I shall not delay the House very much longer and, indeed, to facilitate the House I will be very brief because I know there is a great eagerness to finish the business ordered for this evening. I probably have played my part in this debate. In summary, I would just like the Minister to clarify for us the reasons for this Bill, and whether he intends to create a company which is an independent company being run, as he said, like any other private company or whether it is just going to be run as a semi-State body. Perhaps I should leave the rest of what I have to say to Committee Stage, which will be taken tomorrow morning.
Forestry Bill, 1988: Second Stage (Resumed).
I wish somebody amongst those who advocate a particular way of developing the country would explain something to me because it is implied in much of what is said about forestry, and, indeed, it is implied in the Minister's speech, that somehow or other we did not get it right about developing forestry over the years.
The Minister's speech is full of interesting information about, for instance, the scale of European or EC imports of timber — the fact that the EC has to import 75 per cent of its timber, that the United Kingdom, our nearest neighbour, has to import 90 per cent of its timber requirements. The expectation is that those figures will rise rather than go down. We know that other countries have developed remarkably successful and profitable timber industries based obviously on forestry as the primary producer. Yet, over 60 years we have effectively failed to produce a viable forestry industry. That is underlined by the fact that even still the returns from our forests are less than the annual expenditure on them. Far be it from me to criticise State investment in a productive area, but it would be useful if somebody somewhere would do an analysis of the Irish private sector. We are told it is ready and willing to grasp all opportunities, given half a chance — and that is not just a matter of opinion, it is the underlying thrust of the main economic strategy of this Government and, indeed, of the Opposition party that occupy most of the benches in front of me — that we must base our hopes for economic development on this vibrant, thrusting private sector that is simply waiting for the climate for enterprise to be presented to them.
I do not know in detail what grant incentives, etc., were available or are available for forestry, but I know that they are generous. I know they are generous in terms of both grant assistance and tax write-offs and they have been for a considerable period of years. What appears to me to be evident is that notwithstanding the considerable range of incentives, the considerable range of encouragement that was available, there has been until recently — and the Minister mentioned this in his speech — virtually no significant take-up of private forestry, other than, I presume, on a very small scale by individual smallholders or farmers around the country.
For instance, there has not been, that I am aware of, any significant institutional investment in forestry, though apparently outside this country most pension fund managers recognise forestry as a particularly appropriate form of investment producing a long term yield which would be appropriate to pension fund investors. The Minister's own unfortunate attempt to try to sell off some of our State forests — something that I did not agree with for a number of reasons — was not exactly a spectacular success, because apparently those who made noises about being interested in buying up semi-mature State forests, once it became apparent to them that they were going to have to pay a commercial price, decided they were not interested.
Unfortunately, the consistent record of the Irish private sector is that they will not go into anything involving a reasonable risk, a business risk where there might not be an absolutely secure State guarantee or a guaranteed margin on the investment, which only a catastrophe could undermine. They will not take that risk. The hand-out mentality that is so often ascribed to people on welfare and other people in our society, is in fact perhaps best seen in the mentality that masquerades as the Irish private enterprise sector. Unless they are cosseted on one hand by tax incentives and on the other hand by grants, and underneath that by State guarantees against loss on the odd occasion when they take a risk, they seem to be entirely reluctant — in particular the Irish banks and financial institutions — to take any sort of a risk. They expect other people to make a proper assessment of a commercial proposition and make an intelligent decision about what to do.
It appears to me that most of those who control large investment funds in this country are reluctant to actually do that which they are actually paid to do, and that which they expect substantial rewards for doing, which is to assess the risk involved in a particular commercial enterprise, make a judgment and then make a decision to release funds under their control into that investment and accept the consequences of that risk. They hope the consequences will be success and reward but implicitly, in a proper philosophy of private enterprise, they would also have to accept the consequences and the penalties of failure.
The fact is that we have in this country a private sector, particularly in the financial sector, which is intent on demanding for itself the maximum rewards for growth, but which at the same time protects itself, through the State, from any of the possible penalties of failure. We have seen it, as I said earlier today, in the bailing out of Allied Irish Banks when they made a monumental mess of a particular acquisition. We have seen it, too, in the way in which the PMPA has been protected. We seem to have this presumption running through most of what masquerades as the Irish private financial services sector that, in fact, all they are expected to do is to provide money for investments which, if they go wrong, will be guaranteed by the State. As far as I can see the only real risk they take is in the relatively small proportion of the lending they make to domestic purchasers to buy consumer goods with the ordinary unsecured personal loan.
I know the Minister fairly well and I have come to respect his intelligence and his capacity to think creatively. It is nice to talk to the Minister for once about something where I do not have to complain about him representing somebody else.
It would be interesting if anybody has endeavoured to find out why there has been no willingness on the part of the Irish financial institutions to invest in forestry. Is it that there is no evidence to suggest that it is possible to build a viable forestry and timber industry in this country? If that is so, then this whole venture is doomed to failure. Is it simply that Irish financial systems presume first, guarantees against loss and, secondly, presume short-term profitability inside a time scale that is incompatible with the time scale that is involved in forestry development? Is it essentially that they are so cautious, so conservative and so unimaginative that the sort of scale of decision-making that would be involved in large scale investment in forestry is beyond them? If it is, then the new body will be particularly exciting and worthwhile. In principle I think it is.
Contrary to what the previous speaker, Senator Ross, said, I think the record of semi-State companies is remarkably good, given the heavy hand of Government interference they have all had to deal with over the years. For example, the ESB are forced to keep open some of their most inefficient generating plants because of the possible political consequences of closing down in particular turf-burning stations which in terms of costs per kilowatt of power produced are remarkably inefficient. There are political reasons why they must be kept open and on balance, I agree with them being kept open. However, it is improper then to point at the ESB and say, they are a sloppy organisation, and that they should do this or that. For instance, the ESB are accused of being overmanned but very few Members of either House would sit back quietly if the ESB unit in their immediate area of interest was to close or halve their workforce. It is very difficult for ostensibly commercial semi-State organisations to operate when there is this perpetual political demand being put on them to meet targets other than proper commercial targets, i.e. the capacity to produce a product at a price which is acceptable to the customer and which also guarantees that the company is both viable and profitable.
There is no reason anybody who is on the left in politics should apologise for expecting commercial State companies to be profitable. It is one of the classic pieces of woolly thinking: there is a presumption that somehow there is some correlation between socialism and inefficiency and some correlation between socialism and lack of profitability. In the most successful social democracy in the world, Sweden, Volvo made £1.5 billion and Saab made £0.5 billion in the last financial year. That is £2 billion between two companies. That is what I call the best mixture of social democracy and the market economy I am aware of. That is the model our semi-State companies should be aiming at. There are many reasons to suspect that this semi-State company, however welcome the concept, will be hamstrung by a considerable number of inhibitions which will prevent that taking place.
The principle of setting up a semi-State body to develop forestry is a good thing. It is quite clear that the Irish private sector will never be prepared to accept the long-term investment that is necessary for the development of forestry. It is clear that no amount of incentives up to now have managed to attract other than minuscule investment in forestry. There is no reason to believe that this is going to change. It will probably be one of the ironies of the completion of the internal market in 1992 that in the future other non-national financial institutions will find investment in forestry in this country a considerably greater attraction than the national financial institutions because they are able to think in the longer term and they have more experience of forestry.
Forestry is a substantial part of the development of most of the European Communities. As the Minister said in his speech, we have about 6 per cent of our land area under forestry, the European figure is around 24 per cent. It is an astonishing anomaly. Governments have a habit of blaming the previous Government for everything that goes wrong. As a nation, we can probably blame our former imperial masters for what is wrong with our forestry. Of course there is some truth in that but it is a bit much to keep on saying it after 60 years.
