Seanad Éireann debate -
Wednesday, 13 Jul 1983

Vol. 101 No. 9

Turf Development Bill, 1983: Second Stage.

Question proposed: "That the Bill be now read a Second Time."

Minister of State at the Department of Industry and Energy (Mr. E. Collins)

The primary purpose of the Bill is to raise from £100 million to £180 million the limitation on the total amount of borrowings by Bord na Móna for the performance of their functions under the Turf Development Acts. The opportunity is also being taken to formalise the control of capital expenditure by Bord na Móna and to provide by statute that private bog developers will have access to information resulting from researches and experiments carried out by Bord na Móna.

Bord na Móna are currently in the process of implementing their third development programme. This is a major development programme which was formulated in response to the 1973 fuel crisis when the high cost of imported energy caused a rise in domestic prices and in the balance of payments deficit. The programme, which commenced in 1974, was aimed at expanding peat production for electricity generation and for industrial and domestic use. This programme was subsequently extended and now covers 78,000 acres, most of which is under development. The main development area is located west of the Shannon but operations involved in the programme extend over Counties Tipperary, Laois, Offaly, Kildare, Meath, Westmeath, Galway, Roscommon, Longford and Mayo.

The programme when fully implemented is expected to produce annually 2.2 million tonnes of milled peat, 80,000 tonnes of sod peat and 1.6 million cubic metres of moss peat in addition to existing production.

Some of the additional milled peat production was intended by Bord na Móna to be used in two new briquette factories. One of the factories, at Littleton, County Tipperary, has already been constructed and came into production in September 1981. It is designed to produce 130,000 tonnes of briquettes annually. The second factory is proposed by Bord na Móna to be constructed at Ballyforan, County Roscommon, and some site work has already been carried out there. I should add, however, that because of the high level of borrowings and the need for effective use of capital to ensure a better return to the community, the Minister has initiated a review of all capital investment projects within his area of responsibility, including the Ballyforan briquette factory, to determine whether the projects can be justified on acceptable norms. The review of the Ballyforan project which was indeed projected in the revised Public Capital Programme for 1983 published by the Government, is now at an advanced stage and he hopes to be in a position to put the outcome of the review to the Government within the next few weeks.

The balance of the production of milled peat under the third development programme will be used to increase the output and to extend the life of the existing electricity generating station at Bellacorick. A 45 megawatt extension to the ESB milled peat station at Shannonbridge, County Offaly, was recently commissioned and a similar extension at Lanesboro, County Longford, will be commissioned next year. Additional sod peat under the programme will be used to offset to some extent the reduction in output from existing sod peat bogs as they become cut out. The programme also provides for a major increase in horticultural peat production. Export sales of horticultural peat of the order of £12 million made a useful contribution to the revenue of Bord na Móna and to our balance of payments last year.

Bord na Móna are a major industry employing 6,234 people on average throughout the year. They are particularly valuable in providing employment in many areas which do not have strong potential for attracting other types of industry. Apart from providing employment directly, the programme also generates spin-off employment in engineering construction and allied industries. The consequent effect of this on the economy in the catchment areas of the board's enterprises has been substantial.

The large scale bog development operations of Bord na Móna require considerable expenditure during the development period during which there is no financial return. The necessarily slow process of land acquisition, drainage and other development work means that new bogs do not contribute anything towards the servicing of advances and loans during the development stages. Investment must, therefore, take account that up to seven years will elapse from the initiation of a Bord na Móna scheme before a bog will be capable of producing peat and yielding revenue. Capital servicing at high interest rates impacts heavily on the board's revenue throughout this period.

Low prices in the past resulted in the board not being able to make any significant contribution from their own resources and the servicing of their borrowing places a heavy burden on the board's financial position. In order to alleviate this problem a four phased price increase was approved last year. When fully implemented it will bring prices for the board's products up to market related level and should ease considerably the strain on the board's cash-flow.

In the early years of the third programme the Exchequer funded by way of repayable advances the bulk of Bord na Móna's capital requirements. Since 1978, however, the board have had to meet expenditure on their development programme and related capital charges mainly by borrowing.

The necessity for this Bill arises because the board have almost reached the limit of their statutory borrowing powers. Under the Turf Development Acts the board may not borrow more than £100 million. The total borrowing to date is approximately £98 million, but commitments to further expenditure will shortly arise and it is necessary, therefore, to increase the statutory limitation to allow the board to undertake further borrowing. I am satisfied that borrowings by the board in excess of the current statutory limitation are unavoidable and that the proposed new limit will enable the board to continue their work for the next three years when the statutory limit on the board's borrowings will need to be reviewed again.

