do not propose, therefore, to accept the amendment.
The capital programmes undertaken by the company, in agreement with the Minister, could well mean that the break even date would not be reached as early as it would without that kind of planting programme. There are also a number of imponderables. We are at present negotiating at EC level and the outcome of these negotiations will affect the profitability of forestry. Should we succeed in getting additional funds, particularly for State forests, that will change the picture.
However, I want to say a few words in defence of forestry, because it appears Deputies are under the impression that everything that has happened in forestry up to now has been a mistake. Deputies will appreciate that very often in the past forestry was pushed into the mountains and into the very marginal areas thus requiring expensive road making and expensive management generally. The forestry service were obliged to be involved in activities which ranged far from what one would call commercial criteria. We want to tidy that up, give it a better commercial orientation, free it from the complexities and difficulties which constrain it within the existing organisation and to enable it to achieve a better return on the investment. It would not be wise to write specific targets into legislation. If it was possible to exceed a specific target mentioned in the Bill, they could avail of any opportunity which arose. While I appreciate the reasoning behind the amendments and the need to ensure that we get a return on this massive investment in forestry as early as possible, I cannot accept the amendments.
Deputy Kavanagh mentioned the funding of the company, the share capital, borrowings and so on. What the Bill sets out to do is to establish limits. Within all that, negotiation has to take place with the Minister for Finance to agree an annual programme. It would not be possible to say how this will develop. I said on Second Stage, and I want to repeat, that because of the long time which must elapse before anyone gets a return on their investment in forestry and in spite of the assets of the company, to oblige them to engage in excessive borrowings at an early stage would be unwise. Subject to clarification of this point in the light of developments and discussions with the Department of Finance, I do not think I can go any further than indicate that the whole thrust of what we are doing is to try to improve the performance of the company and returns on investment while taking account of the existing difficulties.
I would like to come back to the specific wording in section 13 to "generate a reasonable proportion of capital needs". In that context I put it to the Minister that his Department have a profile of all the afforestation in the country — the age, when it will be harvested, the likely value, the annual operating plan, the forward plan for harvesting this timber, the likely market price, given that there is a shortage and so on. To allow a private or a semi-State company to go down the road with as little restraint as "generating a reasonable proportion of capital needs" lets the management of this company off very lightly.
I have to agree with Deputy McCoy. Reading the Bill, it appears that the Minister would be happy if this company were to break even.
I would be very happy if the company were to break even in 1992. I have now put this on the record, if that is what the Deputy wanted.
I agree with that, but we are talking beyond 1992.
That is not in the Bill.
If the Minister were to say that he would be satisfied with a real rate of return of 5 per cent after 1992 that would be all right, because he would be acting in the interests of the taxpayers who have invested in this company and he would be seeing their assets realise their true value. He would be protecting their assets for the future. The Minister said there was a limitation on borrowing, that the scope in this area was very small, but there is a temptation on the management to interpret the words "generating a reasonable proportion of capital needs" as meaning that they should break even and that that will be the best we can expect from this company.
Is that what the Deputy thinks?
More learned people than I dwelt for a long time on this matter. Members of the review body concluded that a return of more than 3 per cent over inflation was an achievable objective in the investment of long-term funds. I am asking for a real rate of return of 5 per cent. I am giving the Minister the benefit of at least 1 per cent, if not 2 per cent.
This is not the same kind of operation as An Bord Telecom or An Post. They provide a service. Deputy McCoy has mentioned all the variables in this industry and the Minister is aware that the economic factors can vary and that the company might even make losses. By putting this amendment into the Bill the company will be required to make a reasonable effort to reach their targets. I do not know how that can be condemned.
I have said on a number of occasions that I intend to give this company a hard time and that I will only accept results and performance which indicate that steps are being taken adequately to repay the taxpayer for the investment made in forestry. Deputies cannot have it both ways. Earlier in the debate, Deputies were at pains to ensure that adequate planting targets and matters of that kind were enshrined in the Bill. Land has to be acquired and paid for. The way to ensure profitability at an early stage is to stop acquiring land and stop planting. One cannot expect a company, however harsh an imposition, to become profitable very quickly and to move to a position where they can do without an annual payment from the taxpayer exceeding £30 million, while at the same time carrying out a new planting programme to give an even-aged estate, guaranteeing supplies to processors in the future and establishing new markets. We are asking for a high level of performance but we cannot specify in legislation a date by which the company shall break even. There could be developments in the negotiations at the EC which could bring about changes overnight.
Deputies are seeking something which is not attainable in this section. Here we have a general provision with regard to returns and remuneration similar to that in other legislation dealing with the establishment of State companies. Section 38 empowers the Minister to give a directive to the company and provides that their annual reports are to be submitted within a specified period at the end of the year. This section provides ample opportunity for assessing the progress of the company and ensuring that everything humanly possible is being done to reach break even point and thereafter to make adequate returns to the taxpayer.
I agree with the Minister that a lot will depend on the programme to be undertaken. This begs the question as to what programme the Minister will require the company to undertake. What prospect does the Minister see of getting EC funding?
The Minister was very positive about it on Second Stage.
I do not want the Deputy to be disappointed when I succeed.
I will be happy if the Minister succeeds.
We established a target for 1988 of 10,000 hectares and we will be working towards maintaining a level of planting which will be fairly acceptable. With regard to the possibility of success at EC level, we have been able to get a bit of movement on instruments which were not previously used for afforestation purposes. It will take some time to finalise these matters. The Commissioner for Agriculture will be here during the next couple of weeks and we will further intensify our efforts to gain an improvement in the funds from EC sources to enable a continual expansion on forestry, both private and public.
The Minister has explained the difficulties for a private company or a State private company starting off with a mature bank of trees if they are expected to state a particular time at which they will be able to generate a proportion of their capital needs. Would the Minister not agree that the position must be desperate for those entering private afforestation with no bank of trees?
The situation must be judged on its merits. If we were able to signpost a break even date we would gladly do it. However, there are difficulties. A company could become profitable tomorrow by deciding to abandon planting, but that would be an idle exercise in the context of what we want to achieve in the future. If we are successful at EC level a certain strain will be removed from the company.
We will monitor the activities of the company on an annual basis. I have said that we will be giving the company a hard time but I cannot be expected to specify in absolute terms a rate of return which will be spelled out in legislation. That would be without precedent. Should the possibilities arise for the company to do better than Deputy Carey might wish, the opportunity must be there. There are a number of problems in the way of that happening. According to the best estimate, the company will break even somewhat later than 1992. My experience of forestry is limited in terms of time but nevertheless I contend that to break even in a period somewhat longer than that specified either by Deputy McCoy or Deputy Carey would be an infinitely better achievement than the possibilities that we spelled out for forestry in the review. If we did not establish this company, set new criteria and recognise the urgent necessity to make organisational changes with less attention to aspects which constrained the development of forestry up to now, we would be delaying for many years the possibility of reaching the stage of profitability which all Deputies want.
I do not agree with the argument that is being made by some Deputies. My concern is that this company will not be in a position to generate any funds in the next few years. I am in general agreement about the section but it is not the same as the situation in Telecom Éireann or in An Post; they have revenues coming in from day one. The section is taken almost directly out of that Act. In that respect I have asked the Minister to do that in other areas and he will not agree with me.
Would the Deputy say that again?
I said that when I asked the Minister to take sections out of the Acts relating to Telecom Éireann and An Post the Minister would not agree with me. The situation here is parallel.
The Deputy is doing well this afternoon.