The principle of a semi-State organisation to develop forestry is good.
However, nobody has yet done the sort of detailed, hard-headed financial analysis, cost benefit analysis, to convince me that there is a viable future for Irish forestry. In spite of my cynicism and scepticism about the Irish private sector — and my cynicism and scepticism goes deeper every week as I watch them wallowing in the two most ephemeral economic successes of the 20th century, that of Margaret Thatcher and Ronald Reagan and their believing that these artificial growths can bé sustained without producing anything the world wants to buy. These Irish financial institutions seem to believe that, but you cannot get them to invest in anything as significant as something that grows, develops and makes money and can be sold in the future as a product.
What is so obvious about forestry in terms of its potential, in terms of the markets that are available to it, suggest that even Irish financial institutions ought to have woken up to the possibility. I am amazed, for instance, at the way financial institutions queued up to fund farmers to produce more and more of the same things that were already in vast oversupply in the European Communities. They invested in agriculture, to produce more and more products that nobody wants to buy at a price nobody is prepared to pay. The financial institutions are apparently unwilling, unable or incapable of doing what is needed to be done, which is to invest in something which is in undersupply in the European Communities and which is liable to become more and more in demand over the next 20 years. Has anybody, either in the Department of Finance or in the Department with responsibility for Forestry actually come to a conclusion about why the Irish financial sector will not invest in forestry? If it is simply because of their own inherent conservatism, then this is going to be a very exciting development.
Unlike Senator Ross, I feel that if this project is as full of potential as I think it is then the Minister will overload this agency with burdens of debt that are going to make their life quite difficult, bearing in mind that one presumes that we are talking about at least a 20-year, if not a 30-year, period before a real substantial return on the investment is generated.
The Minister is nodding his head. I look forward to what he has to say in his speech. He says five years.
I am shaking my head.
He was shaking his head in disagreement. My vocabulary is rather restricted at this hour in the evening. I know the Minister's speech talks about a five-year period but we have had 50 years of investment in forestry and it is still not making money. Unless the Minister can produce new figures, then I am not convinced about it. If the Minister thinks we are somehow at a launch point and that we are going to make substantial amounts of money I would be interested in hearing that. He has made an act of faith in his speech that it will happen. He has not produced any detached financial analysis which would suggest it would happen.
The students at the institution I work in released on the world have been trained at great length about how you make a proper financial appraisal of an investment project and how you actually work out when it will begin to make money, how much money it will make and, I presume, that since we are setting up a significant semi-State organisation somebody somewhere has done that. Much as I approve of expansion and extension of the role of the State sector, I would hate to think that it is being done on a wing or a prayer because whatever I think about the power of prayer — and I think quite a lot about it — I do not think it is the way to make proper financial decisions and I would hope that somebody somewhere has done a proper appraisal of this on the basis of either comparative performance by other countries or the expected maturation of our forestry in the immediate future or whatever. Somebody somewhere ought to have made a proper attempt at quantifying the risks, quantifying the investment required and quantifying the projected returns from that investment. If it has not been done then this whole thing should be put into limbo until it is done because it is the only proper way in which proper investment decisions can be made. I know of no other way. I do not believe it should be done for ideological reasons, I do not believe it should be done for political reasons, I do not think it should be done for social reasons unless they are clearly stated and above board in the legislation set up to develop an agency. I am not persuaded that that is the case.
If, on the one hand, it is successful then I think it is something that is both to be welcomed and encouraged. We have such a startling set of facts to which I have referred — the fact that the EC import 75 per cent of its timber, the fact that the import bill for timber is second only to the import bill for oil as the Minister said. We are a country that is under-forested, this should make it clear to us that this idea presents considerable attractions for us.
The fact that Córas Tráchtála has identified the whole DIY area as an area for future Irish exports ought to offer opportunities for downstream timber processing related to the DIY industry and one hopes that there will be an attempt to integrate the development of our forestries with the CTT attempt to increase Ireland's share, particularly of the British DIY industry. My own view of the alleged British boom is that I would not like to base our future economic development on that boom because I think that boom is almost over, if it ever existed. It was quite artificial since it was not based on the production of new goods or new services; it was based on consumer spending. That is not the way to develop an economy.
There are other implications of the development of forestry. The major one I would say is that given the inevitability of the end of the Common Agricultural Policy — and it seems that nothing in this country wants to confront what I would regard as the inevitable end of the Common Agricultural Policy within the period of 15 or 20 years — then obviously forestry ought to be a major alternative attractive investment for many people who are currently involved in agriculture. I think the idea that we can keep on forever producing more and more of these things that nobody wants to buy, as I said before, is nonsense and one of the nonsenses that we seem to have hypnotised ourselves with, notwithstanding the evidence to the contrary. I really do wish we would call things what they are instead of generating imaginary terminology and fictitious headage payments.
The Minister refers to a new compensatory allowance scheme which will allow farmers who are in receipt of headage payment in respect of livestock to continue to receive such payments if they afforest part or all of their land. So, we will be paying headage payments, presumably, for fictitious animals that have been displaced. Why would they be refused headage payments simply by afforesting part of their land? Maybe I am missing a detail here but it appears to me that people would be allowed to keep on being paid headage payments. Does the fact that somebody afforests part of their land somehow make them ineligible for headage payments or, is it that in fact the land that would otherwise have been used for livestock is going to be used for afforestation instead? Where are all the livestock that were going to be on that land? They will be gone I presume, so farmers are going to be paid headage payments for non-existing livestock. I do not think that is the logical and sensible way to deal with this matter. It creates another fiction, apart from the fiction that apparently we are paying headage payments for about 150,000 more head of livestock that actually have been in the census anyway.
How does that relate to the Forestry Bill?
It was only one sentence off the forestry. The principle of the Bill is not in question but there is a considerable number of details in the Bill that need to be addressed and I want to keep them fairly brief. There is a number of sections that need comment. Given the general aggressive nature of the present Minister's views it is particularly disappointing that there is no provision for worker directors in this Bill. It would have been a quite simple thing either to introduce it in this legislation or to amend the worker participation legislation that went through this House and is currently before the Dáil. I think it is a matter of considerable regret and it must be a deliberate policy decision to exclude worker directors from this company. I would like to know if perhaps the Minister could explain to me why.
Second 16 has to do with changes in the Articles of Association. In the case of the legislation to deal with Bord Telecom and An Post changes in the Articles of Association must be notified to the trade unions. For some reason or another a similar provision is left out here. I would like to know why. Either it was a mistake or it is being left out for some reason. I have already spoken effectively about those sections to do with the financing of the company. I am not happy, I must say, with the requirement that an organisation which is expected to think in a much longer-term, though a realistic, commercial term about its investment, will have to borrow £80 million over the first five years. I think that may well be an excessively heavy level of debt and if they had to even develop on a smaller scale, with less ambitious targets, it might be fairer to them than the extraordinary burden of debt they could run up, particularly if this Minister is followed by a less sympathetic Minister who decides to leave them more or less afloat in the commercial financial market without much protection.
Much more serious is the fact that under sections 18 and 21 relating to the issue of shares by the Minister and the transfer or sale by the Minister for Finance of shares this whole agency could be privatised without the matter being brought before the Dáil or the Seanad. The Minister, apparently on his own initiative, without the approval of the Oireachtas could sell off this company and privatise it. I find that quite sinister. It seems to me to reflect a less than wholehearted commitment to the idea that this agency should remain a semi-State company and particularly, given the appalling performance of the Irish sector I think that it would be a tragedy if this agency were to be left in State hands while the risks are being taken and once the profits begin to be generated there will be privatisation possibly. That is the characteristic of those who demand privatisation in this country, that they wait until Aer Lingus return to profitability and then they demand privatisation; they wait until B & I returns to profitability, if it does, and then they will want it to be privatised. They are now talking about ICI being privatised because it is more or less back in profit. They will be talking about other agencies. Now that the shocks of the seventies have been overcome with the assistance of the State and the taxpayer, people will talk about privatisation. Nobody would want to privatise this agency until such time as it began to make money but once it begins to make money a Minister with a different ideological perspective from the present Minister might go along with privatisation. I have a good idea what the present Minister's ideological perspective is, even though Fianna Fáil Ministers by and large claim to have none.
