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Dáil Éireann debate -
Thursday, 11 Mar 2010

Vol. 704 No. 5

Adjournment Debate.

Prompt Payment System.

Members of the House are aware of the need for farmers and growers to get a fair price for their produce. Hence, we are making progress in government with regard to a code of practice even though we would all like it to be faster. In due course, as the programme for Government stipulates, it will be a statutory code. However we all acknowledge this is no panacea and other routes to market must be developed. Supermarkets are not charities and will not simply forgo profit if they can get away with it, regardless of the long-term consequences of the short sighted gameplan they have embarked upon. We need to avoid them becoming cartels or the temptation to so become. The second issue concerning farmers relates to the cost base of machinery, inputs and wages. The social partners, including IBEC and the IFA, are working on these issues.

I refer to the role of the Government in ensuring the spirit and letter of prompt payment legislation is upheld. This applies to businesses the length and breadth of the country. The Prompt Payment of Accounts Act is limited in its scope but the lack of prompt payment is hurting and killing struggling businesses. I refer in particular to the horticulture sector, which I know relatively well. I know one company that employs 24 or 25 people and needs working capital. The farmer in question approached a customer owing €19,000 and found that the company had closed down and has been set up again as a new company. The sum of €19,000 has not been paid. The farmer went to the bank needing working capital for the coming season and is told that the downturn means the assets of the farm are not worth as much and must face the prospect of putting the family home up as security. This is a difficult request to deal with and the spouse and the farmer must talk that over. If they do not do it, they risk the loss of jobs and the loss of fresh produce we all need for our health and our economic well-being. They must also consider the loss of the family home.

The House and the Government need to face up to the need to prevent the sharp practice of companies that feel they can avoid paying bills by using loopholes to open up as a new company. In government and in the House we need to give farmers and companies generally the leverage through which they can get interest on payments forgone on outstanding bills, as provided for under the Prompt Payment of Accounts Act for certain sectors. We must broaden that application.

Growers and farmers are not like short-term business models. They must think in two-year or 15-month cycles and they need working capital. They are the bedrock of our economic recovery and if they cannot get working capital and if they are not around we will not have an economic recovery. We need to take special note of the business model that requires the lead-in period for working capital to be provided. There has already been a fall-off in numbers of growers and farmers, particularly in the area of horticulture, where we are importing so much into this country. It is in all of our interests to ensure prompt payment of bills is enforced and that legislation is in place so that we can introduce measures to ensure farmers do not go out of business as a result.

Gabhaim buíochas leis an Teachta Sargent as ucht an ábhair thábhactach seo a chur faoi bhráid na Dála agus deis a thabhairt dom freagra a thabhairt air. Gabhaim buíochas leis freisin as ucht an sár obair a rinne sé nuair a bhí sé sa Roinn thar ceann na daoine seo. I thank Deputy Sargent for raising this important issue on the Adjournment. Businesses, including farmers, are finding it more difficult to access funding, whether in the form of credit from the banking sector or payments from business customers. Payment terms in commercial transactions are determined by the parties concerned and responsibility for the collection of those payments and for general credit control rests with the selling enterprise. The State does not impose specific payment periods for commercial transactions and thus has no role in regard to enforcing payments or in making public examples.

The Deputy will be aware that the issue of late payments in commercial transactions is addressed by the European Communities (Late Payment in Commercial Transactions) Regulations 2002. These regulations relate to commercial transactions in all sectors of the economy, including the agricultural and horticultural sectors. In accordance with these regulations, it is an implied term of every commercial transaction that where a purchaser does not pay for goods or services by the relevant payment date, the supplier shall be entitled to interest on the amount outstanding. Interest shall apply until such time as payment is made by the purchaser. The current interest rate applicable is 8% per annum or 0.022% per day. This rate is set at 1 January and 1 July each year at a rate of seven percentage points above the European Central Bank interest rate on its most recent main re-financing operation. In the absence of an agreed payment date between the parties, late payment interest generally falls due after 30 days from receipt of an invoice.