The Minister is turning down everything I suggest. All I can say is that the Review Group on Forestry said, at page 35, that they were mindful of the fact that the forest enterprise will not be in a position for many years to come to finance from its own resources its investment in new forests, or even all of its current expenditure, and that therefore they preferred a national forest enterprise which would be within the Department. We disagree with that, I am glad to say. My concern was that the amount of capital being made available may not be sufficient and therefore the company would have to borrow at whatever level of interest rate prevailed at the time or sell of part of its assets which is its forests with immature timber on them. As far as that is concerned, I will put down an amendment very shortly to be discussed. All I want to do is deal with these concerns I have on more specific sections of the Bill at a later time and get the Minister's opinions on them then. Generally speaking, I am prepared to accept this section as it is.
The Minister implies that this section will create a burden for the company. We cannot discuss the progress of Bord Telecom here and we cannot discuss the progress of An Post. Now we are not going to be able to discuss the progress of Coillte Teoranta. The Minister assures us that he is going to give Coillte Teoranta a hard examination every time, that he is going to keep on its back. I know that the Minister for Energy is already keeping a close eye on Telecom Éireann and An Post, but as Deputies here in this House representing the taxpayers we have no part to play. All we are asking is that the taxpayers' investment would earn a real rate of return. No matter what side of the fence one is on, whether one is a socialist, a capitalist or whatever, these huge funds belong to the taxpayers, so why are we not to know the return? The Minister seemed to be satisfied to allow this new company to amble along and to have contained in this section that to break even will be satisfactory. We want a 5 per cent real rate of return and that is reasonable.
One aspect about the conduct of this company that the Minister has not referred to is the new market in semi-mature timber he is trying to create. If such a market is created the funds will be available for this company. The Minister is relying heavily on this, too, by virtue of the working capital he has provided; it is clear that that is what his intention is. I have no objection to that either, but I demand that the Minister put down a firm guideline for a firm rate of return. If the Minister wants to put a date on it, such as 1998 or whatever, that would be satisfactory. I do not think the Minister is right to interpret this legislation in an open-ended way and tell the new executive that the Government will be happy if they break even. The Forestry Review Group do not want that, the Minister does not want that, and the people on this side of the House do not want it. We want to get this forestry idea moving and moving quickly.
In the UK, for instance, there is a market for semi-mature timber. If pension funds and financial institutions are to be attracted into supporting forestry it is in that area it will be. I know the risks are high, that land prices may fluctuate etc. The Minister catalogued all the variable factors in forestry evaluation. I appreciate that but we owe it to the taxpayers whose money is being invested in forestry to get a good return. This is the only area where the State has become massively involved in asset production. It is a single area. I know there were different social demands from time to time and that economic circumstances have changed since the establishment of the forestry division. I appreciate that, and I am not criticising the lack of profitability in the forest service; but a juncture has now been reached in the life of this nation where we have an opportunity to go forward in the forestry area, to expand it and develop it. New companies are being set up, three or four of them on the private side. There are extensive co-operative plantations planned. The Minister is optimistic for the future and I, and everybody else, will be delighted to see a massive expansion of our forestry. All I ask is that we do not set this up without expecting the chief executive and the board of directors to give some positive response like a real rate of return at some future date, and I though 5 per cent was a reasonable rate.
Deputy Carey should be under no illusion as to the constraints on the company or the expectations that I will have of a significant improvement in the organisation and the return on investment. But God help this country if the solution to the problem is the one that Deputy Carey submits: the success of the sales of semi-mature timber in the UK. I said last year, when the decision was taken to dispose of certain lots of semi-mature forest that only those lots for which an adequate offer was made would be sold. I regret to say that the pattern in the UK was far different. If the solution to the Deputy's problem and the attainment of his goals in relation to a financial return on investment is achieved by asset stripping at prices which I certainly would not accept, I am not going down that road. I indicated to the House that we would ensure, in section 38, agreement with the company on targets and on programmes and the submission of accounts to this House and the Deputy will see those targets and accounts in the House himself because they will be there for assessment on an annual basis. We expect the company to go on planting and acquiring land and in that respect we cannot expect the company to attain profitability within a couple of years. The Deputy and the other Members of this House will have an opportunity to see how the company are performing and whether they are meeting their targets on an annual basis.
I do not want to labour this point but the Minister of State has said on a few occasions that I have advocated a programme of asset-stripping but all I asked is that the Minister of State consider establishing a semi-mature market and irrespective of what the Minister believes that does not amount to asset-stripping. I believe that the establishment of such a market is essential in the development of forestry and I have to conclude that what the Minister of State wants is for this company, Coillte Teoranta, to hold a monopoly and to wipe out the private sector. If it is the Minister of State's intention, in not setting targets for the new company, to wipe out the private sector he should say so and the more honest approach for him would be to say that by giving this power to the company they will be able to cater for all of our needs in the future but in alleging that I have advocated a programme of asset-stripping he is using emotive phraseology which I do not intend to engage in.
All I want is the establishment of a semi-mature market to which the company would be able to buy in and buy out if they so wish. The Minister of State spoke earlier of the experience in the UK but the Minister of State knows well what Mrs. Thatcher has done in the United Kingdom, she has told the commission to sell of hundreds of hectares and he is trying to allege that that is what I am proposing. I spent four and a half years on the other side of the House when I was lectured by the Minister of State on Thatcherism——
Unfortunately, I was not a Member of this House during that time.
On coming into office the Minister for Finance was converted to Thatcherism and the Minister of State fully supports him. We have argued at length on this side of the House for controls on this company, Bord Telecom, An Post and the ESB. Does the Minister of State want me to go right down through the list of State companies?
No, I do not want the Deputy to do so.
I do not want to do so either. I believe the Minister of State is going down the wrong road in relying on a tail end. Some fine day the Minister of State will find himself on this side of the House when he will wonder about what this company are doing and whether they are doing things properly. Unless they are given targets I do not believe they will perform——
I have said on numerous occasions that they are going to be given targets, and stiff targets at that.
They should be outlined in this House and not drawn up behind closed doors by the chief executive and the Minister.
Amendment No. 14 has already been discussed. Is this amendment being withdrawn?
I am very reluctant to do so. I think the Minister of State has had his opportunity and I am very sorry.
I take it that the Deputy is not pressing the amendment?
I move amendment No. 15.
In page 8, subsection (1), between lines 12 and 13, to insert the following:
"(d) to provide for consultation with the Minister for Finance concerning forestry development in areas of scientific interest.".
On Second Stage I indicated that I would be moving an amendment along these lines. Basically, what I am asking is that the Minister provide for a consultation process with the Minister for Finance in relation to proposed forestry development in areas of scientific interest which, as far as I am concerned, include areas of important conservation value for amenity, biological, geological and geamorphical reasons. Perhaps the Deputies which the Minister of State has been dealing with up until now in this debate have been gentlemanly but in case the Minister of State has not noticed I am no gentleman and I mean business. I am going the whole way on this amendment and I hope that the Minister of State will be in a position to accept this amendment. It might short-circuit some of the debate if the Minister of State could give an indication that he is happy to take this amendment on board.
This amendment does not threaten the company in terms of their financial viability and it has no financial implications of any kind, not does it disrupt the template the Minister of State has set out for Coillte Teoranta. It in no way threatens the development of forestry in this country. As I indicated in my Second Stage contribution, I broadly support this Bill, with some reservations which have been outlined by some of my colleagues. With less than 5 per cent of our country under afforestation there is much that we can do in afforestation which would be to the benefit of our economy. Approximately 3.3 per cent of our country comes under the category of "important scientific area", which includes areas of international, national, regional and local scientific importance.
