Forestry Bill, 1988: Committee Stage (Resumed).
Debate resumed on amendment No. 4:
In page 8, subsection (2) (a), lines 38 and 39, to delete "not more than 9", and substitute "at least 12".
—(Senator Ferris.)
We had initiated a discussion on amendment No. 4 to section 15 and the Chair had indicated it was related to amendment No. 5 and other amendments which deal with the composition of the board, the number of people on the board. In amendment No. 5, we specifically request the Minister to appoint employees of the company as directors on the board and, indeed, on the sub-board. Concern has been expressed to us by the unions representing workers in the public sector such as the Union of Professional and Technical Civil Servants, the Federated Workers Union of Ireland and the Irish Transport and General Workers Union and other unions about this. As is the normal procedure when setting up boards and sub-boards in State, semi-State and private companies provision is made for workers to be represented at the appropriate level. That is not a request that the Minister should turn down and we are surprised that the Bill, as published, makes no provision for it.
The Worker Participation (State Enterprises) Act does not make reference to the new forestry board. If the Minister agrees to include the new company under the worker participation legislation I will be satisfied. I should like to remind the Minister that at the time Teagasc was established the Minister for Labour gave us an undertaking that that body would be included in the worker participation legislation. However, the Minister responsible for Teagasc, Deputy O'Kennedy, refused to honour that undertaking.
It is our view that we will not make any progress in regard to worker participation if we do not insist on specific provisions being included in legislation. Worker participation is a good principle to be associated with and workers have a lot to offer at management level. I have no doubt that officials in the forestry division would make a tremendous contribution to the new board.
In my view nine is a reasonable number of directors for Coillte Teoranta. I appreciate the reason for the amendments but an increase in the number to 12, as proposed by Senator Ferris, would not be warranted given the size and operations of the company. Frankly, 12 directors would be too many and that number would not have any real impact in terms of increased operational efficiency. In fact the opposite could be the case. On the general issue of worker directors I should like to state that I fully appreciate the views expressed by Senators, and others, on this. My record shows that I have always been concerned for good staff relations, recognising as I do the important contribution which staff in any organisation make to its development. It has always been my view that the most important resource of any organisation is its staff.
In appointing the directors of Coillte Teoranta I am determined to select only those whom I judge to have the necessary qualities to make the maximum contribution to the development of the company which has such a vital role to play in the economic wellbeing of the country. On many occasions in the past, and indeed in the present debate, Senators have pointed out very forcibly the danger in appointing people in a representative capacity to boards of State-sponsored bodies. I do not propose, therefore, to appoint anyone in such a capacity to the board of Coillte Teoranta.
I should like to emphasise to the House that this approach does not in any way reflect an anti-worker sentiment. As I have already pointed out, my record proves otherwise. This simply reflects my genuine view, which is shared by many Senators, that the best way of ensuring the most effective development of Coillte Teoranta is to appoint its directors on the basis I propose. In saying this I do accept that others have a contrary and legitimate viewpoint. I should also mention that in my dealings with staff in the Forest Service I have found diverging views among them in regard to the appointment of worker directors to the board of the new company. Again, differing viewpoints on an issue of this kind are not surprising. I do intend, however, to appoint employees of the Forest Service to the board of Coillte Teoranta on the basis of the individual contribution they can make. While the Government will make the final decision on this matter I would, naturally, welcome any views which the relevant unions may wish to offer.
I also intend to avail of the consultative procedures under the Worker Participation (State Enterprises) Act, 1988 in relation to the participative arrangements at sub-board level in Coillte Teoranta. Senators can thus be satisfied that the contribution which employees can make to the new company will be recognised in the appointment of employees to the board on the basis I have indicated. Participative arrangements at sub-board level will also be an important means of providing for an employee input into the working of the new company. I do not propose, therefore, to accept these amendments.
May I take it from what the Minister has said that the new board will be included in the Schedules of the Worker Participation (State Enterprises) Act, 1988? Will the Minister make special places available on the new board for workers?
In view of that I should like to know if there is a bias on the part of the Department of Agriculture against worker participation at board level?
No. I indicated in my reply that I will be appointing directors from the staff to serve on the board of the company. I told the House that we will be proceeding to abide by the provisions of that Act at sub-board level. If the Senator considered the position of other State bodies, for example Aer Rianta, he will see that the appointment of worker directors followed a conscious decision by management, unions and staff to begin the process of planning for the appointment of board directors. Those ultimately selected had gone through the process of management and had been involved in the budget process and other serious matters in regard to the company. Therefore, they were ideally qualified to move from sub-board level to board level. The important thing is that I should not say that I can nominate a person or that I can appoint directors. The important thing is that the worker directors when appointed should be in a position to make their best contribution to the company.
I should like to tell the House that the Forest Service is changing from a Civil Service organisation to a new company. Many of the reports on the Forest Service have suggested that the structure is not suitable for the commercial demands that will be made on forestry in the future. I would not like to cement the existing structure in regard to the appointment of worker directors at this stage. I would prefer to consider a structure for the future, to commence at sub-board level and move on from there to get the best possible arrangement. I should like to assure the House that I have travelled the length and breadth of the country to have discussions on this issue. I met the unions involved and had discussions with staff representatives. I heard differing views from the staff on the concept of worker directors. Some are against the concept while others are for it. However, I must make it clear that I accept the views put forward by Senators in regard to this and also those expressed by Congress who are making an issue of it. I should like to assure everybody that the course we are travelling is a safe one. It allows for the appointment of staff to the board by the Minister of the day.
I do not have very strong views on the issue of worker directors but it is important in any new organisation that we ensure that worker directors should come from two streams. There is a huge difference between a former civil servant who would be an administrator, a person who would be guided at all times by the written word, and the person who has worked in the forests. In the development of our forests it is important that we have the views of those who have worked in them. I accept that in the last four or five years there has been a change in forest husbandry. For example, the Forest Service do not for some reason plant trees in a straight line. Foresters do not plant trees in straight rows any more and they do not seem to get around to pruning.
