Vol. 729 No. 2
23 Deputy Michael McGrath asked the Minister for Communications; Energy and Natural Resources the role he will play in implementing NewERA; the timeframe envisaged for establishing the bodies outlined in NewERA; and the number of new jobs that will be created under this plan. [6729/11]
The Government has set out clearly its intention to ensure that public enterprise plays a full role in Ireland's economic recovery. The new economic and recovery authority is the vehicle whereby it will manage the State's holdings of the key State companies undertaking investment in key priority areas. These include the energy networks, broadband, water and bioenergy. Under the NewERA plan, streamlined and restructured State companies will make significant strategic investments over the coming years in these key sectors of the economy. These commercially financed investment programmes, in the context of the new national development plan, will support economic activity and employment in the short term. They also will critically underpin investment in sustainable export-led jobs and growth by foreign direct investment companies and indigenous Irish enterprise.
I have been charged by the Taoiseach with responsibility for implementing the NewERA programme in consultation with all stakeholders. This includes bringing forward the necessary legislation to underpin the planned structured changes.
Additional information not given on floor of the House
I am working with the Minister, Deputy Rabbitte, the Minister for the Environment, Heritage and Local Government and all relevant ministerial colleagues to deliver effectively and speedily on our ambition.
The NewERA plan includes the commitment to establish a new Irish water State company to lead much-needed investment in the water network. The Government also is committed to the creation of a smart grid company, which ultimately will have ownership and responsibility for the national energy networks. The programme for Government also envisages the merger of Bord na Móna and Coillte to create bioenergy Ireland with the aim of realising the full potential of Ireland's bioenergy resources. The NewERA plan also will oversee the delivery of next generation broadband in conjunction with the private sector and relevant Statecompanies.
The timeframe for establishing and restructuring the entities will be ambitious, while recognising that there are complex financial, legal and other considerations to be addressed as part of the process.
I congratulate the Minister of State, Deputy O'Dowd, on his appointment and to thank him for his reply. What level of funding does the Minister of State anticipate will be required to fund the NewERA project? Different figures were articulated prior to and during the election campaign, ranging from €7 billion to €18 billion, but the only reference in the programme for Government is to the expectation of raising approximately €2 billion from the sale of non-strategic State assets. How many jobs does the Minister of State expect will be created, as figures of more than 100,000 jobs were being earmarked for the NewERA project? When does he expect Members to have sight of the nuts and bolts or the establishment of the NewERA authority?
When we entered into government, the cupboard was almost bare thanks to the financial mismanagement of Fianna Fáil and previous Governments. There is less money than we expected, but the country must effect changes in its policies, particularly its investment policy. If the Government cannot borrow, State companies can use their initiative to create jobs.
NewERA contains a commitment to establish a new State water company to lend much needed investment to our water networks. We are also committed to the creation of a smart grid company that will have ownership and responsibility for natural energy networks. The programme for Government envisages the merger of Bord na Móna and Coillte to create BioEnergy Ireland with the aim of realising the full potential of Ireland's bioenergy resources.
The NewERA plan is to create new jobs by lending off the Government balance sheet. We will not have 1,000 young people emigrating every week as was the case under the Deputy's Government. The disgraceful way in which the economy was run down by his party in government is clear to us now and we are committed to creating as many jobs as possible under the NewERA programme, which we will implement as quickly as possible.
The questions were simple. In fairness to Fine Gael, it had no problem with going into specifics during the election. It quoted a particular figure for the number of jobs that would be created and the amount of money that would be invested. How much will NewERA cost, how much does the Government expect to invest and how many jobs will be created?
The answer to the last question is clear — as many and as quickly as we possibly can. I am charged with dealing with the Ministries involved — the Departments of Finance and the Environment, Heritage and Local Government — and the Office of the Attorney General. Under a different heading in the NewERA policy, we will address the issue of a national water authority tomorrow. As quickly and effectively as possible, we will introduce programmes and policies to address necessary changes.
How much funding?
I will not quantify that, but I will give the House an absolute commitment to report to the Oireachtas regularly on my progress in respect of the significant changes we must make in how we run our country. In particular, State and semi-State companies rather than the State will invest in the creation of jobs.