As the Minister of State is probably aware, in the seventies An Foras Forbartha carried out a heritage inventory during which most of these sites were identified. I have in mind over 1,000 sites. Only a very small proportion of our inland acreage and waterways would be involved. Since I referred to this matter rather passionately on Second Stage, which I hope has had some effect on the Minister of State, my colleague, Deputy Nealon, raised an issue on the Adjournment pertaining to what I am talking about now, the threat to the Isle of Innishfree. He and other colleagues waxed eloquently, quoting Yeats, on what that part of the world means to us. If this amendment is not accepted there would be no structures to prevent forestry development in specially sensitive areas for reasons which we can outline if necessary.
I ask the Minister of State to accept this amendment which is non-threatening. I would allow for consultation with the Minister for Finance and, through him, with the Commissioners of Public Works as they operate the Wildlife Acts and the National Monuments Act. I am delighted to welcome Deputy Nealon to the House who I know has a particular interest in this matter. The reason the Minister for Finance must be consulted is because of his responsibility for the Office of Public Works, an office in which, a short time ago, I spent a most enjoyable year as Minister of State with responsibility for this area. I am not sure how much convincing I need to do but perhaps if I sit down the Minister of State may give me an initial indication of whether he is prepared to accept this amendment and, if need be, there is a lot more that can be said.
I like to be threatened. Coillte Teoranta, like any other company, will be subject to the existing environmental and amenity legislation. In addition, a duty in regard to such matters is imposed on the company in section 13 of the Bill. The company, therefore, unlike the generality of State-sponsored bodies will have specific environmental and amenity responsibilities. Section 38 gives the Minister for Energy power to issue directions to the company, with which they must comply, on general forestry policies and other matters specified therein relating to their operations. While the Bill essentially sets broad parameters for the operation of Coillte Teoranta and does not provide specifically for every matter relating to their operation, I appreciate the sentiments underlying this amendment. Notwithstanding the fact that I believe the fears expressed by the Deputy are generally groundless and are covered by the Bill I am agreeable to putting the matter beyond doubt. Therefore, I am willing to accept this amendment and will amend the section accordingly.
I am very pleased that the Minister is willing to take on board Deputy Doyle's amendment. Because of the very enlightened attitude which the Minister of State took when I came up against this problem in my constituency in recent times I expected that that would be his attitude towards this amendment. The possible afforestation in the immediate vicinity of the vantage point for viewing the Lake Isle of Innisfree, which would have a serious detrimental effect on the general amenity of the area, is something which I believe will happen on a recurring basis. When perhaps 95 per cent of afforestation was being done by the Forestry Division, we had control and we knew they would act in a very responsible fashion, as indeed they did. Perhaps it is not suitable on a Committee Stage debate but I want to pay tribute to them for the manner in which they developed the forests, not just for afforestation, but also for scenic walks, picnic areas and generally adding to the tourist value of an area in addition to the economic value of very often inferior land. I am delighted that the Minister is accepting this amendment and I know that it will be a very substantial addition to what is turning out to be a very good Bill.
It must be the feminine touch that counts for this success.
Deputy Carey is improving his portfolio.
There is no other reason for it. I appreciate the Minister's acceptance of this amendment. The Minister recently visited my constituency and I am sure he is aware of the extensive developments that have been carried out by the forestry in that area. During the present good weather most of these forest walks and areas have been very well utilised. The people in County Clare appreciate the efforts that are being made in this regard at present. I thank the Minister for accepting this amendment.
A consequential minor technical amendment arises from the acceptance of this amendment. The consequential amendment to section 13 (1) (b) involves the deletion of the word "and" in line 10 and the insertion of the word "and" in section 13 (1) (c), line 12.
I thank the Minister for accepting my amendment. Notwithstanding the provisions in section 38 (1) (c) of the Bill I believe this amendment is necesary to copperfasten beyond doubt the problem which has arisen in the past in relation to the mismatching of land and its use. I happen to believe that money does grow on trees, particularly in the context of this Bill, but all sustainable development must have a look to conservation, and built into any policy in relation to development must be our conservation policy measures. They must go hand in hand and if any development is to be sustainable into the future it must be sympathetic towards conservation generally. The one is not the enemy of the other and should not be viewed as such. There should be no fear by developers if a strong conservation protection measure is built into the Bill.
As the Minister probably knows the mismatching of land and its use has been going on for a long time. For example, we are now planting trees on our mid-lands and western blanket bogs instead of preserving them as wet land ecologies. We should be planting the Drumlin areas which we are now grazing with cattle. Perhaps the amendment which the Minister has now agreed to will concentrate our minds on the proper use of land and perhaps even the proper zoning of land. The Minister mentioned the environmental legislation and the constraints which exist but unfortunately afforestation is not subject to development plans and planning application procedures generally. The planning authorities list all known sites of scientific interest in their development plans and they usually have objectives to protect these sites, but unfortunately that is good only as long as it relates to activities which are controlled effectively by the Planning Act, and forestry is not.
In thanking the Minister for accepting this amendment I want to refer to forestry development in the context of the environmental impact analysis under an EC directive which will become operational in this country post-2 July of this year, which is only a few weeks away. Forestry is dealt with under Annex 2 of that directive and effectively the full spirit of the directive will be operational in this country. Can I ask the Minister to confirm to the House that where there is any threat to an amenity of a conservation nature from a major afforestation plan that he will invoke an environmental impact assessment, through his colleague, the Minister for the Environment, in relation to that proposed development?
Sometimes when we get an inch we take a mile. I have always been very conscious of the quality of our environment and that we are only custodians of it for the time being and that we should do everything in our power to enhance and improve it rather than disimprove it. Beyond saying that I will always try to have regard to it, I have not had the opportunity to assess all of the implications of that document but as soon as I have I will communicate with the Deputy.
I should like to point out to the Minister that his acceptance of this amendment, perhaps in relation to forestry and forestry development, will bring to an end the appalling spectre that has been with us for a long time where one arm of Government is financially encouraging the destruction of a site of conservation interest — that would not be its intention but sometimes a development does that if it is not sensitive to conservation — while at the same time another arm of Government is trying to protect that site without adequate funding. This has been a dilemma for a long time. This amendment will protect areas of particular sensitivity, from a scientific interest point of view, from that continuing any longer. It will certainly make the job much easier for those interested in implementing our Wildlife Acts, National Monuments Acts and Planning Acts when protection is built into the Bill for these most important scenic and scientific areas.
I want to refer to another point in relation to the general area of amenities which the Minister might clarify. As private afforestation spreads in my constituency, in particular areas in close proximity to dwelling houses are being planted. I ask the Minister whether he has any rule on that because the people who live in these dwelling houses may not own the adjoining field and cannot in any way object to the planting. They do not like having what will be, in a very short period, a very thick forest within 30 yards or 40 yards of their existing premises. I suppose it is infringing on an amenity, particularly a dwelling house and the surrounds of a dwelling house, and I ask the Minister if he has any powers in that area.
I cannot say I have had experience of it in the private sector but I came across a problem of that kind in State afforestation. I decided that there would have to be a certain distance between a house and the first band of trees. Obviously it depends on the nature of the terrain, whether there is an incline and so on, as to how far you can go, but we need to have more discussions to ensure that we get the best possible balance. As I said to the Deputy on the Adjournment Debate, you can have extremes on both sides and we need to have a practical balance between them. In the context of discussions with private companies in the forestry area and also in the context of regulations governing the payment of private grants, I will try to go as far as possible on a practical basis to accommodate these matters.
I call on the Minister to move the consequential amendments.
I move: "In section 13 (1) (b) to delete `and', and in section 13 (1) (c) to delete the full stop and insert `and'." Then there is the new section. Is that clear?
Are both these consequential amendments agreed to? Agreed.
I move amendment No. 16:
In page 8, subsection (1), between lines 12 and 13, to insert the following:
"(d) to have due regard to modern safety practices.".