This means that in 30 or 40 years time all timber will have knots and will be of a lesser standard that what is being harvested at present. There should certainly be a forester or somebody working in that area on the board so that there would be a direct input. If some bright spark puts forward a proposal to save £X million it should not be at the expense of whoever will be cutting the timber in 60 years time who will find that he has nothing only firewood for sale. I have been horrified while walking through the Slieve Bloom Mountains to find that no preparation is put into the planting of trees. People there seem to plant a tree where they get a space in the undergrowth. That is not the best utilisation of the land and it certainly will do nothing for the quality of the timber that will be harvested in 40, 50 or 60 years time.
I ask the Minister to ensure that the composition of the board has a mix of expertise and disciplines. The new board will be an improvement on the Forest and Wildlife Service who have done marvellous work in the past but are clearly not able to cope with the commercialism that has ground the industry to a halt. They find difficulty in resisting the powerful multinationals who want all the forest products for nothing. We need to have hard-nosed people on the board who know both sides of the business.
First, we accept that the Minister has agreed to include this new company under the Worker Participation (State Enterprises) Act, 1988, and this is a step in the right direction. In order to bring it to fruition the appropriate thing for him to do would be to accept our amendment No. 5. We accept that the Minister has talked to people throughout the country, to various staff and individuals, all of whom have differing views. The only way to get the view of any group of workers is to consult with the union representing them and not with individuals. Of course individuals, whether they be in political groups or whatever, will have different views on all matters. The only way to achieve a consensus on what a group require is through an electoral process. Congress and indeed all the unions affiliated to them have set down a structure of election whereby the workers involved at the various levels have an opportunity to vote for whoever they consider is the appropriate person to represent them at board or sub-board level.
I would like to thank the Leas-Chathaoirleach for his support in this concept. It is highly dangerous for the Minister to by-pass that procedure and to take it upon himself to decide who should be on the board, whether they be in the Minister's Department, the Civil Service or out in the forests. The affiliated and paid-up members of trade unions are the appropriate people to decide who should represent them. That procedure was adopted in all other State and semi-State companies set up by the Houses of the Oireachtas. It is a procedure that we should not lightly move away from because we could find that only workers who have the ear of the Minister of the day — not this Minister — would be sure of a nomination to the board and those people might not represent the views of their colleagues. Therefore, I cannot accept the guarantees given by the Minister. I appreciate that the designation of the company under the Worker Participation (State Enterprises) Act is a first step. The next logical step would be for the Minister to accept amendment No. 5.
I will not delay the Bill on this section. Worker participation is a good concept. The Leas-Chathaoirleach and Senator Ferris have dealt with it very well and it also has my support. It would be very beneficial for the workers in that it would give them a sense of participation in the running of the new company. Companies could be full of administrators who know what is happening idealistically, but realistically they might not be as well versed as persons who have been in the business or the industry for a number of years. I have slight reservations — I would like the Minister to correct me if I am wrong — if the Minister of the day has power to appoint a worker director to the company. What Senator Ferris said about trade unions nominating people to boards of semi-State bodies possibly is a better procedure because it gives all the workers an opportunity to voice their opinion.
First, I want to leave the House under no illusion with regard to the general practice of appointment to boards. It is not my intention or that of some other Minister to have the board appointed at ministerial level. The practice over a very long time has been that the Minister of the day would establish the first board. Secondly, Senator Ferris might have inadvertently indicated that all semi-State boards have worker directors. I know he knows that is not a fact but perhaps it is no harm to try on occasions to make an argument based on that kind of premise. Roughly seven semi-State boards have worker directors and ultimately many others, like Aer Rianta, will follow suit. The question of worker directors should be considered — I have every sympathy towards it — in the light of progress made, as sub-board level. It is clearly preferable to build on that kind of foundation and infrastructure so that there is the fullest possible participation of workers in the management of this company in the future.
Senator McDonald is unique in many ways because he has a capacity to be absolutely complimentary and at the same time to find a channel through which he rifles fairly ably. With regard to pruning, I wish to tell the illustrious, long-serving Senator that the position has improved considerably in the past two years. For a number of years very little pruning was carried out but we have restarted the process. I accept that all the ground is not being covered but the position is certainly improving. I do not know that time of night the Senator travelled through the forest — it certainly was in the night time — when he noticed that the lines were not straight. That is not peculiar to the Senator alone. I suppose there are places to travel to in the day time which are quite nice also. I have not had the opportunity very often to be in the forests at night time but I think——
The Minister does not know what he is missing.
——the lines are very straight. There may be occasions when there is an odd twist due to the terrain, but that would be a management decision. The foresters in my Department and their staff are well aware of the best way to achieve a good plantation and Senator McDonald should have no fears in that regard. I have no wish to stifle the debate on this Bill but we have given much consideration to this question. As I said, I want to accommodate the House by including, as soon as is practicable, in this Bill the provisions of the Worker Participation (State Enterprises) Act, 1988.
With regard to the nomination of the first board I am agreeable to the appointment of people from the staff of the Forestry Service. I want the sub-board development to take place as quickly as possible and to build on that so that we can meet the wishes of this House. I would not want to indicate that there is very much further scope in relation to this because very firm decisions have been taken already. I have indicated the same view to the other House.
Is amendment No. 4 withdrawn?
I will not push the amendment but I hope the record of the House will record us as dissenting because of the inability of the Minister to accommodate our views on it.
Amendment, by leave, withdrawn.
Question proposed: "That section 15 stand part of the Bill."
On the basis that our dissent is recorded.
Question put and agreed to.
NEW SECTION.
Amendment No. 5 has been discussed with amendment No. 4.
I move amendment No. 5:
In page 9, before section 16, to insert the following new section:
"16.—(1) The Minister shall appoint to be a director of the company each employee of the company who is elected in accordance with this section. The number to be elected at any such election shall be one-third of the number of directors provided by the articles of association of the company for the time being.
(2) An appointment under this section shall be in writing and shall specify the day on and from which and the period during which it is to have effect, which period shall be determined by the Minister.
(3) The term of office of a director of a company who is appointed under this section shall, unless he sooner dies, resigns, leaves the employment of the company, becomes disqualified or is removed from office, terminate on the expiration of the period for which he was appointed.
(4) The Minister may appoint an employee of the company eligible to be nominated as a candidate at an election under this section to fill a casual vacancy arising by reason of an event mentioned in subsection (3) for the remainder of the term of office of the director whose vacancy is to be filled.