The 2002 regulations also provide for compensation for debt recovery costs. Greater use of these provisions would, I believe, assist in achieving a better culture of earlier payments. In addition, under the regulations, the use of terms that are grossly unfair may be unenforceable and such terms may be challenged in court on the basis of criteria specified in the regulations. Organisations representing small and medium-sized enterprises, including those in the farming and horticultural sectors, may challenge any terms that they believe breach the regulations in this regard. It is open to any such organisation to pursue this option. However, I understand that this provision of the regulations has not been availed of to date.

To assist businesses and to set a good example to other purchasers, the Government has introduced formal arrangements to reduce from 30 to 15 calendar days the payment period by central government Departments to their business suppliers. This commitment has effect on all valid invoices received on and from 15 June 2009 and is helping cash flow difficulties for enterprises. As part of the arrangement, central government Departments are obliged to report to the Tánaiste and the Department of Enterprise, Trade and Employment on a quarterly basis outlining their performance in meeting their requirements. Returns have been received for the third and fourth quarters of 2009. These returns were published by the Tánaiste on 30 December 2009 and 5 March 2010 and also advised to this House in a response to a parliamentary question on Tuesday this week. Both sets of returns show that the majority of payments were made within 15 days. Central government Departments are generally paying 97.9% of their invoices by value within 15 days.

Deputy Sargent also referred to working capital for hard pressed business people. The central objective for Government is the provision of normal credit on fair commercial terms in our economy to all viable business, large, medium and small. It is critical that our banking system is again fully fit for purpose whether in providing working capital, new loans or other credit facilities to businesses. The relationship between banks and businesses needs to be fully restored, built on trust and economic and business realism. There is no doubt but that banks are making significant credit available to businesses, albeit in the context of a decline in demand for credit against a background of slower economic activity. The independent reviews of bank lending carried out by Mazars show clearly the significant lending volumes going to businesses. However, we are all well aware of the demands from businesses for greater access to bank credit, in particular for working capital needs.

The Government has taken a range of actions to sustain the banks to facilitate the flow of credit to the wider economy. The bank guarantee and recapitalisation schemes, the nationalisation of Anglo Irish Bank and the massive effort we have put into the entire NAMA process are all for the single purpose of getting our banking sector supporting the wider economy. The NAMA Act was further strengthened by the Government amendment providing the Minister for Finance with a power to issue guidelines to the participating institutions in the NAMA process on lending practices and procedures to improve the flow of credit to small and medium-sized enterprises and, if necessary, to other sectors, including the agriculture and horticulture sectors.

NAMA is absolutely necessary to clean up the balance sheets of the banks and to create a functioning banking system in Ireland. It will not solve everything nor is it all we need to do. NAMA is making banks come forward and declare the scale of their losses up front and resulting capitalisation plans will have to involve State investment as well. As the Taoiseach has already announced, the Government's plans to restructure the banking sector are imminent and will be announced over the coming weeks. Further recapitalisation of the banks will feature in these plans.

The Minister for Finance will shortly issue guidelines to ensure that businesses will have recourse to an independent external review of decisions of credit refusal by the NAMA participating banks. It is hoped that banks not participating in NAMA or covered by the Government guarantee will also decide to join the system. The aim is to have a simple, effective review process, run by people with experience and credibility. The banks must comply with the recommendations of the review process or explain why they will not do so. In addition to dealing with individual cases, the credit review system will examine the credit policies and practices of the banks in respect of SMEs. This will help to determine what further action might be necessary to secure the flow of credit. The Minister for Finance intends to publish the analysis of the review process so that the performance of the banks participating in NAMA will be clear to all.