I am putting forward this amendment because I understand that in the forests over a number of years there have been at least two fatal accidents per annum and many serious accidents. I have come across constituents who have lost part of their limbs in these cases. Part of the problem is that safety practices are ignored. The amendment would require the premier company in the forest area to set standards and have due regard to modern safety practices. Also, some of the problems arise due to the black economy, the way in which people are hired for forest development and forest extraction.
Deputy Lowry on Second Stage appealed to the Minister to ask this company to control any black economy practices that might be creeping in. When the Chipboard Company in Scarriff closed down, many of the problems associated with the black economy at that time surfaced. People who had depended for their livelihood on the Department of Social Welfare and forestry subcontractors or whatever, were very shocked at their lack of income. Some of those people had been injured, but were still associated with the forestry extraction groups. These people were left in a very poor financial position and their families are now trying to look after them. I appeal to the Minister to respond favourably to this amendment. I do not know if this will lead to a further instruction by the Minister to the new company under section 38 — there will be an extremely long list under this section, from what he has told us already. I suppose that it is the relevant section under which he has the power.
I support Deputy Carey's amendment. It has come to my knowledge that the practice to which he alludes is still widespread. The situation arises whereby an operator is paid £9 per cubic metre for felling and clearing timber. There are no deductions of any sort. I have spoken to a number of men engaged in this work and 3 cubic metres is considered to be a tremendous day's work. Against that, the operator is supplying his own saw, his own petrol, his own insurance or whatever.
Or non-insurance, as the case may be. It is obvious that those engaged in this practice just could not afford to regard it as a full-time occupation. There is no doubt, as Deputy Carey has pointed out, that there is an inducement to enter the black economy, especially as there are few or no safeguards, that I can ascertain, by way of screening people involved. This practice is wrong for many reasons. It is especially wrong from a safety aspect. For this reason also, I support the amendment and ask the Minister to consider this area. It goes beyond the actual wording of the amendment.
In case my silence would be taken to mean that I was not in favour of this amendment, I say that I am. I always want to see safety-conscious methods applied in the forestry area. Those of us with some responsibility in that area know that there are practices which we condemned and should condemn. One is the hiring of operators who for one reason or another have not the ability to operate in a safe environment. Have the Department of Labour safety inspectorate any function in this matter? I would hope that they have. Unfortunately, as in other areas, there are not enough inspectors to go around, whether it be to inspect building and construction, or lorries, or the like. The inspectorate are too thin on the ground. I hope that the safety aspects in the forestry area would be the responsibility of a specific Department such as the Department of Labour, and that it would not simply be a matter for inspectors from the Department of Social Welfare who are seeking to shake out people in the black economy. I hope that a real safety approach would be taken.
I know that there are various instruction courses held in places throughout the country where operators can learn to operate in a safer fashion. The Department bring in people who are involved in this industry and give them a basic instruction in the operation of chainsaws, sharpening, methods of felling and so forth. This is not too well known. Perhaps that section of the Department which is not being transferred could be made responsible for safety, rather than it being left to the company. I hope that the Minister would hold responsibility for that section of the operation within the Department, rather than a commercial company who would experience great pressure to make money, resulting perhaps in corners being cut or a blind eye being turned to certain activities. If the Minister does not accept this proposal, I hope he will give us the assurance that within his own Department the highest safety standards will be applied to the operation of the whole forest industry — not just to the commercial activities of the new company, but also to independent private activities in that area.
I support this amendment. I would like to refer to two aspects. The first concerns that great force of men who worked down through the years in forestry in varying conditions from area to area. It depended on the attitude of the person in charge. I have no doubt that many workers suffered ill-health as a result of conditions not being as they should have been. The person in charge could be totally unsympathetic to the needs of those men.
The other aspect referred to more specifically in this amendment concerns due regard to modern safety practices. In the last decade, when the timber was being taken out under the contract and tendering system that applied, the contractor bought the timber from the Department and gave a pittance to the men to take that timber out in all sorts of conditions. They had to make a week's wage and very often could not do that. That happened in the State forests and there is much abuse in that regard. This must not be tolerated any longer.
The safety aspect is very important because of the number of people who have been injured and have received no compensation because they were not insured. They just agreed with the contractor to take the timber out and there was no such thing as safety precautions. I am aware of a number of people who have been injured and in one case a person was so badly injured that he will never work again. Therefore, I support the amendment.
The company, as an employer, will naturally be concerned with safety practices and will continue the good tradition of forest service in this regard. This is only one of the many matters with which the company will be involved but which is unnecessary to specify in legislation. It would be difficult, therefore, to accept the proposed amendment. However, I share the concern expressed by Deputies in relation to safety practices in the whole forestry area.
The forestry service have, over the years, undertaken a variety of training programmes and have ensured that all the staff have adequate protective clothing headgear, etc. but in spite of these training courses and the provision of protective clothing, there have, unfortunately, been a number of accidents. The chainsaw is a particularly lethal weapon and requires constant vigilance. I am certainly open to any suggestion which will improve safety practices and thereby ensure that we will minimise or eliminate altogether the possibility of any serious accidents to our staff.
The problem is considerably different in relation to operators for some private companies and some of the fears to which Deputies referred are, in my own experience, close to the mark. They leave a lot to be desired and are in need of a radical shake-up. In relation to the question of the black economy operations, this accusation can no longer be aimed at the forest service. We have ensured, through a number of ways, that all our practices in this regard are completely above board.
We have also attempted, in a variety of ways, to try to influence this development in relation to the area where it affects our contract services. All the personnel in the Department have been told to try to ensure that none of the people in the forests will be operating in the black economy. Contractors receiving contracts over £10,000 per year will have to produce tax clearance certificates and a new form of contract which has recently been drafted by the Chief State Solicitor is being used for all future contracts.
The problem obviously arises, not in the direct relationship that the forest service have with the contractor, but with the extension of these contracts and sub-contracts further down the line. In so far as we can, in consultation with the Minister for Social Welfare, we will do everything we can to try to improve that situation. This amendment does not relate to the black economy but I wanted to reply to some of the points made by Deputies and to assure everybody in the House that as far as the forest service are concerned training courses, the provision of safety equipment and the general climate for improving these practices is paramount and must be continually monitored and improved. I will take any suggestion made in the House which will help to improve the situation as far as concerns subcontractors over whom we have no direct responsibility but for whom we obviously have to be concerned, where they operate in practices which are a threat to themselves, their livelihoods and their safety. I will be glad to do whatever is possible in that regard.
Once more, the Minister indicated that he will not accept my amendment.
Santa Claus is coming later on in regard to the Deputy's other amendments.
I did not start counting the days to Christmas yet but I will after 1 July.
It will be Christmas at the rate we are going.
1 July is a more significant date. The Minister said he would be grateful for suggestions in relation to safety. Surely it is incumbent on the chief-executive and the board of directors to evolve a practice which would insist on contractors and subcontractors indicating that they had modern equipment available to avoid these accidents? I know the Minister said that the Chief State Solicitor will bring out some form of contract but, if the company's objective was to engage in safety practices, the chief executive, the board of directors and the management would be obliged to develop that limited kind of control which, in the long run, would reduce the number of accidents.
The company will inherit an industrial workforce and technical people who are well trained and conscious of safety standards which have operated in the forestry area for a considerable time and which have been improved through training courses, etc. The problem is not within the confines of the forest service. If, for instance, a stand of timber is sold at an auction or by tender to a private company, they in turn pay a deposit on that purchase and use their own resources to harvest that timber. The forest service do not have direct or indirect control over that and the Deputy's amendment would not solve the problem.
If the sale was subject to safety constraints, they would be obliged to bring in these measures.