(5) A director of a company under this section shall, subject to this section, be eligible for nomination as a candidate and for election at an election for the purposes of this section.
(6) An election for the purpose of this section shall be held within 12 months after the vesting day or such longer period as may be agreed between the company and recognised trade unions and staff associations and in each third year thereafter.".
Although the Minister has confirmed that he will——
This amendment has already been discussed with amendment No. 4.
I know that but I want to clarify exactly what we are doing. The Minister has agreed that he will appoint workers to the first board and I believe this amendment will facilitate him to do it correctly.
Is the amendment withdrawn?
The question is: "That the new section be there inserted."
Question put.
The Committee divided: Tá, 15; Níl, 19.
Tá
- Bradford, Paul.
- Bulbulia, Katharine.
- Doyle, Joe.
- Fennell, Nuala.
- Ferris, Michael.
- Hogan, Philip.
- Kelleher, Peter.
- McDonald, Charlie.
- McMohan, Larry.
- Manning, Maurice.
- Norris, David.
- O'Shea, Brian.
- O'Toole, Joe.
- Reynolds, Gerry.
- Ross, Shane P.N.
Níl
- Bohan, Edward Joseph.
- Cassidy, Donie.
- Eogan, George.
- Fallon, Seán.
- Farrell, Willie.
- Fitzsimons, Jack.
- Haughey, Seán F.
- Kiely, Dan.
- Kiely, Rory.
- Lanigan, Mick.
- McEllistrim, Tom.
- McKenna, Tony.
- Mooney, Paschal.
- Mullooly, Brian.
- Mulroy, Jimmy.
- O'Callaghan, Vivan.
- ÓConchubhair, Nioclás.
- Ryan, William.
- Wallace, Mary.
Tellers: Tá, Senators O'Shea and G. Reynolds; Níl, Senators W. Ryan and S. Haughey.
Question declared lost.
Amendment declared lost.
SECTION 16.
I move amendment No. 6:
In page 9, line 19, after "Finance" to insert "and any proposed alteration shall be notified by the company to recognised trade unions and staff associations".
It is appropriate that the Minister would have the fullest consultations with the trade unions and staff associations. In this amendment we are requesting formal notification of any alteration by the company to the recognised trade unions. The Minister has admitted that he has had widespread discussions. We are satisfied that he does recognise the role of the trade union movement representing staff. We accept that but we want to ensure that the company would also give the same recognition to the trade union movement. In view of the attitude of many people to privatisation nowadays it is important that those representing staff and their associations would be consulted and notified by various companies of what is taking place. If companies bring their workforce along with them, they will be more efficient and profitable, giving everybody an incentive to ensure viability, especially in the case of a new company like this one which we all want to be successful.
Section 15 (2) (g) says:
The company shall not establish or acquire a subsidiary without the approval of the Minister given with the consent of the Minister for Finance.
All we are seeking here is notification of the recognised trade unions and staff associations.
I do not anticipate any great difficulty in so doing. Let us face it, any good, commercial company will ensure there is the best possible liasion and consultation with its staff. As Senator Ferris has said, that is most important and creates overall confidence. The best way to ensure such confidence is that, whenever changes are being mooted which affect staff, the widest possible consultation would take place. I can assure the House that will be the case. The provisions of this amendment would oblige a company to consult unions and staff on every single issue but, as the House will appreciate, from time to time in the course of a commercial business decisions are taken, many of which would have no direct bearing whatsoever on staff. In fact, they would be to the benefit of staff but might well not lend themselves to prior consultation. In such circumstances we are endeavouring to protect the flexibility and commercial freedom we will allow this company but in the normal process when matters affect staff the ordinary consultation procedures will be adhered to.
In fairness, the provisions of our amendment do not seek consultation on every single issue.
Every change proposed in the memorandum and articles of association.
It is an important request because the section reads:
Notwithstanding anything contained in the Companies Acts, no alteration in the memorandum of association or articles of association of the company or of any subsidiary of the company shall be valid or effectual unless made with the prior approval of the Minister given with the consent of the Minister for Finance.
Obviously in any such alteration the approval of the Minister with responsibility for forestry and that of the Minister for Finance will be required. We are requesting that at least, out of common courtesy, the company would notify the recognised trade unions and staff associations. We are not seeking their approval. I understood from the Minister's initial response to my comments and those of Senator O'Shea that he expected that would be the case. If the Minister will reflect our views that it would constitute good business practice for the company to do so, we will accept that assurance but we do need some assurance. Otherwise this company could go off merrily about its business, ignoring many people with the exception of the Minister for Finance and the Minister with responsibility for forestry. That is not an unreasonable request.
We had this debate on the last occasion this Bill was discussed. Perhaps Senators sometimes tend to ignore the fact that Ministers have been appointed through a democratic process and would be anxious to ensure that such matters are properly attended to. I have no problem in giving the House a guarantee that I will be requesting the company to comply with this kind of situation in so far as it affects staff. We are trying to ensure that there is not an obligation to consult on all business, much of which may have no direct bearing on or relationship with the staff but could be required for normal commercial and good practice in the interests of the staff.
Is amendment No. 6 withdrawn?
Yes, on the Minister's assurances which he has now reiterated.
Amendment, by leave, withdrawn.
Section 16 agreed to.
SECTION 17.
Amendments Nos. 7, 8 and 9 are related and may be discussed together.
I move amendment No. 7:
In page 9, subsection (2), line 27, after "represents the" to insert "minimum and maximum".
Section 17 basically deals with the thorny question of valuation of forestry property. I have an amendment down also for the establishment of a reserve account. I hope that the House and the Minister will bear with me if I quote from the Report of the Review Group on Forestry part of chapter 4, which deals with the valuation of forest estates:
4.3 Forestry is an investment where payments and receipts are spread over periods of up to 50 years or more. There is no definitive method of valuing a forest estate.
4.4 Expenditure on a forest crop is highly concentrated in the early years and the greater part of the income comes towards the end of the rotation. We used discounted cash flow methods to appraise the investment. The discounted cash flow method converts, by discounting, all future net revenue and expenses to their present value. This enables an investment to be appraised in terms of
(a) net discounted revenue... assuming a given discount rate; and
(b) internal rate of return.