Since the mid-seventies the board have spent £78 million on their expansion and have proposals to spend a further £82 million, at present values, to complete the programme. This is a major investment in native energy. It will reduce our dependence on imported energy significantly, and will have a very beneficial effect, particularly in the areas in which the bog development works are located.

At the same time a prudent attitude is called for, not least by the Government, who have ultimate responsibility in the matter, where very large capital expenditure is involved. Under existing administrative arrangements Bord na Móna's major capital expenditure is subject to ministerial approval. While this has worked reasonably well in the past, I am sure it will be agreed that in the current difficult economic climate more stringent control of such expenditure is necessary. The provision in section 2 of the Bill will allow for formal statutory control of the board's expenditure. It is based on similar provisions in more modern legislation, such as the Gas Act, 1976, in relation to An Bord Gáis.

Not all bogs, however, are suitable for large-scale mechanised development by Bord na Móna. There are many small tracts of land which can be economically exploited by private developers. While the board will continue to be the dominant force in bog development and peat fuel production, there is a welcome revival of interest in private turf production. This revival has been stimulated by two events — the Turf Development Act, 1981, and the advent of small turf cutting machines. The Turf Development Act, 1981, provides for capital grants for private turf production — up to 60 per cent of the cost for co-operatives and groups and 45 per cent for individuals and private companies.

The administration of this scheme has been entrusted to Bord na Móna because of their unique expertise. To date grants totalling £1.9 million have helped some 4,000 people in carrying out drainage to their bogs and on the construction of roads and the purchase of machines. A number of small enterprising companies are now marketing popular turf cutting and harvesting machinery and taking the drudgery out of the traditional hand-won methods. This development, the grants scheme and the good weather last summer resulted in a very substantial increase in turf production in 1982.

Bord na Móna have over the years built up a fund of information resulting from their experiments and research into bog development. Much of this information could be of considerable value to private developers. While the Turf Development Act, 1946, provides for the dissemination of such information, as the board think fit, the provision in section 3 of this Bill will ensure that the information will be more freely available to private developers. I would like at this point to put on record my deep appreciation of the help and advice that Bord na Móna have given voluntarily to private bog developers in the past. Section 3 simply formalises this practice by ensuring that the private developers will have access to the findings of the board's researches and experiments as a right. However, I believe that the board should be allowed to exercise some measure of discretion in cases where the giving of information could prove a threat to their commercial interests. The Bill so provides.

This Bill will make an important contribution to our energy objectives, as I explained earlier. It will be a vote of confidence in Bord na Móna who have always enjoyed the strong support of the community for the progress they have made down through the years. The board have earned a high reputation for technical expertise and development and it holds an important place in the fabric of rural life.

Mr. Ellis

I welcome this Bill. I believe Bord na Móna have a major role to play in the further development of our bogs. The Minister of State is correct when he says in his opening remarks that the Minister wishes to keep tight control of the affairs of Bord na Móna. Indeed, there might well be tighter control of some aspects of their operations. I say that because for a number of years Bord na Móna did not give a fair return for the moneys previously invested by the State. The need for further development in line with private enterprise is something that should be foremost in their priorities in the future. We are all aware that, other than their own capital, the resources will not be available to them to develop the enormous areas of turbary in the country. In his opening remarks the Minister mentioned the amount of money recently given by way of grants for small bog development. I believe that was the greatest thing that ever happened with regard to the development of smaller bogs in rural areas. It meant that people who traditionally relied on imported fuels, oil or coal, were rendered reasonably self-sufficient as far as household fuels are concerned. It has made extra finance available to such people, because turf is a cheaper form of energy. The 1981 Act which brought about that situation came perhaps 20 years too late. Had it come in the early sixties probably it would have meant that when the early seventies energy crisis arose we would have been in a much better position to tackle the problems it presented.

As far as private development is concerned, in the future I would hope that Bord na Móna would continue to ensure that the moneys made available to private individuals and co-operatives are well spent. We do not want a situation to develop in which that money might be spent on projects which would prove to be non-viable in the long-term. There is one problem which arises in regard to this type of development. Possibly it may not be a problem for Bord na Móna. I refer to the problem obtaining at present with regard to the subdivision of turbary by the Land Commission. There may well be a role to be played here by Bord na Móna, in conjunction with the Land Commission, to deal with the backlog of division of turbary remaining unexploited. In many cases this turbary belongs to absentee landlords and various estates, the owners having long since passed to their reward. There was an example recently in my county when a number of people endeavoured to develop an area of bog and were forced to cease development there because an individual held a turbary right on approximately one and a half acres of 200 acres, which was undefined. This meant he could claim his right to that small portion of turbary anywhere on that acreage. This is something that will need to be tackled in the very near future by Bord na Móna in conjunction with the Land Commission.

