Forestry Bill, 1988: Second Stage (Resumed).

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

Mr. Doherty

As Henry VIII said to his last wife, I shall not keep you too long. I will make a short contribution and it is more of a critical nature than anything else. Firstly, I should like to congratulate the Minister on bringing the Bill before the House. I am disappointed that over the last number of years the Department did not make a better effort to purchase more land for afforestation, as I am led to believe that our soil is the most suitable in Europe for tree planting or tree growing. At present land prices are at their lowest for 25 years. Much land has come on the market but the Forestry Division are reluctant to purchase it. There is also land coming on the market in rural and remote areas of the country which is not suitable for agricultural purposes but is very suitable for afforestation.

About 2 per cent of our land goes on the market every year and the Forestry Division purchase about 0.1 per cent. Most land of that quality would be bought for £300, £400 or £500 per acre. Much of it is waterlogged and many of the people who own it are reaching an age when they can no longer work the land. I appeal to the Forestry Division to co-operate more with the Land Commission, as they have had quite an amount of land on their books for many years that has fallen into a state of infertility and decay. Congests in the areas where it is being sold are refusing to accept it at the price they gave for it. Some of the land was compulsorily acquired and more of it by agreement.

The Forestry Division and the Land Commission have never worked together. The amount of land the Land Commission sold or bequeathed is very small. I know what I am talking about because I have been an auctioneer for many years and I deal mainly with the land market. I know that a lot of land could and would be sold if the Department were anxious to purchase it. I should like to ask the Minister to see to it that we purchase more of this land. Do the Department think there is a good future market for timber? If so, we should put a real effort into the reafforestation of this country.

Part of my contribution will be somewhat parochial. It relates to nurseries. They were not referred to in the Explanatory Memorandum. This is the only opportunity I can find to bring this problem before the House. I come from Ballinalee and a forest nursery was opened in that townland in 1950, consisting of a 20-acre estate. This gave great hope to an area which had no employment and high emigration. This nursery was extended 20 years ago to become one of the biggest producers of trees in the country. Employment rose to 50 in those years, which was a big curb on rampant emigration. Millions of the best forest trees were produced yearly for planting on new forest sites of the midlands and the west, thus giving promise of timber for our needs in the future.

This nursery, though still in production, is scheduled for closure and 23 jobs, which depend on it, are threatened. I understand that the decision to close the nursery is based on the idea of centralised large scale production of forest trees. Nursery work is very intensive, from the stage where the seed is sown right up to the movement of the young trees to the planting sites. I understand that production at the Ballinalee nursery at present is around two million trees annually. This nursery must be the most ideally located of all the State forest nurseries, being almost in the centre of the country.

The new policy, from what I can see, means longer transport of plants from one end of the country to the other. The Ballinalee nursery was very central for the despatch of young trees, both for care and for economic transport. Long distance haulage of young trees means large quantities are delivered in bulk. This is to the detriment of young trees, which are a perishible product and have no tolerance for heavy loading or stacking. The result is, at worst, dead transplants or, at best, a half-dead plant from heating. This gives rise to poor or no plantations at all to look forward to.

My knowledge is based on personal experience of tree production at Ballinalee. In my younger days, when I was physically fitter, I was an agricultural contractor. I used to do much of the ploughing, rotavating, cultivating and haulage for this nursery. I took trees through most of the west of Ireland and through most of the south-east. The tree production of Ballinalee was of top quality. Driving around the midlands and the west one gets full and final proof of that. If the present policy of closing this nursery is implemented I wonder what the forestry horizons of those areas will be like in the future. The forestry staff in this area are all very concerned at this ruthless decision, coming at a time when jobs are very scarce and when job prospects in this area are nil.

The Ballinalee Forest is over 2,000 acres and will contain only a fraction of this staff. The staff employed are all men in their late twenties and early thirties, with young families dependent on them and with no alternative employment to fall back on in the event of losing those jobs, in which they have developed particular rural skills. The likely loss of a weekly wage bill of approximately £2,500 in a country village and surrounding areas is a sickening blow to the morale of the local people who are saddened by the daily sight of overcrowded super-buses taking our young people away to English cities and towns in search of employment.