I think I have, but I do not ever report on private conversations. I will not say any more than that. I think it is remarkable and somewhat sinister that a body which would have invested in five years time upwards of £200 million in forestry development and which, as the Minister said, will have transferred to it substantial assets paid for by the taxpayer, could be sold off without any reference to the Oireachtas almost at the whim of a future Minister for Finance. I think that is a great pity and I cannot imagine that the decision to word those sections as they are worded was taken other than deliberately and with a view to facilitating privatisation or something else. There may be another reason but if there is, I do not know what it is.
There is, of course, the usual provision which, as far as it goes, is hardly unwelcome in section 33 about the unauthorised disclosure of confidential information by directors. It is a pity that the same section does not make any reference to precluding directors from using confidential information for their own benefit. EOLAS, the State agency concerned with science and technology etc., has written into it a specific proviso that directors of EOLAS must make known any conflict of interest or potential conflict of interest that might arise from a particular contract being placed by EOLAS and must take no further part in the decision making related to that. That ought to be. We expect it of people on ethical grounds, but it ought also to be quite clearly illegal for people to use information that they get because of their membership of a State board for financial gain. We all accept that it is unethical. It ought to be very clearly illegal. It may well be illegal in principle because of some other basic legislation but it ought to be spelled out explicitly here.
Moving on to section 34, I think it is a pity that a Minister who was a distinguished Member of this House would allow section 34 to go through. Section 34 is to do with membership of either House of the Oireachtas or the European Parliament. I have spoken on every Bill concerning State agencies and said that it is wrong to equate membership of this house with membership of either the Dáil or the European Parliament because it is impossible to believe that everybody who will come into the Seanad will be paid in their previous employment less than £12,000 a year. You are effectively saying that anybody who is in any way above the average male industrial wage, who is employed by an increasing range of State companies, must actually live on something in or around £12,000 a year if they are to become Senators. That is at variance with the whole philosophical base of the Seanad which is of a vocational body representing vocational interests and which is not meant to be the preserve of full-time politicians.
To make the Seanad increasingly the preserve of full-time politicians is not only at variance with the spirit of the Constitution but it is also extremely unfair to an increasingly large number of employees of semi-State organisations. To give a very simple example, this country is endeavouring to develop itself into a high technology country. It is now impossible, for instance, for the director of either of our NIHE's to accept a nomination from a Taoiseach to become a member of the Seanad because that particular person would have to cease to be paid by the institution and become a full-time Senator. This is a piece of contradictory drafting that is inserted willy-nilly into every single piece of legislation that has come before this House which equates membership of this House with membership of the Dáil and the European Parliament. I do not think it is right and I think it is there because people do not think about it. I particularly invite the present Minister, who is a former Senator, to imagine what it would be like to have to live for four or five years on a Seanad salary. It is something that those who have to do it — and I do not have to, and that is why I feel particularly free to talk about it — will assure you that they do not intend to do for the rest of their lives if they can possibly avoid it because the salary is not exactly generous. It is not a salary that any trade unionist would regard as the acceptable upper limit of his or her aspirations. It is, therefore, quite wrong to insert a provision into every single piece of legislation that I have seen in the last seven or eight years concerning any State agency which says that any employee of that agency who becomes a Member of this House must cease to draw any salary from the State agency.
It is at variance with the philosophy of the Seanad; it is going to discourage more and more people with skills, particularly in the educational and technology areas, from becoming Members of this House and it is going to reduce the pool of skills from which a Taoiseach or a political party or indeed the graduates of either the National University or Trinity can draw in terms of electing their members. It is going to make this place the preserve largely of people who are either self-employed or in some sort of pseudo-private employment like universities which even though they are funded by the State are effectively private employers. I think it is time that somebody somewhere in some Government Ministry actually asked himself if this is necessary and what it is there for. I think it slips through without people thinking and it ought to be addressed.
If people want to make this a full-time institution for full-time politicians then they should pay people the same salary as they pay full-time politicians in both the European Parliament and the Dáil. The reason Senators are paid less is because it is presumed that it is not a full-time institution. I say that with respect to my colleagues. I have nothing to say about the recent developments because it is far too easy for those like me to make smart remarks about them. I regret very much the fact that membership of the Seanad is always referred to in matters like this.
There has been quite legitimate concern about section 36. I am fascinated that at a time when deregulation is the fashion of the day in so many areas, successive pieces of legislation about State agencies actually introduce the right to legislate for the wage rates of employees of semi-State companies. I find that quite objectionable. I think it is a completely unfair loading of the dice against the employees where they cannot negotiate; they cannot appeal to independent arbitration. They are simply at the mercy of a political decision about how much they should be paid. I think it is wrong legislation. It is wrong both in terms of the industrial relations prospects of a company and also in terms of the rights of the employees of the company. I do not think it should be there. Section 36 should be withdrawn. If the Government are unhappy with the way either the Labour Court or the Civil Service Conciliation and Arbitration Scheme work they should, by negotiation, get them changed but they should not by-pass all of these by introducing this sort of offensive legislation.
Section 38 seems to be the section which completely undermines the possibility of this agency operating as a commercial agency. The Minister is shaking his head in a negative fashion. I will read out section 38:
The Minister may, with the consent of the Minister for Finance, issue directions in writing to the company requiring the company—
(a) 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, or
(b) to provide or maintain specified services or facilities, or
to maintain or use specified land or premises in the company's possession for a particular purpose.
The company shall comply with every direction given to it under this section.
There is nothing in that to suggest that any of those instructions must be based on any commercial criteria. There is nothing in it other than the perhaps naive presumption that because the Minister for Finance approves of it, it is going to be commercial. The ESB is compelled to keep open a number of turf burning stations that it wishes to close because of political decisions, not because of any commercial decisions. I know that Aer Lingus was forced to keep open the transatlantic route when it was losing a large sum of money and then having gone into the red because of it, was accused of being an inefficient State organisation. I know that these things go on.
I do not think that any Minister is going to necessarily make a directive simply to preserve his own patch of land but I do believe that there will be a conflict between the political perceptions of a Government on a particularly controversial issue, for instance, about the acquisition of land or the development of a particular area, and the commercial requirements of what is supposed to be a vibrant, commercial semi-State organisation. I do not think the Minister should retain to himself the right to give instructions like that unless he is prepared to qualify them by saying that these must be subject to the normal laws of commercial investment and commercial decision-making; otherwise he is effectively saying: "I can tell you what to do any time and you must do it whatever it does".
Incidentally I think that there is a question — since this is going to be a registered company and is going to be incorporated under the Companies Act — about fraudulent trading where, a Minister, say, gave directions like this to a company. I do not know why the Minister, on the one hand, wants to set up a commercial State agency which is meant to make a profit and maximise the profit that can be made out of our forestry, and in the process — because I happen to believe the two do fairly well overlap very often — maximise the employment potential of our forestry, while on the other hand he says: "If I want you to do something then you must do it irrespective of whether it costs you large sums of money or small sums of money". I do not think those two things are reconcilable and the Minister cannot have it both ways. There is a little bit of glibness here in the sense that in the Minister's speech there is considerable reference to the Civil Service ethos not being ideal for the development of a commercial agency. That is to a certain extent a political cop-out because it points a finger at the Civil Service.
