I thank the Chairman and members for the opportunity to address the committee. As the committee is no doubt aware, a political decision on this issue is imminent. This union's campaign is unique so far as it is not, at least at first glance, an industrial relations issue. When it comes to the State's forestry land, we believe everyone is a stakeholder. Therefore, when the union's Coillte branch began its campaign in late 2012, reaching out to people and organisations of like mind was an important first step.
In general, we believe that selling the rights to fell and sell timber to private operators would jeopardise a profitable State company and public access to forests and result in the closure of many, if not all, of the nation's private sawmills. It would deliver a devastating blow to tourism and forestry if access to our forests was to be restricted by private interests.
We believe that the financial return on the proposed sale would only generate enough cash to pay three weeks interest on the nation's debts. I describe this return as a few grains of sand in a desert of debt, which is a fair and accurate description. Also, it would be a net cost to the State according to Mr. Peter Bacon. Quite simply, the proposal does not add up.
The Coillte branch of IMPACT, representing 600 workers at the State firm, began a campaign against the proposed sale in November 2012. We reached out to a coalition of other organisations to form the Save Our Forests campaign. These include the Society of Irish Foresters, Birdwatch Ireland, Mountaineering Ireland, and more recently, Scouting Ireland - an organisation which has never become involved in any political issue.
Mountaineering Ireland proved to be a key partner on the issue. It had begun to inform about the negative effects of a possible sale of State forests nearly two years earlier. For Mountaineering Ireland, it was all about access. For us, it was primarily about jobs, forestry, and the wider economic issues that were likely to occur as a result of any sale. By linking together, we were at liberty to talk about the full range of issues with authority and credibility. This pushed open doors for everyone involved.
On the issue of the forest harvesting rights, we knew it was never going to be enough for us to simply stand up and say "we are not having it". We knew we had to make the argument and we had to make it credibly. The materials we developed for the campaign, including the brochure and website, were created with this objective in mind. The Save Our Forests brochure which was developed by John Prior of the union's Coillte branch examined the social, economic and environmental case against selling Coillte assets. It was published in November 2012 and a copy was sent to every Deputy, Senator, councillor and Leader company in the country.
Our website Save Our Forests.ie became the online focal point of the campaign and we developed an associated Facebook page as part of that process. The Save Our Forests brochure highlighted the issue of jobs and revealed that the proposed sale could jeopardise up to 12,000 jobs in the Irish forest products sector which is currently worth €2.2 billion per year, including €286 million in exports.
As the union wanted to take the economic argument further, we took steps to properly investigate the economic consequences of the proposal. We commissioned economist Mr. Peter Bacon to weigh up the economic viability of the proposed sale. As it turned out, Mr. Bacon unearthed some uncomfortable truths. His ultimate assessment was that "the economic rationale for the proposed sale of Coillte harvesting rights no longer stands up and cannot be justified". This became the core message of our campaign. Mr. Bacon's assessment was, to put it bluntly, a cold look at the bottom line. He might well have concluded that the sale had some economic merit, and might even have concluded that a cost neutral sale of an asset, with a short-term gain, may have warranted some approval. We believe Mr. Bacon's conclusion drove a stake through the heart of the proposal.
His assessment, which we published in January, found that the State would remain liable for costs of €1.3 billion following a sale of the harvesting rights. Those costs included a loss of funds from Coillte's profit flow of €565 million, a deficit caused by the sell off of €313 million, the economic costs of Coillte job losses of €19 million, a Coillte debt liability of €172 million, a pension liability of €130 million and a loss of amenity of €105 million, amounting to a total of €1.3 billion.
Mr. Bacon found that to cover these costs, Coillte would need to sell timber at €78 per cubic metre, which is well above current or recent prices. The average recent price paid for Coillte supplies to sawmills has been just over €43 per cubic metre. This meant that, rather than generating State income, a sale of Coillte harvesting rights would represent a substantial cost to the Exchequer. The proposal, as it stands, requires the State to continue to maintain the land on which the forests are planted, despite the loss of profits currently generated by Coillte timber sales.
For us, the biggest kicker in Mr. Bacon's report was the estimated return on the sale of the harvesting rights at €774 million as an absolute outside maximum.