Everybody outside the forest service is obliged to conform to certain safety standards and there is legislation governing that aspect in the Department of Labour. However, we are not so much concerned about whether there is legislation in this regard; there are unsafe situations in our forests which are not within our control. It may well require stepping up penalties or other such measures which will enable the safety procedures which have been adopted by the forest service for so long to find their way down to the areas which are at present worrying the Deputies.
Will the Minister accept the new section 38?
Christmas is coming.
Will the Minister do that?
Maybe Deputy Carey will allow us to move on.
I will see what I can do now.
I would give the House a general reminder that we have not moved all that far into forestry, and we have a long road to travel.
I move amendment No. 17:
In page 8, lines 17 to 19, to delete subsection (1) and substitute the following subsection:
"(1) The company shall submit to and agree with the Minister each year a programme for the acquisition of land and for the sale of land, where the company considers such sale to be necessary, and for the sale of timber, whether standing or felled.".
Amendments Nos. 18, 19 and 20 are alternatives and amendment No. 21 is related. With the agreement of the House, for discussion purposes, we will take amendments Nos. 17, 18, 19, 20 and 21 together. Agreed.
There are 71 amendments and you have just reached No. 17——
I have not reached anything. The House has reached amendment No. 17.
Before the Leas-Cheann Comhairle came in a Deputy in this House moved an amendment which was accepted by the Minister. A further Deputy came in and wasted 20 minutes speaking to an amendment which had already been accepted by the Minister. It was a pure waste of time so as to have it in the report, instead of debating amendments which should be debated. That performance has been clearly observed. The amendments to this Bill are important and the people who put them down are entitled to debate them without time being wasted as it was wasted by the Fine Gael Party a few minutes ago.
Section 14 says that:
The company shall submit to and agree with the Minister each year a programme for the sale of land and the sale of timber, whether standing or felled.
We are concerned that an interpretation could be put on this section that it was compulsory for the company to sell off land each year. No doubt from time to time it would be in the interests of the company to sell off small parcels of land no longer suitable for forestry and to acquire other lands. However, we are concerned that this section as worded would open the way for a large scale systematic selling off of the land bank necessary for forestry. Our amendment would remove any element of doubt by making it clear that such sale of land would not be a compulsory annual requirement and would be done only where the company considers such sale to be necessary.
The Labour Party amendment seeks simply to delete the words "the sale of land", and this is another way of doing it. We would be happy with that also. Although it is not addressed in our amendment some of the other amendments made the point that a yearly programme is too short a term for an industry such as forestry which by its nature is a long-term investment. We are prepared to support the idea of perhaps a three or four year programme. In relation to the sale of land and timber, the whole question of policy is very important. Something that has concerned me as a Deputy for Cork East is that in the Doneraile area there has been a sale of timber in Dreenagh Wood just outside Doneraile. Is it the intention to have that area replanted? What way is the land being disposed of? Already a fair section of it has been sold. I am very surprised at the manner in which this is being done and I am availing of this opportunity to address the question to the Minister because this section deals with the sale of land and timber.
This would be an appropriate section in which the Minister could have made reference to the land acquisition and afforestation programme but there is no reference to that in this section. Will the Minister state his intention in that regard?
The requirement to submit a programme as provided in this section poses a few problems for the company. By empowering the Minister to impose such a programme and to approve particular sales, the legislation restricts fairly severely the company's ability to carry on their business in accordance with the sound commercial practices envisaged. This is inconsistent with the reason for establishing the company in the first place which was to free it from the restraints of the Civil Service under which it had to act for so many years.
Annual programmes are inappropriate for forestry operations because of the length of time it takes for a tree to grow or for a forest to mature. A three or a five year programme would be more appropriate. A major point which concerns us and obviously concerns Deputy Sherlock relates to the sale of land. The one thing that has concerned me throughout this debate is the possibility of privatising the forestry industry through various sections of this Bill. I am concerned that the Minister should write into a Bill provisions for the sale of timber or land. The Minister asserts that a programme will be set out for the sale of land and timber whether standing or felled. My concern has been, and from what the Minister said earlier on, his concern also, is that we should sell growing timber and land together. The only purpose of my amendment is to prevent that happening. Now and again small parcels of land are sold off whether for the local authority in a particular area or for a Department of Education requirement for schools or playing pitches or whatever. The Department are often approached to sell small parcels of land and on occasions there may be a need to sell land in certain areas where a private sector operation might be appropriate. I am very much concerned however, about large scale selling off of these assets of this company. If this section goes through unamended it will facilitate the large scale selling off of assets.
Should this company find itself in financial difficulties in the future where the Government will require them to look after their own future with regard to raising funds, the company may have to face the possibility of selling off assets such as timber on land. I opposed this idea when I was in Government. I made a statement at the time and the Minister, a Deputy at the time, also came in very strongly to support that view. Now that the Minister is on the Government benches with the possibility of putting legislation through, I hope he will maintain that position that he and his party held a few years back, that it should not be possible, through a section like this, to sell off large scale areas of forestry estates in the ownership of this company. I know there are other sections which are very important but this is a very basic one, one which concerns me and my party very much. If the Minister cannot accept my amendment I hope he will suggest an amendment which would take on board the sentiments I am expressing here today, namely, that under no circumstances should this Bill facilitate the sale of the land and timber which has been acquired through taxpayers' money over the years and handed over to private enterprise. I hope the Minister can clear our minds on this matter before we proceed.
I understand we are discussing amendments Nos. 17 to 21, inclusive, so it is permissible to move two at the one time.
You may move only one amendment at any one time. There is agreement that the subject matter of other amendments be taken for discussion so we are discussing amendments Nos. 20 and 21 without their having been moved.
I should like to refer to amendment No. 18 to section 14, subsection (1) which relates to the sale of land and timber. The Minister should consider the rewording of this section to "the sale and acquisition of land". If the company are to be allowed to sell land, surely they must be allowed to acquire it given that the programme is agreed with the Minister. Once the programme has been agreed with the Minister at the start of the year he will have given the company the power to sell land during the year. In order to allow them to proceed commercially he must incorporate in this subsection the power to acquire land.
In relation to amendment No. 21, I suggest to the Minister that in line with the commercial activities of the company it should not just be a year-to-year review but the company in line with proper commercial practice should submit a five year development plan. This should be the basis of the Minister's review each year, not an ad hoc plan or an ad hoc agenda for the annual general meeting between the board of directors of the forestry board and the Minister but rather a review of the five year plan which should be submitted to the Minister and updated — and be the basis of the annual meetings — which would decide the sale and acquisition of land and timber for the purpose of the profitable and commercial operation of the company.
Since the debate began on these amendments the Minister has been talking about the constraints which we sought to put on him through the various amendments. In my proposed amendment I am trying to extend the scope of the company's activities by asking for "a five year programme for afforestation, the sale or lease". Following on Deputy Kavanagh's point I might also put in the sale or lease of land and the sale or lease of timber. In this Bill a practice is now being accepted that total sales of land and timber will be the only way forward for forestry and forestry development. I know the Minister had experience last year of two sales.
The Deputy is off the rails again.
I am not quite off the rails. On the first occasion he offered land on lease and in the second case he sold the land because the finance companies asked for it. I do not understand why the financial companies want to take advantage of the small appreciation there might be in land values and commit huge sums to the purchase of land when the development of forestry might be extended much further through a leasing system. I await the Minister's reply but it would appear to me that leasing as an idea has been abandoned in the Bill. Perhaps I am wrong but that is what I think. Some people whom I consulted about this Bill feel that the State is handing over these assets should make at least one last effort to develop a leasing system. We are about to hand over the entire assets and if we asked them to have a further go at leasing we would be taking the right step forward.