Is there an expected level of investment? Is it €2 billion?
I will give the Deputy those facts as soon as I can. I will give 100% in ensuring a significant reduction in unemployment levels and in the shameful number of young people who must leave this country because they had no future under the former Government. We will bring them light and jobs.
People want details.
24 Deputy Martin Ferris asked the Minister for Communications, Energy and Natural Resources when the promised review of the licensing and revenue terms governing oil and gas exploration will take place. [6903/11]
25 Deputy Richard Boyd Barrett asked the Minister for Communications, Energy and Natural Resources his plans to review the system of licensing for oil and gas exploration, development and production on Irish territory and waters, with a view to ensuring greater benefits for the Irish State; and if he will make a statement on the matter. [6732/11]
I propose to take Questions Nos. 24 and 25 together.
While Ireland has recognised potential as a petroleum producing area, the Irish offshore is relatively underexplored. As a result, Ireland's petroleum potential is largely unproven. This is likely to continue to be the case until there is an increase in the level of Irish offshore exploration, exploration drilling in particular. Ireland competes with other countries in Europe and much farther afield to attract mobile international exploration investment. To this end, it is important that Ireland maintains a licensing regime that appropriately reflects the risks and rewards of investing in petroleum exploration in the Irish offshore relative to investing in exploration in other jurisdictions.
Regarding periodic publicity about Ireland's oil and gas resources, recent assessments of yet-to-find potential based on petroleum systems studies indicate a total reserve potential in the order of 10 billion barrels of oil equivalent for the offshore frontier basins west of Ireland. This divides approximately into 6.5 billion barrels of oil and 20 trillion cubic feet of gas. It should be understood that these figures only represent potential reserves, namely, the reserves that might be present based on geological criteria and regional comparisons, and that they have not been discovered. Actual reserve figures are likely to vary widely from these estimates and will not be known without a dramatic increase in the level of exploration activity.
A comprehensive review of Ireland's fiscal terms was carried out in 2007. This review, which was underpinned by independent economic analysis, considered the appropriateness of Ireland's licensing terms in comparison with other European countries with which Ireland competes for exploration investment. The review concluded that there might be potential to capture a higher share for the State on more profitable finds, but that the potential for this should not be overestimated. The outcome of the review was the introduction of a supplementary tax, known as a profit resource rent tax, of between 5% and 15% that will apply in the case of more profitable fields. The supplementary tax would be payable in addition to the standard petroleum corporate tax of 25%, which is double the standard corporation tax rate of 12.5%.
Since the review concluded in 2007, there has been no significant change in terms of the level of exploration activity and no new commercial discoveries have been made. The level of exploration activity will continue to be the critical factor in Ireland obtaining a benefit from our indigenous oil and gas resources. We need to get drilling levels above the recent levels of one or two wells per year if more commercial discoveries are to be made.
As part of an ongoing strategy to attract new companies and new investment, my Department is running a licensing round that is deliberately structured to attract new exploration companies. This licensing round, which closes at the end of May, also aims to encourage companies to look at areas of the Irish offshore where few data currently exist and, as a consequence, little is known of their potential prospectivity.
While I will keep the licensing terms, both fiscal and non-fiscal, under review in light of relevant future developments, at this juncture the focus should be on attracting a larger share of mobile international exploration investment to Ireland to increase the chances of new commercial discoveries being made.
It is ironic that we are discussing Corrib at a time when it is in the news again for the wrong reason, namely, allegations about an audiotape of gardaí in the back of a car talking about the use of rape against two protestors. Equally disturbing if the contents of the audiotape are true, some of the commentary was derogatory towards protestors but favourable towards oil companies.
In the context of a review, will the Minister argue that the State should reinstate the type of fiscal regime put in place by the late Labour Party energy Minister, Justin Keating, in the 1970s? Under it, the State had holdings of 50% and between 6% and 7% in royalties. The Minister will probably remember how the stake was lowered by Dick Spring, but it was subsequently devastated by Ray Burke, who abandoned the State's share altogether. Does the Minister agree that, at a time when we are loaded down with an unpayable bank debt, the State should reinstate the sort of regime that Justin Keating put in place to ensure our people benefit from Corrib and other reserves when they come on stream? What is required is something that was advocated in the mid-1970s by one of the Minister's former parties, namely, Sinn Féin The Workers' Party. He might be able to correct me on the date. That party supported the objective of a resources protection campaign, something that was supported by members of the Labour Party.