In no way can an alternative forest operation be substituted to replace the workload of the production of forestry trees within the locality. If the argument be advanced that the decision to close this nursery was based on the quality of the land, it should be known that other areas of land in the locality were offered as being available; but there was no record of those offers being investigated or followed up. I did say I was in the land business. This last number of years we all believed that this nursery would run out at some future stage, but we did not think it would go so prematurely. I have been offering land to the Department over a long number of years, but without any co-operation from the Department. I still believe that there might be some land — not immediately convenient to this nursery but in the catchment area about a half of mile from it — which would be suitable land. That is why I would like to ask the Minister to hold back on the closure of this nursery for some time in order to investigate the situation.

Ballinalee is situated in the most severely handicapped part of rural Ireland and is classified as a severely handicapped area. I think we should look at it in a sympathetic, human and Christian fashion and see to it that those people will not be deprived of their livelihoods. Our locality seems to be the subject of much neglect, as there is no drive at all to buy land for planting either. There is located in Longford one of the biggest and most progressive sawmills — indeed, the Minister visited it some weeks ago. That sawmill, situated in the centre of Longford, is celebrating its 75th anniversary soon — I think it may even be tomorrow. I had an invitation to it but I cannot attend.

An Cathaoirleach

The Minister says it is "on" tomorrow if he finishes here.

Mr. Doherty

We all need to be guided by somebody. In view of the fact that this sawmill is located in Longford, this type of planning makes poor economic sense. Not alone does it eliminate the production of young trees in our area, but it also does little to ensure the production of sawdust as well. A few years ago I remember lorry loads of forestry trees leaving Ballinalee for Scotland and Northern Ireland. What shift in policy has occurred, so that now the trend is to create jobs abroad by importing planting stock from cross-channel and the Continent while at the same time planning to close down forest nurseries at home? I understand that the policy is to close many of the forest nurseries in favour of large scale production by a few nurseries on the east coast.

One of the claims put forward for increases in afforestation is the stabilisation of local rural communities. Since most of the afforestation at present and in the foreseeable future is targeted towards the midlands and west of the country, it is inappropriate that this nursery, which is ideally situated for the targeted planting areas, is to be closed down. Indeed, it is ironic that in fact forestry jobs are to be lost in the very area where they should be created.

Mr. McCormack

I would like to take this opportunity, too, of welcoming this Bill. The purpose of this Bill is to grant power to the Minister to set up a new State-sponsored company to operate forestry on a commercial basis, and that is to be welcomed as a step in the right direction. It is a Bill which has been promoted for more than five or six years and has now finally come to fruition. The Bill apparently gives an endorsement to the Forestry Review Group report.

I would like to pose a few questions to the Minister concerning aspects of the Bill that I am not clear on, or to ask the Minister could those matters be catered for. I would like to ask the Minister how the new body, Coillte Teoranta, is to be staffed. Will the embargo on public sector recruitment have any effect on the staffing of it, or are staffs to be transferred from other areas to staff this new body, or how will the recruitment take place to staff this new body? Is there any provision to be made in the Bill whereby this new body will have to report back to the Houses of the Oireachtas on the work it is carrying out, or is there a set time? I believe that this body should have to report back to the Houses of the Oireachtas. The Houses of the Oireachtas should monitor the performance of this new body. If they do not report to the Houses of the Oireachtas, to whom will they be reporting? Are there any targets set down through this new body for areas to be planted in any one given year? Will forestry grants come under this new body or will they be still dealt with otherwise?

Surely our aim should be to eliminate or rather probably to drastically reduce the importation of Canadian and Scandinavian timber. If we wish to compete with imported timber we will have to take steps to improve the quality of our native timber. We should encourage and promote by IDA assistance proper drying facilities in our sawmills because if we do not get the finished timber dried to the correct standard, then we will not be able to compete with imported timber.

Should we have our own pulpwood mill? Perhaps there is not enough timber in the country for that, but if the rate of planting increases there should be enough within a few years to service that.

The potential for the development of our forestry is enormous in Ireland. As my colleague, Senator Doherty, has said, land is now coming on the market at rates at which it would be very economical to plant it. I know tracts of land in Connemara that are coming on the market at £200 and £300 an acre. A few years ago, in the early years of our EC entry, this land would be bought up for its potential as land suitable for reclamation or to turn into agricultural use. This is marginal type land. Now that land is of immense value for afforestation.

