Dáil Éireann debate -
Tuesday, 12 Apr 2011

Vol. 729 No. 5

Adjournment Debate

Energy Resources

Deputy Frank Feighan

Is the Minister for Communications, Energy and Natural Resources, Deputy Rabbitte, aware that the Lough Allen gas field in the north west, covering the counties of Cavan, Leitrim, Roscommon, Sligo and Fermanagh could be of great benefit to the taxpayer? What measures is the Government taking to benefit from the potential resource? As a country we have not been to the fore in recognising the vast resources that exist. Through mismanagement and what some refer to as dodgy deals we seem to have lost control of vast amounts of licences from which the country could benefit substantially. Perhaps now is the time to set up a State oil company or gas company to help us get out of the recession. The State could buy out the existing licences. More importantly, it would allow us to wear the green jersey and benefit enormously from the potential resources.

The vast Lough Allen field stretches to counties Cavan, Fermanagh, Leitrim, Roscommon and Sligo. Given the rising price of natural gas and the application of new technology such as horizontal drilling, exploration in the area will be of considerable interest. In Texas horizontal drilling has replaced vertical drilling which has resulted in considerable growth in the sector. The Fort Worth chamber of commerce once compared the growth to having ten Boeing aircraft plants plunked down on the prairie overnight. Jobs were created in record numbers, royalty payments of billions of dollars poured into local landowners and the money began to circulate through the economy. This country's tax coffers will swell if the State gains more control of the sector.

Many years ago I was involved in exploration shares and I have knowledge of exploration companies. I am interested in the area because I believe it would be of significant benefit to this country. I do not have a personal interest. This country should consider setting up major exploration companies. We should consider taking the licences for ourselves. We should take a risk on behalf of the economy. We have seen what has happened off the west coast where we effectively lost control of licences and where considerable opposition exists to what is happening. I do not say that what is happening to Shell is right or wrong but it is important to have control of our own destiny. When one has such control, one has control of the tax take and where the profits go. Will the Minister outline what exactly we are doing to ensure we have control of the vast natural resources around our coasts but more importantly, onshore, where it is much more economical and less risky to exploit natural gas? That would be of considerable benefit and would be of huge interest to the taxpayer.

Minister for the Environment, Heritage and Local Government (Deputy Phil Hogan)

I am replying to this matter on behalf on the Minister for Communications, Energy and Natural Resources, Deputy Rabbitte. I thank Deputy Feighan for his remarks and for giving an opportunity to the House to discuss the matter relating to the Lough Allen gas field in the north west.

The Lough Allen, or North West Carboniferous, Basin is situated in the north west of the country and includes parts of counties Cavan, Donegal, Leitrim, Mayo, Monaghan, Roscommon and Sligo. The North West Carboniferous Basin also extends into Northern Ireland.

The basin has been subject to a number of petroleum exploration authorisations since the early 1960s. Six exploration wells have been drilled in the area since 1963 and while some natural gas potential was identified, it was not considered to be commercially viable. In recent years there has been renewed interest in exploring the natural gas resource potential of the area. Earlier this year, following an open competition, the Department of Communications, Energy and Natural Resources offered onshore petroleum licensing options to Tamboran Resources Limited covering 986 km2 over parts of Cavan, Leitrim and Sligo and to the Lough Allen Natural Gas Company Limited covering 467 km2 over parts of Cavan, Leitrim, Roscommon and Sligo. The licensing options offered are for a two year period and are subject to agreed work programmes. The work programmes include procurement of all available and relevant technical data, including geological and geophysical studies, along with new data acquisition projects as considered necessary. Exploration drilling is not allowed under these authorisations, but shallow geological sampling is permitted where subsurface penetrations would typically not exceed 100 m to 200 m. Option holders wishing to enter on to land would need the landowner’s permission.

While exploration activities under these licensing options are at an early stage, the licensing options will allow the companies to participate in developing exploration objectives and assess the petroleum potential of their acreage before deciding on whether to progress to an exploration licence. It is positive that these two companies, one Irish and one Australian, have demonstrated an interest in investing in exploring the petroleum potential of the North West Carboniferous Basin. Ireland's petroleum potential, both onshore and offshore, can only be proven through effective exploration.