In 1995, a group stated that a large area of the nation's offshore rights had been conceded for a pittance. Does the Minister agree that what was done at that point and in subsequent negotiations with oil companies has done significant damage to the potential resources off our north-west and west coast?
I have personal experience of working on the rigs on the Porcupine Bank. In 1978 and 1981 there were finds and the depth was approximately 1,600 ft., so they were not seen as commercially viable. The geology reports from the time indicated the finds could be substantial but because of the depth of water, the technology was not available at the time to access the resources and bring them ashore.
I do not have any knowledge of reported stories concerning the protests at the Corrib field but I agree with the Deputy that the allegations are unedifying. With regard to the tax regime as applying to offshore prospecting, it is true that a different regime existed up to 1987, when it was changed. The change occurred because the expectations from the early 1970s were, unfortunately, not borne out then or since. Our strike rate is especially disappointing. Therefore, I fully endorse the current policy of trying to generate more activity in exploration.
Deputy Ferris would acknowledge that 25% or 55% of nothing is still nothing. If we do not bring about finds, the issue is entirely theoretical. Deputy Ferris advances the information that when he worked on the rigs, there were potential finds but the water was too deep for technology to exploit the resources at the time. Over the years the strike rate has been poor, although few holes have been drilled. We are trying to increase the rate of exploration activity.
Deputy Boyd Barrett's name is attached to the other question and as there are just over two minutes remaining in the slot, I call Deputy Richard Boyd Barrett.
The petroleum affairs division, as mentioned by the Minister, estimates that 10 billion barrels of gas or oil equivalent are out there. We should be clear what is at stake. If that is anywhere even close to the mark, at current oil prices that would amount to €900 billion of gas and oil just off the west coast. One can consider that we have just borrowed €100 billion to bail out toxic banks and NAMA in a deal that will enslave this country to austerity, cutbacks and an unsustainable debt burden. Would it not be better to instead invest in developing resources and establishing a regime where we can get a reasonable benefit from the development and exploitation of those resources?
Is it a fact that we have one of the most pathetic arrangements for licensing, as we will get next to nothing? We have an arrangement where no royalties will accrue to this State from the development by multinational companies of our gas and oil resources. For all the bending over backwards we have done to facilitate Shell in its activities in Mayo etc., there is no security of supply. It does not have to supply to us if it does not want to.
Why do we not act like the Norwegians? That country has a 78% tax on profits made on oil resources in its territory and it owns 67% of Statoil, the national oil and petroleum company. The state jointly participates with multinational oil companies in the development and exploitation of those resources. It is shocking that the people of Norway will benefit more from the development of our gas and oil resources off the west coast of Ireland than we will. Should we not do something about it urgently? There are now reports of significant finds in Dublin Bay in the hands of more private companies but why are we giving away gas and oil resources rather than developing and exploiting them ourselves?
Deputy Boyd Barrett only listened to half of the sentence. I stated that according to seismic data and available information, there is a "guesstimate" of 10 billion barrels out there. The problem is we have not found any of it. If Deputy Boyd Barrett can help us and point us in the right direction——
Shell has found some.
——I will join with him in reviewing the terms. We have not made the finds and in comparison to Norway, the strike rate in that country is beyond our wildest dreams. If a hole is drilled unsuccessfully in Norway, the state pays 70% of the cost, and if we were to do so here our financial position would be worse. What Deputy Boyd Barrett is not minded to accept is that what we are talking about is a potential reserve but we have not yet been able to find it. We are now engaged in a new licensing round calculated to bring in more companies with an exploration interest into this area of our offshore.
