Turf Development Bill, 1988: Second Stage.

Minister for Energy (Mr. Smith)

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

I am very pleased in my new role as Minister for Energy to pick up where my predecessor left off and to advance this wide-ranging legislation relating to Bord na Móna.

This Bill should be seen as a major step to provide the board and management of Bord na Móna with some of the main tools they need to restructure and revitalise the operations of the board, in order to deal with their present great difficulties. The Bill's main purpose is to provide greater flexibility in the ways the board may adopt to reorganise and restore their core peat business to a sound financial basis, to enable them to engage in other activities in which they have acquired particular expertise; to enable the board to promote, form, take part in or acquire companies and to enter into joint ventures, to exploit cutaway bogs and other bogs not required for peat production; to undertake engineering and building works not related to peat; and to engage in consultancy, advisory and training activities.

All this is to lay a sound basis to preserve jobs and long-term viable employment and to contribute to regional and national prosperity. At the same time the opportunity is being taken to effect a number of other minor amendments relating to pensions, accounting procedure and pay policy in the board.

When Bord na Móna were first set up in 1946 their functions were restricted essentially to the extraction, production, marketing and sale of turf and turf products and all ancillary requirements necessary for this purpose. The board have, therefore, no power at present to engage in any activity not strictly related to peat. In this new Bill, an opportunity is being afforded to the board to extend themselves further into peat-related developments, and into areas which, though not peat-related, are areas where the board have acquired or are likely by the nature of their operations to have potential expertise. The Government's commitment to the future of Bord na Mona is clearly in evidence. The board believe they can exploit their opportunities. This Bill is designed to enable them to do so.

In our Programme for National Recovery, this Government have sought with outstanding success to regenerate the economy by creating a climate conducive to economic growth. Central to efforts to achieve our full economic and social potential is the better utilisation of our resources, human and natural, and the fullest application of science and technology. To further that aim State-sponsored bodies are being actively encouraged and facilitated to develop and diversify their economic activities in the interest of job creation. Where new legislation is required to achieve this the Government undertook to bring such legislation forward. This Bill is a measure to do that and indeed, specifically, a number of development proposals submitted as part of the board's contribution to the Programme for National Recovery require legislative changes to make them possible.

Under this Bill the board will be permitted to promote, form, take part in or acquire companies, either within the State or abroad. The power of State-sponsored bodies to form or take part in subsidiary companies is nothing new. Earlier this year my predecessor gave the necessary statutory power to the ESB to set up companies. With this Bill I am now giving similar powers to Bord na Móna. The board will, therefore, have flexibility to develop new emphasis, particularly in marketing, which I see as a vital ingredient in securing the future of the board. These new powers will be of major assistance in the exploitation of new business opportunities, not only at home but abroad.

As I have already said, the remit of Bord na Móna up to this time was restricted. Through this new Bill positive encouragement is given to the board to expand their activities and to take advantage both at home and abroad of the expertise they have acquired as one of the world's leading peat producing companies. Now, with this extension of commercial freedom the board can broaden the scope of their activities and take advantage of their expertise in production engineering, mechanical and civil engineering, in horticultural products marketing, resource management, operations management, project management, personnel management and training.

With reference to horticultural markets in particular, of which the board's peat moss is an outstanding success, I note that this is seen as one of the more promising areas for development by the board under the new powers. I am pleased to see that horticultural peat products are currently the most dynamic and encouraging component in the company's product range. Indeed, I understand that Bord na Móna are the international brand leader in this market with sales of £22 million, 90 per cent of which is for export. This clearly therefore is an area with great potential in which future success will demand flexibility in strategy, pricing and organisation as is provided under this Bill.

This Bill will also permit Bord na Móna to engage in joint ventures in relation to their business as extended and defined in this Bill both here and abroad. Obviously it is intended that the board should participate only in companies or joint ventures which will be able to pay their way and in this regard participation in joint venture is subject to the approval of the Minister for Energy and of the Minister for Finance.

In order to optimise the potential benefits of this new remit, clearly the current position of Bord na Móna with their adverse financial position must be improved. Improvement of their core business and diversification into profitable new ventures are the keystones and the latter should not occur at the expense of the former. The board themselves have accepted that in order to address their strategic weaknesses a change in corporate culture is required. Bord na Móna must be transformed from a production-oriented organisation, their traditional role, to one which is market led. They must face the increased challenge of hydrocarbon fuels greatly reduced in price, and likely to remain so. They must cut costs and become more competitive. They must cope with their heavy indebtedness and high interest charges.

As part of the fairly far-reaching transformation seen as necessary, this Bill will allow Bord na Móna, subject to my approval, to delegate certain of their functions to sub-boards. The powers of Bord na Mona can, under the 1946 Act, only be exercised through the main board, but this Bill provides the main board with power to adopt another route by permitting the establishment of sub-boards and authorising the exercise of some of their powers through them. The drafting of this section of the Bill, however, reflects my belief that these sub-boards should only have powers as defined for them, and conferred on them, by written delegation of the main board. These sub-boards will be appointed by the board themselves, and the members will be drawn from the membership of the board.

I wish to stress also that these sub-boards will not, of course, be empowered to do anything which is not within the power of the board at present. Their purpose is to ease the plenary board's workload, to reduce the time necessary to get through the business, to enable the sub-boards to give more concentrated attention to particular areas of problems and to facilitate a speeding up of the decision making process. I accordingly propose to supply the required power, which is rather similar to that commonly found in the rules of management of private sector companies. Furthermore, this particular provision is not intended to indicate my approval of any particular restructuring plan for the activities of Bord na Móna. The Bill enables routes to be adopted if that is what is finally decided as in the best interests of the board. I would not be prepared to consider sanctioning changes until the consultants, who have been commissioned by the Minister for Energy to undertake a review of the board's operations, have reported to me next March. I will refer in more detail to that consultancy study later.

At present the board may only exercise certain of its powers within the State. This was unduly restrictive in the effort to develop new markets abroad. Section 4 of this Bill allows the board subject to ministerial approval to exercise the necessary powers abroad and to enable them to exploit foreign market opportunities.

In considering the options for the board's future one obvious question is the future uses of bogs from which the commercial quantities of turf have already been extracted and which are not suitable for forestry purposes. In July 1987 the Government decided that the Bord na Móna cutaway bogs which were suitable for forestry were to be transferred to the Forestry Service of the Department of Energy. This decision applies to those cutaway lands at present available for planting and to those areas of cutaway which will become available in the future. The acreage involved to date is 3,770 hectares of which 2,824 hectares has been transferred to the Forestry Service. This area will rise in the future as more and more bogs are depleted in so far as commercial exploitation by Bord na Móna is concerned. That decision was taken primarily out of the Government's concern to ensure a measure of alternative employment in these areas.

At present, the board's own activities on cutaway bogs are largely for research purposes. The board have no statutory power to use cutaway bogs to establish any activity unrelated to peat production for which there may be a commercial opportunity. This Bill provides the board with such power but, I must emphasise, that as far as cutaway bog is concerned, the power applies ony to cutaway which is not required for forestry purposes and there will be no departure from the earlier Government decision or from the administrative arrangement set up thereunder.

In this context I wish to draw the attention of this House to the fact that the Bill provides that all cutaway bog no longer commercially viable for the exploitation and extraction of turf must first be offered to Coillte Teoranta. Only when that body have indicated that such cutaway is not required for their purposes, may Bord na Móna engage in developing its potential in other areas. Such other cutaway and bogland other than cutaway which Bord na Móna might also wish to develop commercially, and not likely for any valid reason to be used for peat fuel development, if a viable opportunity presents itself, is open to such use by the board under the Bill's provisions. Among possible options under consideration by Bord na Móna are the development of wetlands and lakes that would have considerable tourism and recreational possibilities. Such developments which might combine peatland resource and interpretative centres for specialist study and targeted tourism packages, could have useful employment content and could add significantly to the tourism potential of the Midlands region.

One of Bord na Móna traditional areas of expertise relates to the development of engineering. Since their inception the board have had the power to manufacture plant and machinery in the preformance of their functions. They did this with competence and great technical ingenuity. They pioneered many machines. Clearly they have potential in this field for machinery development generally. We, as a country, have a huge import bill under this heading. Part of it must be capable of home production. The Government's Programme for National Recovery specifically sees the development of a strong indigenous component to the mechanical engineering industry as essential to the development of the manufacturing sector generally because of the industrial support services it provides. The particular expertise and specialist knowledge of Bord na Móna in this sector is acknowledged in the programme. The board have already submitted initial proposals for development and diversification under the Programme for National Recovery. Some of these potential projects are dependent on the new powers provided in this legislation if they are to proceed.

This Bill also provides the board with the power to undertake consultancy work. The board have often received inquiries on this subject from abroad but could respond only by way of secondment of Bord na Móna staff to the Department of Foreign Affairs. A threefold expansion of consultancy work abroad by State agencies is foreseen in the Government's Programme for National Recovery. The provision will enable Bord na Móna to play their part in that programme. It would be my wish that the board should export services in that form, on a commercial basis.

I believe the board should concentrate their activities on their area of proven expertise. It has never been my intention that their diversification should be pursued to an extent which would downgrade their peat business, but through their involvement in peat development, the board have accumulated a great deal of expertise in other areas. The board believe they can build on this; the Bill provides for that. The board are one of the leading peat producing companies in the world and have led the way in peat technology. Other companies, including the Finnish Peat Board, have used many of the board's techniques in establishing their own operations. As I have already indicated, it is in these technical and engineering areas and new product development where the board have gained a particular expertise, that I wish to give the board the necessary latitude in this Bill to pursue business opportunities. However, these new powers will be subject to ministerial control.

I consider these ministerial controls to be necessary not to inhibit entrepreneurial spirit and drive within the board but to ensure concentration on the core business of Bord na Móna, the exploitation of Irish bogs.

While I have concentrated so far on the main elements of this Bill, there are, of course, other amendments of a more routine nature provided for in relation to superannuation, pay, and the format of the board's accounts. Under sections 5 and 6 of the Turf Development Act, 1953 Bord na Móna are empowered to operate superannuation schemes within the approval of the Minister for Energy and the concurrence of the Minister for Finance. At present the Act provides that benefits under the superannuation schemes can only be paid to full-time members of the board and their permanent employees. This excludes benefits for spouses and children. However, a non-statutory widows' and children's pension scheme for employees has been operated by Bord na Móna since 1970 with ministerial approval. The Comptroller and Auditor General has been concerned for some time at the non-statutory basis of the existing widows' and children's pension scheme. As auditor of the Bord na Móna superannuation schemes, he has reported to the effect that an amendment to the Turf Development Act, 1953 is required to enable formal ministerial approval to be given to the scheme. Section 6 of the new Bill provides for this.

The section of the 1946 Act which deals with the accounts and audits of Bord na Móna provides that the board should keep, inter alia, a capital account and revenue account. Such accounts are no longer common in conventional accounting practices. In this Bill section 3 provides for the necessary amendments in order to permit a change in the format of the board's accounts in line with the more conventional practice.

In regard to section 9 relating to pay, this will formalise the controls relating to the remuneration of the employees of Bord na Móna and is in line with Government policy in regard to the public sector.

In order to ensure that all aspects of Bord na Móna would at this important juncture be taken under full review, my predecessor, Minister Ray Burke, commissioned a wide ranging consultancy study. The study will review the existing operations of Bord na Móna and will recommend such changes as may be necessary. The consultants are due to complete their report early next year. Their report and the board's own task force report will assist me in deciding on the measures to be taken in all necessary spheres.

I believe that this House is well aware of the contribution by Bord na Móna to the economic life of this country and to the Midlands in particular, since their creation in the mid-forties. Indeed, in the wider context they have contributed to the national economy through oil import substitution, diversification of fuel sources, and optimisation of indigenous resources.

Because of their wide economic and social role in the Midlands and the implication of their activities for the community there, I have no doubt that the board will make every effort for the reconstruction and improvement of their position and so secure their future. This indigenous resource must be developed to the benefit of our economy but that must be done in the changing and increasingly competitive market place.