In countries such as Israel they set up communes where people work steadily year in year out under the high sun, yet the system of land ownership there is that of lease. Even if it goes to a 700 year lease they will accept that in Israel. There is something wrong in this country when we are not able to get our farmers to adopt a proper leasing system and to have confidence in it. I am told the financial institutions are the very people who will not have confidence in the farmer honouring his lease after 40 years. Irrespective of the malpractices which are going on, surely the State is guiding the company would indicate to them that they consider the two matters, the sale of the land or the lease of the land. I think everybody would be happy if the land was leased because less emotions would be released about the disposal of a valuable State asset.
That is the main reason I have put down the amendment. I think that a five year programme is a realistic period for the chief executive and the directors to have something put together and it would release them from the scare of the big hand of the Minister for Finance coming down on them on an annual basis.
I propose to take these amendments together as they all relate to section 14. I want to make it clear to Deputies that the primary purpose of this section is to prevent the company from selling off large tracts of land to compensate for management deficiencies in conducting its business. The objections which Deputies have in relation to any unnecessary disposal of land are more than adequately covered. Indeed, the fears expressed by Deputy Kavanagh in that sense are unwarranted. In my view it is entirely reasonable that the Minister, on behalf of the citizens of the State, who have invested large sums in forestry down through the years should have a role in preventing excessive land sales, together with timber on that land, by the company.
The reference to timber can be interpreted as being almost exactly the same as that to land. It is also possible to strip assets prematurely by the disposal of timber which is not ready for harvesting. There is no intention to use this section to put a strait-jacket on the company in relation to normal timber sales. The section, in fact, allows the Minister flexibility in exercising his responsibilities under it. It would not, for example, prevent the Minister agreeing a five year sales programme with the company, annual sales targets within this programme to be settled in consultation with them.
Secondly, the memorandum and articles of association provide for a five year programme. Within this section, and through the memorandum, we have copperfastened the twin aims of having a five year programme and having within it an agreed annual sales programme. I do not propose to accept the amendments relating to the sale of land and programmes but I would be prepared to accept that section 14 should also provide for an annual programme in relation to the acquisition of land and, therefore, I agree to accept Deputy McCoy's amendment on that point.
What about leasing?
The memorandum and articles of association provide for leasing. However, I do not see it as having the potential that Deputy Carey considers. There is a reluctance on the part of farmers to lease land in conventional farming areas for dairying or beef production and in such instances farmers are in a position to retrieve the land at a given time but forestry is a long-term project and it is doubtful if it will encourage leasing. We have provided for leasing and we will encourage it but it should not be seen as the be-all and end-all in terms of acquiring land for forestry purposes.
The Minister has told me that the section covers the point I have raised, that the land on which the timber has been planted shall not be sold off without the Minister having made the House aware of it. However, section 14 (1) states:
The company shall submit to and agree with the Minister each year a programme for the sale of land and the sale of timber, whether standing or felled.
Other sections amplify that provision. Is there not a method whereby we can make it clear to future Ministers that under no circumstances can the assets of the company be stripped? The Minister and I are concerned that the company should not be stripped of its assets but I am not satisfied that the amendment deals with the point.
Will the Minister indicate which of Deputy McCoy's amendments he has accepted.
Only one amendment refers to the acquisition of land, No. 18, and I am accepting it. When I read the section I expressed concern in relation to what appeared to be an annual obligation but the matter has been checked with the parliamentary draftsman and I understand that there is not a better way of dealing with it. Provision is made for the sale of land but at the same time the Minister can ensure that should the company decide to oversell, it will have to be specified. I am advised that there is not a better or safer procedure to deal with this matter than that included in the Bill.
The Minister is happy that he is meeting my point but I am thinking of the attitude of future Ministers, perhaps a Minister from the Progressive Democrats who may not have the same attitude to the sale of such land as the Minister has. The Minister shares my view with regard to the sale of land and that policy was expressed by his party two years ago. However, the Minister will not be in charge of forestry forever and his successors may not have the same attitude to forestry.
I should like to thank the Minister for accepting Deputy McCoy's amendment because in doing so he is accepting portion of our amendment which states:
The company shall submit to and agree with the Minister each year a programme for the acquisition of land and for the sale of land where the company considers such sale to be necessary....
I am pleased that the Minister has agreed to a programme for the acquisition of land. It was good to hear that he was in agreement with the view that the company should not be selling off land. He has told us that there is no compulsion on the company to sell off land. Deputy Sherlock was anxious to include the words, "where the company consider such sale to be necessary", so that that view would be submitted to the Minister and if he consented the land would be sold.
It appears from the Bill that a Minister can insist on the company submitting a programme for the sale of the land he wants sold. There is nothing in the Bill to the effect that that should not happen. Each year the company must submit to the Minister a programme for the sale of land and the Minister can insist on the company doing that. It is for that reason that we want the following words included, "where the company considers such sales to be necessary". If the company do not consider such sales to be necessary there should not be any need to submit such a programme. The Minister has said that he accepts that view.
I accept the point made by Deputy Kavanagh that, in accordance with subsection (1) the company will have to submit to the Minister each year a programme for the sale of land. I would ask the Minister to consider this matter again. He has been very reasonable in accepting amendments. I am glad he has accepted that there should be a programme of acquisition of land but to insist that there be a programme of sale of land every year would be wrong. It would give undue power to future Ministers.
I do not want to delay the House because we have not made very much progress. It has been clearly outlined by Deputy Mac Giolla that what will be involved will be the absolute sale of land, as is written down in this section. I am saying that the wording should be "sale or lease of land". Maybe I did not put down the proper amendment but I believe that it should be worded in that way. I do not see why the company should be committed totally to the sale of land. I wanted to extend the time in order that there would be a five year programme. Such a programme in that area would be satisfactory and would not put the company under undue pressure. In an earlier amendment the Minister said that I was putting unnecessary restrictions on the company by including, in section 12, land acquisition and afforestation. The Minister said that that was a restriction and that it was dealt with in the articles of association. While he is accepting this amendment, he is excluding the possibility of the lease of land.
In reply to Deputy Carey, I said earlier that as far as leasing is concerned it is covered in the memorandum and articles of association and there is no doubt about the freedom of the company to lease land. This is a separate section. Let us try to imagine a situation where no provision was made with regard to getting agreement with the Minister on the sale of land and that all that was included in the provision was the sale of timber. It is probably likely that by staying silent on this matter there would perhaps be no objection whatsoever to the provision. The reason why there is an objection is that there is a precise reference to a programme for the sale of land. What I envisaged in that situation is that the company for one reason or another could decide, off their own bat, if the Minister did not have the power to find agreement with them, to dispose of unnecessary land banks to cover up for their own inefficiencies. If I do not put in the provision, obviously I would not have the same power to restrict the company in the way the Deputies would wish. In that sense I am meeting, in a general way, what this House wants to achieve.
I readily admit that having read and re-read the section I was inclined to have the fears that were expressed by Deputies in this House. I subsequently ascertained, in so far as I possibly could, from the draftsman whether agreement with the Minister on the sale of land could be incorporated in a different way and I am reliably informed that this is not possible. Nevertheless, I have to emphasise that the provision does not necessitate the sale of land on an annual basis. It cannot be provided for in any different legal format.
For instance, in the previous section there is the provision to remunerate capital and repay borrowings. It may not be possible to do that within a given time and therefore many of the provisions in the Bill have, of necessity, to cover a range of possibilities, not all of which would have to be put into effect at a given time. Therefore all we can do is try to cover eventualities which we envisage, in the best legal way that we can, and at the same time confine intrusion or any involvement of the Minister in the day-to-day activities to an absolute and total minimum. I hope Deputies will accept that if I could be convinced — I have tried this from a number of angles — that there was another and more appropriate way to make the same determination, I would be glad to do so but, as I have said, I am reliably advised that that is not technically possible.