Deputy Sargent and Members of the House will be aware that the renewed programme for Government contains a specific commitment to implement a code of practice for doing business in the grocery goods sector to develop a fair trading relationship between retailers and their suppliers and to review progress of the code and, if necessary, to put in place a mandatory code. It is the Tánaiste's intention to give effect to this commitment by including a specific provision in the legislation on the merger of the National Consumer Agency and Competition Authority which will allow for the introduction of statutory codes of practice in areas such as the grocery goods sector. In the interim, the Tánaiste intends in the coming weeks to explore with all the relevant stakeholders the possibilities of agreeing a voluntary code which would respect the interests of all parties. A voluntary code offers stakeholders the opportunity to develop a code which is appropriate to the dynamics of the Irish grocery goods sector and which, in turn, could also form the basis of any subsequent statutory code. The concerns of the horticultural sector can feed into this process.

The Government will continue to take the necessary actions to support businesses and to restore the banking sector so as to position Ireland to be best prepared to benefit from an economic upturn.

EU Funding.

The background to this matter is a question I raised in regard to the €7 million competitiveness measures in respect of the food development initiative introduced recently by Government, the objective of which is to improve food sector competitiveness in exports markets. The reality is that unless something is done to address the serious devaluation of sterling, this will count for nothing and will be money down the drain. Mr. Aidan Cotter, chief executive of Bord Bia stated in 2009 that the underlying performance of the industry reflected in an estimated volume a decline of almost 3%, which was impressive when set against current challenges. He also stated that sterling remains the single biggest issue for the industry, adding that it was estimated that in 2009 the depreciation of sterling would reduce the value of exports to the UK by €400 million. The actual figure in this regard was €3.1 billion or 44% of all our exports. This goes beyond food and food exports and is our single biggest exporting indigenous sector, which is hugely dependent on the UK. We cannot devalue or deal with this because we are part of the euro and the restrictions on us in this regard.

I wish to make two suggestions. Will the Minister of State present a case to the EU for assistance on the grounds that our food sector is at a major competitive disadvantage owing to the devaluation of sterling by our neighbour, the UK? This creates serious trade distortions in respect of cross-Border trade and for our exports. It is a competition issue which should be addressed by the Irish Government and the EU before the food production sector is irreparably damaged and jobs in the sector are lost forever. The second line of support is the availability of a State-backed credit insurance scheme which would assist exporting companies in dealing with increased costs. A similar scheme is already in place in Hungary, France, Belgium, Sweden, Holland, Austria, Germany and Luxembourg. In recognition of the difficulty of exports across the EU, the European Commission has, in response to a parliamentary question by Mairead McGuinness, MEP, simplified the rules and application procedure for countries seeking sanction to put in place a credit insurance scheme.

The €7 million competitiveness measures are supposed to protect jobs and viable companies and businesses across the food exporting sector. Unless we put in place a credit insurance scheme, this will count for nothing. Has the Minister of State any intention of supporting the food and drinks industry group, IBEC, which has made a strong case for the introduction by Government of a viable export credit insurance scheme? While the Government has introduced all sorts of initiatives, including innovation funds and policies, not one job has been saved or created as a result. This is an indigenous sector. Surely, we can introduce measures already streamlined and approved by the EU to protect an industry worth protecting and which can sustain and create more jobs.

I look forward to hearing the Minister of State's response.

I thank Deputy Doyle for raising this matter. Underlying this matter on the Adjournment is of course the effect of currency volatility, in particular in respect of sterling and Irish food exports. As the Deputy will be aware, national currency adjustments are not possible for Ireland or other members of the euro group. While Ireland successfully pressed for targeted EU market management measures in the milk sector in 2009, EU funding is not available to aid the food sector in a single member state. EU state aid rules preclude export subsidies and currency assistance within the Single Market. This has a greater impact on Ireland than on other euro member states as 44% of Irish exports go to the UK, our nearest market and one with similar consumer and retail demands. In the face of this challenge, the industry has shown great resilience. In volume terms exports in 2009 were at 97% of 2008 levels despite a 13% fall in value.