The past few years in particular have been difficult ones for the board. Problems will not be solved even if one could assure improved harvesting seasons. Work methods to improve output and to reduce poor weather impact, are factors which merit increased attention and I can assure the House that the board and the consultants which my predecessor appointed, will rigorously examine all possible approaches.

Another major influence on commercial performance is the high cost of servicing the loan capital by which the board are financed. In the last year I understand that this amounted to about 15 per cent of revenue. This is one of the matters being addressed by the consultants in their study.

The implications for jobs of the board's financial difficulties is obviously of great concern. Given the large share of annual expenditure accounted for by manpower, the board's cost reduction programme means that reduction of the workforce, on a voluntary basis, is unavoidable. A voluntary early retirement scheme has been agreed which will greatly facilitate the reduction of costs and overheads. It is to the credit of the board, and their staff, that despite changes and some unpopular measures being taken, the dedication of the staff to the commercial success of the board has never been in question. I believe that all parties are to be commended for this and I hope and trust that the future can be faced with the same dedication and forbearance.

EC assistance, through the Valoren scheme, is being provided to Bord na Móna for the development of more than 8,600 hectares of additional bogland over five years at a cost of £22 million. The employment provided under this programme, when new jobs and jobs which would otherwise disappear are taken into consideration, accounts for almost 500 jobs. I am happy to say that the development is on target and is one of the board's contributions to the Programme for National Recovery.

On a wider plane, I will be pursuing vigorously the possibilities under the economic and social objectives, and indeed the R&D objective of the European Regional Development Fund, to see what financial assistance will be forthcoming to assist this major industry with its significant economic and social implications. I believe that the peat industry, employing thousands of people, affecting a notable percentage of our national product and touching the lives of people in an extensive region of central Ireland, merits the greatest possible support.

In conclusion I should mention that I have just now received from Bord na Móna some proposals for the amendment of this Bill. I will be looking at these sympathetically and I may have something further to say on these matters on Committee Stage. I will, of course, be very pleased to listen carefully to contributions from Members of this House and to consider any amendments they may wish to put forward. I commend the Bill to the House.

An Leas-Cheann Comhairle

I am sure the House would wish me to congratulate the Minister on having introduced his first piece of legislation as Minister for Energy.

Mr. R. Bruton

We have had an opportunity to congratulate the Minister on his appointment and I should like to warmly repeat that on the occasion of his first presentation of a Bill as Minister for Energy. Unfortunately, my comments on what the Minister has had to say today will in large measure be critical but I hope he will take them in the constructive way they are intended. There are three points I should like to make about the Bill. First it is ridiculous that the Dáil should be debating a restructuring of Bord na Móna in the absence of an awaited assessment of the board's future. That is turning the order on its head, putting the cart before the horse. The second point I should like to make is that the Bill fails to address the key strategic issues that face Bord na Móna. The Minister mentioned the problems the board have but the Bill does not address them or provide a framework for resolving them. The third point I should like to make is that even on the very narrow terms that the Bill adopts, the proposals contained in it are full of ministerial involvement. They betray a lack of trust in the ability of the management and board of Bord na Móna to get about their commercial business. That is something I am critical of.

Consideration of the Bill, without having seen the important report on the future of the board, is quite out of line. Throughout the past year the Minister's predecessor refused to answer parliamentary questions from concerned Deputies about the future of the board on the grounds that he had appointed the much vaunted consultants to assess the issue. However, the Minister today is expecting us to approve proposals for legislative restructuring of the entire board without seeing the results of that consultancy work. Frankly, the introduction of the Bill is premature.

It has long been the practice in this House, and in most parliamentary democracies, that when major plans, such as the restructuring of an industry, are proposed they are preceded by the publication of a policy White Paper. We have the reverse in this case. The Minister is seeking approval for the legislation and promising to carry out the policy assessment analysis afterwards. That is a crazy order of things. The Bill, as it stands, is an empty shell and the debate we will have on it will be barren because we will be trying to analyse structures and relationships whose real purpose are still unknown to us. It is like being asked to examine the bone structure of a skeleton when the real issue that we are all concerned with is the life, health and strength of Bord na Móna as a living organism. That cannot be done in the absence of the type of analysis the Minister recognises as being essential.

There seems to be something of a sham in the Minister introducing a Bill that is designed to all intents and purposes to the outside viewer to set up a structure to have subsidiary companies with separate profit centres, companies that would be production and market oriented in their separate areas of responsibility, and yet telling us that he would not like it to be taken that he believes this is the way to go. What is the point in asking us to approve this if the Minister does not see the way for Bord na Móna to go in the separate profit centres and so on? Even the Minister for Industry and Commerce has gone on record as saying that the ideas of the board are on ice but the Minister for Energy is asking us to debate what anybody outside would interpret as the enabling legislation for such a structure. Frankly, I do not understand why we are considering this if the Minister has not made up his mind about the future approach for the board.

In many ways the strange approach I described, the Minister putting the policy analysis after the solution to the problem, would not be so serious and might be overlooked if it was not for the fact that there is a crying need in Bord na Móna for a recovery plan of some sort. We all know that. The board put such a plan in place, and the Minister intervened and blocked that plan. That is what he is there to do and he put in his own consultants but I cannot understand why he should go ahead and produce these proposals without the benefit of the report of the consultants.

The problems of Bord na Móna are obvious. First of all, they are almost 60 per cent dependent on the ESB contract which, as we know, is set at an uneconomic price from the point of view of the ESB relative to the much cheaper fuels than when the contract was signed. The board have also sustained losses of £33 million in the last two years and, again, that is a serious problem. They have borrowings that are equivalent to almost 90 per cent of their capital employed. In terms of gearing of the company that is a very precarious situation for the board to find themselves in.

In spite of the obvious gravity of the problems facing the board the Bill, frankly, does not address any of the strategic ways in which the board can get out of those problems. It is disappointing in that sense. It is worth dwelling for a moment on the problems the board face. Obviously, the ESB contract is one of the major ones. Recently an economist calculated that the cost handicap to the electricity consumer of the peat generating stations was £55 million per year. I would have no doubts about the validity of the precise figure but it gives an order of magnitude to the size and scale of the problem we face. It is easy, when looking at the published figures, to see that milled peat is being delivered to the ESB at a price that is about 30 per cent dearer than natural gas or oil and about 65 per cent dearer than coal. It can be seen that the thermal efficiency of the peat generators is 24 per cent compared with 35 to 36 per cent for coal, gas and oil. This is another indication of the problems in this area.

To give the board their due, in their own proposals for restructuring which are now put on ice, to quote the former Minister for Industry and Commerce, they were taking this very seriously. They have proceeded with rationalisation proposals and they are modelling a lot of their recovery plan on the notion that the finished system which relies heavily on subcontracting and different harvesting techniques is the way forward. They are to be commended for that. Equally, the board find themselves in difficulty in their other significant market, that is the domestic fuel market. With the growing consciousness among the domestic public, particularly here in Dublin, of the smog problem an enormous marketing opportunity is now open to the board if they can exploit it. I hope that will be the direction they will take. Similarly, it is very important that they exploit the marketing opportunity that is available to them in the horticultural market. The idea of separate profit centres with production obviously geared to the markets' needs is the way forward but the Minister, despite apparently giving some imprimatur to that in his Bill, says that we are not to interpret it as his support for that idea. We do not really know what the Minister's intentions are.

The board need a long-term national policy framework in which the key issues that face them can be reconciled. There are key conflicts in the whole area of the production and use of peat. I have already mentioned the heavy cost to the electricity consumer. On the other hand, we all know this is an industry of enormous strategic importance to the midland region and other areas where it is difficult to get alternative industry to establish. The other area of conflict with highly fluctuating fuel prices which we now have is that it is impossible to expect an industry, such as Bord na Móna, which is a labour-intensive production industry, to be able to be put up on a hook and taken down off a hook, to fill gaps in the market, depending on the price of alternative fuels. We need a national approach to this issue to say what is the proper depletion and production policy in times of fluctuation prices for alternative fuels. We need to be able to look at what is the social role of Bord na Móna and to what extent should that be met by direct public subvention. The present situation, as the Minister is aware, is that we do not know. Economists quote figures which the Government have never confirmed or denied. We do not know to what extent Bord na Móna are being heavily supported by the ESB consumer. It would be far more healthy to have the Minister speaking to us today about what he believes the cost of supporting peat production is, what his analysis of their problem is, where their future lies, whether we should be considering above the line subsidies to Bord na Móna, setting them targets of fuel-related prices, perhaps related to coal and so on. That has not been addressed either in the Bill or in the Minister's speech. Basically, we have no proper long term framework established by the Minister. That is a sad reflection.

The midlands area will be poorly served in the long run by the lack of a proper analysis of this problem because the peat industry will not last for ever. As people have said, we should have a proper regional strategy with Bord na Móna placed in the context of that regional strategy that can maximise the development of the midlands in a cost-effective way. I am sad to see that the Minister has not addressed this issue. The whole question has been swept under the carpet today as far as the Minister is concerned.

There is another area where the Bill has completely missed the boat. Everyone is saying that the future for Bord na Móna is to take a much more commercial and market orientated approach to their business, but there is no clear commercial mandate given to the board by this Bill; indeed the opposite is the case. At every hand's turn the commercial discretion of the board has been circumscribed by the requirement of not just one Minister having to give sanction but two Ministers having to give sanction. Almost before they can scratch their noses they will have to go to the two Ministers. For issues of very minor intent they will have to go to the two Ministers. For example, if they want to engage in research and to quote the terms of the Bill, "research of whatsoever kind", they will have to go to both Ministers to get approval. They are already carrying out valuable research without the involvement of the Minister for Finance or the Minister for Energy but that will no longer be the case when this Bill is enacted.

As I have said, there is no framework for deciding on what depletion strategy should be adopted in this country. We have to bear in mind the cost of competing fuels but we also have to bear in mind that there are pressures on wetlands that are of ecological importance. We have not seen in this Bill any provisions that would protect wetlands of ecological importance. There are, I understand, ten sites which are regarded as being of particular importance which are under threat. This is another issue that one would have expected the Minister to address in designing the strategic way forward for the board for the next ten or 15 years.

Another area to which there has been a very weak response in this Bill is on deciding the priorities for development of cutaway bogs — this is the land left after the peat has been removed. The new forestry board are being given the right, within 12 months, to veto all development on land that is available for further use. I believe this is a recipe for over-extraction of peat as Bord na Móna would try to maximise to the very end their use of the resource while they still have it and the ultimate dereliction of the cutaway bogs. Effectively, the forestry board will be able to lock out any alternative use if they so wish. If there was an area where the Minister should rightly have become involved in the activities of Bord na Móna it was precisely here, to decide when and where it is in the national interest to use these cutaway bogs — should they go to Bord na Móna for uses that they identify or should they go to the forestry board for uses that they have identified? That is an area in which I could understand the Minister assessing their alternative contentions and coming down in favour of one or the other, but that is not what we have in this Bill. The Minister, uniquely in this area, has decided not to get involved. He is saying that the forestry board will be able to put an order on all cutaway bogland and say "hands off", to Bord na Móna. The Minister was vaunting the new powers in this Bill as if the board were now going to have new powers to develop the cutaway, when, in fact, the reverse is the situation. They will lose any possibility of using the cutaway because the forestry board will have the right to block any such development and knowing the way these things happen they will always want to keep that reserve open to them. They know neither the day nor the hour when they might want to use them. When it costs nothing they will certainly keep that reserve on it.