The provisions of this Bill mean an investment of £80 million by the State, which, it is envisaged by the Minister, will be spent in the next three years. There was one point in the Minister's opening remarks that annoyed me intensely, that was that the decision with regard to the Ballyforan peat briquette factory is being deferred. I will admit that the Minister says it is hoped there will be a final decision taken with regard to this project in approximately three to four weeks which will then be put to the Government. But if this money is made available to Bord na Móna by the Government they can instruct Bord na Móna to proceed with this project which in my opinion is viable, especially in view of the fact that today large amounts of German briquettes are being imported. This is a drain on the economy. If we produced these briquettes from our own resources we would be providing badlyneeded employment in the area.

Bord na Móna, like all semi-State bodies, have a social as well as an economic role. If they were to become totally economic-orientated, they would not fulfil their purpose as a semi-State organisation. Then they should be handed to a private enterprise organisation and in that event they would have to survive on their own, although I accept they could do this. However, they must fulfil their social obligation as well as an economic obligation. In making his decision on the future of this project I hope the Minister will remember that quite an amount of money has been spent in the provision of services in respect of the factory in question. Not alone was it a commitment of the previous Fianna Fáil Government but there was also a commitment by members of the Minister's party and his Government to proceed with the Ballyforan project.

Bord na Móna should be requested to make available to all Members of the Oireachtas, as should all semi-State bodies, a detailed breakdown of their capital expenditure for each year. By this I mean making available details of all capital expended in excess of £100,000. We have a right to know how such moneys are spent. The annual report of Bord na Móna or of any other semi-State organisation which is made available to the public and to Members of the Oireachtas merely shows items listed as capital expenditure, and round sums are given. Information should be made available to the public regarding the way the money has been spent.

One or two matters slightly annoy me in the operations of Bord na Móna. There is a kind of closed shop operated with regard to quotas for peat briquettes. I know of fuel merchants who have to pay money to third parties to take up their quotas from peat briquette factories. This is an unhealthy situation because people who are not directly involved in the fuel business are getting commission on fuel that is later sold to the public. I hope the Minister will ask Bord na Móna to seek tenders for quotas in tonnage of briquettes that will be required for the following year. I know of one case where a person who entered the fuel business in the past two years has been refused a supply of turf briquettes. He has been told he must get them through a quota-holder with Bord na Móna. I hope the Minister will do something to rectify this unhealthy situation. Turf is one of our great natural resources and if it is handled properly it could safeguard us in the future against the problems we faced in the period 1973 to 1975 at the time of the energy crisis. I hope that in future Bord na Móna will examine the possibility of giving assistance by way of grants to private individuals, in addition to the 45 per cent presently given to them to develop areas of bog.

The amount of moss peat being produced could be increased greatly because there is a widespread market for this product. The board should make a greater effort in this area. The income this year was £12 million from this product. If it were fully exploited, £30 million to £40 million could be gained from the sale of moss peat. There is a large market on the continent for this product which is of great benefit to the horticultural industry.

The Minister in his speech mentioned the extensions being provided at Shannonbridge and Lanesboro. These are welcome developments which will benefit the country in the future, especially as we could have the same problems with regard to energy supplies that we experienced in the past. The Minister has stated that it is proposed to spend a further £82 million to complete the present programme of development and he has said that he hopes the capital position will be reviewed in three years time. I hope this will be done and that the expansion work will be carried out within three years. We lost at least 20 years in terms of development.

I should like the Minister to consider the points I have raised. In view of the fact that we are giving this company an extra £80 million over three years, they have an obligation to explain to the public each year what they do with the finances that are made available to them by the State.

Mr. McDonald

I welcome the Minister of State to the House. I support the Bill and I admire his dedication in furthering the interests of Bord na Móna. Since the board were set up in the late 1930s, and certainly since the 1946 Act, they have played a significant role in the economic life of many of the midland counties. The Minister told us that Bord na Móna had over 6,000 employees. That contribution to our economy, especially in the midland counties, is one that we must jealously guard. I should like to compliment the board and their employees on their progress to date. The chief executive is coming to the end of his term and I wish him happiness and success in his retirement. Under his guidance the board have made a very significant contribution over the past number of years.