This means we have had to look to a variety of other measures as well as the food industry's own resilience and adaptability in order to sustain this export oriented sector. During 2009, Bord Bia implemented a comprehensive set of promotional programmes and services, which were adopted in consultation with industry bearing in mind the impact of the sterling differential on competitiveness. This included a marketing fellowship programme to support companies seeking market opportunities and assistance in developing and bringing new products to market. A second Bord Bia-Smurfit-UCD marketing fellowship programme will be launched this month. Marketplace Ireland 2010, hosted by Bord Bia in Croke Park, enabled 150 food and drink companies to conduct more than 3,800 meetings with 400 buyers, including 300 from 27 international markets. The feedback from companies is that most expect to do new business. The feedback from buyers is very positive particularly as regards the innovation and breadth of the Irish food sector offering.

Food companies have also benefited from very specific schemes of assistance to industry. Some 21 internationally trading food companies, which were undertaking development expenditure to reduce costs and gain sales in overseas markets, have been approved €14.8 million under the enterprise stabilisation fund operated by Enterprise Ireland. Amounts totalling €13 million have also been approved to 69 food companies under the employment subsidy scheme.

The roll-out of a €100 million fund to support the food industry will commence this year with €9.5 million provided in the Department's revised Estimates for competitiveness and marketing initiatives. Enterprise Ireland will apply €7 million from the fund on measures to enable key exporting companies to adopt sustainable best-in-class lean business practices and to assist them in developing leadership and management capability to best international standards, as recommended in the report of the food expert skills group. Innovation measures will also be promoted. In addition, €2.5 million is being provided to Bord Bia for a variety of marketing initiatives building on marketplace and aimed principally at assisting the industry broaden its export reach.

In terms of the whole food supply chain, Bord Bia is in the process of extending its quality assurance programme to incorporate new environmental criteria that will position Irish food exporters as market leaders and provide a new platform for promotion in the context of the increasingly important sustainability agenda.

The Agri-Vision 2015 report and the Cawley report identified the delivery of safe, high quality, nutritious food, produced in a sustainable manner for high value markets as the optimum road for the future of the Irish food industry. The recommendations spanned the entire food chain from primary production through processing to market access, which is key to developing export potential. Implementation of the action plan is on target.

A focused strategy to chart the direction of agrifood, forestry and fisheries for the next decade to 2020 will be completed by June 2010. A high-level committee from the full food chain — consumers, retailers, consumer food producers, primary processors and farmers — has been appointed by the Minister for Agriculture, Fisheries and Food to undertake this task. A web-based public consultation process has also been initiated, and the output of the Food and Drink Summit — Building Ireland's Largest Indigenous Industry in April, which is being facilitated by the Harvard Business School and hosted by Bord Bia, will also feed into the 2020 strategy.

Roads Network.

While the Minister of State might not be familiar with this issue, it is a very important issue. Fingal County Council and all of us in the area are seeking approval from the Departments of Transport and Finance to allow the council to borrow in order to complete the project to build the N2 to N3 link road. The area, which is heavily congested with traffic, is very important to Ireland's economy as a whole because it is home to IBM Ireland, Bristol Myers Squibb, PayPal and various other companies.

The M3 from Kells to Clonee and the M50 project are now nearing completion. When that happens people will be able to drive from Kells on the M3 along the M50 and go as far as Wexford or from Belfast on the M1, along the M50 and all the way to Navan, and only meet traffic lights at one point. That one point is this area of road that is not being upgraded between the M50 and Clonee, on the N3 where it goes through Blanchardstown. We will essentially have an entirely new toll bridge. All the traffic from Kells to Belfast and from Wexford to Navan will be stopped at these two sets of traffic lights. It is similar to the situation that existed at the toll bridge and at the Red Cow interchange, which were not sorted out for a long time. We are now recreating that problem all over again. As is often the case we put in new road infrastructure which is necessary but do not figure out what will be the impact at the bit of the road down the line or up the line. Again this is happening and I want the Government to be aware of it so that it can be held responsible for it if it fails to act in coming months.