We have the natural climate for growing timber. We have the suitable soil types. Yet the percentage of land in Ireland under forestry is very small in comparison to other EC countries. I understand that only about 6 per cent of the land in Ireland is under afforestation. This compares with 9 per cent in Britain, 27 per cent in France, 29 per cent in Germany and with an EC average of 21 per cent. All of this is at a time in our agricultural history, in regard to the EC, when we are being put under quotas, when we are being restricted in the amount we can produce in almost everything. We have beef quotas, milk quotas, grain quotas, milk lakes, beef mountains. There is a quota or a restriction on the production of practically everything except sheep.

I believe now that we are at a stage where we have the natural climate for the production of timber and we should be gearing ourselves to bringing marginal land into afforestation rather than bringing marginal land into agricultural production. The cost of reclamation now does not justify the expenditure on that type of farming. With restrictions on the amount we are allowed to produce agriculturally, it does not make economic sense at all to be now reclaiming land for agricultural purposes. It is alien for me, as a person involved in the agri-industry, to have to say that; but that is the situation and the reality that we must face up to. There was a mad rush for reclaiming land in the early and mid-seventies after entry to the EC, when it appeared that we had unlimited markets for our agricultural produce. That is no longer the case today. In fact, it would not pay a farmer to be spending £500, £600 or £700 an acre on reclaiming land, bringing marginal land into agricultural production. Because of the overall economic situation, both nationally and vis-á-vis the EC, it does not pay to be doing that now.

We must bring about the situation whereby, through the incentives and generous grants which are available, this type of marginal land would be brought into afforestation production. Our climate and our soil types can produce conifers — Sitka Spruce and so on — within perhaps ten to 15 years. I see a difficulty in that for a small farmer who invests — and it is a very good investment, but it is more an investment for his children than for himself. If the system could be more fully developed, whereby that small type farmer using marginal land going into afforestation could recoup more of his money each year rather than having to wait 15 years for his first pay-back, we would have a lot more planting of this marginal type land, which is now being more or less left idle, due to the price of small stock, the price of calves, the price of manure — the price of everything now. It does not make economic sense to bring that type of marginal land into half or full agricultural production, because the income is not there for that now and the cost of doing that is too high in relation to the income to be got from that type of thing. Perhaps we could devise a system whereby grants could be linked — I know there are moves in that direction — and farmers could obtain an income annually from the year after they went into afforestation production, provided of course that the job was done right.

Those are the questions I would pose the Minister. I believe that if we take steps in that direction we would, over a year or two, greatly increase the amount of acreage under afforestation in Ireland. We would come more in line from the 6 per cent we are at now. We would come more in line with the percentage in the other EC countries of over 20 per cent. That would be of long-term benefit both to the State and to the people directly involved in that.

We do not now what the future holds in agriculture. I do not like to be pessimistic about this, but a policy is now apparently developing in the EC, or thoughts in that direction are now apparently developing — more than thoughts; it is actually on paper — whereby farmers will be actually paid to get out of farming and paid to leave their land idle. That is alien to the make-up of the Irish farmer and to generations of Irish farmers who had a belief in and a desire for farming. It is entirely alien to the family farm in Ireland that land should be left idle, even marginal land. Perhaps we should be looking more at better incentives — I know there are very good incentives there, but there are some obstacles in them — better incentives to bring more of the marginal land in Ireland under afforestation. I think that would pay us better in the long run.

Mr. Ross

When I see all the parties in this House agreed about a particular Bill and welcoming it, as an Independent I often feel very suspicious of the Bill, just instinctively.

An Cathaoirleach

You should not, Senator.

Mr. Smith

That is your nature.

Mr. Ross

That is very subjective judgment, but you are entitled to it. As a result I tend to look at it a little bit more critically than perhaps a Bill about which there was some controversy. This Bill is one that comes into that category. Once you come across a Bill like this which appears to have such tremendous support from all sides of the House, I feel it must be taking away from somewhere or doing someone some damage or contradicting some philosophy which is already being championed.

I have read the Bill very carefully and listened to the Minister's speech very carefully and I think my suspicions are reasonably well grounded. While I welcome the objective of the Bill and, as I understand it — and the Minister will be able to correct me — the objective of the Bill is to make the forestry service or the operation of forestry and timber in this country more efficient and more commercial. I am not sure that the Bill is going to achieve that in itself. I note that the Minister said in his speech to the Dáil that this was fulfilling an election promise. To me that appears to be a bad reason for actually bringing anything to this House. Thank God, the Government have not used that as a criteria for most of its legislation.