On the return to the State from any possible future commercial finds of hydrocarbons in the area, a comprehensive review of Ireland's licensing terms was carried out in 2007 by independent economic consultants. Following this review both the fiscal and non-fiscal licensing terms were revised. The revised terms apply to all exploration licences issued since 1 January 2007. The terms provide for a new profit resource rent tax of up to 15%, in addition to the 25% corporate tax rate previously applying. The revised terms ensure that the direct return to the State would be up to 40% in the case of very profitable fields.

The tax regime applicable to petroleum production is a key factor in attracting internationally mobile exploration investment to Ireland. The tax terms offered to companies reflect the fact that Ireland's petroleum potential is largely unproven and that we need to encourage a higher level of exploration activity. It is, however, much too early to talk about a possible commercial development. While the exploration activity planned for the next two years will help develop the understanding of the area's hydrocarbon potential, it will not prove the existence of commercial quantities of hydrocarbons. That could only happen in a number of years, after a further programme of exploration work is carried out, including successful exploration drilling. Before that could happen the two companies mentioned would each have to apply to the Department of Communications, Energy and Natural Resources for an exploration licence.

Local Authority Housing

Deputy Tom Fleming

I welcome the Minister for the Environment, Heritage and Local Government, Deputy Phil Hogan. In the previous budget the then Minister of State with responsibility for housing and local services, Michael Finneran, announced the new tenant purchase scheme which was widely welcomed by local authorities and tenants' groups, offering more families around the county the opportunity to purchase their own home.

In February the Minister released details of the new scheme and in recent weeks local authorities have been publicising the scheme to their tenants. The new scheme provides long-standing tenants with the opportunity to buy their homes at a discount rate of up to 45% on market price, which as we are all aware is already much reduced. With the equivalent of the owner-occupier grant of approximately €4,000 the discount amounts to approximately 50%. The main details of the scheme are as follows. The maximum discount on market price will be 45% at a rate of 3% per year of tenancy up to 15 years maximum. The new scheme will apply to tenants of more than 15 years standing. All applications to purchase must be received by the relevant housing authority before the end of the current year and the purchase completed no later than 31 December 2012. This scheme offers possibilities for families and local authorities to benefit from the sale of local authority properties. The moneys generated from the scheme will stay with the local authorities and contribute to their funding. However, due to the lack of access to credit, many potential purchasers are being forced out of the market.

This scheme has really caught the imagination of tenants in my constituency in Kerry, as it has done around the country. However, the problem now is ensuring that people can avail of the scheme. I am calling on the Ministers with responsibility for the environment, housing and finance to consider the introduction of affordable credit lines specifically for those wishing to access this new scheme. They could, perhaps, work with financial institutions, banks, credit unions, and local authorities. I would welcome their comments on this.

Deputy Phil Hogan

I thank the Deputy for raising this matter. The most recent tenant purchase scheme, introduced in the last budget, is an enhancement of the existing scheme. It provides for a discount of up to 45% for qualifying tenants. Given that the discount is applied to the open market value of the property, and that house prices have fallen considerably in recent years, the scheme is both generous and attractive for prospective purchasers.

My Department is anxious to facilitate home ownership under this and other schemes for as many local authority tenants as possible. In order to advance such acquisitions, local authorities have been making loan finance available for a good many years. A considerable number of people have benefited from access to funding from this source when no other options were open to them. My Department and the local authorities will continue to explore more imaginative modes of housing delivery in the coming years. In advancing loans for housing acquisition, it is of pressing importance that the funding be made available based upon sound lending criteria. We owe it to our borrowers to ensure that loans are granted fairly and transparently. We also have a responsibility to ensure that the borrower can sustain the loan and keep intact the realisation of the goal of home ownership to which he has aspired.

Of equal importance, in view of recent developments in the domestic property market, is the imperative for local authorities to ensure that prudence and pragmatism are applied to all aspects of the management of their housing loans books. In a time of limited resources, deploying those resources in a focused and effective manner ensures the management of the loans portfolio can be achieved as efficiently as possible.

The current credit policy has been in effect since 2009. It was deemed appropriate at that time to update the elements associated with local authority lending and to have a homogenous regime in place that ensured best practice was followed across the sector. My Department constantly monitors these trends and reacts accordingly. A revised set of guidelines, which are in preparation and which will issue shortly, will voluntarily incorporate recent changes made to the Financial Regulator's code of practice. Under this protocol, all applicants are assessed according to the same criteria, and their applications subjected to the same independent scrutiny. It is desirable to make adequate lending provision available to local authority tenants who wish to avail of the tenant purchase schemes, while also adhering to prudent lending practices. The current and impending revised guidelines achieve equitable consideration of all applications.