If we were on Report Stage I would suggest an amendment. I do not think the Minister should ever accept from draftsmen that something is not possible. The Minister should be given a programme every year of what the company are doing. It is stated in the Bill that the company shall submit to and agree with the Minister each year a programme for the sale of timber, whether standing or felled, and if they intend to sell any land such programme should also be submitted to the Minister. The "if" makes that provision less definite than the one proposed which states that every year they must submit a programme for the sale of land and timber.
I know the House is very constrained with regard to time and it would not be possible to accommodate the House in respect of any change this evening. When the Bill goes through this House it will then go to the Seanad and I undertake to have a further look at this provision. I want it to be understood that, having already tried to achieve this end, I have to give that undertaking without a commitment to come up with a different solution.
I thank the Minister for making that commitment. It is fair enough. Having got that commitment I do not intend to press a vote on this matter. We will be having another look at it and some of our Senators can put forward an amendment if they think that a better wording is needed. The purpose of my amendment is a simple one, to create a discussion on this matter, to voice our fears, to get the Minister's reaction to it and perhaps to get a more appropriate amendment from his point of view.
I will put a hypothetical case to the Minister and perhaps he could refer to it. He has said that this provision is a safeguard as far as he is concerned. Suppose it happens that, as I suggested earlier, in the next few years this company are not generating sufficient revenue to meet all the commitments which they are supposed to meet, on the revenue side as well as the capital side, and a Minister tells them that he cannot give a direct grant to them but that they should sell some of their assets, as is provided for under section 14 (1), can that be done under this Bill as it stands?
Ministers and Ministers of State have great difficulty sometimes in dealing with actual situations without also having, during the course of a debate, to deal with hypothetical situations.
That is a practical proposition that I put forward.
In relation to the sale of semi-mature lots, I believe that there is an absolute minimum share of that market available to everybody. In general terms it is quite small. The opportunity, even in the hypothetical situation that the Deputy referred to, would not be great. However, in the context of a Bill like this, I do not think I can be expected to judge what somebody else might do in a hypothetical case. Let us confine ourselves to the actual position.
Can I take it that we have walked long enough in the forest of section 14?
The Minister did not say why he wanted a yearly programme.
Obviously this is for practical purposes. The five year programme can be agreed and within that five year programme there will be an annual component. For instance if we agree a five year programme starting now we will have agreed a four year programme next year. One way or the other, we will have to take a closer look annually at what is happening. It is possible to accommodate the Deputy two ways. We are empowered under the articles and the memorandum to have a five year programme and within that five year programme we can agree an annual component. That is normal, safe, and there is nothing wrong with it.
I move amendment No. 18:
In page 8, lines 17 to 19, to delete subsection (1) and substitute the following subsection:
"(1) The company shall submit to and agree with the Minister each year a programme for the sale and acquisition of land and the sale of timber whether standing or felled.".
Amendment No. 22 in the name of Deputy Kavanagh. Amendments Nos. 23, 24, 25 and 27 are related. With the agreement of the House and for the purpose of debate we will take amendments Nos. 22, 23, 24, 25 and 27 together. Is that agreed? Agreed.
I move amendment No. 22:
In page 8, subsection (2) (a), lines 35 and 36, to delete "not more than 9", and substitute "at least 12".
I will be very brief. What I am trying to establish is that there will be worker directors on the board of this company. The transfer of so many workers, professional technical or outdoor staff, people who have worked for many years creating our forest assets, are as entitled to be on the board of the company as any other employee in a State company. In providing only nine members on the board the Minister is obviously keen to have a very small tight-knit operation running the company and one cannot criticise him for that. He might say that if there were three worker directors out of nine we would not have a balanced board. I am not making his case for him because I would not agree with that.
I decided the best way forward would be to increase the number of directors to allow the Minister to create worker directors. If the Minister agrees with what I am saying — whether a nine member or a 12 member board — I will be happy and I am prepared not to delay the House any further. However, it will not be sufficient for him to say that this can be covered in the Worker Participation Act, 1988, because when that Bill was being discussed, we tried to have this new board included, but the Minister rejected it on Committee Stage.
His idea seems to be that it is sufficient to create a sub-board level operation in future concerns to be included in the worker participation legislation. I do not think that is appropriate for the employees of the new company because they are very experienced and highly skilled people at all levels. They do not need to be educated into the decision making process. In my view they would be a great asset to the company. We heard one of two remarks on Second Stage about working directors rather than worker directors and I want to reject any slight that worker directors did not contribute fairly and completely to the operations of their companies.
My reason for proposing that worker directors be appointed to the board is that their knowledge and experience in their own industry can benefit the company; I am not simply making a political demand. As I said, boards can only benefit from worker participation, not at a sub-level where, as somebody said, they deal with the colour of the toilet rolls. We want them involved in decision-making. We do not want them kept happy at meetings held in backrooms and brought to Dublin once or twice. We want them opearting at full capacity and making decisions using their expertise. All the necessary information should be available not alone to the people the Minister will choose but also to the worker directors. I do not mind if the Minister accepts my amendment or somebody else's amendment. All I want to know is if he accepts the principle of worker directors in this company.
Amendment No. 23 in my name reads:
In page 8, subsection (2) (a), line 36, after "more than 9" to insert ", of whom not less than three shall be elected by the employees of the company".
We are shocked that it is intended that a new commercial State company be established without any provision for the appointment of worker directors. The Irish Congress of Trade Unions have made it clear that they consider this omission to be a breach of the terms of the Programme for National Recovery. There seems to be a new element of hostility to the principle of worker directors creeping into Fianna Fáil policy. This is the second major State body to be set up by legislation within the past few weeks in which no provision was made for worker directors.
During the debate on the Teagasc Bill, the Minister for Agriculture and Food, Deputy O'Kennedy, made it quite clear that he was absolutely opposed to the principle of worker representation on the boards of these companies. Whatever about Teagasc, the case for worker directors on the new forestry company is unanswerable. I understand there have been very strong representations from the unions involved but they got a totally negative response from the Government. Why is it there should be worker directors in a company like Bord na Móna but not in a very similar company, the Irish Forestry Board Limited? When posts and communications were taken out of the Civil Service through the establishment of An Post and Telecom Éireann, provision was made for worker directors. Why is it that when forestry is being taken from under the direct wing of the Civil Service and a new commercial company is being set up, worker directors are not being provided for? The only possible interpretation is that Fianna Fáil, in yet another U-turn, have decided to turn their back on the principle of worker directors, despite the generally held view that worker directors have contributed to a greater sense of involvement by workers and a better climate of industrial relations. Who can deny that workers on the ground and representatives at a higher level will not be aware of the anomalies in the workings of a company? Direct representation on the board could eliminate these shortcomings and be of great advantage to the company.
Our amendment is reasonable and asks simply that the workers in the forestry company be given the same rights and the same element of industrial democracy as workers in Aer Lingus, the Sugar Company, Bord na Móna, CIE, the ESB and so on. The amendment suggests that three of the nine directors be elected by the workers. I respectfully ask the Minister to accept the amendment.
I have two amendments to this section. I emphasised during my Second Stage contribution the need for expertise on the board of directors. Amendment No. 24 states:
In page 8, subsection (2). line 36, after "more than 9" to insert the following:
"and shall include among them persons with established experience in marketing, accounting and personnel management;".
All the studies on the State forests concluded that the main objective in setting up a new enterprise should be to establish a market-led industry. I have asked for the inclusion on the board of persons with experience of marketing and accounting. We have had experience of companies where directors did not consult with other directors and made forward contracts. There is also need for a director who is experienced in personnel management because there will be huge problems in transforming this State body into a private company.