Mr. McCormack

Election promises can be broken.

Mr. Ross

Election promises on the whole, thankfully, have not all been kept. The idea is obviously to put a new semi-State body on a commercial basis. There you have got what is almost an inherent contradiction. I think this is the real problem with this Bill, because when you are setting up a semi-State body you cannot really run it on a commercial basis by virtue of it being semi-State. I think that the problem with this Bill is that the philosophy behind the Bill too often conflicts with the facts that are actually in the small print. I understand what the Government are aiming at, which is really that the forests of Ireland should be run on a commercial basis. But when you read the Bill, and when you even read the Minister's speech, you realise that they realise that what they are trying to do is actually impossible and that they are not going to be able to do it; but they are going to make the best possible effort at it.

Having said that, I think it is a contradiction, and I would like to explain to the House why. I find there is a certain amount of confused thinking about this sort of Bill. The Minister's speech was full of extremely interesting and very plausible euphemisms. Having said that he had the laudible objective of making money, he then said that the new company will make a loss. He said that the new company will make a loss for a considerable amount of time, but he does not know for how long. To me this is not running anything on a commercial basis. To me that is the opposite of running something on a commercial basis. It is humbug to say we are going to run this on a commercial basis. We are going to set up a company on a commercial basis, but it is not going to make any money. That seems to be defeating the objective of the Bill. The Minister will undoubtedly be able to reconcile those two facts in his summing up speech, but I think it is very important that this be done as soon as possible by the Minister.

I would have suggested to the Minister that instead of introducing this Bill in the way he has, instead of introducing the clauses and the fundings requirements and the funding from the national Exchequer which he is providing, there are other ways of doing it. The Minister has said that £100 million could be provided in shares and advances from the State and £80 million in guaranteed borrowings. To me, by any standards that is an awful lot of money to put into a company which you are going to call commercial but which is not going to make any money. It seems to me that this is a very heavy subsidy with absolutely no great prospect of return in the near future. I know that we say it is a long term investment. I know that the Government's view is that there will be a break even point; but we are very short on projections on this. I am not at all convinced that this is going to work, for reasons which I will outline in a minute.

The principle form of funding private forestry appears to be the EC. I would like to congratulate the Minister for the obvious initiatives he has taken in getting EC funding. I know it is very difficult to get that sort of slice of the cake and to squeeze more money out of the EC for this sort of development. But, as the forestry development here is so behind and since such a small percentage of our country is actually afforested, I see the reasons why he has been able to get EC funding. But what I would have thought would have been far more sensible and far more constructive was to follow up a suggestion which my colleague, Senator O'Toole, made yesterday, and to look elsewhere for funding. I do not believe the State needs to be burdened necessarily with this sort of funding. I do not believe it is essential that the State pays for all the development of the forests of this country.

The reason for that is, as Senator O'Toole said yesterday, that there are billions of pounds in pension funds in this country looking for a home. There are billions of pounds in insurance companies. There are plenty of rich investors whose money is run by merchant banks. If this is a reasonable investment — short or long term, it does not matter — that money will find its way there. What I do not understand is why the Minister instead of burdening the State with this dubious investment, as it is, if he believes it is a really good investment, does not either privatise the forests now or sell them to private interests or allow a market to develop in future afforestation. Because, if these forests have a future value — which undoubtedly they have, I can tell the Minister, and the Minister knows this full well — then because of the way the markets work it means that they have a present value. There will be all sorts of pension funds, private investors, insurance companies, banks who will be prepared to put money into this sort of investment if it makes any sort of sense.

Those who manage money of this sort have got funds for exactly this kind of purpose. That is why I think it is wrong for the Minister to burden the State with it. I would like the Minister to say in his reply that this is too long term or that it is too doubtful or too difficult or too risky; or maybe he will say it is too good an investment and we should not give it to anybody, that we should keep it in the State. Perhaps emotionally and philosophically he believes that this land, this afforestation, should belong to the State and should not be sold off. I do not know. All I am saying is that there is money available, and plenty of it, for this type of investment if the Minister wants to consider that alternative. At a time when the public finances are in such a terrible state I think it would have been more appropriate to look to private industry to subsidise — if subsidise it is — what the Minister has openly admitted will be a loss in the initial stages.