I am happy that the current regime is a fair scheme that adequately meets the needs of prospective borrowers and facilitates participation in housing acquisition initiatives such as the existing and revised tenant purchase schemes.

Planning Issues

Deputy Olivia Mitchell

I welcome the opportunity to raise this issue with the Minister, specifically the impact of section 48 levies and, where they exist, section 49 levies on business activity, primarily in my constituency but also nationally. I realise there is an elegance to the notion underlying the system of levies in that those who benefit from development should be the ones who pay for the infrastructure that is supported. However, the reality in this climate is that this is simply not practical. I do not believe it was ever practical or realistic.

It is true that in the Celtic tiger years businesses and developers were willing to pay almost anything to obtain planning permission. However, the levy was calculated in such a way that there was an incentive for local authorities to over-zone, overdevelop, increase densities and have one eye at all times on every single zoning and planning decision.

Levies are calculated by dividing the cost of the infrastructure by the quantum of expected development. The greater the quantum, the more infrastructure that local authorities could provide. We all know how that ended. The problem now, however, is that there is no building taking place. Where somebody wants to build, the levy is still in place at the old rate. All other prices have fallen and levies have not. They are now acting as a brake on development and preventing otherwise viable developments and business decisions. The levy is preventing those who might have made the decision to expand their business or add an extension to their home from doing so. Small amounts of activity are being stymied by the levies and development.

In my constituency, even to convert a warehouse from an old use to a new use attracts a levy of thousands of euro. The net result is that jobs that might have been created are not created, and businesses that might have grown decide not to bother expanding.

It is true that local authorities unilaterally decide to reduce the levies but, understandably, they are reluctant to move on their own primarily because it could attract business from one local authority area to another. However, it does not solve the overall problem, nor does it, without some nod from central government, give some indication as to how infrastructure would be tackled in the future.

The real issue, which I do not expect the Minister to deal with today, is the very vexed question of how and by whom infrastructure should be funded. The previous Government fuelled the property bubble by loading all costs of all infrastructure onto those responsible for newly built projects. That is not sustainable, except in very unusual circumstances where there is constant expansion of the population. This only ever happens for a few years, during which it is sustainable, but thereafter one runs into the kind of trouble we have run into.

A more sustainable funding source must be identified and a fair distribution of infrastructure costs between central and local government must be found. In my constituency, I benefit from the Luas, for which I paid no contribution whatsoever. My neighbour's children, however, are paying for it owing to their new houses. The new residents and businesses pay while the others do not. That is fundamentally unfair and it is also unsustainable. I ask the Minister to address, in the short term, the immediate issue of asking businesses to pay what are effectively Celtic tiger prices in a bailout economy.

Deputy Phil Hogan

I thank the Deputy for raising this issue.

The key objective set out in the programme for Government is to get people back to work, and this will be reflected in policy and programme development across Departments, agencies and local authorities, now and for the coming years.

The Planning and Development Act 2000 provided for a radical overhaul of the development contribution system. One of the central tenets of the reforms under the Act was to introduce greater transparency in the way in which development contributions were levied and applied. Under section 48 of the Act, elected members in local government were given the powers to make, amend or reject the development contribution scheme proposed by the manager following a public consultation process. It is the elected members, therefore, that have the central role in overseeing the level of contributions being sought and the way in which these contributions are spent by the local authority.

Section 49 of the Act provides for the drawing up of a supplementary development contribution scheme to fund a particular strategic public infrastructure service or project and these have been used typically, but not exclusively, to fund in part transport infrastructure projects. Notwithstanding that, I understand where Deputy Mitchell is coming from in regard to the contributions that accrue to the local authority under these schemes and the part they play in drawing down necessary infrastructural finance from the Departments, particularly from mine.

The policy guidance framework for development contributions set out by my Department is designed to draw the attention of local authorities to their obligations under the legislation, while also recognising that the adoption of development contribution schemes remains a reserved function. The most recent policy guidance requires the county development board to be consulted in the framing of development contribution schemes, thus ensuring input from a broad spectrum of sectors.