4.5 A valuation of the State forest estate can be used to:
(a) assess the value obtained from State capital expenditure on forestry;
(b) provide a periodic statement of movement in the value of the forest assets owned by the State;
(c) quantify the longer term and more recent historical performance of the State forest investment programme;
(d) provide a numerate base for decisions in commercial forest management;
(e) assist in calculating the levels of efficiency achieved in the carrying out of silvicultural operations and the influence of overheads on efficiency; and
(f) indicate the impact of non-commercial influences...on forest management decisions.
That states the reason for an amendment on evaluation. One of the issues within the forestry Department is how much our estates are worth. In the setting up of a new company, it is essential that we have a minimum evaluation and maximum level. In this context, amendment No. 9 to section 17 becomes self-explanatory. When you have a maximum and minimum set-up, a reserve account would then be established. This would be a great indicator of how the new company is progressing financially. If we do not have a reserve account, we can get into all sorts of problems wondering, if the valuation is set too high, whether you are putting the new company under a lot of financial pressure to try to establish a strong financial base. If it is set too low, the company are shown as doing much better than their achievements. The amendments are relevant and are extremely important to the setting up of the new company.
I want to comment on what Senator Reynolds has been saying. I want to know how the valuation will be established. The national forest estate is about 400,000 hectares and about 350,000 hectares of that is planted. It has a planted value today. The value of forests in normal growing years increases, perhaps, by about 5, 6 or 7 per cent per annum. That is not taking into account interest, inflation and so on. I am talking about the real value of forests as the yield increases. In this section of the Bill the Minister talks about consulting with the company and the Minister for Finance etc. but there must be some other expertise being brought into play actually to determine the real value of the forest estate.
It is very important at this stage that a real, meaningful value is put upon it. That has all kinds of implications for the performance of the company thereafter, because the valuation will be the basis on which their performance, their profits etc., will be measured. When you make up a balance sheet for any company, naturally their fixed assets or growing assets will be a major reference point in determining the health of the company. It is very important, when this is determined, that it is determined, first, by the right kind of people, that the right kind of expertise is brought into play to carry out a realistic and real evaluation of the estate.
Senator Reynold's amendments carry the implication that the company could revalue transferred assets upwards in the course of time and that the Minister for Finance therefore could lose out, as his shareholding would relate only to the value of the original assets. That, however, would not be the case. The revaluation of the assets of any company is a normal accounting matter which does not affect shareholders' interests. If, for example, the forest estate transferred to Coillte Teoranta were revalued upwards, the excess over the original valuation, in accordance with company accounting procedures, would be represented by a capital reserve which is part of the shareholders' funds. The Minister for Finance, therefore, would not lose out in the case of such a revaluation. I might also mention that under section 38 of the Bill the Minister for Finance will have an important input into stipulating targets in relation to payment of dividends by the company.
As I have mentioned, Senator Reynolds' amendments imply that a revaluation will always be upwards. Amendments No. 9, for example, proposes that each adjustment in the minimum value should be accompanied by a corresponding issue of further shares to the Minister for Finance. This amendment does not cover a situation where the valuation of original assets is revised downwards. It would be inappropriate, therefore, to incorporarte this amendment into the Bill, at it does not provide for all eventualities. There is no particular reason why a valuation cannot be put on the forest estate and other property being transferred to the company. We intend to do that and, as was done in New Zealand in the recent establishment of their State Forest Company, to agree with Coillte Teoranta appropriate accounting principles in regard to the treatment of transferred assets. As I have mentioned, any consequent increase in valuation can be dealt with through the capital reserve, the normal method of treating such evaluation. While I appreciate the underlying basis of the Senator's amendments, I think that my approach to valuation is simpler, more clear cut and I do not propose, therefore, to accept them.
Finally, it has not been the practice, in establishing State companies, for the relevant Minister to be able to give on all occasions the value of the assets being transferred. As far as I can recall, in the Bill on the transfer of Bord Telecom and An Post, the valuation was not known at the exact time of the passage of the Bill through the Houses.
I thank the Minister. As far as evaluation in forestry is concerned, I think that the Minister would have to agree with me that one of the major problems has been trying to set the proper value on the amount of forest estate that we have. My amendment may not have any relevance as far as downward evaluation is concerned, but I put it in with a totally positive attitude. I am hopeful that the company will be very successful. As I stated on Second Stage, forestry development is looked upon as one of the major economic reforms that will help us along the road to economic rectitude. It was a positive amendment in the sense that the revaluation would be upwards. It is a very technical and complicated amendment. I understand what the Minister said but the Bill basically is to establish forestry and it was with that positive attitude that we proposed the amendment.
The underlying theme of the amendment is that the value of forest estate will continue to rise in future years. The Minister gave us a warning and we should always be mindful of warnings of this kind because no commodity or product is guaranteed to keep on rising in price.
When one looks at the timber industry worldwide and especially in Europe, where our closest market might be, it is obvious there is a huge deficit. I am not sure of the figures but the deficit for timbers in Europe at the moment is absolutely amazing. There are countries in Scandanavia — and if you travelled in Scandanavia you would think all the land is covered in forests — which do not even meet their own needs although a great proportion of the land is under forestry. Therefore, the theme of our amendment is optimistic in the sense that it foresees the value of the forest estate rising in future years. Given the destruction of tropical forests, the rain forests, the lack of forest growth in the industrialised parts of the world through acid rain and the fact that remedial measures are not being taken to an extent sufficient to make an impact, there is a huge market and rising prices. The old principles of the market will come into play — when the product is scarce, the price will rise. That is one of the oldest principles in economics. The only thing that would spoil all that would be if timber was replaced by another product, synthetic or otherwise. We are confident that the value of forest estate will continue to rise for at least the next 35 years.
In relation to valuation, the Minister did not answer the question as to what kind of expertise he would be drawing on to put a real value — and this is very important — on forestry estate. The Minister did not reveal at the time of the transfer to Telecom, the value of all the equipment, lines and so on transferred to the new company. The same applied to An Post. Nevertheless, I am sure that there exists within the Forestry and Wildlife Service a valuation — maybe not an official valuation — of all the forestry estate and perhaps the Minister will reveal that to the House today.