It was a bit depressing to read in the Minister's speech some of the phrases which give us the background to the thinking behind this particular Bill. When he says in that negative way that funding has not been ungenerous, I agree with him. What he means, of course, by that code word is that it has been a very generous piece of funding, and perhaps he means — and I would suggest he means — that it would not stand up to the normal commercial criteria which should be applied to this sort of investment.

The Minister is right: it is not ungenerous. He goes on to say that further support will be necessary after five years. That is exactly the sort of situation which I would be fearful of, the sort of blank cheques type situation which might exist and has existed in other similar type bodies. Having stated funding was not particularly ungenerous, it is a pity to see a bland declaration that in some time in the near future the Minister may have to write another cheque without quantifying how much it would be, without projecting how much it would be; but making it absolutely obvious to the company and to whoever is running the company that further support will be there if it is needed. That is about the worst possible basis for any company to be run on. It certainly does not answer or meet any of the normal commercial criteria.

Having said that, the Minister goes on to say that the company must stand on its own two feet. I again find it difficult to reconcile the fact that the company is going to be drawing heavily on the Exchequer for at least five years and the statement that it will be standing on its own two feet. This Bill has a laudable objective but there is some very confused thinking behind it because it cannot be an independent company; it will not be run as an independent company. They will not think of themselves as an independent company so long as they have the Exchequer backing them in this very generous way.

I was interested in what the Minister had to say about the Civil Service. Perhaps he could explain what he means when he is summing up. It is indicative of a shift in Government thinking and in thinking in this country about the Civil Service and their relationship with the private sector and the commercial world. He says that the Civil Service are not conducive to commercial criteria which I presume means that the Civil Service are incapable of running a company on the basis of making profit, or that the Civil Service are not a commercially efficient organisation. That is something with which on the whole I would agree. It would be interesting to note if this is now the Government's view of the Civil Service. Do the Civil Service need a shake-up? Are the Civil Service not to be entrusted with running a commercial company like this? Are the Civil Service incapable of taking decisions like that? If that is true, what are the Civil Service for? Are the Civil Service there not to take any initiatives? Are they there simply to implement without thought the wishes and the whims of the Government without taking any decision on their own bat? I would like the Minister to clarify this. The Minister said also that the traditional restraints which apply to the Civil Service would be an obstruction to the company. What are those traditional restraints? We are on the point of unveiling some very new thinking about the Civil Service. To back that up I will quote from the Minister's speech where he was referring to the new forestry company.

In the first place a commitment to commerciality must permeate all parts of its organisation. In the past, the development of forestry in this country was not always guided by strict commercial considerations and as I have already said, a Civil Service structure is not the most conducive one for commercial operation. All that must now change. Freed from the constraints of the Civil Service, the company will have the necessary flexibility and freedom to conduct its business in a commercial way like any other private sector company. It will have no excuse to do otherwise and no excuses will be accepted.

It cannot be run like any other private sector company because they are going to be Government funded for at least five years. I find an inherent contradiction in there. Then the Minister went on to say:

Secondly, the company must operate in a cost effective and efficient manner. I mentioned earlier that the current development of our forest estate has a major influence on the break even date and that, because our trees are at a certain stage of growth, it will still take some time before profitability is reached.

What we need to know is vaguely when? "Some time" is not good enough if one is running a company on commercial criteria. Is it five years, ten years, 15 years, 20 years or is it three years? It seems impossible that it will be in the next five years because the Government are obviously going to keep funding them. We have no specific projections. We have no specific ideas. We are being asked to write a blank cheque without any promises. He then went on to say:

There is not much the company can do about that—

I have rarely read as vague a phrase in any speech

—but it can certainly do a lot in terms of reducing its operating costs. I expect it to do so and thus achieve a much earlier break even date than would have been the case if forestry had continued to be operated within a Civil Service structure.

This is a fairly damning indictment of the Civil Service structure. It is totally unspecific in projections, in profit targets, or in any sort of future targets for this company.