One of the problems about attempting to develop a commercial agency in a Civil Service ethos is that it is under the thumb of a Minister. What effectively we have done here is that we have attempted to take away the Civil Service side of it but we have left the possibility of day-to-day political interference in the operations of what is supposed to be commercial State agency. I do not think the shareholders in a private company would be able to have that sort of power. If there were a majority of them I do not think they would be able to issue a direction to a company because they were shareholders in it, that it must do this or that irrespective of the commercial value of the action. I do not think that actual power exists under company law or in regard to the Government's private company. I do not see why it should exist for State companies. It is the sort of provision that guarantees that yet another State company is going to be forced to do things that are mutually contradictory, to invest and lose money and then be blamed because they do not make money. That is the history of a large number of our semi-State companies. CIE are told, quite rightly, to keep the railways open — and I agree fully with the decision — but they are then blamed because the railways do not make money.
Every one of our State companies have been told to do things that are inconsistent with optimum commercial operation. I believe that a semi-State company should operate on a strictly commercial basis other than in areas where there is an identified social need which is costed and funded separately and which is not taken in under the heading of their commercial accounts. I think retaining those sort of provisions is fundamentally at variance with the objective of setting up a commercial semi-State organisation.
It is a classic position here to say that we always think the present Minister will not do anything like that and that his successor will. Having said that, I have to say the same thing about the present Minister. This Minister is subjected to the same temptations as I am. Therefore, if he does not like what a semi-State organisation is doing, how can he be sure he will not feel obliged to interfere? It is a classic thing. If you delegate authority and responsibility to somebody else, your first job, if you are going to make delegation work, is to be prepared to support what the person to whom you delegate does even if you do not agree with it. Anybody who claims to be good at delegation and reserves the right to overrule what that person does is not a good delegater; he is simply passing on the admiinstrative burden to somebody else but keeping the authority for himself. It is about time that semi-State organisations were protected from that possibility of day-to-day interference. It does not exist in the private sector. There is no reason, constitutional or financial, why it should exist in the public sector. It exists and will continue to exist for purely political reasons.
If we are going to make this a commercial agency, so be it. If we are going to make it a social services agency, then so be it: I believe in both kinds of State agencies. But you cannot make one into both without causing contradictions which will make life difficult, which will guarantee conflicts and will guarantee that you will either get poorly motivated executives or no executives of any quality. If people are going to be given the job of running a major commercial State agency, then they ought to have the independence and the authority that goes with a similar scale of operations in the private sector. I appeal to the Minister to remove section 38 completely or else to rewrite it in such terms that the Minister's directives can only be implemented if they are consistent with the commercial objectives of the agency.
Can I ask the Minister to have a look at section 39, subsection (3), because I do not think it makes any sense:
— The Minister may on his own initiative and shall on the application of the company issue a certificate in respect of specified land certifying, as he thinks proper, that the land vested in the company under this section or did not so vest —
I do not understand that sentence —
and the certificate shall be conclusive evidence of the facts so certified.
Maybe it is a drafting or a printer's error, but I do not believe that sentence makes any sense. Either it should be "that the land the Minister vested in the company under this section or did not so vest and the certificate...", but there is either a word left out or that is gobbledegook. I have had gobbledegook before via the parliamentary draftsman so at this stage I do not believe that the draftsman is necessarily right and I am wrong. I ask the Minister to clarify at some stage, either on Committee Stage or now, what that subsection means.
There is, I understand, considerable concern about the position of employees of this agency. The status of present members of the Forestry Service apparently is guaranteed but the prospects of future members, apparently, are not nearly so clear. These are some of the issues I would like the Minister to address either now, or on Committee Stage tomorrow, or whenever we take it.
In conclusion I want to raise something which I think needs comment. Perhaps it has been covered somewhere but, if so, I missed it, namely, the forests have never been treated exclusively as a commercial resource. They have been treated as a leisure resource and as part of our environment and have been developed as such. Has the Minister a clear plan in his mind to reconcile the quite proper emphasis on commercial development that is contained in his speeches on the Bill with the traditional environmental contribution the forests have made and the recreational and other contributions they have made? Essentially, we used to have the Forestry and Wildlife Service; we now have the forestry section becoming a State agency. How is the other side of the development of our forests, which has made such a contribution to our amenities and which so many people enjoy so much, going to be guaranteed and protected under this legislation?
I shall not delay the House very long but I must respond to a number of points that were raised by Senator Ryan. I have never heard such a despondent type of speech from any Senator in this House about a very positive piece of legislation. There is possibly one area of agreement that I would have with him and that is that when English is being written it should be written as it is spoken or written as people nowadays would suggest that it should be written. Parliamentary draftsmen seem to be writing English that is more related to the 18th century than to the 20th century and I would agree with him that at times there is a problem in reading what is in parliamentary draftsmen's version. While I do not agree with him on his interpretation of the particular section, I do suggest that our parliamentary draftsmen would look at English as it is spoken and at English as it is understood in the 20th century and not go back to the 18th century from which they seem to take their current writing.
We have had an appalling list of wrongs from Senator Ryan about the private sector. We have had from him over the past number of minutes an indictment of the private sector. One would imagine that people in the private sector in Ireland, whether in forestry or in any other area of society, are crooks, that they are not in it for anything else except to try to maximise the benefits to themselves and make no effort to maximise the benefits for others. I would remind Senator Ryan that he works for a semi-State body——
A State body.
A State body and has had the protection of a State body for a large number of years. He has never had to come to grips with the problems that have been associated with working in the private sector. He has never had the worry of having to deal with banks and to pay his staff or having creditors on his back. He has had the protection of having a dual salary for a long number of years. He comes up here and he tells us who are in the private sector what we should and should not be doing. He comes from a privileged sector of society and it is about time that his lies were nailed.
A Chathaoirligh, I demand your protection. The Senator can say what he likes but he cannot use that word about me.
Senator Lanigan, you will have to withdraw that last remark about Senator Ryan.
I withdraw. If I used a word that is not desirable to use in relation to anybody, I will withdraw it. From the protection of the exclusivity of where this Senator comes from, he is in no position to give out about people in the private sector. He mentioned the "appalling record"— he used those words — of the private sector. There is no appalling record in the private sector.
To get back to the Bill, the Senator gave out about the risk factor. There is a risk factor in any enterprise. This Minister is bringing in a Bill which will ensure that Irish forestry will operate in a situation in which there is a commitment to commerciality. I do not understand much of what Senator Ryan said about this Bill. There is a shortage of timber in Ireland and in Europe. The Minister is trying to redress the balance and to give a commercial aspect to afforestation in Ireland. Timber is becoming a very scarce resource, not alone in Europe but in the world in general. This Minister is attempting to redress the problems we have had in Ireland in the past. He is attempting to bring the timber industry into a commercially viable position and not with, as the Senator has said, the heavy-handed Government interference that existed in the past. I do not think there was a heavy-handed Government interference in the past. One of the problems that existed was that people did not realise that timber was an excellent resource which took a long number of years to come to commercial fruition. An attempt is being made in this Bill to give those who go into the timber business a return which will be viable for themselves and indeed for the country as a whole.
The Irish financial sector involvement in the timber business has been criticised by Senator Ryan. I suppose it could be said that, because of the long term investment necessary, the banks and the commercial institutions were not eager to get involved. Similarly, the banks were not inclined to get involved in long term investment in housing. That was left to the local authorities or to building societies. Now the banks see that housing can be a viable proposition. They realise, too, that the financing of the forestry sector can be viable in the long term. There are many problems associated with the lack of timber. In India at present there are no forests. States like Brazil are wiping out forests at the rate of 17,000 hectares per day. There are problems associated with deforestation in the African Continent and the sapele is growing at an enormous rate.