People who read the Fianna Fáil manifesto dealing with the future of Bord na Móna will be dismally disappointed by this Bill. It is worth recalling to the House what the Government said about the future of Bord na Móna. They said they would be examining Bord na Móna to see how Bord na Móna could be developed into a resourcist development corporation with the responsibility for both forests and bogs. Not only does the Bill not extend the role for peat development into the area of forestry but it has virtually excluded the board not only from forestry but effectively from any exploitation of cutaway. The manifesto also said they would provide a new and wider brief to fit the organisation for the years ahead. The so-called new and wider brief which we have here today amounts to virtually nothing at all. The board are already involved in training and in consultancy. They are already involved in research without ministerial sanction from two Ministers and they are already marketing their products overseas. There is nothing new about these so-called new powers. Perhaps the Minister is ex post facto giving them a legislative base for things they are already doing. The manifesto indicated that this would be a new and wider brief but this Bill does not live up to that. Basically, no future has been defined for the board as was promised by this Government when they were coming into office. This is a disappointment. They have closed off opportunities for Bord na Móna instead of opening them up for them.

I would like to turn to the specific contents of the Bill. Even on its own narrow terms the proposals put forward in this Bill are bureaucratic and portray an unwillingness on the part of the Minister to trust the management and the board of Bord na Móna to conduct their business properly. If State bodies are to be developed successfully two basic ingredients are essential. The first is that they be delegated commercial responsibility free from political interference, and, secondly, that there be a balancing requirement of accountability for the responsibility entrusted to them. Despite the Minister's sincere statement that he wants to see State boards contribute to economic development in this country he has failed in this Bill to provide those two basic requirements — properly delegated commercial responsibility free from political interference and the balancing requirement of proper accountability for the responsibility entrusted to the State board. This is tragic because effectively the dead hand of departmental control is going to be extended under this Bill.

Not only will the Minister appoint all the members of the board, he will also appoint all the members of the sub-boards. No new blood will be brought in. The Minister is not going to allow either executive directors or non-executive directors to be brought in. The reason he gave for the establishment of the sub-boards is that he wants to try to reduce the burden on the existing directors at their plenary sessions but he will be over extending those same directors if he expects them to be also members of these new sub-boards. If there is any sense in having new sub-boards it would be that it would provide the opportunity to bring new blood into the company, people who could provide the company with a new commercial approach in relation to these specific activities. This cries out for the introduction of executive directors in the areas concerned. If there are to be sub-boards for horticulture, peat, the domestic briquette market and the home heating market, executive directors with expertise in those areas should be appointed to the boards along with non-executive directors who know something special about these areas and who would bring something new to these activities. Again, this opportunity has been denied under this Bill. It seems the only reason for this is that the Minister wants to retain tight control over these activities.

In this legislation we are seeing for the first time ministerial control being extended to the payments of the chief executive. This flies in the face of commercial realities. If we want to see our State boards have the best management, see them succeed, set up new enterprises and new ventures we have to be willing to offer to the chief executive the kind of rewards they will get elsewhere. Once again, we are seeing the dead hand of departmental control being extended to block off this opportunity.

The sanction of two Ministers is now going to be needed where the board wish to engage even in the most basic activities. As I have mentioned already, if the board wish to engage in research the sanction of two Ministers is going to be required. If the board wish to get involved in small scale joint marketing efforts so as to launch an attack on the Dublin market the sanction of two Ministers is going to be required. If the board wish to get involved in a joint effort to exploit some bog the sanction of two Ministers is going to be needed. If the board wish to engage in even the tiniest activity overseas the sanction of two Ministers is going to be required. There is nothing in the Bill to suggest that, for instance, the Minister for Finance would only get involved in cases where the figure exceeds £10 million, £15 million or £20 million. Therefore, if the figure is £1 or only 1p, the Minister for Finance would have to get involved. This is crazy if we want to see State bodies develop. The Minister should look again at this matter.

My third point is that there has been no proper accountability. This may fit in well with the fact that the Minister is not willing to delegate any responsibility but I hope the Minister will think again about this. If he does go along that road which I hope he will, he should look for a much more rigorous system of accountability, in respect of performance, to the taxpayer. Quite honestly, no one has any chance whatsoever of making sense of the annual report of Bord na Móna in that there is no analysis of the performances of their separate businesses contained in the report. We do not know what businesses are making money and what businesses are losing money. This is not good enough. While the Minister is taking the opportunity to establish sub-boards he should also, at the very minimum, make provision for separate accounts to be published by those sub-boards and for these to be made available to the public. There is no such provision in the Bill.

I cannot understand why the Minister is making provision for the parent company to make concessionary loans, grants and cross-subsidies available to any new ventures they might establish. If the Minister wants to see commercial ventures established by Bord na Móna, instead of the proposed sanction of the Minister for Finance, it would be far better to remove from them the right to get involved in cross subsidisation as between one business and another. I do not see any reason for giving the concessionary loans. Surely in any new ventures established by the company they would subscribe to shareholders' capital. I do not see why they should be allowed to pay subsidies which amount to cross-subsidisation so that the consumer in one market would effectively be propping up another business which is not successful. Obviously the dangers in this case are not as great as they were in the case of the ESB to whom the Minister has given the same power but it is wrong in principle to give this power.

There should be a provision in the Bill which would allow for a review of the performances of any new ventures the board establish. If the board decide to establish new companies there should be an obligation on the board to come back after perhaps five years and account for the success or otherwise of the business. It is only right that a board funded by taxpayers' mnoney should behave in that fashion. This Bill should provide also for proper tests of performance so that we would see, for example, how Bord na Móna fare in regard to production and harvesting when compared with Finland which is being held up as a great example.

The taxpayer would like to be able to assess how the board are doing compared with Finland. We would like to be able to assess how the different businesses are doing. We should give the companies much more commercial freedom and allow them to decide on what research needs to be carried out with perhaps sanction being sought where they wish to get involved in projects of a large scale which may have implications for the Exchequer. We should trust their commercial judgment but at the same time we should be looking for accounts of their stewardship. On Committee Stage I will be putting forward a number of far reaching changes to try to enshrine in the legislation the idea that Bord na Móna would not have to look for ministerial sanction at every hand's turn but that they would be responsible for results and would be paid for achieving results. That is the way in which business works and that is the way in which a successful State sector will work. If that is what we want to cultivate, that is the system we should put in place.

Mr. P. O'Malley

At the outset let me say I find myself in considerable agreement with the previous speaker. The Minister in introducing this Bill said that its purpose is to amend earlier turf development Acts in order to broaden the remit of Bord na Móna. While there are some welcome features, if I could describe them as such, in the legislation before us, it certainly does not go far enough. What is needed is a fundamental recasting of the legal and capital base of the company conferring on them new objectives as well as new powers.

The Bill does not do that. It is purely enabling legislation and it merely allows Bord na Móna to form companies, engage in joint ventures, acquire assets, etc., but all of these activities, including the day-to-day decision-making of the company, will still be strictly subject to the approval of the Minister and the Department. Much more fundamental changes other than those outlined in the Bill are needed. Bord na Móna must be established on the same basis as any other commercial State-sponsored company. They must have a clear mandate to achieve certain policy objectives and they must be given commercial freedom to make management decisions in pursuit of those objectives.

The Bill represents a no-change situation for Bord na Móna. Even though the company may become incorporated they will still be subject to the control of the Department and civil servants and all decisions relating to the day-to-day operations of the company and the pursuit of their policy objectives have to be approved by the Department and the relevant Minister. How can a business be run commercially and viably when those kind of constraints are laid down for it? As Deputy Bruton pointed out, in theory under this Bill and under existing legislation Bord na Móna could not buy even a ream of paper without first getting approval to do so.

Mr. Cowen

That is not true.

Mr. P. O'Malley

It is very difficult to expect a committed management team to function properly under that sort of regime. It must be disappointing for the new Minister, who I presume had no active part in the preparation of this Bill, to introduce in the Dáil as his first piece of legislation a Bill which I think he knows is clearly inadequate. As I said earlier, presumably the Bill was put together by his civil servants who appear to want to maintain the status quo which exists and to continue to exercise control over all aspects of Bord na Móna's operations.

Needless to say, the Progressive Democrats will not be supporting this Bill. It fails to define a new remit for Bord na Móna, giving them a clear set of economic, social and environmental targets and providing a realistic statutory framework to enable them to achieve those targets. Obviously I can understand the need for ministerial approval in cases where Bord na Móna require Exchequer funding or where they would be giving guarantees on behalf of the company in relation to borrowings, but it is a different matter altogether when approval is required for every commercial decision the board have to make in the normal course of their business.

Bord na Móna have definitely outgrown their present framework and they should be reformed into a publicly owned company run on conventional equity lines like any other State company, for example, Aer Lingus. At present Bord na Móna are a statutory body and are heavily reliant on State funding and borrowings. Loans have to be repaid at commercial interest rates and are a dominant feature militating against the company's attempts to change from a production-orientated company to a market-orientated enterprise. New markets are now opening up for the company within the EC, notably in France, in the Middle East and even in the United States for both fuel and horticultural products. The company should be put on a proper footing in order to respond to those market opportunities.

The Minister referred to the study being carried out by the private consultants who were commissioned to examine the entire operations of Bord na Móna and the previous speaker also referred to this study. All of us would agree that the study is necessary and is recognised as such at all levels within Bord na Móna. We are told that the study will take account of developments in peat technology in Ireland and overseas, will focus in on management structures, financing, planning, research and marketing and other areas of the organisation where change is deemed necessary. The report is eagerly awaited and I assume it will analyse Bord na Móna's performance and look objectively at the company's trading operations. There is no doubt that the performance of Bord na Móna in the solid fuel and horticultural products markets needs to be improved and it is also clear that there must be less dependence on ESB contracts as the artificially high prices paid by the ESB only add to the cost of electricity to the consumer.

Like Deputy Bruton, I am curious as to why the legislation has been introduced at this time, given that we are still awaiting the report by the consultants. I presume the report is well advanced and I ask would it not have been better to await publication of the report prior to the introduction of any necessary amending legislation? It is expected that the consultants will identify the need for rationalisation and restructuring in the long-term interests of Bord na Móna and their workforce. It is widely anticipated that the report will recommend dividing the company's operations into three distinct areas relating to energy products, horticultural products and the management of the lands owned by Bord na Móna. This would seem to be a sensible approach. Separate companies should be formed to carry out those individual aspects of the company's business. When these companies are established I do not see why they should not be offered for sale and privatised. I would have thought that it would have been logical to await the publication of the consultants' report, which will address the future of the company and set out clear policy objectives for them, so that the Minister, having received that report, would be in a better position to introduce meaningful legislation which would put in place a structure that would be capable of meeting those policy objectives.

I should like to refer to the present structure of the company and to some of its operations. I believe Bord na Móna employ 6,000 people, almost all of whom are concentrated in the midlands and additional people are employed in neighbourhood power stations which are fuelled by turf or milled peat. Turf supplies will begin to diminish in due course and it is estimated that they will be fully depleted in about 40 years time. A new strategic plan needs to be drawn up for Bord na Móna — I assume this is another matter which will be adressed by the consultants and that the Minister will look at it also. The plan must take into account the fact that on the one hand peat is a diminishing resource and on the other hand that large tracts of cutaway bog are gradually becoming available for alternative use. This land must be used to create new employment opportunities for many of the existing workforce.

I know much research has been done into the potential use of cutaway bogs. One of the main proposed uses is the development of forestry which has rightly been identified as a major growth sector for the Irish economy. I believe research has also indicated that there is very good potential for horticultural, vegetable growing and grassland development. However, it is disappointing to note that the potential for short-term rotation crops to be used in the pulp industry or biomass production for use as a primary energy source for electricity generation seems to be limited at this stage. While that is my understanding I should like the Minister to enlighten me otherwise. In fact I would welcome it very much if research was indicating that biomass was now becoming worthwhile. It is very important that we speed up and co-ordinate research in all of these areas and establish a national plan for the use and development of this valuable resource by both the public and the private sectors.