If the Government are going to be giving this sort of money to this company, we certainly deserve to hear detailed projections. The Minister has said this will be run as a private sector company. If a private sector company were going to a bank, which in effect is what is happening here, to borrow money or to inject share capital and they said: "It will be some time before we are profitable, but we do not know when, and we will try to reduce our operating costs but we do not know how long that will take. We also think that in five years we will be coming back for more money, but we have no projections", the bank would just show them the door. This is very short on detail but very big on handing out money.

The Minister then went on with some generalised suggestions for improvements. Again these are short on detail. He made comments about the introduction of new arrangements which will reduce the outgoing on purchase and increase income per unit of sales and used the sort of phrases which could apply to any industry. The point I am trying to make here is very simple. If there is a transfer or if there is going to be a change in method, there is no sign of it here. If there is going to be massive Government funding we are entitled to ask for answers before it is granted. There may be a very good reason for this, but if the investment is as good as the Minister says, the funds should be there but the details should be there as well.

The Minister finally summed up by saying:

I do not accept that this is just another "SSB". I expect far more than that and if I do not get it I will give the board a very hard time.

I am delighted to hear the Minister say he will give the board a hard time. The Minister's phrase "just another SSB" is an extraordinary reflection on the semi-State bodies. It is reflection with which I would agree. I think the justification for semi-State bodies is very doubtful. Senator Ryan, undoubtedly, will have something to say about that. I would like the Minister to say in what way it is going to be different from the other semi-State bodies. Secondly, what is wrong with the other semi-State bodies? I will tell him if he likes, but it will take too long. I would like to hear it from him, because he has put it down here himself. Thirdly what does the Minister mean by giving these chaps a hard time? Does it mean that he is going to phone them up every morning and say: "Listen, you are not making enough money, you are not doing very well." Does it mean he is going to sack them? Does it mean he is going to harass them at home?

These are all very brave words but the Minister will make the appointments. He will have to answer for them. To put down blandly that he is going to give them a hard time is not good enough. He must have real sanctions. He must set them real targets to which they must keep. If he likes he can give them incentives rather than threaten them. Perhaps he should give them incentives, options, or all sorts of different incentives to meet targets. To say simply they are going to have a tough time if they turn out to be like all these bodies run by this State is not good enough. I suggest that the answer to this is that the State should have a very close look at all the other semi-State bodies that the Minister is talking about. He has, by implication, in fact, indicted them in what he says. I am delighted to hear it. I would like to hear specifically what he intends to do rather than just giving them a very hard time. This speech, as all speeches which receive the approval of all parties, is very heavy on rhetoric but is very light on detail.

I do not want to anticipate the speech of my colleague, Senator Ryan, but I suspect that ideologically he believes that the forests of this country belong to the people of this country.

Mr. B. Ryan

It is a commercial fact.

Mr. Ross

It should be recognised that this is a very emotive issue and a possible ideological fact and, indeed, it is something that has been applied to the oil and gas industry as well. We have to decide whether this is a resource which should be privatised. Should the private sector or the public sector be allowed into the field? This halfway house which the Minister seems to be trying to achieve in this Bill is totally unsatisfactory. This sort of compromise is going to give us the worst of all worlds and what we are going to have is a so-called commercial body which is floundering around but is, in effect, being run by the State, by the Minister and by the executive for the State.

I would like to support that by pointing to the provisions in sections 14 and 44 of the Bill. Section 14 says that acquisition and sale of land and sale of timber shall not be carried out without the permission of the Minister:

The company shall submit to and agree with the Minister each year a programme for the sale and acquisition of land and the sale of timber, whether standing or felled.

Nothing could be clearer than that — and some of these Bills are very clear. However, it is impossible to reconcile that with the statement that the company is being given autonomy. To me it means quite simply that the most important decisions the company have to make are only going to be made if the Minister approves them and they are not going to be made if the Minister does not approve them.

To maintain that the Bill, in itself, is giving autonomy to the company is completely fatuous and wrong. It is contradicted by section 14 of this Bill, which quite simply says that the company can do very little except what the Minister and the Government approve. In effect, while it is being called a private commercial company, it is still being State funded and State run. The running of this company and the old system of running the State's forests will not be that much different; and, indeed, I believe that many of the staff from the old forestry service will be transferred to the new company. I am sure they have done a tremendous job, as the Minister quite rightly said. It looks to me as if really very little is changing. There may be a bit more streamlining. The direction from which the orders come may be different, different people may be taking orders, but we are going to have the same personnel, the same people holding the strings and we are going to have the same people making the decisions. There is going to be a board, but they cannot really take any decisions without the Minister approving them.