Section 135 of the Local Government Act 2001 requires managers, before the start of each financial year, to prepare and submit to the council a report indicating the programme of capital projects proposed for the forthcoming and following two years. The development contributions collected by local authorities are ring-fenced and committed to fund a planned capital programme as set out in the development contribution scheme adopted by the elected members. The rate of development contributions must have regard to the actual estimated cost of providing the classes of public infrastructure and facilities. There has been a steep decline in revenue from these schemes and income will undoubtedly continue to be adversely impacted upon in the current economic climate.

A number of local authorities have responded to the difficult economic circumstances by amending the scheme to reduce their contribution rates, in particular for employment generating projects. For example, Louth County Council has halved its development contribution rates for expansions to authorised industrial and manufacturing operations, for IDA and Enterprise Ireland supported manufacturing, international trade and the financial services sector, and for businesses grant-aided by the county enterprise board. This is an example of what local authorities can do if they have the existing resources to achieve it. The Department is also aware that in many cases the payment of development contributions has been phased by local authorities.

The Department is preparing updated guidance for local authorities which will require them to consider the impact of development contributions on businesses and competitiveness generally in the development of the scheme in the current climate. The guidance will be finalised by the middle of this year. Any changes made by local authorities to their schemes on foot of this updated guidance will also have to consider the overall funding of the authority, existing contractual commitments and the importance of supporting local employment through projects funded by development contributions.

I am conscious of the difficulties projects have in getting off the ground because of the imposition in recent years of development contributions that may be more closely related to more buoyant economic times. I am glad to say these schemes are constantly under review and will be continually monitored in the coming months to see whether we can ensure the development contribution scheme is not hampering business and employment projects from commencing.

Health Service Staff

Deputy James Bannon

I welcome the Minister for the Environment, Heritage and Local Government, Deputy Phil Hogan. I also thank the Ceann Comhairle for affording me time to discuss this important matter, namely the need for the Minister for Health and Children to outline his position on the issue of agency nurses, given the untenable cutbacks in the wages of such health care professionals and the abuses in the system which are leading to a stranglehold in the employment of such staff through the endorsement by the HSE of the monopoly position of one agency which I believe was paid €47 million in the period 2007 to 2011.

I cannot stress more strongly the need to address the current situation in the employment of nursing personnel which is leading to what I can only describe as a major abuse of the health care system. While I am aware that this is in no way an indictment of the position of the Minister who inherited the problem from the previous Administration, it is one that needs to be urgently addressed. That money needed for patient care is being squandered on private employment agencies is scandalous.

From my perspective and that of any taxpayer, it is an outrage a situation has been allowed to develop which has seen an embargo on the employment of front-line staff and resulted in money being made hand over fist by a private employment agency at the expense of the sick and vulnerable and nursing staff. All right thinking people are outraged that the embargo on the employment of front-line medical staff has led to a situation where a gravy train has been created for private agencies. The €376 million spent by the HSE on agency nurse wages employed by 277 companies between 2007 and June 2010, with €100 million going to agency owners, is indicative of the abuse of the system.

For the HSE to have handed a monopoly in the provision of agency staff to one private agency is incomprehensible and very annoying. It is my understanding €100 million has been paid to agencies to attempt to maintain staffing levels without breaking the previous Government's moratorium on the employment of new staff. To put it mildly, this is criminal. Given that it has been proved that employing a stand-in nurse can cost more than one third more than a full-time staff member, where is the logic in continuing this practice? It is obvious that patients do not benefit from the continual turn-around of staff; nurses do not benefit in any way from engaging in temporary work and, to make matters worse, the taxpayer is being screwed yet again. It should be borne in mind that agency nurses are now at the mercy of one agency and have seen pre-tax salary cutbacks of between 20% and 50%. They enjoy none of the rights of full-time employees. They have no entitlement to sick pay, pensions, maternity leave or paid further education programmes such as postgraduate courses.

I understand an attempt has been made by the HSE to establish a national pool of nurses, which would eliminate the middle man or woman. While this would go some way towards removing the terrible waste, I cannot help but think that if the health boards were still in place, this could be done better at a regional or local level.

Another abuse of the system is the allowing of double-jobbing. Nurses who availed of the buy-out package or early retirement are returning to the system on a temporary basis, which means they are receiving both a pension and a salary. This is totally unfair to those who are struggling to make ends meet on wages which have been paired to the bone.

Slashing the pay of agency nurses would not improve services. In the long run it would be detrimental, as having high numbers of rotating agency nurses on wards would remove continuity of care, leaving patients, staff nurses, doctors and management with new faces on a daily basis. While all agency nurses are professionals, it takes time to adjust to a new ward, thereby causing potential inefficiencies at ward level.