Some concern has been expressed about the depletion of bogs, and in particular I would like to make the point about the depth of peat which is being left on cutaway bogs. As I understand it, there is no requirement on Bord na Móna to leave a minimum depth of peat when carrying out their harvesting operations. There is a requirement that an average depth of a half metre of peat should be left, but average can often mean that there are vast areas with much less depth of peat than that. There should be an urgent examination to establish what optimum depth of peat should be left. This would ensure that the full range of options for the use of cutaway bogs, particularly for forestry and horticulture, can be facilitated. There is obviously little point in harvesting the last half metre of peat because of its fuel value, even though it would be quite economical to do so, if the end result is that we are creating large tracts of barren land that will have no further useful potential.

The Minister mentioned some land that would never be suitable for use as grassland or for forestry. Such lands could be very suitable for amenity use. As the Minister pointed out, it could enhance tourism prospects in the midlands. These lands, if flooded, could be used to provide amenity areas for fishing and other water-based activities. Pension funds, banks and multinational companies could well be interested in developing these lands in a joint venture with Bord na Móna as, indeed, is provided for in this Bill, even though in a very restrictive way.

Bord na Móna have rightly been accused of being inefficient. There is major scope for improvement in all sectors of their operations. They are using outdated technology to harvest their peat crop and there is poor labour productivity performance. Peat harvesting in other countries, notably Finland, is carried out much more cost-effectively, even though weather conditions there are less suitable than in Ireland and the harvesting season is much shorter. I understand that Bord na Móna, in an effort to reduce their production costs, are considering contracting out their harvesting operation and employees would be given the opportunity of working for the company on a contract basis using Bord na Móna machinery which they would maintain and could use for their own private use and undertake other contracts for private sector companies. I would be supportive of this type of development as it would undoubtedly lead to cost-effectiveness and make the company more competitive.

Improving competitiveness in their existing energy activities and expanding their markets for fuel must be a major priority of Bord na Móna. At present — and Deputy Bruton referred to this at some length — the ESB are Bord na Móna's single largest customer, purchasing, I think, about 60 per cent of their milled peat output at prices in excess of what they would have to pay for alternative fuels such as coal or oil. The ESB have been required by the Government to enter into contracts to buy peat at a price which related to historically high oil prices. These contracts are coming up for renewal shortly and they should be reviewed on the basis of the market price for these fuels as distinct from the artificially inflated price. As I said earlier, an artificially inflated price for the Bord na Móna product is leading to a cost handicap on the consumer when he is buying electricity. I do not think it is right that Bord na Móna should be protected in this way. They should stand on their own two feet in the commercial world and not be given a privileged position in the marketplace. They are at present relying for profit on their captive customer the ESB and the electricity consumers are, effectively, subsidising their activities.

The whole question of generating electricity using turf as the primary energy force should be re-examined. It is inefficient and produces electricity at a cost greater than that at which the electricity is subsequently sold. The ESB have enough installed capacity already to meet some 75 per cent more of the peak demand for electricity and do not need to rely on expensive and inefficient generating stations. I know that the argument for retaining these stations is a social one, based on the unemployment that would result if these stations were closed down. However, it must be asked whether it is right to maintain an inefficient system of production when the result is that you are imposing a cost handicap on our economy, threatening existing jobs in industry and, indeed, limiting the prospects of creating new jobs because of the resultant high energy costs. It would be far better to reduce these electricity costs and devote some of the savings made to providing alternative types of employment in the affected regions.

Another case of Bord na Móna's failure to exploit the energy market relates to the sale of their peat briquette products. We are all aware in this House of the recent very serious smog problems in Dublin and other population centres throughout the country which have been brought about by the burning of bituminous coal and other high smoke-content fuels. Bord na Móna have only about 8 per cent of the Dublin fuel market at the moment, yet they have not capitalised on the major opportunity now presented to them arising out of the Confirmation (Smoke Control Area) Orders. Bord na Móna, first, have an indigenous fuel. There is no import content in it. It is providing jobs for Irish workers but, much more importantly, in relation to smoke control independent testing has established that peat briquettes emit up to 70 per cent less smoke than Polish or English coal which is extensively used here, and briquettes are well within the smoke emission levels laid down by the EC. Furthermore, the use of briquettes does not require any capital expenditure on the modification of existing fireplaces.

In effect, we have an ideal fuel which meets all the requirements of the new statutory smoke control area orders and there is no requirement on the State to spend further money on grants for conversion of existing fireplaces. I would have thought that this was an ideal opportunity for Bord na Móna to penetrate this captive market but this has not happened to date. There is still consumer resistance to peat briquettes because people are not familiar with them, particularly in Dublin. They are also considered to be less value for money than coal. People need to be convinced that there will be an adequate supply available and, above all, the briquettes need to be delivered to the doorstep, as many people living in high density housing estates, which are the places affected by smog, do not have cars available to them to go to the local supermarket and pick up a bale of briquettes. There is no doubt that more widespread use of peat briquettes has been hampered by Bord na Móna's poor marketing and distribution and the price of the product compared with that of coal is another factor which militates against it.

Improvements in production costs would, of course, enable Bord na Móna to reduce the price of their produce. I know that the management in Bord na Móna are now guaranteeing that they will deliver briquettes to the door at a price at least equivalent to that of coal, based on the calorific value of both fuels. However, the distribution network and delivery system need to be greatly improved. In the Ballyfermot area, for instance, some 80 per cent of fuel is delivered in small lots to the householder and a weekly credit facility is also available. If Bord na Móna are to penetrate this market, they must develop a similar distribution and delivery system. These are the challenges that the management must rise to. It should not be beyond their ability, given that they are dealing, as I have said earlier, with a captive market which must comply now with compulsory smoke control area orders.

Similarly, Bord na Móna must expand their markets for horticulture and organic based peat products which at present represent 18 per cent of their sales. The Minister has said that 90 per cent of these are exported. However, private sector operators in the peat moss business in Ireland have a greater share of the market in the UK than Bord na Móna. The failure of Bord na Móna to expand their market for energy and horticultural products — in the case of the energy products given the favourable conditions I have already outlined — underlines the necessity for totally revamping the whole structure of Bord na Móna.

As I said at the outset, there is a committed and skilled management team in Bord na Móna and they must be given the right framework within which to operate on a truly competitive basis. I note that the Minister said he had been contacted by Bord na Móna and that they submitted proposals for amending the Bill. The Minister did not say what the proposals were but I imagine they are to the effect that the board are not satisfied with the provisions of the Bill and consider them entirely inadequate.

I am not convinced that the Bill meets the needs of Bord na Móna although it contains some useful provisions.

However, they are not catered for in a meaningful way and a much more fundamental restructuring is required. As I said earlier, we will not support the Bill.

Mr. Spring

The Bill, in form and content, is relatively minor and I will deal with its broad principles. The timing of the Bill in relation to the consultants' report leaves me somewhat puzzled. There is no doubt that Bord na Móna need to be restructured, that their raison d'être is changing and that it is timely to look at their overall operations. We have been told that a group of consultants are looking at Bord na Móna to bring back recommendations to the Minister with a view to setting the terms of reference, skills and guidelines for the company which will take them into the next century. At the same time, the Minister is looking for rather minor powers to broaden the statutory remit of Bord na Móna, which, in effect, are long overdue. In that respect, Bord na Móna have no choice but to look beyond their current activities if they are to continue to play a very important role in our economic life.

In general, I am supportive of the Minister's intention. The Labour Party and I are supportive of the idea that semi-State enterprises should be allowed and encouraged to compete in the open market. They should not be inhibited in any way from developing the range of products and services. Over the years Bord na Móna played a very important role in the economic life of the country in the area of energy and fuel provision, particularly in the midlands.

Some Members oppose the Minister's intentions but I see little reason for doing so at present. We are not getting the full picture, which is unsatisfactory, but the Minister has signalled his intention to work on the report of the consultants as soon as possible. I am in a position to offer help and encouragement in relation to anything he might need to bring before the House because the remit of Bord na Móna needs to be sharpened for the difficulties that will face them in the nineties and the next century.

In general, perhaps all Governments after initially setting up companies like Bord na Móna, have not been very helpful to those companies. There has been a lot of confusion in relation to the aims and powers of these companies and, on occasions, undue political interference in their management. At times, these companies were not allowed to conduct their affairs in a strictly commercial manner. Bord na Móna have played a remarkable role in our economic life, particularly in the midlands. It is all very well for the previous speaker to say that the generating stations in the midlands should be closed down because of the uneconomic nature of the fuel supply. That will happen in due course but I would like to impress on the Minister the necessity to start making provisions now and to have strategic planning in relation to replacing the activities of Bord na Móna and the ESB which will come to a natural end in due course in the midlands. There are approximately 4,000 people involved in the activities of Bord na Móna and the ESB in the midlands and we will be faced with a very severe crisis there in relation to employment. The matter should be tackled now because it is not satisfactory to carry on in our merry way. The bogs will eventually cease production and milled peat will not be available for the ESB. Consequently, the power stations will have to be converted or, more likely, technology will have developed to such an extent that they will be closed down and scrapped. We will then be faced with huge unemployment in the midlands. We could, indeed, given the basic make-up of the midlands where vast tracts of land are covered in peat, be faced with a wasteland. It is very important now, in terms of development of the region, for the Government to address themselves to alternative employment opportunities and policies for these areas so that we will not be faced with the gloomy prospect I have just outlined.

The Bill does not address the overall funding of Bord na Móna and the imbalance in the debt equity ratio in the company. The Government have not given enough thought to this because quite often public enterprises are so heavily in debt that it is very difficult for them to service the debts and to work their way out of them.

The marketing area will also have to be scrutinised by the Minister and his Department. If we took on a detailed examination of the marketing skills and abilities of Bord na Móna, would we be satisfied that what they had been doing in the past was satisfactory? If we are dissatisfied with their activities in the past, what changes will be made in relation to their new powers under the Bill? Have they, for example, presented the Minister with a strategic plan in relation to sales abroad? The activities for which they are looking for power to engage in will entail working in the markets abroad and I question their record to date in relation to some of their activities abroad. It will require the best marketing skills in relation to their sales efforts in the UK and France. Perhaps the Minister will address this in his reply.

Bord na Móna have had a rough passage over the last number of years. There is little we can do in relation to the type of summers we have had which put enormous strains on the financial resources of the company. There have also been enormous tensions between Bord na Móna and the ESB in relation to pricing policy for fuels, the amount of fuel to be taken by the ESB and the price for it. Obviously, the board have had extreme difficulty in the last number of years but they have shown their resilience. The workforce of Bord na Móna have made enormous efforts in the past two to three years to overcome the difficulties facing the company and caused mainly by the weather, totally beyond the control of the company. The workforce in Bord na Móna, after some initial lack of direction, did a good job in those years in pulling together to take on the problems caused by the bad summers which we have had over a two to three year period.

There are enormous possibilities for the board in relation to the problems being experienced in the city of Dublin in the last number of weeks but they will not fall into Bord na Móna's lap. They will have to compete with the coal cartel which exists in this city and country and they will have to take on well-organised and efficient — albeit a monopoly situation — coal companies in Dublin. They will have to change their marketing policy, as has been said, to reach those people living in vast housing estates in Dublin who at present are not convinced that peat briquettes are as effective as coal, who find it difficult to get adequate supplies of peat briquettes or machine cut turf on a regular basis from Bord na Móna.

These are matters of planning and marketing which the board will have to take on. If they do not take them on they will not succeed in the very difficult marketing battle and they will not get their share in the marketplace because they have to compete against some of the strongest companies in operation in this country. In that respect the board will have to change. They will have to stand their existing marketing policy on its head, examine it critically and come up with a realistic and viable marketing programme which reaches into the homes of the many potential clients in the city of Dublin. I do not believe enough effort has been made in the past and this is borne out by the figures available for the amount of peat briquettes and peat burned in the city of Dublin.

In terms of environmental protection, the minimising of the smog in Dublin in recent weeks has perhaps given the board their best and long-awaited marketing opportunity in recent years. There is at present a focusing on the smog problem and the alternative fuels available. In recent times the board have produced statistics on the comparisons to be made in relation to the environmental impact from the various fuels available to householders in Dublin. These are matters which the Minister may have an opportunity to comment on when replying to this debate.