In the medium term we need the upgrading of that section of the N3, which will be the only bit that will not be motorway between Kells and Wexford or between Belfast and Navan. The council needs to be given approval to build the N2 to N3 link road, which will take pressure off that section of the road in the short term. It is an economically viable project which will pay for itself from development levies. It is also an economically important project because of the area it serves, which is the enormous industrial area north of Blanchardstown that accommodates so many major businesses, including IBM, Bristol Myers Squibb, Abbott, Alcatel-Lucent and PayPal. I want to notify the Government that this issue is going to occur so that it is aware of it and can be held responsible if it does not act, but more importantly so that it can now make plans first by providing funding for the link road and then by agreeing to upgrade that section of the N3 without too much delay.

I thank the Deputy for affording me the opportunity to address this issue in the House on behalf of the Minister for Transport. The improvement and maintenance of regional and local roads is the statutory responsibility of each local authority, in accordance with the provisions of section 13 of the Roads Act 1993. Works on those roads are funded from local authorities' own resources supplemented by State road grants paid by the Department of Transport. The initial selection and prioritisation of works to be funded is also a matter for the local authority.

The Minister for Transport recently announced the 2010 regional and local road grant allocations. A total of €411.4 million is being provided to local authorities this year for the maintenance and improvement of regional and local roads. In deciding on allocations for 2010 the first priority was to ensure the protection of the existing road network and particularly the major Exchequer investment of €6 billion which has been made through the provision of regional and local road grants since 1997. It is important that resources are therefore targeted to address, on a priority basis, the most urgently required repairs resulting from the extensive damage caused by the recent severe weather. Local authorities should carefully reassess their planned road programmes for 2010 having regard to these priorities.

It is understood that Fingal County Council recently applied to the Department of Transport for sanction for loan approval of €20 million for this project. This application is being considered in conjunction with the Department of the Environment, Heritage and Local Government. The Department of Transport has requested the Department of the Environment, Heritage and Local Government to indicate the overall borrowing limits in place for local authorities for 2010 and the proportion that will be available to cover roads-related borrowing by local authorities in 2010. Once this information is available, the Department will review all the loan applications which it has on hand, including the application from Fingal County Council.

We are nearly half way through 2010. It is March.

Field Sport Regulation.

I thank the Ceann Comhairle for affording me time to discuss this important matter, namely the need for the Minister for the Environment, Heritage and Local Government to reconsider the regulation of field sports including stag hunting. I am shocked to see on his website the no-holes-barred assertion that the Green Party intends to attack coursing and fox hunting and secure a legislative ban on all blood sports. Has he considered whether he can afford such misguided aspirations in the current economic climate? Can he survive the anger of those involved in the sector?

As in most things, we know there is no consensus with his party's partner in government, Fianna Fáil. Despite the additions to the forthcoming Animal Health and Welfare Bill, which include a commitment to ban stag hunting, Fianna Fáil Deputy Batt O'Keeffe said recently in an article in The Avondhu that there was no Government proposal or Bill to ban stag hunting.

I would be obliged if the Minister of State could clarify the Government's position on this very important issue for rural communities. I would be delighted if he could tell me that I have been misled and that there is no threat to field sports, including stag hunting.

Research indicates that hunting had an economic value of €111.6 million in 2007, broken down as follows: game shooting, €41.7 million; hunting with hounds, €34.2 million; coursing, €26.2 million; deer shooting, €8.9 million; and falconry, €600,000. I cannot emphasise strongly enough the devastation to the sporting, economic, leisure and tourism activities of any ban on field sports, hare coursing and stag hunting. Any such move would be detrimental to the country as a whole and the countryside in particular.

I can assure the Minister of State that any attempt to ban hunting, which is a strong tradition in rural Ireland going back centuries and many generations, would be a threat to the rural way of life and would be strongly resisted by rural people, and indeed people living in towns who participate in the sport. The voices of the 300,000 field sports members would be loud in opposition.