Anything that the Government do to increase the potential for afforestation has to be fully supported. The Minister has in this Bill attempted to commercialise afforestation. There is absolutely no doubt in my mind but that he will succeed, because that is what he intends to do. I am delighted that in the past number of weeks he has invited Vice President of the European Community, Frans Andriessen, to Ireland. He will come here within the next couple of weeks. I am quite sure that the Vice-President will endorse what the Government and the Minister are doing in terms of this Bill. They are doing what should have been done many years ago.
I do not agree with the remarks of Senator Ryan about the appalling record of the Irish private sector. The Irish private sector has helped him and many like him to live in the cocoon in which he lives. There is nothing sinister about being an entrepreneur. An entrepreneur in this country is a vilified person. People such as Senator Ryan living in cocoons do not know what it is like to be in private industry. An attempt is being made here to commercialise Irish forestry and I commend the Minister for the work he has done since he came into that office.
I agree with Senator Ryan that the salary of Senators is not what it should be. That is the only area in which I agree with him. I commend the Minister for bringing this Bill before the House. I have absolutely no doubt but that as a result of it a commercial afforestation programme will be set up and that our children and our children's children will benefit from it.
I wish, in the most genuine way, to extend to you, a Chathaoirligh, and to all the Senators who have spoken on this debate over the past two days, my thanks for the very forthright, interesting way they have dealt with the provisions of this Bill. Reference was made on a number of occasions to the fact that I had served in this House. I have to admit that on those occasions I looked forward to the opportunity of some day doing what I have been doing for the past couple of days. I would like to thank Senators for their welcome and support.
I will try to deal with all the contributions as comprehensively as possible. I will begin by dealing with some of the general comments and then I will try to deal more specifically with others as they arise. Should I fail to cover some elements we will have ample time to deal with them on Committee Stage. In the earlier part of the debate quite a number of Senators were interested in the funding for forestry from EC sources. I want to say straight away that, far from having any ideological objection to EC funding for private forestry, I naturally welcome it. I will try to ensure that that area is properly developed in the future. Public forestry is also an essential element, indeed for a very long time, as at present, it has been the main element in meeting national forestry targets. I agree completely with Senator Norris therefore that the EC should provide substantial funding for public forestry. To do otherwise would be to discriminate in an area which is very important to us. We literally cannot accept a continuation of the present position.
While most of the points in relation to EC funding for public forestry were directed at the advantages we have in this country for tree growing, I would merely point out that from an EC point of view — this point was made by Senator Brendan Ryan — since there is such a heavy import content of timber into the Community it is also vital for the Community as a whole that forestry is developed. We are in a strategic and advantageous position to do that. Therefore, in calling for support for public forestry in Ireland we can do so in a totally EC context.
Forestry has been a poor relation in the EC. It may be no harm to put it on the record that it has been often a poor relation here in Ireland so far as its treatment by Government is concerned. Because it has been often a poor relation here at home, and it certainly has been a poor relation in the Community, overall Community policy on forestry as a whole has been quite slow to develop. Forestry has been catered for not in a specific way but very often through other programmes — for example, agricultural programmes where there were straightforward conflicts. In the context of contributions made by Senators with regard to the slow rate of development of forestry in some areas, particularly in the private area, one has to take into account the background and the thinking in agriculture generally and the manner in which forestry as a result was pushed out onto the perimeter and did not get the kind of treatment it should have got. Since we came into office we have made a major and sustained effort to change that climate. There is evidence here at home and in the EC that forestry now has a higher profile and that we can expect, provided we do our job properly, to be able to improve quite substantially the elements which go to supporting forestry, particularly public forestry, in the future.
In the course of the next fortnight I will be meeting the Agriculture Commissioner, Mr. Andriessen. We will take advantage of his trip to this country, on my invitation, to visit some of our forests and see at first hand counties, particularly in the west, that have real potential for forestry development. We will try to ensure that he understands perfectly the necessity for greater financial support for the public forestry element.
With regard to the policy-making organs in this country, we have established a special section in our own Department. The Taoiseach is heading a special committee so that for the first time we are beginning to put together a programme as to how best to achieve these financial aims in Europe. The House can be happy that these developments will prove fruitful. We have already improved the position with regard to an £8.1 million grant for roads from the European Regional Development Fund and we have negotiated a £29 million loan preferential treatment for forestry development from the European Investment Bank. We will continue to explore every avenue and possibility to improve that situation. We effectively want to throw down the gauntlet to the EC in this area and to manage it in a much better way than has been the position heretofore.
A number of Senators referred to the question of worker directors in the new company. I have said in the Dáil, and I repeat here, that directors of Coillte Teoranta will be appointed solely on the basis of the contribution they will make to the company and not in a representational capacity. We do not, therefore, provide for worker directors although the above approach would not prevent an employee of Coillte from being appointed to the board. I have had discussions with unions on this matter and I have told them that I would have no objection to availing of the provisions of the Worker Participation (State Enterprises) Act, 1988, to provide for participative arrangements at sub-board level, as envisaged in the Government's Programme for National Recovery. I can also assure Senator O'Toole that the Minister will appoint only the best. My record proves that I do not go for the old pals' act. No matter what criteria are applied in the appointment of directors, they would not prevent such a happening, but I can guarantee the House that it is not going to happen in this case. The Bill reflects the generality of State body legislation in providing that the Minister appoints the board. Senator Ross conveniently forgot that in this context the chief executive was appointed following a public competition.
Reference was also made by a number of Senators of the sale of shares provisioned by the Minister for Finance. Section 21 follows the generality of State body legislation which provides for the sales of shares, legislation such as that dealing with SFADCo, the Irish Steel Holdings Act, the National Film Studios of Ireland Act, 1980, or remains silent on the matter. Being silent does not prevent the Minister for Finance from selling his shares. The Postal and Telecommunications Services Act, 1983, was the exception. This set up two monopolies, BTE and An Post. All of the rest either had the same provision that I am putting into this Bill or were silent. Section 21 is not a charter for private participation. It gives the Minister for Finance a certain flexibility in regard to share sales in accordance with the practice of other State body legislation. There is no intention in section 21 to allow for a private takeover by the company. Why would the Minister for Finance give somebody else all the benefits of the investment in forestry? It is only reasonable, however, that he should have a certain flexibility.
Concern was expressed by Senators with regard to amenity development and the environment in general. The company will take over the present amenity activities — for example, the forest parks, picnic sites, etc. They will be first of all, expected to maximise revenue from this source. I am at a total loss, having known Senator Ryan for a very long time and, like Senator Lanigan not doubting on occasions his capacity to put his point across, to know why he could have ignored certain provisions in section 38 which includes a most important clause which provided that the company will be reimbursed for losses incurred on non-commercial activities such as amenity. For the first time we have been able to put into legislation a provision which enables the company, following a directive from the Minister, to carry out specified works and, as a consequence, where they are not commercial and where the company have attempted to make them as profitable as is humanly possible, the difference will be made up by the Minister. I think Senator Ryan, if he had a further opportunity to speak in this debate, would have to acknowledge that he has not seen that provision too frequently. It puts into character — I will be dealing with this later — some of the real effort that has gone into the production of this Bill to make it as comprehensive and as fair as possible.
The company, like others, will be subject to the laws of the environment. The final part of Senator Ryan's question related to the environment. Section 13 obliges the company to have regard to the environment and amenity consequences of their operations. Section 38 allows the Minister to give the company binding directions on specified matters relating to these operations. The company therefore, unlike the generality of State bodies, would have specific amenity environmental responsibilities. In addition, I accepted a Dáil amendment to provide for consultation with the Minister for Finance on forestry developments in areas of scientific interest. Senator McEllistrim was quite concerned about this provision. He, too, can be quite happy that his fears will be catered for.