As I have said, the overall direction of the Bill is to be welcomed. It does not set out clearly the future direction of the board. I gather from the Minister's speech that it will not be possible to outline to the House what will be the direction of the board until he receives, studies and comes to his own conclusions on the consultants' report. The board have had enormous successes down the years, for example, in the development of peat technology. I wonder if we were to compare the peat technology available at present, for example, in Finland, Russia and North America with that which we are using, would we still be able to claim that we have in Ireland the leading peat technologists in relation to machinery? We may have allowed ourselves to slip back in this regard. We also have to consider that we are dealing with different environmental conditions. Perhaps in Finland, where by and large there is a different type of bogland, different technology has been implemented. I would like the Minister to outline to us if he and the Department of Energy have made an assessment of where Bord na Móna stand vis-à-vis other competing peat production companies worldwide. Are we still a leader in this industry or have we slipped back from the position which we occupied in the thirties and forties in world peat production?

I would also like the Minister to give a more specific idea on what markets are available to the board. Are there markets in Europe and abroad, and what steps are being taken by the board to prepare themselves for these markets? Have the board considered joint ventures? Perhaps the Minister could inform us of the type of companies abroad, public or private, with whom Bord na Móna are in discussions in regard to sharpening up their marketing activities. I would also welcome from the Minister an indication of the type of amendments which are now being sought by Bord na Móna. That would certainly be beneficial and helpful to the Opposition parties in respect of the contribution we will make on Committee Stage. As I have said, this is a minor Bill but it could have very important positive consequences for Bord na Móna and therefore I welcome it.

Mr. Sherlock

Since their formation in 1946 Bord na Móna have played an important role not just in providing an important alternative native source of energy but also in providing a significant number of jobs in areas in which, in most cases, there was no alternative source of employment. The importance of peat in Ireland is emphasised by the fact that one-sixth of our total land area, amounting to three million acres, is covered in peat land. Bord na Móna are currently involved in extracting peat from 200,000 acres of bogland purchased from private landowners. This obviously is only a small fraction of the total amount of peat land in the country, most of which is either completely unused or very poorly used in relation to its economic potential. There has been very little private bog development. Private enterprise has shown little inclination to get involved in the area, presumably because the profits would not be big enough. It is fair to say that had it not been for the establishment of Bord na Móna, this vitally important resource would have remained undeveloped and certainly under-developed.

In the year ending March 1987 Bord na Móna employed an average of 4,688 workers, rising to 6,146 at their peak period. Sales amounted to almost £110 million. Bord na Móna are a unique company in that they are totally dependent on the unpredictable nature of Irish weather. They have faced major problems in this regard in recent years when we experienced summers ranging from poor to abysmal. Despite those problems the board have made a major contribution to otherwise poor areas in which emigration was a constant feature prior to the advent of Bord na Móna. In addition, peat-fired power stations employ in the region of 1,000 people. The board have made a major contribution to our economy over the years, through export sales worth £16.25 million in the year to March 1987, and through savings in fuel imports.

Also the company have been a major centre of technological innovation with a worldwide reputation in that field. To the extent that the provisions of this Bill will allow Bord na Móna to promote, form, take part in and acquire companies and engage in activities not strictly related to peat, that is a welcome development. Allowing Bord na Móna to delegate some board functions to sub-board level is a welcome development also. However, that cannot be viewed in isolation from threats to divide the company into three separate ones — which would not be a good thing — or from attempts by the board to shed permanent staff and replace them with contract workers.

A number of other problems confront the board which are inadequately addressed in the Bill, such as that of the underlying problem of funding of the board and the future of cutaway bogs. Apart from climatic problems the major contributory factor to the board's financial difficulties has been the requirement to fund their operations almost totally by way of costly borrowing from the commercial banks, which now involves approximately £20 million per annum in interest payments. The board referred to this problem in their report for 1985-1986 when they said that this unbalanced capital base increases the financial vulnerability of the board in periods of difficulty such as the two production seasons, 1985 and 1986. In that report the board called for a conversion of existing Exchequer loans to equity and for an injection of new State equity.

Unfortunately, the Government have failed to respond to a fundamental review of the capital structure of Bord na Móna. If Bord na Móna are to survive and develop they must be provided with a proper financial structure, releasing the company from their crippling debt-interest burden. It is important to remember that Bord na Móna do not have access to the type of generous financial supports given to private companies. The company have been a consistent provider of jobs with a good technological record. Yet they receive no money from the IDA who have provided hundreds of millions of pounds in grants over the years to fly-by-night operators such as Hyster, Mostek and so on, many of whom remain here only as long as such hand-outs are provided for them.

The Bord na Móna group of unions in a recent submission set out proposals to put the company on a sound financial footing. We completely support these suggestions which include, first, the conversion of the £25 million Exchequer loan into equity; second, an injection of new State equity; third, access to the full range of Government and EC supports as are available to the private commercial sector and, fourth, the refund to Bord na Móna of EC interest subsidy rebates confiscated by the Government and the direct payment of these moneys to the company. Unless the fundamental financial problems of the board are addressed by the Government they will continue to experience major problems and their real potential remain untapped.

The other key issue affecting the future of Bord na Móna which needs to be sorted out without delay is the future use and control of cutaway bogs. Between now and the end of this century it is estimated that an area larger in size than County Louth will become available for alternative use as Bord na Móna complete their turf cutting operations in areas in the midlands. Such a large tract of land becoming available will afford tremendous opportunities for major developments in agriculture and related areas. There has been considerable research carried out already by Bord na Móna and An Foras Talúntais into possible alternative uses of such land. There is a number of possibilities, including horticulture, biomass, conventional forestry, grassland and amenity use. All of these offer advantages and disadvantages. The best usage of cutaway bogs may lie in a mix of options, allowing a degree of flexibility which would take into account local circumstances and changing conditions. It is vital that an early decision be taken as to who should have responsibility for the development of cutaway bogs in order to allow the requisite planning to begin.

There have been predictable calls from the farming organisations that cutaway bogs should be divided into small units and handed over to existing or aspiring farmers. I contend such a move would constitute a retrograde step as it is clear that cutaway bogs will need a centralised drainage system individual farmers would be unlikely to be able to provide. To reap the best return from cutaway bogs substantial investment and a high level of technical expertise will be required. It must also be said that the vast majority of farmers have shown no inclination to develop bogland. To allow individuals now reap the benefit of the work undertaken by Bord na Móna would be unfair and economically senseless.

Another factor to be considered is the position of the very large number of generally highly skilled employees of Bord na Móna and ESB employees in turf-burning power stations who depend on peat for their livelihood. Steps must be taken to ensure that cutaway bogs are developed in such a way as to provide the maximum employment opportunities for those who might lose their jobs when the present phase of bog development has been completed. I contend the most sensible approach would be to give Bord na Móna overall responsibility for the development of all cutaway bogs. At a time when State companies in general appear to be fair game for every right-wing politician and pundit it is worth reminding the House that Bord na Móna's record, despite Irish climatic conditions, has been good and that private enterprise has shown little or no interest in bog development.

In that context we are concerned about the provisions of section 7 which appear to place an obligation on Bord na Móna to hand over cutaway bogs to the new State forestry company. We supported the Forestry Act, 1988 and look forward to the early establishment of the commercial State forestry company for which the provisions of the Bill provided. But why is it necessary to compel Bord na Móna to hand over to that new company areas of cutaway bog? We totally acknowledge the need to expand our overall forestry area. Indeed the amount of Irish land under forestry — at approximately 5 per cent — is the smallest within the EC and needs to be expanded rapidly. There is no shortage of land here, privately-owned bogland and marginal land, which is either under-used or not utilised at all and which should be acquired by the new forestry company without having to take cutaway bogs from Bord Móna.

If the jobs of Bord na Móna workers are to be protected, as the current phase of bog development is completed, the board will need to be in a position to consider all possible options for the use of such cutaway bogs. As I understand the position, the new forestry company will be involved in all facets of forestry and wood processing. They will grow their own timber but will also purchase timber from privately owned forests. Therefore, why not allow Bord na Móna become involved in the forestry area if they should decide that that would constitute the best option for the usage of cutaway bogs? Why not allow them to sell the timber they produce to the State forestry company in the same way as any private forestry company?

This Bill is published against a background of changes which the management of Bord na Móna are seeking in the nature of the workforce in the company, particularly the proposal that much of the permanent workforce should be replaced by contract workers. I assume that the company's management would not attempt to move in this direction unless they had been given the approval of the Government.

It should be acknowledged that the trade unions in Bord na Móna have adopted a flexible approach to the changes and to the modernisation process necessary to ensure the future of the company. In 1974 and again in 1979 major agreements were concluded providing for increased productivity and flexibility in the production, transport and processing areas. The extent of the concessions made by the workforce is indicated by the fact that the permanent workforce was reduced by some 800 between 1984 and 1987 while production targets remained constant. I understand that the management put forward a 37-point list of changes which they are seeking, to improve productivity and achieve more flexible work practices, and that the unions have indicated their willingness to negotiate on these matters. However, it is also clear that if the management go ahead with proposals to shed almost 700 permanent jobs and 400 temporary posts and replace them by contract workers, they will be strongly opposed by the unions, and there is a grave danger that this will plunge the company into serious industrial conflict.

The trend of replacing permanent workers with contract employees has been well established in the private sector but it is alarming to see this practice spreading to the State sector. While there may be short-term financial savings for the board in such a practice, in that they do not have to pay PRSI and pension payments for contract workers and they get away with paying less to temporary staff than to permanent staff, the long-term implications of such a development for the company would be disastrous. The Bord na Móna workforce has loyally served the company over the years and in many respects the workforce is the company's greatest asset. It is not likely that contract workers will show the same commitment and loyalty to the company. Bord na Móna can have a very positive future if the correct decisions are made now. There is still enormous potential for their products and there is considerable scope for diversification.

The low smoke content of their products is becoming increasingly important in the context of the serious smog problems in Dublin and in other urban areas. With the expansion of smoke controlled areas the potential market for Bord na Móna products is increasing dramatically. Against this background it would be sensible for the board to increase production of briquettes and consider going ahead with the construction of the deferred briquette factory at Ballyforan.

There is an obligation on Bord na Móna and other State companies in the Programme for National Recovery to consider ways of expanding their areas of economic activity, creating additional employment. Apart from the use of cutaway bogs, Bord na Móna have considerable expertise in engineering and consideration should be given to expanding engineering activities either through direct engineering production or through contract or consultancy work for other companies.

Mr. Dempsey

Very often this House is criticised for passing legislation considered to be too little too late. It is not often that we have the opportunity that we have today to make decisions of major importance which will have far-reaching consequences. That is why I welcome this Bill.

I also take the opportunity to congratulate the new Minister on his portfolio and to wish him well. Knowing his capabilities I am sure the Minister will fit very well into the brief and that he will have a long and successful career in this area.

This Bill is very important. The implications of our decisions will be far-reaching for Bord na Móna. Our decisions will decide on the very survival of the company. Few would deny that Bord na Móna are at a crossroads and that urgent decisions need to be taken. There is no doubt that structures must be changed and that the company must be geared to current and future challenges. This Bill gives us the opportunity to streamline an organisation which has served us well for the past 40 years and which, properly structured, will continue to serve the nation well in the challenging nineties and into the new century.

We, as legislators, must offer every facility to the board and management to ensure that the company operate to their maximum potential in a highly competitive environment. The present structures of the company will not allow them to operate to their maximum potential when facing challenges. We cannot expect management to operate within archaic structures, structures which were suitable for the forties but which bear little relevance to the eighties and even less relevance to the nineties. Because of developments by Bord na Móna the structure of the forties has already proved inadequate. This has forced Bord na Móna to adopt a new approach to parts of their operation, particularly international marketing and trade.