26 Deputy Michael McGrath asked the Minister for Communications, Energy and Natural Resources if he will provide further details on the commitment in the programme for Government to review the funding of public and independent broadcasters; and if he will make a statement on the matter. [6731/11]
The commitment in the programme for Government referred to in the question is in recognition of the pressures that the funding of both public service and commercial broadcasters has faced in recent years as a result of the serious decline in commercial revenues. Whereas this decline is primarily as a result of the impact of the recession over the past three years, revenues have also been impacted through the increasing fragmentation of the broadcast market as a result of the increasing number of channels available on satellite and cable, and through on-line and other developing platforms.
Funding of the public service broadcasters RTE and TG4 is met through a mix of licence fee revenues, Exchequer grant-in-aid and commercial revenues obtained largely from advertising. The public funding element is provided for the purpose of allowing these bodies to meet their respective public service broadcasting objects. These objects are set out in part 7 of the Broadcasting Act 2009, and they impose a wide range of public service obligations on each of these broadcasters. I am aware that the funding of the public service broadcasters has been subject to criticism by private sector broadcasters and, in particular, that there has been criticism of the dual public and commercial funding model as applied to RTE. The funding of privately owned independent broadcasters is, of course, derived from their own commercial activities.
Both public and independent broadcasters can also access funding from the broadcasting funding scheme, the purpose of which is to encourage the inclusion of additional programming of a particular character in broadcasters' programme schedules. The fund is open to independent producers and all free-to-air broadcasters.
The broadcasting funding scheme is funded by way of a payment of 7% of net licence fee receipts.
Additional information not given on the floor of the House.
This is paid to the Broadcasting Authority of Ireland (BAI) in respect of this scheme. This amount was increased from 5% to 7% under the Broadcasting Act 2009. On the proposed review of funding, the Broadcasting Act 2009, which was enacted on 12 July 2009, provides mechanisms that may be used to facilitate this process.
Section 124(8) of the Act requires the BAI, within three years of enactment of the Act, to review the adequacy or otherwise of public funding to enable public service broadcasters to meet their public service objectives. In addition, section 158(1) requires the BAI to review the operation, effectiveness and impact of the broadcasting funding scheme not later than three years after enactment. I understand that the BAI expects to complete both of these reviews before the end of 2011 and I look forward to receiving both reports from the BAI in due course.
It is my intention that the findings of these two reports from the BAI will be used to inform the review referred to in the programme for Government, which I can confirm will be carried out by my Department. This review, which will focus on the scope of funding of public service content provided by all broadcasters, public and private, will be undertaken in tandem with the review of the licence fee funding mechanism, which is also committed to in the programme for Government.
In conclusion, I accept that the broadcasting sector, in common with other sectors, is facing very challenging economic circumstances. In addition, change in the way content can be transmitted is adding to the challenging environment. Apart from the reviews referred to, I look forward to working with all of the sector to ensure that broadcasting can continue to play its important and distinctive role in Irish society and maintain quality standards in the process.
I thank the Minister for his response concerning what we all agree is an important area. I welcome the review to be initiated. Will the Minister elaborate on when he hopes to undertake the review, who will undertake it and its anticipated terms of reference? I am sure he is aware of reports today that the independent broadcasters of Ireland are asking the Government that the planned new broadcasting charge which is expected to replace the licence fee should also fund independent radio stations. Will that issue fall within the remit of the review? The replacement of the television licence fee by a public broadcasting charge is a separate matter within the programme for Government. If the charge is to be used to extend funding to independent broadcasting entities will the Minister also consider extending public service obligations to such commercial broadcasters?
The rest of my prepared answer sought to deal with the Deputy's question. Section 124 of the Broadcasting Act requires the Broadcasting Authority of Ireland, within three years of its enactment, namely, by the end of this year, to review the adequacy or otherwise of public funding to enable public service broadcasters to meet their public service objectives. In addition, section 158 requires the BAI to review the operation's effectiveness and the impact of the broadcasting funding scheme.
I understand the BAI intends to have those reports with me by the end of this year and it is my intention that the findings will be used to inform the review referred to in the programme for Government, which I confirm will be carried out by my Department.