I would like to say at this stage that the Forest Service can be very proud of its achievements in that area. The forest parks, picnic sites and reserves are the window through which the public have come to know forestry. It is one area which has caught the imagination of the public and it is important that we deal with it in the future as well as we possibly can, bearing in mind that much of that activity is not commercial. At the same time, it should not be neglected because of the commercial force we are putting behind the company.
Senator O'Toole was worried about the broadleaves and I will just bring that into the context of amenity. Despite the problems that we have nationally, we have introduced and increased the level of grants for broadleaf plantation. We have stopped the carnage in Coolattin. We have donated free of charge to Dublin University, the Dublin Millennium group and other groups deciduous plants for planting in different cities and towns. We have had consultation with the tree council. The broadleaf plantation which formed part of our history going back over the centuries will not be reintroduced overnight but we will try to ensure that there will be a proper balance. Each year for the past two years we have increased, albeit a small percentage, the level of broadleaf planting and we hope to continue to do that. In deference to Senator Kiely's contribution, he acknowledged what we are trying to do with regard to getting cash from the ash so that, particularly in Tipperary, we will have sufficient resources to deal with any problems that would come up at the Munster Final or later on.
I would like to acknowledge the fear that was expressed with regard to indiscriminate cutting of trees. Farmers and others tend to use mechanical hedge cutters. They are a very lethal machine and should be used with more discretion. It is not possible to put it into legislation but I would very much like to see a climate of opinion developing where people would at least feel that there was an obligation on them to replace trees when they cut them down. It is bad enough to cut them down but not to replace them or not to do anything about them in the future is painful and unnecessary. We have ample opportunity and knowledge to stop that kind of carnage.
In regard to private forestry development, the Seanad, as it has been known to do in the past, has taken up two different sides of the coin. There is nothing wrong with that. Senators Kiely and Mooney felt there was a need to develop private forestry while Senator Ferris and others felt that there was no guarantee that private forestry would deliver the goods. Some Senators were reading from material which is somewhat out-of-date in this regard. I know what the pressures are and this can happen all of us from time to time but we have had a tenfold increase in private planting since 1983. It was 3,200 hectares last year, it will be over 4,000 hectares this year and I will guarantee to this House that it will be over 6,000 hectares next year. The farming component in that will keep on increasing. We have also extended the grants to the co-ops so that a co-operative effort is being made to bring groups of farmers together to push private forestry.
The imbalance between State forestry and private forestry is being tackled. As Senators know, 85 per cent of the forests are owned by the State. This is unique by international standards, Europe or otherwise. In Finland, for instance, 65 per cent of the forests are owned by the private sector. We need to encourage farmers, land owners and others to become more actively involved. This is not a question of a row between the private sector and the public sector. There are resources held by groups which we want to release and which will help to create employment and a more stabilished and developing processing industry for the future.
Senator Connor said that private forestry development had mainly helped insurance companies and banks. I do not think he is getting the point in this. Irish investment companies and banks are prepared to invest in forests in the UK. I want to rehabilitate that money in terms of investment here at home. There is a considerable amount of financial resources and it is important that it be used here at home rather than in other countries. I do not think we should object to this development.
There were conflicting views on section 14. Senators Reynolds and Ross thought it to be quite restrictive while Senator O'Toole was not adverse to the sale of land in specific circumstances. The basic intention behind this provision is to ensure that the company does not flog off land to make up for management deficiencies. Its purpose is to prevent the sale of the family silver, if you like. I really do not understand the objections to this provision. It is being interpreted by some as interfering in the day-to-day management but what we are doing is looking for agreement on a national programme, an annual programme, which can form part of a five-year programme, which limits the capacity that the company might have in a given situation to dispose of lands. The Minister is entitled to act on behalf of the citizens of this country who have invested large sums of money in forestry.
In the Dáil The Workers' Party Deputies were concerned that the wording of this section would enable the Minister to force the company to sell land and I promised to look at this. I have since obtained further legal advice and these fears are groundless. The Minister cannot force the company, under this section, to sell land. The company can put up a programme of nil sales and that will obviously be acceptable. The Government are clearly committed to forestry. The forestry action programme in the Programme for National Recovery demonstrates that the record planting targets which have been set will be achieved and that there will be large support for forestry. In a situation of scarce resources, we have targeted forestry as a major developmental activity.
We are now about to establish Coillte Teoranta. The funding for this body will be as generous as possible over the next five years and will permit significant planting programmes. The annual planting programmes for public and private sectors will be decided in the light of situations then applicable. The memorandum and articles of Coillte Teoranta will give it the power to plant. Senator O'Toole said that 2,000 forestry jobs were promised in the Programme for National Recovery. The programme said that 250 job opportunities in planting would be created in 1987 and 1988 with an estimated additional 500 jobs in downstream wood industries over the next three to four years which could grow to 1,000 over the next eight to ten years. Obviously the bigger the forestry programme, the greater its impact on jobs, particularly in the downstream industries.
Senators were concerned that the Dáil would review the performance of the company. Section 38 (7) of the Bill allows the Minister to set financial and other targets for the company. Section 31 (2) allows the Minister to include information on such targets in its annual reports. These reports will be laid before the Houses of the Oireachtas who will thus be able to review the progress. We fully intend to avail of these provisions. Section 23 provides that dividends received by the Minister for Finance will be paid into or disposed of for the benefit of the Exchequer and the Minister has no choice but to do this.
Senator Mullooly was concerned that the company should have compulsory acquisition powers. We considered this very carefully and we are satisfied that to extend compulsory acquisition powers to the company would give it an unfair advantage over other companies. I, therefore, decided that the Minister should retain these powers for use at his discretion.
Senator Connor said there was no overall increase in land under forestry in recent years because of reafforestation and the use of the land reserve. Again, I think he has got it wrong. What is one supposed to do with a land reserve? Would a farmer take land for 11 months and not put stock on it or not till it? Should the taxpayer buy land and not plant it? All I am doing is ensuring that we plant on the land we buy. I am not concerned about building up a land bank for the next 10 years which we do not plant. Any funds available to me will be used to purchase land to fill in forest blocks. The main concentration will be to ensure that the land we have is used. I cannot see why there should be any objection to that.
With regard to reafforestation, we have a problem with interpretation. Some people understand reafforestation to mean planting all over the country and going back to the position of some hundreds of years ago. I am not going to get involved in an argument about that but reafforestation in the modern sense means planting after a first or second crop has been taken. To object to that is to misunderstand forestry which, in a real sense, is continuity. If one harvests a crop one replaces it. About 25 per cent of the planting last year was in that category. I would love to reach the day when we did not require any more land, when all the land we would be planting would have produced a crop of trees. Then we would be into the real cycle of forestry and harvesting between 3 million, 4 million or 5 million cubic metres, which is about treble what we have coming from our forests today and would be going back on that land again with a further crop.
Senator Connor also said that the wood processing arm of the industry was in chaos. I am delighted to be able to tell him that Finsa Forest Products in Clare are expanding their employment. Medite in Clonmel also have a fantastic operation producing medium density fibre board for export all over the world. They too are examining the possibility of expansion. The sawmilling sector, generally, has responded to the extra saw log output from our forests. New technology has been introduced, dry kiln facilities have been provided and research has gone into stress grading and marketing to ensure that we have a good quality product. I suggest to the House that we are seeing in private sector processing a new impetus. We have already gained substantially in the construction market which has grown from 13 per cent of the construction domestic market in 1981 to over 50 per cent now. That has taken a lot of work by people in the Forest Service, in research and in processing, to break down the attitude which was solidly held by people throughout this country, including specifiers, architcts and others who would specify timber other than native timber. We are changing that but it is taking time to do it and a lot of effort has to be put into it. We want to see further improvements, particularly as we discover the possibilities in the UK, our nearest neighbour. We must get into that market with a good quality product, hold our gains and improve on them wherever possible.