The management and workers of the company must be complimented for the way in which they have adapted to the new situation and have spread into the international scene. The fact that they did this successfully showed that the expertise is there, and that the skills are there, but it underlined the fact that current structures are inadequate. This Bill addresses that major problem and when passed will allow the Minister and the company to adopt structures which will be vital for the future survival and expansion of the company.

I do not in any way denigrate the proud tradition and record of achievement of Bord na Móna so far. In the context of the present Bill, lest I am seen to be criticising the company, I will comment on the history and achievements of the board. The company were established under the Turf Development Act, 1946, with a specific task of maximising the benefits to the nation of the exploitation of the natural peat resource. The company were very successful and quickly took a position of pre-eminence among the world's peat producers, in terms of bog husbandry, the technology employed by them, the production techniques adopted, and the restoration of cutaway bogs and production development. They also attained a certain pre-eminence in environmental and conservation matters. Their achievements in taking undeveloped peat lands to the current state of development is impressive and is recognised throughout the world. Bord na Móna are recognised as one of the foremost companies in this area.

With regard to production, the company also have a very proud record as an employer. They have sustained employment throughout their history and, as has been mentioned by previous speakers, they have a relatively trouble free industrial relations history. They have contributed to the economic life of the country through discharging their remit to develop our natural peat resources, but they have also made a huge social and economic contribution at local and community levels in areas which, it would be fair to say, would be otherwise severely disadvantaged. There are many areas that would be economic and social wastelands but for the employment and social contributions made by Bord na Móna, and this House should recognise that.

Many Deputies from all sides fear that any changes in the structure of Bord na Móna would seriously affect their areas. When the time comes to review the existing position in the light of future requirements, they fear the past will in some way be denigrated by such a process of examination. However, the majority of people on reflection will not take this view but will recognise this move for what it is — an attempt by a successful company to reorientate and to adapt themselves to a changed environment. I have no doubt that Bord na Móna will use the qualities so evident in the past to meet a new set of challenges in the future. These factors which must be faced, and the factors which underpin the successful past performance of the company, do not to a large extent apply to the existing situation or to future developments. The challenges I speak of are in the external environment and market areas.

The company have to face the challenge and respond radically to it to ensure their future viability. The change is already underway and so far, within the constraints imposed on them by the 1946 legislation, Bord na Móna have tried to adapt to these challenges. A number of areas of significant progress have been noted over the past few years. A number of key management posts have been filled and initiatives are being taken in critical functional areas, such as marketing. More recently the company have attempted to reduce costs through a voluntary redundancy and early retirement package. A number of the uneconomic sod peat works are scheduled for closure or have already been closed, and a number of new systems aimed at gaining efficiencies in production and lessening the effects of weather dependency are being pilot tested.

According to Bord na Móna and somewhat in anticipation of this Bill, a number of opportunities for profitable participation in new industry areas are being pursued. I am sure Members will be very much aware that a number of initiatives are being taken to exploit market opportunities in Europe, and particularly in France. I mentioned the changes that have occurred to illustrate and underline the fact that the board are willing to change and to adapt, and they have done that within the constraints of the Act, but just as important is the change of attitude among staff and management. This has allowed changes which would probably have been unheard of in years gone by.

Members will probably be aware of this but over the past number of years Bord na Móna have shown themselves to be more ready to open their doors to the public and have adopted a more vigorous public relations and public information initiative. This in itself can only be good. The changes I mentioned are welcome and significant in the context in which Bord na Móna are working, but I contend that they do not go far enough to meet the challenges I referred to earlier.

Before dealing with the structures of Bord na Móna and the possible improvements that could be brought about by this Bill, it is necessary to address some key strategic issues which will have an impact on the type of structure required to face up to the future challenges to which I referred. The basic issue which must be faced is the fact that the company are responsible for exploiting what is a depleting natural resource. Estimates of the remaining life of the reserves are very difficult to make because they are so dependent on projected usage and extraction rates. They can also vary as a result of the type of products that are developed. However, we must now address the choice which must be made on where and how to maximise added value and gain the maximum return for the future.

One of the unique aspects of a bog is that it is capable of producing different products at different stages of its development. It is fair to say that up to now we have concentrated largely on the extraction of a rather limited range of products. Future development will require a different type of strategy, one which will be a mix of the more traditional areas with a certain bias towards the high value added products. It is also likely that the development of bogs will lead to the development of a new product range and totally new businesses. This is why I feel the current legislation is so important.

To a certain extent Bord na Móna are hamstrung by current legislation in that the company were set up solely for the purpose of exploiting our natural peat resources. In this day and age it is too restrictive and the legislation before us will allow for considerably more flexibility. If the company are to develop new products they will require the flexibility to be able to set up new companies or to engage in joint venture activities. They will also need these companies to develop and market the product and the legislation before us will help to facilitate that process.

A considerable amount of research has gone into the development of peat for anti-pollution uses and a very active research project is well advanced. The research appears to indicate that peat can be used in a revolutionary new way to prevent pollution. If that research is successfully concluded it may be necessary to set up a new company to exploit the research fully by marketing the finished product. This new product would be completely different from anything the board are involved in at the moment, and obviously different strategic approaches and responses to the market-place will be required. The company should have freedom to set up the structures which would allow them to exploit that fully.

That is only one area. There are many others some of which we are aware of and some of which we probably are not aware of at present. The key point here is that if the board are to develop new products they will have to be allowed develop structures that will exploit them adequately through sales, marketing and so on. At present Bord na Móna are involved in a variety of activities. They are involved in the commodity-energy industry, to some extent the agriculture-horticulture industry and the solid fuel and domestic heating industry. They are developing in the pollution control industry, and only time can tell us what other industries they may become involved in. There have been many changes in these industries over the past number of years and there are potentially very many more changes in the very near future.

In the commodity energy industry, that is the supply of milled peat to the ESB for electricity generation, the major market forces are world energy prices and exchange rates. In addition, there are wider national, economic, financial and social considerations. However, the future forecast for trends in world energy prices indicates that this industry will have to aim at a price structure which will be more in line with general commodity-energy prices. In order to achieve that, maximum efficiencies will have to be obtained and these will have to be reflected in reduced costs. Performance in that area is not dependent on just direct cost reduction but calls for reinvestments of profits in production technology. From my limited knowledge of this area it appears to be seriously under-funded and in many cases machinery used in it is either ancient, or, some would contend, obsolete. That in turn reflects itself in major costs, such as transportation and maintenance, and as long as it remains it will affect the company's ability to achieve any sustainable cost reductions.

Horticulture and garden industries are probably one of the most exciting areas that Bord na Móna are becoming involved in at home and internationally. It is an area that presents Bord na Móna with a golden opportunity for growth. However, it is also a highly competitive area in which Bord na Móna to some extent are a late arrival. The company so far have shown themselves capable of competing with the best in Europe but the key issue for the company in this area relates to their potential to market their product internationally but particularly in Europe. A new and fresh marketing approach is needed and so is diversification into high value-added products. The company need to build on the niche they have created for themselves in Europe. In this area another matter that has to be faced is the price sensitivity of the market and, as in the commodity-energy industry, cost containment is very necessary here. Again this can be achieved through increased efficiency and increased productivity.

The solid fuels area is one of the most serious challenges facing Bord na Móna because the markets worldwide are contracting. For that reason this industry presents its own challenges. It is inevitable in a contracting market that in future there will be fewer suppliers. The challenge in this case for Bord na Móna is simply to survive.

The briquette business needs to succeed in volume sales not just at home but abroad because of the relatively high cost and the growing strength of competitive fuels like gas and privately cut peat. Again, the major issue to be faced here is the need to reduce prices and to create an attractive product. Indeed, probably at present in this country one of the strongest selling points the company have is the relatively low smoke emission from burning briquettes. In the current controversy Bord na Móna should capitalise on this, not just in Dublin but in other cities and towns around the country and internationally. The recent decision, belated though it might have been, to include briquettes under the smoke free zone legislation is a major bonus for the company, and I venture to say that without it the solid fuel business would have found itself in very serious trouble.

In the sod peat area the biggest problem is the inroads being made into this market by private producers who are estimated at the moment to produce about 1.5 million tonnes per annum. In the peat area productivity will have to be increased. I read recently that 1,750 tonnes of turf per worker are extracted here and the comparative figure in Finland is almost double at 3,450. That may not be a reflection on the workers but it refers back to the point I made about equipment and so on.

In agriculture a unique opportunity is presented to the company to develop the cutaway peatland areas. The Government have already decided that some sections of the cutaway bogs will go to forestry and will be handled by a new State company. This has caused certain problems and, as Deputy Sherlock said, there are quite vociferous groups saying it should not happen. I understand clearly that the areas that will go to forestry will be suitable for forestry and not good agriculture land. In addition, there has been criticism of the decision because some people feel that the fact that some of this cutaway bogs has been given over to forestry and a separate semi-State company is in some way a reflection on Board na Móna. I do not take that view. I feel it is more a signal of the Government's commitment to the development of the indigenous Irish timber industry to which the Minister was very deeply committed in his time as Minister of State. However, it might be no harm for Bord na Móna to take some note of the fact that the Government have decided to allow the new State company to develop some of the cutaway peatland areas.

To my knowledge, Bord na Móna have developed no overall strategy for land utilisation and there is a danger that if they do not do that sufficiently quickly other interests may put forward proposals that would leave them out in the cold. Therefore, the decision by the Government might be a timely warning. I am aware that Bord na Móna have been considering, for a considerable length of time, a strategy for land utilisation. It is time now that they produced the goods and produced some kind of document that can be worked.

On strategic issues under the heading of other industries, expanding and developing the range of products capable of being produced from the bog presents its own opportunities for profitable participation in other industries. I earlier cited the pollution control industry as an example. This Bill will allow Bord na Móna to participate in other industries in a variety of ways, for example, by way of joint ventures or setting up other companies, etc. The legislation will facilitate this, and from that point of view it is good.

It would be very difficult to talk about strategic issues in relation to Bord na Móna without referring to the problem of debt facing them. This is the major factor underlying all of these other strategic issues. It has had a considerable impact on the past, present and future performance of the company. There is a necessity for price competitiveness and profit performance and these are affected by the very high level of payments needed to meet interest and capital repayments on past loans. The figure for 1986-87 is about £22 million. Repayments of this order have arisen because the company are entirely founded on loan capital on the basis of Exchequer advances and commercial loans backed by State guarantee. Because of this approach the accumulated debt has reached a stage where it is no longer feasible to expect the company to carry the burden. The level of debt is a major contributor to the price levels which are too high right across the total product range.

Servicing a debt of that level also has other effects. It has a major effect on cash flow. It also prohibits reinvestment which, in turn, is essential to contain costs and reduce prices. In addition it gives rise to short term cost cutting exercises which cause problems in subsequent years. In many cases the quality of products is reduced affecting sales and continuing the spiral.

Bord na Móna are involved in a high risk business. At all times they are trading in very difficult circumstances. They are seriously affected by the weather not just in the production process where a wet summer will have serious effects but also in the domestic heating area; if we have mild winters it is bad news for Bord na Móna. Because it is a high risk business it should not be financed by loan capital but by equity. If this were the case the company could pay a dividend in years of high return and could prevent a further increase in losses during a bad year. At the moment in a bad year the situation is made even worse in that losses that occur are adding to an already incredibly high loan situation, and again the cycle continues and worsens.

I realise that in the current economic climate what I am suggesting will have implications for the Exchequer; but we have to face the reality. There is little point in gearing a company to meet the major challenges facing it in the market place in the years ahead if these structures are to be based on a foundation of debt. The foundation is very shaky and I would urge the Minister to have a look at this to see if there is some way to get Bord na Móna out of this loan situation. I understand the current level of the loan is around £170 million and the repayments are about £22 million a year. No company could be expected to survive under that load, still less improve their situation to meet the serious challenges they face. The Bill will allow the Minister to take some action in this area.