Section 44 is a similar type clause. Section 44 (1) says:

The company shall prepare and submit to the Minister a scheme or schemes for the granting of pensions, gratuities and other allowances on resignation, retirement or death to or in respect of such members of the staff of the company as it may think fit.

It is a very long section which goes on to elaborate on that particular subject. It gives very strict and detailed powers in this area to the Minister for Finance. This is absolutely impossible to reconcile with the supposed and the proclaimed belief and statement of the Minister that this is a commercial company being run like any other private sector company. Quite simply it is not, and it is very wrong that we should maintain that it will be. It is going to continue to make losses which no private sector company would do. It has not produced projections, without which no private sector company could be funded, and it is going to be dependent on the Government, which no private sector company is.

Mr. B. Ryan

We are all dependent on the Government.

Mr. Ross

In your State maybe they would be, but not in mine.

Mr. B. Ryan

In my State all the private companies would be closed down because they are living off the State.

Mr. Ross

I choose to ignore that remark.

Acting Chairman (Mr. Harte)

Senator Ross to continue.

Mr. Ross

It is great to see my unruly friend been put down.

Mr. B. Ryan

May I invite Senator Ross to change that phrase to something less hostile?

Mr. Ross

I do not think it could be hostile to call anybody one's friend.

Mr. B. Ryan

It is the "put down" I object to.

Mr. Ross

Section 38 is a similar type section, where it goes on to talk about general ministerial powers. I do not want to labour this point, but it is very important that it gets through: "The Minister may, with the consent of the Minister for Finance..." Now, we have got two Ministers having ministerial powers in this Bill. We have got two streams of Government power. The company have to seek permission from the Minister for one thing, who then has to seek permission from the Minister for Finance for another thing — and this in a company which is commercially run like a private sector company.

The section goes on to say that the Minister may issue directions in writing to the company requiring the company, ordering the company, to do certain things: section 38(1)(a) says "... to comply with policy decisions of a general kind made by the Government concerning the development of forestry and related activities of which he may advise the company from time to time". How can that be reconciled with saying that this is an autonomous company run for commercial reasons? It is simply saying one thing, and one thing alone, that the company have to do what the Government tell them if it is in keeping with the general Government policy as regards forestry. That means that the idea of they being a private sector or an independent company goes out the window. It is better that this is actually spelt out in full.

I believe there is a real problem in other areas as well. The requirement on the company to use the Office of Public Works in certain areas restricts them. There is a real danger in giving the Government quite so much power in the company's internal affairs. The very fears which were expressed by this Government while in Opposition about the National Development Corporation have not materialised, but still could materialise. I am not worried about that because it is past history, but it is important to bring it out. Those fears also should apply to this particular company. I am afraid they do apply. Those fears are that preferential treatment could be given to certain areas if the Government or any Government in the future have so much power in the direction of these natural resources. I am not suggesting at all — I have said this on various issues before — that this applies to the present Government or any particular Minister involved. I am just saying that I find it a very difficult precedent and a wrong principle that the NDC should have funds available, which, if an unscrupulous Government or Minister took part or decided to, they could use for their own electoral purposes. I know it is very difficult to avoid this. It is part of the political game and it happens in other areas. But there is a danger here that political interference could decide where roads are built through forests, where afforestation takes place, and the preference could be given to certain constituencies and certain areas because of ministerial power within this company. I do not make this as a political point against the Government, and I wish to emphasise that. I just wish to say quite simply that the less power and discretion that Ministers and members of Government have over this sort of development, the better. I would just like to see less and less of that particular power with the Government because while it may not be abused, it is certainly open to abuse and it is certainly open to temptation at some time in the future. I have another very real fear about this Bill. Because of the lack of projections — and because of the apparently very vague future in terms of profitability for this company, it may of necessity be vague — and the complete absence of any suggestion of what the return on the capital employed will be what the assets are worth — we can make guesses — but we cannot make any accurate guesses because of the lack of year by year projections — it seems to me that we may be going down a road, out of which it will be very difficult to get. It is as though there is no exit from this road we are going down. I am reminded — and I should remind the House — of the history of B & I which has many similarities to this company. The Minister may correct me because my facts may be wrong on this because I have forgotten some of them — but B & I was making losses for 12 years.