Senator Ferris criticised the tender system. We have tried to improve on that over the years. There must be a tendering system when the demands that are there in the sawmilling sector cannot be satisfied. We have got to have some mechanism whereby the opportunity is given to people to tender for resources. As well as the tender system we have introduced a quota system for sawmillers and processors who have an established record, have introduced new technology and are producing good products. We are able to guarantee them up to 40 per cent of their supplies annually. We are also having consultations with the Irish Timber Council with a view to introducing auctions where sawmillers and purchasers throughout the country will be free to pick and choose from the supplies available. We have updated our inventory. Not only have we used our own resources to do that but we called in international consultants. We are able to give an accurate forecast not just for this year but for the next 10 years as to precisely what will be coming from our forests. Those involved in the pulpwood sector who use thinnings, and those in the small and large saw log sections can know the types, quality and amounts that will be coming on stream. They can plan in the long term and not just in the short term. We are not giving figures which we cannot stand over. These have been checked, and double-checked. We had forecast that we would take out 1.25 million cubic metres last year and we extracted 1.3 million; we were forecasting 1.4 million cubic metres for this year but we think it will be very close to 1.5 million. Therefore I want to put into context our forecasts with the actual delivery. I want to nail the lie that is circulating in relation to what is happening in our forests and the process by which timber is becoming available to the industry.
Senator McEllistrim referred to the old chestnut, damage by the Forest Service to roads. We are not the only contributors. We are not any worse than the juggernauts. The Department of the Environment pay to the local authorities grants in lieu of rates on behalf of the various Departments. However, I accept that we have a problem. I do not think it is one that can be solved in the context of this Bill or, indeed, by the Forest Service. I would like to think that some way will be found to improve the country road network. The question can be more appropriately addressed to a slightly taller Minister.
Senator McCormack was anxious to know how the company will be staffed. Section 43 provides that the staff will come from the Department of Energy. He was also anxious that the company should report back to the Houses of the Oireachtas. I have already included a provision for this in section 31.
Senator Doherty was concerned about the closure of a nursery in Longford. That is a regrettable development. We have had negotiations with the unions and we are offering voluntary redundancies to a number of workers and the remainder will be deployed to other forests. In a general sense, we are out in the open market and people can import plants into this country from the UK and France at considerably lower costs than we are producing them. It is because of that that we have had to rationalise. In the rationalisation programme we have had to concentrate on those nurseries which had the best soil conditions for the production of good healthy plants. We plant about 50 million plants each year and we require for our programme 35 million plants. The remainder is virtually lost in the system. If you examine that closely you will understand that some of the soil where nurseries are located is unsuitable as it produces weaker plants. The rationalisation is fundamental to ensuring that we have a strong nursery programme. I said last year, and I say it again, that I am not satisfied with a nursery programme which is confined to the domestic market. In view of the health status we have, the disease-free status in international terms with no acid rain or real problems with regard to disease in trees, we should look at our nursery programme with a view to satisfying needs in any part of the world and not be confining ourselves to domestic demands.
It would be nice for the time being to be able to satisfy that demand alone. Therefore, in our rationalisation we are talking about a stronger nursery programme which will cater not only for domestic needs but for international needs and will be strong and competitive enough to do that.
As Senator Shane Ross spoke I heard tapping on the wall and any knocking I will do of his speech was being appropriately delivered by the building work as he spoke. I thought that his contribution was quite extraordinary in many ways. He interpreted some of my statements with an elasticity which was quite extraordinary. He said that because of necessary procedures and so on in the Civil Service it was not always the best suited for commercial operations. What we are doing is the same approach as in regard to BTE and An Post and those companies have been very successful. Civil servants transferred directly from Departments into the new organisations and nobody can say there was anything wrong with them before that or subsequently. Indeed, I want to acknowledge publicly the calibre, dedication and commitment to work in the Civil Service. I say that from experience in two Departments, apart from my knowledge in local authorities throughout the country. They are second to none and we are fortunate to have people so dedicated. There are officials here tonight and I do not think they will be able to charge for overtime or anything like that. I would like to publicly acknowledge their work. Any member who interprets my speech as conveying the impression that I have in some way played down the contribution that the Civil Service or those in the Forestry division have made is wrong. I object to it and I will try to deal with that claim as best I can. Within the Civil Service there are constraints and there are procedures which must be followed. We have reached the stage in forestry development where the people who have been managing and developing estates over the years have been pushing for a change in the organisation. They see that there are scope and opportunities. That is one side of the problem.
A number of civil servants who in the past 12 months took voluntary retirement have gone into private enterprises. They were very virtually sucked out of the system because of the ability they have which was acknowledged by those in the private sector who contacted them. There can be no doubt about that. Something similar has happened in Aer Lingus and other organisations too numerous to mention.
I said that this company would not just be another semi-State board but by some extraordinary convoluted interpretation of the English language Senator Ross interpreted that to mean that all semi-State bodies are inefficient. I am glad that as a result of my sightline penetrating to the back seats, I can see it has got so hot that Senator Ryan is reacting even though I have not mentioned his name in any derogatory way so far.
What I said does not mean semi-State bodies are inefficient. Indeed, many of them, as we know, are quite efficient. What I said means that I am setting a special standard for the new company and there is nothing wrong with that. Why, in Heaven's name, should everything be the same? If it is different I say it is different and we will make it different. We have the confidence to do that. It should not be interpreted as a reflection on civil servants who will be transferring to the new company. Over the past 12 months the changes that have taken place make me feel happy that the staff who will be transferring will demonstrate that the company is special and different. That is probably the only way to effectively answer the pessimism, the fatalism delivered by highly-rated Senator Ross.
On the question of funding, and the break-even date, the fact is that our forests are at a certain stage of development. We cannot realise profits until they reach a certain stage. Even Senator Ross, with his unique capacity, cannot make trees grow any faster than they are growing. He should know enough about investment to realise that forestry is long term but that does not make it a bad investment. A private speculator would hardly pull out of a good investment just because it had not yet realised its full profit potential and hand it over to somebody else. Why should the State be any different with a very good investment in forestry which will give certain and substantial profits? Therefore, the State, like a wise private entrepreneur, will continue to fund forestry.
Senator Ross made the point that it was wrong to say the new company might not run into profit in the next four or five years. I am coming to this House, as I did in the other House, to state the facts. I know from the exhaustive examination we did, and from the consultants we called in to advise us, that it will not be profitable within that period. What I am saying is that by having the new organisation the break-even date will be brought forward considerably. I differ from Senator Ross fundamentally on this in that I see that as a saving. To do otherwise and maintain the same programme we would have to draw on the Exchequer and, consequently, the draw on the taxpayer would be substantially greater.
There are two ways of making a profit. One is to decide to take action today so as to reap the profits tomorrow. The other is to decide to do nothing because if it does not happen tomorrow it is too late. We cannot afford to be that pessimistic. Senator Ross referred to section 14 and I should like to emphasise that this it not a straitjacket on the company. I have already emphasised that the section seeks to prevent excessive land sales. The Senator also seemed to condemn section 44 which, as I understand it provides pensions and safeguards pension rights. I do not know what he feels the company should do in relation to this. The staff are as entitled to have these rights as they were while in the Civil Service.
