Dáil Éireann debate -
Thursday, 1 Apr 1993

Vol. 429 No. 1

Adjournment Debate. - Disposal of Teagasc Premises.

Mr. Dukes

I am given to understand that it is proposed to sell the Teagasc premises at Sandymount Avenue in Dublin. Those premises, as I am sure the Minister is aware, were purpose built for An Foras Talúntais many years ago and passed to Teagasc, when that organisation was set up in 1988.

I understand the proposal to sell the premises arises directly from the very restrictive approach to the funding of Teagasc taken by successive Governments and by successive Fianna Fáil Ministers for Agriculture ever since it was set up in 1988. From its very inception it has been unmercifully squeezed both in relation to current and capital funding. It is the fact that it has been throttled by Fianna Fáil Ministers for Agriculture that has apparently led to the current proposal to sell the premises.

I am informed that the current market value of the premises at Sandymount Avenue is estimated to be between £1.5 million and £2 million but that the replacement cost of the site and building is estimated at £4.5 million. Apart from the acquisition of new premises, relocation costs are estimated at about £800,000, including the cost of the first year's rental on new premises. In addition, there would be recurring annual costs as a consequence of the sale, amounting to £300,000 for administration and management and a further £300,000 for the extra costs of carrying out the current range of activities from new and more dispersed locations.

There is an alternative to outright sale, to mortgage the premises. A suggestion has been made that a mortgage be taken out of 75 per cent of the assessed market value of the premises. On the analysis I have seen, any mortgage up to a market value of £4 million would produce a financially more attractive result than outright sale at a price of between £1.5 million and £2 million. There is a very clear question here in relation to the taxpayers' interests and the interests of Teagasc.

Under the terms of sections 15 and 21 and the First Schedule of the Agriculture (Research, Training and Advice) Act, 1988, the Minister for Agriculture, Food and Forestry has a direct key role in any decision about property in the possession of Teagasc. I would like the Minister to give a clear account of the current financial position of Teagasc which has led to the proposal being made. Why is the sale of the Sandymount Avenue premises being considered? Is it, for example, for the reason enunciated some time ago in Enniscorthy by the current chairman of Teagasc, a man noted for his tact and gentleness, who said the premises would have to be sold to stop the animals from wandering back into the sheds? Will the Minister tell us what other options, if any, have been considered, what the benefits, if any, of those options will be, where those benefits will accrue and how? In the absence of clear explanations on those points I fear very much that the interests of Teagasc and of the general taxpayer will be seriously at risk.

Minister of State at the Department of Agriculture, Food and Forestry (Mr. Hyland)

I thank the Deputy for raising this question. I do not think I have to tell him that Teagasc found itself in a difficult budgetary position in recent years——

Mr. Dukes

It was put in that position by the Minister's predecessor.

Mr. Hyland

——with accumulated borrowings of the order of £10 million by 1992. In order to place the organisation on a sound financial footing an efficiency plan was drawn up last year by a working group representative of my Department and Teagasc. This plan was adopted by the authority and accepted by me and the Minister for Finance. The plan involves the rationalisation of Teagasc's physical resources, selected voluntary early retirement, improved income through increased charges for its services, efficiencies within the organisation and the funding of £6 million to reduce the core debt. The plan is now in the course of implementation and the Government made a once off payment of £4 million to Teagasc last December for the purpose of reducing its core debt.

Under the efficiency plan it was envisaged that a reduction of £6 million in the accumulated borrowings would be achieved through the once-off Exchequer £4 million contribution and £2 million from Teagasc by disposal of surplus assets. I understand that the sale of headquarters was identified in the efficiency plan as the most appropriate means of raising the authority's contribution. They recently decided that in order to assess adequately the various options open to them in relation to the headquarters building it would be necessary to establish the market value of the property. Accordingly, it was advertised for sale on 10 March last. The Teagasc authority will consider its options having regard to the market response. They will also have full regard to the costs of relocation of headquarters and to the performance of the functions carried out from the headquarters office. The options include direct sale, sale and lease-back or a mortgage on the property. None of these options will involve a loss of employment for the staff in question.

The manner in which Teagasc's contribution of £2 million is raised is primarily a matter for the authority subject, of course, in respect of the disposal of assets, to the approval of the Minister for Agriculture, Food and Forestry in accordance with section (1) of the First Schedule of the Teagasc Act, 1988. It is important to realise that the efficiency plan was drawn up and agreed as being the most effective means of ensuring long term financial viability for Teagasc consistent with delivery of relevant and cost-effective services to the agriculture and food industry. A central element of the plan was the provision of £6 million to eliminate or reduce the core debt. The Government had provided £4 million of this and it is essential that Teagasc provides the balance of £2 million. This is the context in which the authority has decided to place the headquarters on the market.

Mr. Dukes

Will ADM make a bid for it?