Government after Government, year after year, pumped millions and millions of pounds into B & I. The Government were really in a situation where they could not pull the plug on B & I and they just had to pour more and more money into a loss-making company. I think hundreds of millions of pounds were lost on B & I by successive Governments. It was not just this Government, but the last Government and the Government before that, which continued to meet the losses over 12 years without a remedy emerging, without too much pressure coming from successive Governments. However, cheque after cheque after cheque came from the Governments, small ones, large ones, whatever was required.

There were requirements made on B & I by successive Governments to put their house in order. Those requirements were not actually complied with by B & I in that they seemed to be incapable of doing that within the terms agreed. They declared successive losses but the Government having poured so much money into B & I, had to pour more money into B & I to keep it afloat every year or every six months. I am not saying there is a direct parallel here, but I am saying that without projections and in such a long-term investment as this, there is a danger that this will become a continuous and constant drain upon the public purse.

I do not see any provision or any recognition by the Minister or by the Government that the investment in forestry might turn out to be a bad investment, that the money put into foresty might turn out be be wasted money. It may be unthinkable but it is a thought we should consider. There is a possibility that we might be going down the same type road as we have been down before. I would like the Minister to indicate whether there are any limits as to how much money the Government will put into forestry and where those limits lie. After five years — as he has made quite clear — when he has put more money into forestry, will he say there is only so much more to go after this or whether it is an open ended cheque? Is the commitment now so great that the company that is being set up is in fact cracking the whip because the Government cannot afford to pull back from the road which they appear to be going down?

I would just like to get an assurance from the Minister that there will not be continuous dependence by this company on the Government for ever, that the Government have plans at some stage to say, "Thus far thou shalt go and no further", and if the company are looking for more money and still making losses they will simply not get it. Otherwise it is only human nature for whoever is running the company, as B & I did, to say, "We are not making money. We have not met our objectives but there is always the Government behind us and we know they cannot let us down". I know, and the Minister probably knows, that forestry is probably too big an investment now to be actually let down, but I would just like to see how much he is prepared to put in before he sees a return on this investment.

I would like to come back to what the Minister said about the new company not being just another "SSB". That is not a phrase I want to hang around his neck but it is a phrase which I think should be elaborated on, especially in regard to the appointments to the board and the chief executive. The chief executive, as Senator O'Toole said yesterday, will be appointed by the Minister.

Section 35 states:

The first Chief Executive of the company, having been selected by means of a public competition, shall be appointed by the Minister for a period not exceeding three years and may be removed from office by the Minister during that period.

That is a very worrying, very difficult and a very wrong clause.

As I said last week, and the week before, there is a danger of this just being another example of jobs for the boys. I am not saying — and I do not want the Minister to take it personally or sensitively — that it will necessarily apply in this particular case, but the Government are continually giving hostages to fortune on this issue.

On the Broadcasting Bill, a very similar Bill which we had last week — we had a very similar section in the Bill appointing the chief executive. The small print in that Bill is similar to this one. It gave the Minister total power over the appointment of the board, the chief executive and the auditor. If that is the case and if that continues to be the case, it means that the new so-called private independent forestry company is being directed directly by the Government. I do not believe that is the way this sort of company should be run. It would be far more sensible if we were more honest about it and left the company in the hands of the Civil Service.

This clause which gives the Minister power not only to appoint the chief executive, but to decide his salary, allows the Minister far too much power in this area. I would have thought it would be far more sensible to make his salary and his remuneration statutory, if it has to be, or to leave it up to the board, or to fix it in a far less dictatorial way and also to decide the remuneration of the board in a completely different way.

If the chief executive is to be dependent on the Government for his job, which he will be, he will have to, as in the Broadcasting Bill, implement Government policy. That is something which I fear more than anything else in this Bill because I believe this is going to become just another semi-State body. The seeds of it are spelt out in this Bill — the structure of the board, the chairman, the directors, the way it is run, everything like that is so similar to other semi-State bodies that I have very little confidence that this particular board and company will have any more independence than the other semi-State body. Yet it will have the dependence for funding on the Government that the other semi-State companies have. That is going to be very difficult. I would like the Minister to say, not just in an abstract way how it will differ not just about how he will operate it.

Seanad Éireann debate -
Wednesday, 29 Jun 1988