I am delighted that Senators Connor and Reynolds are optimistic because on this side of the House we have been trying to convert Senators to the position of more optimism generally, not only in forestry——
(Interruptions.)
I accept what both Senators said in relation to the likelihood of a continuing upward value of the forest estate. In relation to Senator Connor's query in regard to the European Community, the present position is that they import over 50 per cent of total timber requirements, valued at over £15 billion and second only to oil imports.
The valuation of a forest estate is very complex. First, it will have to be decided if average market prices for timber will be to taken in a specific year or over a previous ten year span. Then one has to compute the maturity of the crop and work back on a discount to the present time. It is a complex business and different figures have been put forward. We are not at the stage where we could say precisely what that is. It is obviously into hundreds of millions of pounds and is not essential for the passage of this Bill. We are continuing to work on this process so that we can have the valuation at the earliest possible date but I assure the House that that is not essential for the passage of the Bill. It is not essential for the establishment of the company and there are many examples, not only here but in other countries, where companies have been established and in some cases it has taken a couple of years before the assets are decided.
We should remember that the shareholding is practically all in the hands of the Minister for Finance. It would be an entirely different matter if there was a different breakdown to the shareholding. All those shares are held by the Government or by the Minister for Finance. Therefore, it does not make a material difference of it is somewhat greater than we anticipate at present.
Amendment, by leave, withdrawn.
Amendments Nos. 8 and 9 not moved.
Section 17 agreed to.
SECTION 18.
We have reached section 18 to which there are amendments. It is 12.55 p.m. and I understand we are breaking at 1 p.m. Does Senator Ferris wish to commence his amendments?
Amendments Nos. 10, 11 and 12 are related and may be discussed together.
I move amendment No. 10:
In page 9, between lines 39 and 40, to insert the following subsection:
"(4) The Minister shall not transfer or alienate his share in the share capital of the company.".
These amendments refer to the section which empowers the company to issue shares to the Minister to hold that part of the share capital of the company. In other legislation, which specifically deals with the setting up of An Post and An Bord Telecom, there was a provision that the Minister shall not transfer or alienate any of his shares in either company. If the section is passed unamended, some or all of the company could be sold off without further reference to the Houses of the Oireachtas.
The Minister is aware that section 9 (3) ensures that any such decision of the company would have to have his approval and that of the Minister for Finance. A similar provision strengthened the original Postal and Telecommunications Act. We are now seeking a provision that neither the company nor the Minister could dispose of this nominal share that has been given to the State in recognition of the contributions we have made down through the history of the State in putting the whole infrastructure of forestry in place. We are now transferring it to a private company and have given the commitment to follow through with further public capital investment. In recognition of that, the Companies Bill recognises the Minister's right to have a share in the company. We are trying to ensure that the Minister keeps a share and if he intends to dispose of it — a fundamental point — that some reference would be made to the Houses of the Oireachtas or to strengthen it further by saying that the Minister should not dispose of this share. We should be grateful that the Minister is getting a share in the company but, in fairness to the principle about which we are concerned, those amendments deal with the specific section of transfers of shares.
Sitting suspended at 1 p.m. and resumed at 2 p.m.
Before the break my colleague, Senator Ferris, elucidated our problem. I formally second the amendment.
I propose to take these three amendments together as they all relate to the recurring theme of share sales and issues. It has been said to me in another forum that section 21 is a charter for privatisation of Coillte Teoranta. In my view, that is a rather jaundiced view of the section which reflects the thrust of other legislation on State-sponsored bodies which in the case of SFADCo, Irish Steel Holdings, the national film studios, etc., incorporated similar provisions or was silent on sales of shares by the Minister for Finance.
The Bill, therefore, follows the standard practice in other legislation on State-sponsored bodies, with the exception of the Postal and Telecommunications Act, 1983, which prohibits the sales of shares by the major shareholding Minister. The provisions of the Bill make it clear that the State will be the major shareholder in the company and, accordingly, section 21 contrary to some views which have been expressed to me is not intended as a means to privatise the company. It would, however, be unreasonable to put an absolute prohibition on sales of shares by the Minister for Finance or to restrict the issue of share capital in the way proposed by certain Senators. This would be contrary to the thrust of other legislation on State-sponsored bodies.
The one share issue to the Minister for Energy under section 18 is in recognition of his policy and other responsibilities under the Bill, and thus confers on him the powers and duty of a shareholder in Coillte Teoranta. It is highly unlikely that he would wish to sell his single share or that a buyer would be found for it.
Senators have recognised that the new company must be given the freedom and flexibility to conduct their operations in the most effective way. It would, therefore, be a negation of that principle to restrict the issue of their share capital in the way proposed by amendment No. 11. This amendment reflects similar provisions in the Postal and Telecommunications Act, 1983, which, as I have said, is an exception in the context of the generality of State-sponsored bodies legislation. I do not propose, therefore, to accept these amendments.
The Minister has more or less assured us that, although this section would allow for privatisation, it is most unlikely to happen. The Minister has given a commitment that this would be a busy, fruitful and functional company and that it would not be sold off. This section will ensure that the State will retain its share in and commitment to the company. That was why we moved this amendment. We are satisfied with the Minister's reassurance.
I support the case made by Senator Ferris. There is a real danger in this legislation. I accept the Minister's good faith on the issue. I have listened closely to what he said on Second Stage but I am sure he will recognise the concern of any citizen of the State. What is happening in the medium term — a period of five to seven years — is that we will be investing in our huge national resources. Since we last met, I have been considering the various scenarios that would be possible over the next few years. When I spoke on Second Stage — and the Minister referred to it on a number of occasions — I mentioned the lack of EC money which is tied very closely into this section. It is disgraceful that, on the one hand, companies like Irish Life, a State company, can buy afforestation and qualify for European grants, or, that AIB, a commercial, private, profit-making operation, can buy forests and get State support while on the other hand, the State cannot get support from Europe in its afforestation project. What can we do with our present afforestation? We can let it sit there, develop and within a very short number of years, try and get a certain amount out of it every year. As it stands now, there is a temptation for the Government to dispose of their shares.