Deer and fox hunting have a long history in this country since the 19th century and earlier. The Ward Union Hunt, the only licensed stag hunt in the country, covers areas of north County Dublin, together with south and east Meath. The Ward Union Hunt maintains its own herd of 150 red deer. They hunt stags, which are not generally killed but are recaptured and returned to the herd. The stag is checked before and after the hunt and stress levels recorded. Each stag is hunted only once a year and is checked by Department of the Environment, Heritage and Local Government wildlife officers and veterinarians. The Ward Union Hunt has 200 members and contributes €1.4 million to the economy annually.

With 27,000 members of the National Association of Regional Game Councils in 926 clubs, the Minister can assess the impact of any attempt to curtail or prohibit field sports of this nature. In my constituency of Longford-Westmeath there are 2,000 members of the National Association of Regional Game Councils, with 800 affiliated to the Longford Shooting and Conservation Council, LSCC, and 1,200 affiliated to the Westmeath Regional Game Council.

Hunting creates a sense of community in rural areas. It joins farmers and sports people in the unity of a common recreational purpose and tradition.

The Fine Gael Party will strongly oppose any change to the existing licensing arrangements for stag and fox hunting. Any new regulations made by the Minister, or his Government, will be reversed.

Under the renewed programme for Government, which was published last October, the Government included a ban on stag and fox hunting in the forthcoming Animal Health and Welfare Bill. While the initial target is stag hunting, groups such as anglers see the ban as a prelude to a wider and more aggressive so-called green agenda in the future. This could be the end of country-side recreation as we know it and another blow to our already hard-hit tourism industry.

The Deputy must conclude.

This is the second attack the Minister has made on field sports. The first one to restrict hare coursing was unsuccessful. The restrictions put in place on the carted stag hunt rendered hunting impossible.

It is ironic that a Minister with an avowed objective to ban hunting is in charge of the regulation of hunting. It is doubly ironic that such a Minister is a city dweller, with little feel for rural life.

The Deputy must conclude.

I ask the Minister of State to reconsider the adverse implications of this ill-considered threat to field sports, hare coursing and the Ward Union carted stag hunt. I do not know what he hopes to gain from the interference in a well-regulated sporting activity. However, I am aware of the great losses that would be incurred by sporting organisations, tourists and our economy.

The Minister of State's Government has presided over the rape of the countryside. It has destroyed the farming sector and left rural areas without viable infrastructure, transport, health and educational facilities through lack of funding.

The Deputy is a minute and a half over his time.

It will not get away with destroying our traditions as well.

The renewed programme for Government includes a commitment to ban the practice of stag hunting. I should explain that under existing wildlife legislation the Minister for the Environment, Heritage and Local Government can issue a licence for the hunting of deer by a pack of hounds. As the Deputy is no doubt aware, there is now only one hunt club in the State which continues to hunt deer using a pack of hounds and horses. The Minister issued a licence to this hunt club to hunt deer with a pack of hounds for the 2009-2010 season which will end on 31 March of this year.

The Government considers that this hunting practice should cease for animal welfare and public safety reasons. A large proportion of the Irish public consider such activity is no longer acceptable. The Deputy may recall an incident some years ago when a deer pursued by a pack of hounds entered a school yard during the school day. Since then, there have been other public safety incidents involving deer in flight leaping through hedges onto public roads during the hunt. On one occasion recently, towards the end of 2009, a stag had to be euthanised following a collision with a vehicle on a public road. Incidents like these are clearly a potential danger to the general public.

Last year, the Government approved the drafting of legislation to prohibit the hunting of deer by a pack of hounds. I want to make it clear that this legislation will not have any implications for other country pursuits such as fox-hunting, hare coursing or deer stalking. Hunting with harriers and beagles will still be permitted and therefore foxhound, harrier and beagle hunting associations in the State can continue to operate as before as this legislation will not impact on them.

The legislation will increase the maximum fines that could be imposed on a person following a conviction for an offence under the Wildlife Act. The penalties were last increased in 2000. For example, the current maximum fine of €500 will be increased to €1,000 while the €50,000 will increase to €100,000. It is the Minister's intention to publish the legislation very soon.

The Dáil adjourned at 5.20 p.m. until 2.30 p.m. on Tuesday, 23 March 2010.
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