However, I am a little disappointed with some aspects of the board's development. Some of the recent capital intensive expansions they have undertaken have had more teething troubles than should have been expected for a semi-State organisation with such well developed technological expertise. The amount of experimentation and obvious waste in that area should be closely looked at. There may be a looseness in some areas of the board's responsibility which in the present state of national finances should not be disregarded. Some activities should be subject to closer scrutiny. I wish the new chief executive well. I hope that the £80 million being made available by the Government under the terms of this Bill will provide clear planning for the future. Bord na Móna are a semi-State organisation and the Turf Development Acts clearly set the guide lines for them. They are a fuel development organisation. Within the terms of the Turf Development Acts the board should diversify as much as possible. It is not acceptable that a semi-State organisation such as Bord na Móna should be content to sit back and use up the bogs of this country within the next 20 years. The present board should ensure through their policy that they will be able to conserve resources and continue to provide employment and make a useful contribution to the national economy indefinitely. That is possible.

I am disappointed that the board have been so blatantly foot dragging as far as the biomass energy experiments are concerned. It is a national disgrace that Bord na Móna, the ESB and An Foras Talúntais have so half-heartedly spent only a portion of the money made available for the biomass experiment in the midlands. If I were an employee of Bord na Móna in the midlands in Clonsast, Portarlington, Boora, Offaly or Kildare, I should be concerned for future employment because Bord na Móna are making absolutely no attempt to perpetuate their activities in the future. The board have an obligation to carry on their activities economically and successfully and the members and the servants of the board have an obligation to ensure that the activities of the board can be carried on indefinitely. I hope that the Minister will interest himself in that area as well. Reading through the Turf Development Bill I see no reason why the board cannot diversify into other areas of energy production. Perhaps it might be no harm if the Minister would consider asking the board to take over control of coal development in the Leinster coalfield and in the Leitrim and Tipperary areas.

When one sees a new coal face or coal mine being opened and coal being lorried in from Tipperary and from other coal mines to be sold at a new pit, which obviously is waiting either for coal and steel grants or for IDA grants, one wonders what is going on and what sort of supervision there is. Bord na Móna were specifically set up as a semi-State organisation to provide fuel and energy for this country and they should take on a wider role and utilise the terms of the Acts to the very fullest extent.

I read with considerable interest an article in the June issue of Farm and Food Research. This is a publication of An Foras Talúntais. There is an article on page 86 of this magazine which gives a very optimistic report of two beef production systems on peat land. The experiments and the progress that is being carried out in this area over the past ten years must surely put pressure on Bord na Móna to decide exactly what they are going to do with the 3,000 or 4,000 acres of cut-over bogs that they now own, bearing in mind that the vast majority of that acreage was compulsorily acquired by the bord at figures ranging from half a crown an acre upwards. I hope to speak about their CPO facility later on.

I should like to dwell very briefly on the beef production systems. I know that Bord na Móna have a sizeable agriculture sector in the midlands. Unfortunately, they do not seem to have specific figures for the results that they have achieved in that area. In the Turf Development Acts there is no statutory provision to allow them to go into farming. Before the spending of this £80 million Bord na Móna must make a policy decision on exactly what they are going to do with their large holding of cut-over bogs. If they are to go in for State farming of 1,000 acre farms across the midlands it is going to be extremely difficult for farmers to compete with that kind of loss-making activity.

When we consider that the best developed State farms in the Soviet Union have not yet, after over 60 years, been able to get around to a profit making situation I cannot foresee a situation in this country when Bord na Móna will be able to break through and make a profit from working huge farms in the midlands. The option would be for the board either to hand back the cut-over land to the people from whom it was acquired or lease it to new farmers. On the face of it I would be against that because if that were to happen in the midlands we would lose 4,000 to 5,000 jobs, which we can ill afford to lose. Therefore, I ask the Minister to use his good offices to ensure that, with the first of the new moneys which are being made available, the board will examine their full range of options so that the policy will be to retain an optimum depth of peat on the cut-over bogs so that it will render land use in the decades ahead more flexible and more useful.