This amendment attempts to restrict the Government from disposing of their shares, a sense to put temptation out of their way, because it must be very tempting to realise that even if they put nothing into this area for the next number of years, it will develop very slowly and will be worth a lot of money to a private company. Even though the State, cannot afford to develop our forests without a huge input of cash, if we tell Irish Life to buy them as soon as they do so they qualify for an 80 per cent grant.
There is a huge temptation here. That is what makes this Bill different from any other legislation the Minister referred to. As well as being a national, natural resource, it is also something that could be liquidated very simply by the State. It is for that reason that we have put down this amendment. We recognise what could be done over the next few years. Ideally, what we would like to do would be to pour hundreds of millions of pounds into afforestation and to then take our profits from it as a continuing industry in ten year's time. I know from anything I have read about it that the Minister's Department would also wish to do that but it worries me that we are setting up something now that can actually undermine that plan.
Let us take the present Government or any Government out of it, and put in an unscrupulous Minister for Finance with scant regard for the resources of the nation and he might exploit the Minister's legislation in years to come. For that reason Senator Ferris has made an extremely strong case in support of this amendment. It is unfortunate that the Minister cannot see what he has accepted. We accept the Minister's good faith on the issue. His record is certainly very solid. His heart is in the right place but he might not be there in five years time, not to mind his heart.
I would ask the Minister to reconsider this issue. We will not push it but our views are very strong on this issue.
I want to clarify the points that Senator O'Toole has made in relation to the grants and support to the private sector vis-á-vis Irish Life or Allied Irish Banks. That does not exist in the context of the purchase of semi-mature or mature assets. It revolves around actual planting, greenfield operations. The same thought has run through my head on occasions. We have to be careful not to argue against these grants being allowed to facilitate extensive planting on the basis that they are not at present being afforded to the State because what could emerge from that is that the existing grants available for that purpose could be discontinued rather than extended to the State. We must be more positive at EC level to try to get support for the State plantation the Senator envisages.
This is a general provision. It applies to a great number of State bodies and it certainly is not a charter for privatisation. Since I went into the Forest Service there have been a number of significant advances made in terms of the resources that were made available to enable this extensive Bill to be introduced. There has been an extension in plantation, increased harvesting and development on the EC side as far as private grants are concerned, research into further downstream processing, added value and new projects. All of these clearly show that we have an organisation capable of quite rapid expansion.
I would say to the staff in the forestry service that I am quite happy that that resource is there. I would not like to see it too sheltered. I would like to see it form the bodywork of the generality of State companies. The Senator seeks to put in a provision not because he is afraid of me but because he is afraid of who might follow me, but whoever does take my place can, if he has a majority, change legislation if he so wishes, no matter what provisions the Senator puts in. I want to be more positive about it and I want to respond to the reaction I have got in the Forest Service. I do not want to see that organisation go on in too sheltered a way because it is capable of disproving the need for any kind of privatisation because the capacity, the ingenuity, imagination that are there will ensure that it will develop in a contracted and positive way. That is the general framework we would like to see in operation. I see it a little differently in the context of forestry as being positive rather than restrictive.
I accept what the Minister has said, but there are two things that should be very closely addressed here. I take the point that legislation can be brought in by any Government, but what we are now facing into is a period where the State has to put a lot of money into forestry. Let us bring ourselves forward by five years. In five years time the right-wing press could say that we have this national asset here, this forestry, the State having paid in 1988 or 1989 £40 million per year or whatever, that is costing us a fortune and that we could sell this now for a couple of hundred million pounds. Suddenly to the right-wing press it becomes a simple black and white situation. Notwithstandig the fact that it is a huge, growing, capitalising investment. That is one point. We want to make it difficult for that to happen and if it had to come through the legislation that would be one way.
The other thing the Minister did not really address in his response to the Second Stage is that we never went eagerly enough for this EC money on this issue. That is my view. The blame can lie wherever it should lie; let whoever the cap fits wear it. Perhaps we never were hungry enough to try for EC money. One of the reasons for this is that somebody recognised somewhere that if we were to get that money it might interfere with the Common Agriculture Policy and it was not a very political attractive proposition to get involved in taking this particular money which might in some way impinge on the CAP. I wish to put on the record that as far as I am concerned money for forestry would be money well spent, and if that means a reduction in the amount of money we get from the Common Agricultural Policy, then so be it. I would not have any difficulty with that; I accept that votes are probably not dependent on that, but I would certainly take a very firm line on that issue.
A selling job needs to be done by Coillte Teoranta in order to sell what they produce. Their first appointment should be a good PRO, so that the people will know what they are doing and that this is year-by-year capital appreciation and that, therefore, we will not have somebody saying in five years time that it is costing us all this money and we could sell it: that only could we stop it costing us money but we could sell it and make a fortune for the State. The other point I would make is that we should demand that European money.
It is fair to agree with Senator O'Toole on the question of the efforts that were made up to quite recently with regard to adequate funds for forestry from EC sources. I accept that there can be a conflict between the Common Agricultural Policy and forestry programmes. Next week we will have Commissioner Andriessen over to further discuss this matter, but we have set in train the organs which can help us to have a sustained effort in Europe to extract the maximum support for forestry and to put that programme in the context of a roads programme or other national programme and get the financial resources from that sector to help it to develop.
In relation to the question of the fears of privatisation to which Senator O'Toole referred, at present the Forest Service require a fairly substantial Government commitment each year to maintain the existing programmes. In a commercial sense one really does not have saleable shares at present.
The other aspect of that is that within a few years the Forest Service will be returning a profit. At that stage, based on my hopes for the development of forestry and what I think the organisation is capable of doing, I consider the Government will be getting a return on its investment and the pressures to move in that direction will have changed the other way around. If we get down to business on a proper basis that is the kind of result we will get. I accept the point in regard to EC funds and I am doing all I can to change what has been the practice up to now. The figure up to 1987 was something like £4 million, which is a pittance.
Amendment, by leave, withdrawn.
Amendment No. 11 not moved.
Section 18 agreed to.
Sections 19 and 20 agreed to.
SECTION 21.
Amendment No. 12 not moved.
Question proposed: "That section 21 stand part of the Bill."
I would like to have it recorded, that I have grave worries, as enunciated earlier, about this section. Otherwise we accept it.