I welcome contributions such as the Deputy made to the debate from wheresoever they may come. We live in changing times. A review is taking place separately within the Department of the efficacy of the licence collection system, with an attempt to measure the extent of evasion and gather understanding of the new platforms used in particular by young people who do not necessarily access television by means of a television screen. In that sense, one can see the notion of a universal household charge might be worth considering in the not so distant future. I have an open mind on this and the issue will be included in the review.
May I speak?
No. The rules do not allow it. For Priority Questions only the Deputy named on a question may speak.
27 Deputy Martin Ferris asked the Minister for Communications, Energy and Natural Resources the position regarding the proposed creation of a new energy company through the merger of Coillte and Bord na Móna; and if he will make a statement on the matter. [6904/11]
In the context of the NewERA plan the Government commits to an ambitious strategy of accelerating the development of Ireland's forestry and bioenergy resources. Key to the realisation of this strategy is the plan to create a new State company, to be called BioEnergy Ireland, which will entail the merger of Bord na Móna and Coillte.
The Government envisages that the new company will become a global leader in the commercialisation of next-generation bioenergy technologies. In addition, it will oversee delivery of an annual 14,700 hectare afforestation programme. I will work with the Minister, Deputy Rabbitte, with the Minister for Agriculture, Marine and Food, and all relevant Ministers to develop a national bioenergy strategy as well as a comprehensive business case to underpin the merger of Bord na Móna and Coillte.
The systematic development of Ireland's abundant bioenergy resources will contribute to national security of energy supply and our renewable energy targets. Critically, it will support rural development by providing new markets and employment development opportunities for the agriculture, farming and forestry sectors.
The McCarthy report was released — or leaked — in part at Christmas and given to the previous Government. Concerning some of the proposals relating to Coillte and Bord na Móna there was a report in the Sunday Business Post of 12 December that one option in respect of State assets and liabilities considered at the time was a merger of Coillte and Bord na Móna. Does this Government’s policy proceed from the McCarthy report?
My understanding is that at that time some of the labour negotiators met Professor McCarthy in regard to the sale of €2 billion of State assets. What will happen the land currently owned by Coillte? Many people were very concerned some months ago when it appeared that an international forestry group was interested in purchasing it — a group, incidentally, chaired by a previous Taoiseach, Bertie Ahern. People were concerned regarding the actual land under forest. What is to happen Coillte lands with regard to the merger?
The key point is that what is being discussed is the setting up of a State company, not a private company, and one which will remain in State ownership. To put it a different way, in medieval times if one were going through the forests of Nottingham, the Sheriff of Nottingham's writ would have run there and the Robin Hoods of the day would have prevented him doing whatever he wanted to do. In this modern State these are the people's forests and will so remain.
I acknowledge the 150 different recreational and special amenity areas that Coillte hold and maintain throughout the country which provide fantastic public amenities for anybody and everybody. These will continue, absolutely. However, we need new synergies between the two State companies and our plan will bring this about.
The key point is that this will create new jobs, particularly in rural areas where at present there is no opportunity for employment, as all of us know.
Perhaps I misunderstood and did not explain my point. When the forestry owned by Coillte has been harvested what does the Minister of State intend to do with that land?
It will remain in State ownership. Does the Deputy require references?
The land will remain in State ownership. Will it be replanted?
The problem at present is that by virtue of a European directive Coillte is prevented from benefiting from grants such as those farmers receive for reforestation and, therefore, there is an issue which must be tackled. I believe Coillte has not planted a tree since 1995 for that reason — perhaps I may be corrected by a Member with greater knowledge. We need new synergies to plant more trees. We need more jobs and we need to reduce our carbon footprint. One of the key points about forestry is that it is a carbon sink and will help us reduce our CO2 emissions, strengthen our competitiveness and will create more jobs locally. That is our plan.
If the land is not to be replanted what does the Minister of State intend to do with it?
At present Coillte cannot plant it because it cannot benefit——
What will happen when the forests are harvested?
The idea is that the new company will have a new synergy and a new way of looking at this issue which is not the case at present. The only way we believe we can make it happen——
The lands will not be sold.
——is by the new company creating new jobs and new synergies. One cannot exclude the possibility that people might wish to co-invest with the State company.