So far I have outlined the challenges facing Bord na Móna and the strategic issues that need to be addressed urgently to allow the board to face those difficulties and challenges. I would like now to turn to the structure of Bord na Móna and the options which the Bill before us leaves open. It is the inclusion in the Bill of possible options of change in the structure of the company that has caused most comment and given rise to fears of privatisation or that certain segments of the company would be sold off. It has generated some controversy. It may be appropriate in the present context that the debate may have generated a little more heat than light. All sorts of claims and counter claims are being made. No matter how attached people have become to the old Bord na Móna with their fine traditions, if the structures do not change we will be left precisely with that, a fine tradition, and little else.

The Bill before us leaves two options open to the Minister: the board to remain more or less the same and the various enterprises to be organised and run by sub-boards or possibly limited companies formed under a group structure. In that context I feel that the way forward is for the company to adopt a group structure with Bord na Móna becoming a holding company and operating initially with three separate limited liability companies set up under the Companies Act. These three companies would deal initially with the milled peat, horticultural-agricultural area and solid fuels. This approach would lead to regularisation of the current position with regard to the UK and European subsidiaries. Each of the three companies that I have referred to could be autonomous in that they would have a board of directors and a management structure and would be able to operate as a separate company. That type of structure would allow the holding company, Bord na Móna, to operate at a strategic level deciding on general policy while the individual trading companies would be involved in the day-to-day management of their specific areas of responsibility. There is no doubt that such a structure would allow for more efficient use of resources and would gear the company to the competitive atmosphere in which it will be operating.

The type of structure I have outlined would give sufficient flexibility to allow the different industries in which Bord na Móna operate the opportunity to grow and develop. It would also allow flexibility for the development of new industries — I already mentioned some of them — once the initial research into their viability has been concluded. Such a structure would also allow for product development and technical innovation to be provided for in the most effective manner for all companies. In addition it would help the individual companies to concentrate on their own markets and try to develop them. That is particularly important in the horticultural-garden area where development in the European context is vitally important. The proposed structures would also broaden the range of options for future development and allow the company to develop in various fields as the need arises through joint ventures and acquisitions.

An important point in relation to operating under separate companies is that such a structure would give a clear picture of the performance of each sector and ensure that each company operated in a more commercially orientated way. Obviously, a certain discipline would be imposed on each company to produce the goods because if they did not that would be obvious. Such a structure is important because the management skills and techniques needed to sell turf are completely different from those for the development of horticulture. The companies, if set up individually, will have an opportunity to develop their own speciality and be more responsive to market conditions.

The alternative to such an approach would be to make structural changes internally and, possibly, to appoint sub-boards to look after the various sectors. That would not be a proper response to the challenges facing the board and would lead to the continued centralisation of power in the company with a consequent danger in that it would mean less accountability by individual groups and management. I suggest that if we are setting up three separate companies a portion of the Baggot Street office should be retained for Bord na Móna and the other companies should be located in appropriate centres around the country.

The key to the Bill is its flexibility. It gives the Minister and senior management of Bord na Móna flexibility. There is flexibility for the undoubted talents of the management and executives of Bord na Móna. If the new structure is set out executives will be able to specialise and shine in their own areas. That would be good for the company and for the country. Most of my contribution has been devoted to the structures of Bord na Móna with emphasis on the need to make it a profit-making concern. I may have concentrated on economic issues but, like other Members, I am aware of the contribution by Bord na Móna to the social life of the country. I referred to that briefly and my brevity should not take from the fact that I have a lot of regard for what Bord na Móna have done down the years. They ensured the survival of many rural communities.

I should like to make a point in regard to section 9 which deals with the remuneration of officers and servants. The provision, a standard one in Bills of this type, states that the remuneration and allowances to be paid to officers or sevants of the company should be subject to conditions which the Minister may lay down and take cognisance of the nationally agreed guidelines set down from time to time. I am not sure that that is the best type of approach for our semi-State companies. We should be aiming to attract the best people into those companies and to rewarding them accordingly.

Mr. R. Bruton

Hear, hear.

Mr. Dempsey

We tie the hands of those who have an obvious contribution to make by saying that they should be paid a certain level of remuneration. If we must insert such a clause we should add a provision allowing for a bonus and penalty scheme. If an individual delivers the goods he should be rewarded. I would be more in favour of appointing such people under contract, pay them accordingly and reward them with bonuses. If they do not deliver on their contract the obvious option is open to the board. There are people who would be interested in such positions and would probably accept a salary lower than they could command in the private sector. However, we should give them a reasonable chance. It is wrong that we should continually tie their hands by including provisions like in section 9. A person who proves successful should be paid accordingly. If we are to get anywhere after 1992 we will have to have a look at the salary structure of the executives of semi-State companies. We will have to pay people according to their ability and their performance. I do not think our semi-State companies will survive if we continue to pay their executives what amounts to a pittance when their salaries are compared to what is available in the private sector.

I welcome the Bill and, for everybody's sake but particularly for the sake of Bord na Móna, I hope it receives a speedy passage. The sooner the structures are put in place the better for the company, their management and employees but most of all for the communities that Bord na Móna have served so well in the past 40 years.

Mr. Carey

It is refreshing to hear a Deputy on the other side asking the Minister for Energy to change section 9 of this Bill. When I put a similar request to the Minister during the debate on the Coillte Teoranta Bill he dismissed it out of hand. I hope Deputy Dempsey has more success than I had. It is refreshing to hear a man on the other side of the House talking about the change-over that is required for semi-State companies to provide a future for themselves.

This Bill is another effort by the Department of Finance to put their tentacles around all the activities of the State. The terminology used in this Bill is similar to that used in the Coillte Teoranta Bill. The Minister was anxious to get that legislation passed as there was an urgency on the forestry side in so far as there was a need to move on as promises had been made and they were fulfilled. I appreciate the Minister doing that but I question the timing of this Bill. We all know that Bord na Móna have considerable difficulties. The former Minister in his wisdom appointed consultants and gave them a wide-ranging brief and asked them to look into Bord na Móna and its future. I wonder why this Bill was introduced before the consultants' report became available. When replying perhaps the Minister would say if the consultants have seen this Bill, have they examined it, have they made comments on it, have they approved of the Bill.

As my colleague, Deputy Bruton, pointed out there are many limitations in this Bill. It expresses almost verbatim what the Minister and his party said about the scope for growth in peat. They said:

Fianna Fáil remains committed to the maximum utilisation of our peat resources. Bord na Móna is on the threshold of great change as its peat production phase approaches maturity. Its future role needs to be clearly defined and we will provide a new and wider brief to fit the organisation for years ahead and make it fully market orientated.

These are laudable aspirations.

Mr. Smith

The Deputy is always stimulated by them.

Mr. Carey

I really am.

Mr. Durkan

But we are not impressed.

Mr. Carey

I am puzzled by the initiative in this case because if the former Minister decided to spend enormous sums on a consultants' report — I doubt if it was out of friendship that he appointed them, I would not say the Minister would do that but he would do it in the interests of Bord na Móna — why did the Minister proceed with this Bill at this time? I do not understand it, especially when the consultants' report is expected next January. Is it right that we should rush a Bill through the House about changes in Bord na Móna and pack in Government Deputies praising the Minister for his initiative, the company's wide expansion, their commercial orientation and all the rest of it? Indeed, all the other Deputies praised it. Next February or March we will have a total change as a result of the consultants' report about the position in Bord na Móna.

We all know that Bord na Móna cannot meet their debt. If we were serious about the future of Bord na Móna we would first tackle the major problem of the financial difficulties in which the board find themselves. I am not going to say that every political party in this House can wash their hands of the problem and say they did not do anything about it. The Minister can say to me when the Coalition were in power they did not do anything about it.

I got out a number of Bills and looked through them to see what went on, and I am not satisfied with what went on in the time of the previous Government either. This Government laud themselves about their realism and the new beginning and all the changes and the challenges we will have in this community and they leave a company and their employees, who are dependent socially on it, in limbo with a new Bill that is just putting in order things that have existed for a long number of years.

The Minister spoke about their great progress, the progress on the horticultural side, the forays into Europe and so on. Deputy Dempsey said that this would be a new development. This is something that is there already.

Mr. Smith

The Deputy is in for a few surprises.

Mr. Carey

I do not know where the surprises will come from. The Minister could have enlightened us in his speech. Maybe we are acting contrary to EC regulations.

Mr. Durkan

It might be shocks.

Mr. Carey

Perhaps there is something else wrong. There is a serious debt problem in the company. That was the first problem that should have been faced by the Minister before bringing in a Bill for Bord na Móna — and I think Deputy Dempsey proposed a solution with which I would not disagree. He talked about the position of the debt in Bord na Móna and how this liability could be reduced. The National Planning Board indicated a formula by which the Minister and his Government might consider a degree of write-off in the debt because this is an untold burden. The board of directors and the management are tearing their hair out every day trying to find ways to make ends meet. How will they say to all their employees in counties Offaly and Laois and in all the other constituencies in which Bord na Móna operate, "How can we guarantee continuity of employment?" One way of doing it is to accept the recommendation of the National Planning Board and to examine its efficiency. I presume this is going on with the Minister's consultants and I presume that when the Minister reports he will be able to say to us: "We will be able to put Bord na Móna on a profitable basis". The aim should be that they would be commercially viable and the balance of debt should then be written off. When replying to Second Stage I hope the Minister will say to the House that he will examine that objective. I join with Deputy Dempsey in reminding the Minister that he should tackle that matter.

As far as progress on the social side is concerned, that is the reason there is a reluctance to make any massive changes in Bord na Móna. I am aware of the great benefit Bord na Móna have been to the midlands. When I was in my youth I spent a few summers around Tullamore and I realise the effect of summer employment on the economy of that town. It is necessary that alternatives be examined.

It is commendable that Bord na Móna have become involved in the consultancy, horticultural and engineering fields. They deserve great praise for this. The Minister agreed that the Minister for Finance would join with him in overseeing small areas of activity. I do not see the necessity for this. A long list of areas of activity, such as the manufacture of plant and machinery, the erection of buildings and the undertaking of hire purchase schemes is given in the Bill but why should the Minister for Finance have to be consulted in relation to these activities? Is it necessary for Bord na Móna to go cap in hand to Merrion Street to obtain permission? As Deputy Bruton said, it would be reasonable for the Minister to include some limit, say, up to £20 million, but it should not be necessary for Bord na Móna to go cap in hand to Merrion Street to obtain permission. I know from sad experience what treks to Merrion Street can do even to a Deputy. They will keep putting one off. If any good ideas emanate from Bord na Móna or from the new sub-boards they will spend a lot of time in trotting to and from Merrion Street to obtain permission to go ahead. I would ask the Minister to take another look at this provision and to insert some reasonable figure into the Bill, say a figure above £15 million, but if the Department of Finance do not agree to this, the sum of £10 million would appear to be a reasonable figure. Bord na Móna are not going to go wild in the way B & I or Irish Shipping did. They committed themselves to contracts of enormous proportions. Apologies will not be accepted any longer.

Mr. Smith

Write down a few guarantees for me.

Mr. Carey

I will come to the guarantees later. The Minister also referred——

Mr. R. Bruton

The Minister cannot make these decisions on his own, he has to go to the Minister for Finance.

Mr. Carey

I feel sorry for the Minister——

Mr. Smith

Do not be.

Mr. Carey

——as I know he is well able to fight his corner. He has proven this in the past. His progress to date would also prove this. The former Minister, Deputy Burke, may have been misled but for the sake of the future of Bord na Móna can the Minister not ask the new Minister for Finance to reconsider his position on this matter and agree to the insertion of the figure of £10 million? Perhaps Deputy Bruton would not agree with me on that as he suggested a figure of £20 million. Deputy O'Malley suggested a figure of £15 million, but let me suggest a figure of £10 million.