May I take it that the Minister will consult those people who have expressed concern about this section those who have written to him regarding the powers being taken in the section? As long as the Minister keeps in touch with the people who have expressed concern about this section we are in good faith, prepared to accept the commitment he has given today. If he continues the dialogue with them and keeps to that commitment I think they will be happy.
We will be replying to the Irish Congress of Trade Unions in the course of the next few days but even beyond that I am always available for further discourse and discussions as regards future developments.
Question put and agreed to.
Sections 22 to 29, inclusive, agreed to.
SECTION 30.
Question proposed: "That section 30 stand part of the Bill."
I have one concern in relation to section 30 which relates to the keeping, auditing and publication of accounts. The section states that the accounts should be presented to the Minister who shall lay copies of them before each House of the Oireachtas. This is a process that those of us who have an interest in these particular areas would welcome because it would give us an opportunity, limited through it might be, to have a discussion on the performance of the company. Concern has been expressed that there is a looseness about when annual reports can be presented. May I take it that report will be produced annually? On my interpretation of the section it would not be necessary to publish and present a report on an annual basis. Perhaps the Minister could clarify whether in fact a report will be presented each year to each House of the Oireachtas.
As the Senator is aware, in the Dáil we accepted an amendment to this section. The original proposal was not to specify a particular date but rather for the report to be presented as soon as possible. In this section we are making it completely clear that we expect a report to be made available within six months of the end of each accounting year. As I understand it, the Companies Act provides for the kind of situation the Senator has outlined and I think we are going as far as we possibly can to make sure that all of the information which should be made available will not only be made available but will be made available within a specified period.
Question put and agreed to.
SECTION 31.
I move amendment No. 13:
In page 14, subsection (2), line 31, after "company." to add "This information shall include the cost per hectare of planting, of forestry management and of harvesting.".
The reason I put down this amendment is that I find the section does not deal comprehensively enough with the financial aspects of the company. By including the line "the cost per hectare of planting, of forestry management and of harvesting" into the section I feel we will have a better understanding of how the company is developing, what its potential is and that it would also deal with the matter in a more comprehensive way rather than if we just referred to the financial targets of the company.
I agree with Senator Reynolds that it is important that the accounts outline the cost of harvesting and planting so that comparisons can be made with other sectors as regards new developments, new technology and new systems. In my discussions with the company I will try to ensure that that kind of information is made available but, as the Senator will appreciate, in the context of a Bill such as this, it is not necessary to go into such precise detail. Once you start to go down that road, you will end up with 53 sections, each a mile wide, each trying to cover every possible eventuality. I can assure the Senator that in my discussions with the company I will try to ensure that that information will be made available but it is not necessary to include such a requirement in this kind of legislation.
Amendment, by leave, withdrawn.
Section 31 agreed to.
SECTION 32.
Question proposed: "That section 32 stand part of the Bill."
This section relates to the disclosure by directors of certain interests. This matter has been the source of some considerable controversy for some time. It is important that confidential information is not disclosed by those who might have a vested interest. I am aware that worker directors have been asked to leave meetings when the director of the company considered that the worker directors had a vested interest in what was being discussed. This section deals with directors, some of whom we hope will be appointed worker directors if the Minister is as generous as he promised he will be today, but we are anxious to ensure that there will not be a disclosure of information which would be prejudicial to the company.
As we understand it, publication of information would amount to disclosure. If, say, and this is why we have put an amendment down on the next section, a director did not publicly disclose the information but used it for his own personal benefit, in my opinion he should have declared his interest, be bound by that declaration of interest and not use privileged information for his own personal benefit if involved with a business allied with the business of the company. In other words, what we are trying to do is strengthen the section so as to ensure that it would be made absolutely clear what the Minister requires in so far as confidentiality and the non disclosure of information is concerned and that the person responsible for disclosing privileged information be liable to the payment of a fine.
Perhaps we will have to refer to sections 32 and 33 together but the point the Senator has raised is one which has been raised on previous occasions. The advice I have received from the Attorney General is that the amendment would have the effect of restricting the disclosure of information only where it would be used for someone's own benefit, it is the intention to prevent disclosure without qualification. In other words, it is intended to cover every conceivable eventuality. In relation to the case the Senator referred to where it was alleged that a director, who had an allied business, was using information for his own personal benefit, as I understand the law, it would not be possible to do so without actually disclosing in some shape or form the information you hold. The provision contained in this Bill, which is also contained in other legislation, covers every conceivable eventuality. As I have said, it is intended to prevent disclosure without qualification.
Is the Minister suggesting that the section is strong enough as it stands and that by defining it as we do in the amendment you could weaken it?
Is the Minister of the opinion that disclosure even to one self is disclosure?
The fact that information is used for one's own benefit and not disclosed to anybody else is equivalent to insider trading.
We have established to our satisfaction that that is clearly the position. It is a well established principle that the legal provision covers disclosure to oneself, or seeking gain for oneself, and not necessarily disclosing the information to other parties.
I accept the Minister's assurance that the section is strong enough to meet our requirements.
Question put and agreed to.
SECTION 33.
Amendment No. 14 not moved.
Section 33 agreed to.
SECTION 34.
Question proposed: "That section 34 stand part of the Bill."
I had a major row with the Minister for Communications and Energy because he allowed this section to appear in the non-amended form. I want to compliment the Minister, his advisers, and the parliamentary draftsman that the section is appropriately worded and takes account of the special position of Members of this House who are nominated by outside bodies to contest the election. They are not excluded under this section. I compliment the Minister for continuing the precedent set by his predecessors. Last week, we were in a dilemma because we could not amend a section, as the other House were not sitting and we had to accept it. However, the Minister admitted that our point of view was valid. I wish to put on record that this section is drafted correctly, and I welcome it.
The temptation is to take personal credit for this provision since I sat in this House for a number of years, but I have to say that it should be accorded completely to my staff.
Question put and agreed to.
SECTION 35.
I move amendment No. 15:
In page 16, subsection (2), line 26, after "Minister" to insert "and Board of Directors."