I appreciate that the trade unions encouraged the Minister and the review group to change from State control to private control. They showed their goodwill towards the establishment of the company. I was interested to hear Deputy Sherlock's remarks about the contribution of worker directors. Some kind of incentive should have been provided for the workers such as, for example, a profit-sharing scheme. This would apply to all the workers in the industry.
I tabled amendment No. 25, dealing with worker directors, because I have been impressed by the progress made in my constituency by Aer Rianta, who are encouraging worker participation. The workers, trade unions and staff associations have come together and have made some progress towards the worker director concept. They have had lots of meetings which have been very beneficial for industrial relations in Aer Rianta.
The Minister is not even providing for trade union representation at sub-board level. Is it to be done under the infamous section 38? The Minister will have to come clean and say whether he intends to have these people at sub-board level.
There will have to be strong management in the area of marketing, accounting and personnel. I do not believe the transition will take place as smoothly as everyone believes. I appeal to the Minister to give a definite indication that something firm is being done to provide for worker participation in the company.
It is the Government's intention to appoint directors to the company on the basis of the contribution they can make to it. Obviously experience in marketing, accounting and personnel management are important but, equally, they are not the only considerations in view of the business in which the company will engage. For this reason they should not be singled out for mention in the Bill. A list of all the desirable attributes of the directors would not be possible. This is a forestry company and there is nothing in the amendments to secure the appointment to the board of a person with a knowledge of forestry. I should prefer to leave the legislation as it stands.
I now turn to the other amendments tabled by Deputies Kavanagh, McCoy, Sherlock and Carey. I consider that the proposed number of directors is appropriate, given the size and operations of the company. I do not consider an increase in the number would have any impact in increasing efficiency. The opposite might well be the case, as I think Deputy Kavanagh would agree. It is the Government's firm intention to appoint the directors solely on the basis of the contribution they will make to the development of the company. This approach would not, of course, preclude the appointment of an employee as a director but not in a representative capacity.
The Programme for National Recovery states that the Government proposes to facilitate the introduction of worker participation arrangements at sub-board levels. Recently the Worker Participation (State Enterprises) Bill, 1988 was considered by both Houses of the Oireachtas. Accordingly, I would be prepared at the appropriate stage to avail of the consultative provisions of that legislation in regard to the implementation of participative arrangements at sub-board levels in the company. The Forestry Bill would give the right to employers to initiate arrangements for participation below board level in accordance with the provisions of the Worker Participation (State Enterprises) Act, 1988. It will be up to the employee representatives and the company management to work out arrangements best suited to the new company.
It is not intended at this stage to make provision for the election of worker directors. Progress in participative arrangements require patience, time and discussion. By concentrating first on identifying the common ground, employee representatives and management can concentrate on building a climate of trust under a scheme of participation suited to the particular needs of Coillte Teoranta. To achieve this, worker directors are neither necessary nor particularly appropriate at this time.
The legislation provided for sub-board structures. This will lead to a regular exchange of views and information between management and employees concerning matters of interest to both. These could include company plans, manpower policy and budgets. Development of sub-board structures will require the time and commitment of employees and management, especially live management, to make these structures work. The aim, therefore, is to allow an opportunity for employees and management to design and put into operation their own participative arrangements below board level. The question of worker directors can be considered in the light of the progress made at sub-board level. It is clearly preferable first to build a foundation and infrastructure of participation below board level. We only have to take the Aer Rianta experience where the management and staff set about over the years providing these structures and were gradually able to grow into a position where the worker director position was reached.
I am not going to take second place to anybody in this House in relation to efforts we have tried to make to ensure we have the widest possible consultation with staff at all levels, not only in relation to the introduction of this new Bill which obviously affected their terms of employment and everything with that, but also in connection with the plans for the development of forestry as a whole. We have had discussions with the trade unions, all levels of staff at headquarters, visited many of the forest centres, talked to the industrial workers and the technical staff at all levels to ensure that we would have the best possible consultation with regard to forestry development for the future, and indeed with regard to the development of the new organisation. I am very concerned to ensure that we have the best possible staff relations but I do not, however, agree that this is the appropriate time to make this provision.
Many of the arguments which were made over the years for the establishment of a new company to run our forestry services were based on the outdated procedures and the constraints in the Civil Service and even the dual structure in the forest service. It could well be that to accept the proposals put forward, however genuinely, at this stage one would actually perpetuate some of the divisions which could be better overcome by establishing single line management under the new company where a basic effort would be made to work not only from the top down but from the ground up to establish the best possible staff procedures and mechanisms from which developments of the kind the Deputy has in mind would grow in the future.
For these solid reasons, and bearing in mind that I have personally endeavoured to get the greatest possible consensus in the forest service with regard to these developments and that I have met not only the unions but personnel at all levels throughout the country in relation to this provision, I feel for the time being the presentation we are making in relation to development at sub-board level and the structures which would have to be built around that should be acceptable.
This is a great disappointment to me. The Minister says he discussed this matter with the unions. He must not have listened to what the unions said to him in regard to worker directors. The Public Service Executive Union, the Union of Professional and Technical Civil Servants, the Federated Workers' Union of Ireland and the Irish Transport and General Workers' Union represent the full staff of the present forestry section of the Department of Energy. All of those indicated clearly that they want full board level representation. Even yesterday the Irish Congress of Trade Unions, which represents the voice of the total trade union movement, told the Minister quite clearly in a letter to him that they were disappointed with the Bill since the Minister would not accept two basic changes in it, the first that it was essential that provision be made for the election of worker directors to the board of the new company in accordance with the terms of the Worker Participation (State Enterprises) Act, 1988, and the second that in order to protect the new company from any attempt at privatisation that might be made in the future the Minister should be obliged to return to the Dáil before any changes could be made in the status of sales of shares which could take place.
The Minister was asked to make those two changes in the Bill. He has rejected both of those and as a result I, on behalf of my party, will be opposing the Bill. It is wrong to say that the unions have indicated to the Minister that they are in favour of sub-board level participation by workers; they are not. The Minister has their letter. I have mentioned the unions that have made representations to me in regard to amendments that should be made and giving the opinions of the workers whom they represent.
Because the Minister has rejected an amendment to the principle stated in section 15, on behalf of my party, I cannot accept this Bill in its entirety. Therefore, I am not only opposing this section but since it is very unlikely that we are going to get much longer to debate the remainder of the amendments I am opposing the whole Bill.
I am afraid I will be echoing Deputy Kavanagh's views on the issues he mentioned. The Irish Congress of Trade Unions have made it clear that they consider the omission to be a breach of the terms of the Programme for National Recovery. I would contend that what the Minister said in reply is a reflection on the workers in the forestry section at all levels. The Minister is saying that within the workforce of that grouping there are not people who are fit to be on that board.
I did not say that.
The Minister did not say it but he implied it because he gave no reason good, bad or indifferent for being guilty of this very serious omission of not including worker directors on the new board. For that reason I and my party will be opposing this Bill.
I thought that my amendment was the slow lane process that the Minister was talking about and that the Second Schedule of the Worker Participation (State Enterprises) Act, 1988 dealt with this matter. I had hoped the Minister would have given me some indication of how exactly this was going to work. Is the Minister going to say that the provisions of the Second Schedule of the Worker Participation Act are going to be invoked? That is really my question.
As it is now 7 p.m. I am required to put the following question in accordance with the order of the Dáil of this day: "That the amendments set down by the Minister for Energy for Committee Stage and not disposed of are hereby agreed to; in respect of each of the sections not disposed of that the section or, as appropriate, the section, as amended, is hereby agreed to in Committee; that the first and Second Schedules and the Title are hereby agreed to in Committee; that the Bill, as amended, is hereby reported to the House and Report Stage is hereby completed and the Bill is hereby passed".
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