I should like to put on record that the forestry development we have today is there largely because of the taxpayer. Between 6,000 and 7,000 jobs have been provided in that sector by successive Governments and the taxpayer. I do not think Senator Ross should have reflected on that contribution. What is happening in forestry at the moment, and I want to be the first to acknowledge this — there are very exciting developments taking place — could not have been taken were it not for the decisions taken a long time ago in difficult times by different Governments. The staff in the Forest Service, serving and retired, have made their contribution and we have a resource which we can develop. It is certain, beyond any doubt, in spite of what Senator Ross said in relation to what the private sector would do, that that resource would not be there if we had to depend on the private sector to provide it. I cannot say what will happen in the future but that is a fact. I wonder where the 400 picnic sites and parks around the country would have come from or what private entrepreneur would have spent his or her money developing them. We should acknowledge this publicly, and the staff involved in these developments can be quite proud.
Senator Ross also found something wrong with the staff in the service at the moment moving to the new company and, as he said, still holding the strings. We have more confident people today and I would like to think that when the organisation changes take place — some of the changes were made in advance of the formation of the company — they will indicate the commitment that was there in the past will be enhanced in the new company.
We are not giving the company a blank cheque. We are doing the best we can to ensure that it will have adequate funds to develop. To say that because we cannot say exactly when it will be profitable is giving them a blank cheque is wrong. Many private company and enterprenurial decisions are taken without people being able to say exactly when the company will be profitable. Given a certain set of circumstances, certain planting targets, market developments, and a number of positive improvements in those areas, which are quite likely, we can bring forward that day. I do not think it would be proper, in the context of moving the legislation to set up the organisation, to get down to the nitty gritty of saying precisely when exactly the profit date will be. We can make it as near as possible and leave it at that. I do not agree with the implication that there is an assurance in the Bill that the company can, willy nilly, decide when it is profitable, when it is not or when it will go to the Exchequer for funds. That is not the road we are taking. I do not think the Senator should say that because we are not specifying the break-even date there is something fundamentally wrong.
The Bill is not about checking the accounts line for line of a company not yet established. It is to establish a new company to manage and develop our forests. Indications in regard to the cost of harvesting, the cost of planting, the increased amount of sawlog coming from our forests are that, organisation, following restructuring and other developments, in the future, we are creating an organisation which will prove Senator Ross to be quite wrong.
Senator Brendan Ryan wondered why there had not been more development in the private sector, particularly in regard to farmers getting involved in forestry. The grants which are available now date back only to 1981, so that the incentives for farmers to become involved were miniscule. There is, of course, an historical reason. Conventional thinking on agricultural development encouraged farmers to develop land for conventional farming, which was highly unsuitable and quite expensive. In fact, much land is overgrown with rushes following very expensive treatment. The incentives were not in place. There was the historical attitude to trees which were associated very often with failure, landlordism and the foreign occupier. This view is changing now. We have been working to bring about change through the farming organisations and the co-ops. I should like to thank them for the cooperation they have given to me. There are very encouraging signs. I have already indicated the growth in the private planting area over the last couple of years and I think that will be sustained. We will leave the past to the historians and we will look to the future with more confidence.
Senator Brendan Ryan also wanted to know why investors shied away. One of the reasons was given by Senator Lanigan, the long term nature of the investment and the fact that people were not familiar with forestry. There is still a shyness and I am doing my best to break down the barriers. Other reasons included the fact that there were so many gilt-edged opportunities for investments which were safe and risk free. I regret that we are not a little more willing to take risks. I would like to see more risks being taken and we will encourage that as far as we can.
Very often people had a bad experience in forestry. It was because of the conventional thinking in farming that forestry was pushed into the hills, into inaccessible areas, into low-yielding forests. People got the wrong impression. However, with higher yielding forests coming onstream and a more positive attitude, we can change that thinking. I should like to take this opportunity to invite investors who have spent their money abroad to think more in national terms of what forestry can do in regional and outlying areas and in creating employment. We have ideal climatic conditions and ideal soil and happily much of the good land is in areas away from cities and industrial estates. We can have better rural development, a better balance, and forestry can be tied in with farming, tourism, fisheries and developments of that kind.
I was asked if we really know that there will be a return. I was asked if there was doubt in the private sector because there was no possibility of profit. I will take two yardsticks. I hope forestry income here will have increased by 50 per cent in our first two years of office. There is still room for improvement, both on the cost cutting side in management and in increasing the income limit. That is a positive indicator. This year we will be expecting 1.5 million cubic metres, by 1992 it will be two million cubic metres and by the end of the decade it will be three million cubic metres. Then we can look forward to the day when we will reach break-even and the possibility for profitability. Senator Brendan Ryan talked about 20 years hence — I do not know who will live to see it — but he will be proved wrong on that point.
I never challenged the Minister, but I wanted to know why the private sector would not invest if it was such a good prospect.
We cannot say exactly when that day will be. I can only guess and that guess will be confined to my trusted self. With regard to the headage payments, I do not understand the Senator's philosophy that we will be continuing to pay grants for stock that has left the land. Let us get this straight, forestry is a long term business. We are trying to get the farmers and landowners involved. The attachment to land is incredibly deep. Long before there were any foreign occupiers, scholars wrote in the 6th century and 7th century about the attachment to land. It is difficult to get people to change from conventional farming into forestry, against the background of oppression, the use for military purposes and so on of the fine oaks that have been used all over the world. It is one thing to get somebody to change if you can pay them within a year. It is another thing to tell somebody who is 55 years of age that the real return will come when they are 85. The national average lifespan for a man is something like 65; and, if you are happy and lucky enough to be of the other sex, you have a chance of about five years longer. I hope all of you do well on that score.
The headage payment is intended as a compensatory element for taking the stock off the land which is converting to forestry, but it is more important that he or she knows for 15 years after planting that they are sure of getting some income from an investment which would otherwise produce nothing in terms of income. I think it should be seen in those positive ways.
I agree with Senator Brendan Ryan in regard to heavy borrowing. I have stated time and time again that I do not want to see the company lumbered. It has got a good endowment and it can tolerate some level of borrowing, but it should be carefully monitored and it should not be placed in a position of any financial jeopardy.
The Senator has an objection to section 36. Well, you have to object to An Bord Gáis and to the National Development Corporation, because it is a provision which is enshrined in all of those. All it does is to expect the company to comply with what are national pay guidelines. Heaven knows, we have gone through enough on comparability. We have gone through enough on all of these things over the years to have some sense of balance in all of this. If one company sets the norm, what happens — the next one has to follow. So, we have to have regard to national pay guidelines. An Bord Telecom and An Post do not have the same provision enshrined. If you look at section 110 you will see where they have to take directions from the Minister which could imply the same provisions, and there are also other sections which relate to having regard to pay guidelines. I think I have dealt satisfactorily with section 38, to bring you back on course again.
May I add one other thing? If you read through that section you will see where we are talking about particular developments or specified developments — for instance, private grants. The control of private grants will be held by the Minister for Forestry. He will ask the company as an agent to operate these grants; otherwise it means that the Minister has to have the staff to go perhaps to Mayo, when there are technical staff in that area working for the company. Let us have a bit of sense. It is not a directive to interfere every day. It is just a managable provision which has a lot of weight, a lot of strength, and I think it is basically sound.
Section 39 provides for the transfer of lands. That is the main provision. The subsection the Senator referred to is merely there to ensure that the Minister would issue a certificate where there was a doubt as to whether the land was vested or not vested. It might otherwise be used in a situation where the Minister might for one reason or another decide to retain a certain piece of land.
In the course of what I have said I have tried to answer as many of the questions as possible that were raised, quite genuinely, by Senators. I was quite impressed — as I have often been in this House before — by the standards set, the research and the effort Senators went into to ensure that they had all the material necessary to improve the provisions of the Bill. I look forward to having the final Stages tomorrow. I would again like to thank all of you who have stayed on late to facilitate me in the passage of the Second Stage. I look forward to continuing the deliberations early tomorrow.
May I thank you, Minister, for that excellent reply. I think everybody would agree.