I hope the new chief executive, whether it is Mr. McEvilly or someone else, before taking office, will embark on a fact-finding tour either to Georgia in the United States, Georgia in the Soviet Union or to any of the Nordic countries such as Denmark, Sweden or Finland, where significant results have been achieved in the biomass experiment. In this country yields of 24 tonnes per hectare have been recorded. This is far above the experience that Bord na Móna experiments have yielded. I would like to know why. If the Minister is going to endow the board with this extra capital there should be a more futuristic approach taken to it. I hope that some of the board members, such as the new chief executive and their technical officers, will go to some of those countries to see exactly what is being done. People from all over the world are coming to look at the achievements and the progress which Bord na Móna have made. My sole concern is that the board should remain in a position of offering long-term employment to people in Laois, Offaly, Kildare, Westmeath and Longford, where there is not a strong industrial base. The activities of Bord na Móna have made a useful contribution to the economy in those counties since the thirties.

The Minister mentioned briefly the reason for section 3. On reading section 19 of the 1946 Act, I thought the Act made it clear that the board were free to give information that had come up during their research. As I read through it, I missed the finer point why there was necessity for this particular section at this time. If it is because the board — this is my experience — have been reluctant to divulge any semi-State secrets on their profits from their farming activities — it does not appear anywhere in their annual statement of accounts — if it is to conserve that kind of a closed shop, then it is a mistake. I believe the accounts of a semi-State organisation should be absolutely open and free. I hope the Joint Committee on Semi-State Organisations will look in some depth at the activities of Bord na Móna, not by way of a witch-hunt but to ensure that whatever policy the semi-State companies have, it will, in the long term, be in the national interest, the interest of job creation.

I should like to draw the attention of the Minister to the situation in many parts of the midland counties where people are going back more and more to cutting their own turf, taking up their turbary rights and using the banks that families have had traditionally. Senator Ellis mentioned a case where an individual held up progress. I would not like to be part of that. People must clearly indicate where their rights are and come to some agreement but there are people who have very definite turbary rights in marked areas. In these areas it is not acceptable that the board should come along and compulsorily take them over from the ordinary householder. This is a great year for turf and people with turbary rights must have those rights respected. It is not sufficient for Bord na Móna compulsorily to acquire the rights of small individuals who want to continue using those rights.

Another point, which has already been mentioned by the previous speaker, is the quota system. It is not sufficient for the board to say that they only supply people who have been traditional customers over the years. Quite clearly, their present policy is an infringement of the competition policy of the EEC. The fact that they will not supply even large fuel importers is forcing these people to import peat briquettes from European countries. That is not in the national interest. It is ridiculous to find Republic of Ireland fuel merchants having to import supplies of baled briquettes from Northern Ireland. That is not acceptable. I ask the Minister to ensure that there is free and open competition in that semi-State organisation. The cartels, the rings and the most favoured customers should be done away with because the present system militates again the provision of the cheapest type of domestic fuel for the ordinary housewife. I hope the Minister will take this matter up with the board as it gives considerable concern. If not, I feel it is something that should be brought to the notice of the Commission. There is unfair competition there. There is no great difficulty in getting supplies from second or third parties but Bord na Móna refuse to supply everyone who goes to them. That, for a semi-State organisation, cannot be in the interests of normal good trading.

I wish the board well. I hope their plans for the expenditure of this money will be well and truly laid. I welcome the development in Shannonbridge. The relationship between Bord na Móna and their employees throughout County Offaly and in the other midland counties has been exceptionally good. The board are lucky that their staff have shown great dedication through the years and that has been a significant factor in the success story of Bord na Móna.

My one fear with regard to this semi-State organisation is that the board will just sit out the lifetime of the present bogs, having no regard whatever for the maintenance of employment at the present level. I hope the Minister will use his powers to force Bord na Móna, the ESB and An Foras Talúntais to press ahead with the biomass experiments. If they are successful in five or six other countries, in Europe, in North America and in the USSR, there is no reason why they cannot be successful here, especially when a yield of up to 24 tonnes per hectare has already been recorded here. Perhaps a strong contributory factor is the fact that the ESB have not fully co-operated in providing the furnaces.

An unfortunate development over the past few years has been that the National Board for Science and Technology have lost some of their control. They were transferred from the Department of the Taoiseach, where they seemed to have plenty of power and were in the middle of the decision-making process, to another Department and they have lost their supervisory role and their effectiveness. This has shown up drastically in those experiments where there is no supervision and it is difficult to see the trees and plants because of weeds. There is an uncaring attitude. There is not much point in having a board of science and technology if they have not the facilities to carry out their task. I refer the Minister to their American counterpart who can report directly to the US Senate and to the President of the US. Unless we restore bite and power to the decisions of the National Board for Science and Technology, we cannot hope to break down the barrier which hinders progress. I welcome the Bill and wish the board continued success.

Debate adjourned.