Last week alone in one midlands hospital 58 shift periods were left uncovered. The first consideration is patient care. Another is the stress on ward staff to make good the lack of necessary personnel. Front-line services are being severely affected by the lack of staff. Wards are being closed, services reduced and waiting lists are becoming ever longer. Unless one has an emergency one will not be treated in a timely manner and many less urgent illnesses or ailments are left being untreated owing to a lack of services.

Acting Chairman (Deputy Joanna Tuffy)

The Deputy's time is up.

Deputy James Bannon

These ailments may not be life-threatening, but they are often the cause of people being unable to work which, in turn, places an economic burden on our already crumbling economy.

Agency nurses are very much aware of the economic crisis, as most are struggling to survive and many of them are the only person in a family working and they pay taxes like everyone else. Does the Minster believe it is right and just that anyone's pre-tax wages should be cut by between 20% and 50%?

Acting Chairman (Deputy Joanna Tuffy)

I have to call the Minister.

Deputy James Bannon

These nurses work alongside colleagues and perform the same duties and have the same responsibilities and level of accountability, yet they have no pension, sick pay or maternity leave entitlements. Now they do not even have a decent wage. I ask the Minister to bring to bear some logical thinking on the issue of the employment of nursing staff. I am certain that he cannot see any benefit in putting in place an embargo on employment only to spend three times the amount on the employment of temporary staff.

Acting Chairman (Deputy Joanna Tuffy)

The Deputy went well over time.

Deputy Phil Hogan

I thank Deputy Bannon for raising this matter and apologise for the absence of the Minister for Health and Children, Deputy James Reilly, who has asked me to reply on his behalf.

The HSE introduced new arrangements for contracting agency staff on 14 March 2011. The appointment of agencies to provide health staff, including agency nurses, is a HSE procurement matter. The new contract for agency staff is part of the approved HSE service plan for 2011 and will deliver cost savings in excess of €40 million across the health sector, thus helping to protect services. The use of agency staff has always been a feature of the health system and will remain an ongoing requirement to fill short-term vacancies and ensure continuity of service provision. All agency staff, including agency nurses, are employed directly by the agencies that are successful in the HSE's tendering competitions.

The new agency contract was raised by health service trade unions at the health sector implementation body established under the public service agreement and was subsequently considered by the national level implementation body. I understand the unions expressed serious concerns about the fact that agency nurses would now be paid at a lower rate than had previously been the case. The HSE pointed out that this was a matter for the agency concerned. The implementation body noted that a process of engagement between both the social partners at national level and the parties within the public service on the implications of the utilisation, terms and conditions of agency staffing, arising from the transposition due by December of this year of the directive on temporary agency work, 2008/104/EC, should commence as soon as possible. The body also recommended that the parties should seek the assistance of the Labour Relations Commission regarding implementation issues.

In summary, therefore, the contract negotiated by the HSE remains in place, but it is my understanding that both parties will attend the Labour Relations Commission to discuss certain issues relating to its implementation. The HSE is required as part of the employment control framework to keep the use of agency staff to a minimum. It has indicated that where possible, in the context of the employment control framework, part-time and work sharing staff will be offered the opportunity to increase the number of hours they work before agency staff are used. However, the HSE is also required to achieve the overall employment targets set out under the Employment Control Framework 2011-2014 as part of the package of measures being undertaken by the Government to address the crisis in the public finances. The framework requires the HSE to achieve a net reduction in employment of approximately 1,500 each year from 2011 to 2014.

The employment control framework provides that agency personnel can be used in exceptional circumstances to provide emergency relief for medical-professional staff providing essential front line health, welfare and protection services. Furthermore, the HSE is allowed under the framework to fill posts on an exceptional basis to maintain essential services at risk and to meet priority service change and reconfiguration requirements once the overall required reduction in employment is being met.

The new contract secured by the HSE for agency staff is only one of a wide range of measures being put in place within the health service to protect services while still achieving the expenditure reductions required under the EU-IMF agreed programme for the stabilisation and recovery of the public finances. The health aspects of the public service agreement recognised that reductions in expenditure and employment numbers would be required and were specifically designed to help protect services in this way.

The Dáil adjourned at 9.05 p.m. until 10.30 a.m. on Wednesday, 13 April 2011.