The Bill makes provision for a borrowing facility. I agree with Deputy Bruton when he says that making available such a borrowing facility is wrong. If Bord na Móna wish to set up companies they should be set up and given the capital to operate on a commercial basis without interference. In the previous turf development legislation before the House permission was sought to increase the subsidy to Bord na Móna from £100 million to £180 million. This Bill makes provision for a borrowing facility and everyone knows the consequences of making mistakes in this area. It would be easier to lend money or to provide letters of comfort but in doing so we may end up in a worse position. It would be preferable if we were to say to them that this is their limit and if they wish to engage in a joint venture later they should go ahead because we believe that they provide a good service and have a good product. I am disappointed with the Government's approach towards semi-privatisation of semi-State bodies. I do not know if Deputy Cowen understands when I say it is another half-way house. The Minister for Finance does not want to let go of the goodies while the Minister for Energy feels he must be there with him.

One aspect of this matter which has not been referred to is that Bord na Móna made a submission about four years ago to the Oireachtas joint committee in which they recommended that they be given the borrowing powers that are being provided in the Bill. As I said earlier, they should be allowed to avail of commercial opportunities. Everyone has praised Bord na Móna, yet they say that we should look to Finland for our model. In 1946 the Government established Bord na Móna and at that time there was no such thing as peat production in Finland. In fact, they looked to us for advice and borrowed our techniques. Now we are looking to Finland for advice. What has happened in the meantime? Where are the astute Irish now? I would have to conclude that limitations have been put on Bord na Móna, that the legislation establishing them has hamstrung them, that they have been prevented from carrying out necessary research and development and that they have suffered from a lack of capital. Under this Bill the Minister is proposing that Bord na Móna may establish new companies in the same old mishmash way. I wonder will we be able to look to Finland for advice on horticulture or engineering? I am sorry to be derisory towards the Bill because I feel that the Minister can do a great deal better. He is well capable of doing a great deal better. He understands commercialism, why then is he asking people to suffer this again?

There is one aspect of the operations of Bord na Móna with which I am very disappointed and that is their investigation of new products. There are those in this country who have an interest in using peat or in using peat along with other products. Instead of objecting to this proposal they should have considered a joint venture arrangement. I believe this would have been the most progressive way to approach the matter. Alternative fuels are in demand at present. As we know, smog is a problem in Dublin city in particular and if a manufacturer comes up with a formula whereby the amount of filth in the atmopshere in Dublin can be reduced I believe that that initiative deserves to be supported. Even if peat products are produced by a person in the west of Ireland this development deserves to be welcomed and supported. I was disappointed that Bord na Móna adopted a niggardly approach to this development.

I believe our spokesperson on energy, Deputy Bruton will be putting down admentments to the Bill. It is difficult to know whether one should vote for the Bill on Second Stage after all the heavy criticism it has received, but in the interests of the people who are employed in the consultancy, horticultural and engineering areas who need a way out of the quango they are presently in, I suppose we should pass the Bill. I believe we rely too much on the mandarins in the Department of Finance to get advice on every aspect of living in this country. They will really be poking into our pockets because of the way legislation is coming before the House.

Mr. Cowen

Before beginning my contribution on this Bill, which has very important implications for the people in my constituency — a Bill which allows us to deal in detail with the specific provisions contained in it and the general change which will be brought about by its passing, and I believe this Bill must be passed by anybody who has the interests of Bord na Móna at heart — I want to preface my remarks by publicly, as I have done privately, offering my sincerest congratulations to my friend and colleague Deputy Michael Smith, on his appointment as Minister for Energy. I have every confidence in the Minister for Energy's ability and capacity to pull together the various strands of interest involved in trying to grapple with the very serious situation which has developed within Bord na Móna. I am confident that when the consultants have reported to him he will be able to come forward with proposals to ensure the company's long-term viability and the continued immense contribution which they make to the economy of the midlands. I am sure the Minister will justify that confidence we are placing in him even prior to those decisions being taken. He is a man who understands very clearly that this semi-State body is the life-blood of the local economy in many parts of my constituency and in County Offaly in particular. This company have served us very well down through the years and it would be remiss of me not to pay a genuine and special tribute to everyone who has worked in that great company, even prior to the introduction of the Turf Development Act, 1946. I am glad to say that in the local public life in my county there are people who started on that long road many years ago in building up what was to become one of the flagships of semi-State companies in terms of their success and contribution. Men like Pat Andrews and others led the way in making the company the great company which they were and I believe they can be as great in the future if we as legislators give them the power to direct their efforts in view of the changed market conditions, the need to be competitive and the need to get out and win a greater share of the market for the products which they manufacture.

I have listened intently since 3.45 p.m., and it is now 6.45 p.m., to every contribution which has been made on this Bill and it is my intention to listen to all the contributions on Second Stage, Committee Stage and Report Stage. It is with that sort of genuine concern that I should like to make my contribution. As a Deputy from the constituency which will be most affected by any changes or rationalisations which take place as a result of Government action or internal management action, I hope these will have the approval, consent and goodwill of the workforce who will follow on in the footsteps of those who were there before them.

The first point I should like to make is that a distinct attempt has been made by some Opposition speakers to attribute to this Bill purposes and objectives which patently are not relevant. The explanatory memorandum to the Turf Development Bill, 1988, says:

The purpose of this Bill is the amendment of the Turf Development Acts, 1946 to 1983 in order to broaden the statutory remit of Bord na Móna to allow it:

—promote, form, take part in or acquire companies;

—delegate some of the functions of the Board to sub-boards;

—engage in activities not strictly related to peat.

Those are the specific parameters within which the discussion on this Bill must be kept if one is to make a contribution which is relevant to this legislative proposal. It is clear that the bringing forward of this Bill and this Second Stage debate give is all an opportunity to assess the present state of the board, their operations and the future of those people who will be working in Bord na Móna after this Bill has been passed, after the consultants have reported and various key strategic management decisions have been taken.

While we may place different emphasis on the terms of the Bill, I think almost all of the Opposition parties are in agreement with us that rationalisation is necessary to secure the long-term viability of Bord na Móna and that Bord na Móna should continue to make a significant contribution given the social realities which are involved in the midlands economy and that the imminent demise of Bord na Móna or the ESB power stations which are related to the company, and which take the milled peat from Bord na Móna, should not even be considered as an option or regarded as a possibility in terms of the overall review which will take place both in this debate tonight and during the coming months.

I was astounded at the contribution of Deputy Pat O'Malley, the Progressive Democrats spokesman on energy. I regard Deputy Pat O'Malley as a personable and genuinely nice man but one of his statements caused me great concern and as a constituency representative I believe it is a point which I should bring to the attention of my constituents so that they will understand and realise from the very outset the Progressive Democrats position on this Bill.

This evening in the House Deputy O'Malley asked the following question: "Is it right to maintain an inefficient system of production when you are imposing a cost handicap on our economy and threatening existing jobs in industry, indeed limiting the prospect of creating new jobs because of high energy costs?". The important reply to his own question was: "It would be better to reduce those costs and devote the savings to providing alternative types of employment". It was definitely the gist of what he was saying that the Progrssive Democrats had in their minds the possibility that it would perhaps be better to close the power stations that would have a limited life anyway, and forget about the milled peat being supplied by Bord na Móna stations, whether it be Boora, Derrygreenagh, or Blackwater. It is incredible that any politician or any party should consider that that econmic activity should go and that from whatever increased revenues resulted from the reduction in energy costs alternative employment would be provided. In other words, they would make the midlands a wasteland. They would write it off in terms of its participation in energy production and they would wait for some guardian angel to appear who would provide alternative employment for the 4,000 to 6,000 people involved in this industry.

This was simply another example of the Progressive Democrats ideology running away with itself and forgetting that ordinary people are involved. Many families whom I represent are very much affected by that sort of talk and the implications of that sort of policy being generated publicly on Second Stage of this Bill by a party who claim to aspire to obtaining a seat in my constituency in the next election. I want to make it very clear tonight that I and everybody in my organisation will be putting forward precisely what the implications of Progrssive Democrats policy would be in my constituency if that type of approach were to be adopted. It has always been Fianna Fáil policy and will remain so to recognise the strategic importance of those two industries to our economy.

When people had a chance to focus their attention on that point before in the 1984 by-election, when I was elected with the highest number of votes ever obtained by a by-election candidate in the history of the State, that was the issue on which the election was decided. In future elections it will always be an issue. Only a person living in that area and working there as a constituency TD would know how significant this industry is to the constituents whom he represents and many more besides in outlying counties.

When we talk about Bord na Móna and how important it is to Offaly vis-à-vis any other county, some very simple facts will enlighten people as to just how great that contribution is. The annual industrial employment survey of 1987 stated that there were 1,678 people from County Offaly employed by Bord na Móna and 561 by the ESB giving a total of 2,239 people. When you consider that the total number employed in manufacturing industry in County Offaly, both foreign based and indigenous, is 2,684, it is quite clear that here is a county where 50 per cent of the workforce in manufacturing industry are employed in Bord na Móna and the ESB. Therefore any strategic decisions that are taken, any rationalisations that are to take place will be monitored by me and by my constituency colleagues and by my organisation, as we have done since August when the voluntary redundancy package was announced.

We understand the significance and importance of this industry to the people we represent. There is no ideologue or no so-called progressive party who will intimate, and expect it to go unchallenged, that it is possible even to contemplate the destruction of that industry on the basis that alternative employment will be provided in the future. That will not happen so long as I am a Deputy or so long as there is a Fianna Fáil organisation in County Offaly and I speak on their behalf tonight, also. We accept that if one is to be really interested in the long term viability of Bord na Móna there must be rationalisation.

It is clear to anyone who wishes to inform himself of the facts and the realities of the financial situation within Bord na Móna and the way in which the costs of production are made up, that rationalisations will mean job losses and have meant job losses. Last August, under a voluntary redundancy programme there was a tacit agreement with unions that 690 permanent workers would be let go and 404 workers would be let go overall throughout the board. The take-up on that voluntary redundancy package outstripped those numbers. What happened was that many more than that number left. I do not think that I am too far out in this, but I think there are probably 650 permanent jobs gone in County Offaly. Other seasonal workers will no longer be taken on as a result of that package. That has very serious implications for the people and the communities I represent. I assure this House that I will use my influence for whatever it is worth at every level within this Government to make sure that an alternative regional strategy is agreed and implemented within the lifetime of this Government. That is the mandate which comes not from me but from my constituency organisation. I will be constructive and realistic and, most importantly, I will be supportive of the present Minister and of Government in that task. It is imperative on me, as a constituency TD for the people of Laois-Offaly, to stitch that into the record of the House, on the Second Stage of this important legislation.

There are proposed rationalisation procedures which are outlined by an internal management plan and are radical proposals. They must be given careful consideration. There also are, and will be, proposals from trade unions representing workers in this industry. I am a great believer in the consensus approach in order to achieve the goals set out for us which we know must be achieved if we are to maintain a long term, viable Bord na Móna operation. It is possible, and I hope that there is sufficient goodwill and sufficient agreement between all parties, to ensure that we get agreed structures and an agreed way of moving forward so that we can deal with these issues.

The important point is that we must restore the morale within Bord na Móna and ensure a common sense of purpose at all levels within the company so that the loyalty that has been the trade mark of that company will be in each worker, each staff member, each manager, to overcome the difficulties that face them. We are all too well aware — politicians, management, unions and workers — of just how important this industry is to the midlands economy. It has been said that the ESB are Bord na Móna's largest customer and that is true. In 1986-87, £45 million out of total sales of £98 million were sales to the ESB. When you consider that of the total payroll of the board of £60 million, £19.6 million goes to workers in County Offaly, you get some idea that, despite the fact that they are a semi-State company there are areas in the midlands which are very heavily dependent on them in terms of maintaining economic activity and keeping up spending power. There are towns and villages in County Offaly built around this company which built houses in north, south and west Offaly and into south-west Meath to ensure that their workforce could live in the area and earn a living.

Debate adjourned.

Dáil Éireann debate - Wednesday, 30 Nov 1988

Turf Development Bill, 1988: Second Stage.

Dáil Éireann debate -
Wednesday, 30 Nov 1988