The amendment deals with the provisions for the chief executive. If we were unfortunate enough to find that the chief executive appointed was not performing properly, I feel that the board of directors should also have a say in whether he should be removed. I think that if only the Minister has a say in removing the chief executive, it would leave it open to political influence. By inserting provision for the board of directors, I think it would take the onus off the Minister to have to remove a chief executive officer. While the Minister should have a say, I think the board of directors should also be involved.
It is proposed that the Minister will make the initial appointment of the chief executive because it is necessary to have him in place at the same time as the board is appointed. Both have urgent tasks to perform and it is in everybody's interest to have the company up and running as soon as possible. Recruitment to such a senior and important position as chief executive of Coillte Teoranta will, as in all positions of this type, take time. To leave it to the board of the company which cannot be appointed until the legislation is passed and the company registered would conflict with the need for urgency. That is why the Minister is initiating the recruitment process now and making the first appointment of the chief executive following a public competition.
I fully accept that in the future, the board of directors will determine who their chief executive will be. Therefore, the initial appointment by the Minister of chief executive is for a set period of three years only. After that, the choice of chief executive will rest with the board. While I appreciate the reasoning which underlies this amendment, I do not accept it for the above reasons. It would be very unlikely that the Minister would take any action to remove a chief executive without proper consultation with the board. I think the Minister would follow the normal processes in such matters and the Senator should have not great fears.
I have no great fears, but I think that the amendment would remove an unnecessary evil. If unfortunate circumstances prevailed that a chief executive had to be removed, it would be better if the board of directors together with the Minister were involved in his removal.
I think that conflicts with the Senator's earlier optimism on another section, whereby the person we appoint will be suitable and the provisions we are inserting are unlikely to be used.
I am an optimist by nature. On the basis of the Minister's assurances I will withdraw the amendment.
Amendment, by leave, withdrawn.
Section 35 agreed to.
Sections 36 to 38, inclusive, agreed to.
SECTION 39.
I move amendment No. 16:
In page 18, subsection (1), lines 8 and 9, to delete "(other than land designated by the Minister)" and substitute "(other than land designated by the Oireachtas)."
The Labour Party were anxious that the Houses of the Oireachtas should be consulted when land is being transferred. This section allows for the transfer of land by the Minister to the new body on vesting day. We feel the Oireachtas should have this power as a follow through of the democratic process. If the Minister is excluding some designated lands, then we should know what lands are designated not for sale of transfer. There is no record of this anywhere. I would have expected that the Minister would identify the land he is excluding in the Schedule. If the power was to rest in the Oireachtas as opposed to the Minister, I would not have a problem with the section, because we would know and we could discuss the position. However, at present I do not know which land the Minister is going to keep or sell. Therefore, I feel that the amendment is necessary.
In the nature of things, discussions will take place between my Department and the new company on the transfer of land. Perhaps both parties will accept the necessity for the State to retain small parcels of land for particular purposes. At this stage, however, it would not be possible to specify what land will be retained. In any event, I think it is entirely inappropriate for the Oireachtas to become involved in the designation of land. That is a function proper to be discharged by the Minister in consultation with the company. I do not propose therefore to accept this amendment, although when the matter is resolved, I would be prepared to provide information to the House on the specific land, if any, being retained.
May I say, however, that it is not certain that the Minister will be retaining any land. While we are talking about a transaction involving a transfer of a million acres of land, it could well be necessary for different reasons to retain certain parcels. As soon as we have worked out those in consultation with the company, I would be prepared to provide that information to the House. However, there is no definite knowledge at the moment in regard to what lands, if any, might be retained.
The section is written in such a way that the Minister is as much in the woods as I am and he does not know what lands, if any, will be retained. The section empowers the Minister to designate areas of land that he wishes to retain. Naturally the company will want all the land. Of course they will; they would be very foolish if they did not.
In my position as Minister of State with responsibility for Forestry I am supposed to be the owner of most of the land in the country. For that reason the Deputy will appreciate if I have difficulty in identifying each portion of land at the one time.
Big landowners have the same problem; they do not know where their wealth begins or ends. Now that the Minister has been forthcoming in admitting that he is the largest landowner in the country will he tell us when he intends to dispose of it, how much he will be paid for it and the amount of land he proposes to retain? After all, this is our land and we have given the Minister responsibility for it under the Constitution, for the time being. I hope he does not run away with it. We want to know what he intends doing with it. The Minister's response to my questions has been welcome and I will not press my amendment.
Amendment, by leave, withdrawn.
Section 39 agreed to.
Sections 40 to 42, inclusive, agreed to.
SECTION 43.
We now move to amendment No. 17. I should like to inform the House that amendments Nos. 17, 19, 20 and 21 are related and may be discussed together.
I move amendment No. 17:
In page 19, subsection (2), lines 25 and 26, to delete "a member of the staff of the Department of Energy" and substitute "an industrial or nonindustrial civil servant".
In my amendment I am seeking to ensure that there will be a balance of knowledge on the board. It is my view that very knowledgeable people work in the forests and it is appropriate that they should be included in the membership of the board. The Minister may tell me that non-industrial or industrial civil servants will remain on the staff of the Department of Energy because, technically, they will be considered to be staff but there is a classification of staff in the Department. The worker in the forest, while he is on the staff payroll, may not be considered to be a member of the staff. The related amendments refer to the same terminology about staff members in the Department. I hope the Minister will respond to my appeal in regard to this matter.
Anyone who is designated to join the staff of the company by the Minister will receive all the benefits accruing to the remainder of the staff. The amendments relate to the same general theme. The provisions in the Bill in relation to the transfer of staff are the same as those in the Postal and Telecommunications Services Act, 1983. They reflect the fact that in this case the company will be staffed by people currently employed in the Department of Energy and that the Minister for Energy can only transfer staff from his own Department to the company and so the guarantees will only relate to such staff.
I understand that in the case of the postal and telecommunications bodies a small number of staff transferred to them after vesting day from other Departments as a result of competitions. In that instance they followed the conditions of the competition. I am sure that in similar circumstances Coillte Teoranta will do the same.
It is amazing that the Minister quotes the 1983 Act when it suits him but ignores sections of it when it does not suit him. If we were to follow the principle of that Act the Bill before us would be framed in a different way. The Minister has made fundamental changes from the provisions of the 1983 Act. He did not adopt the provision in regard to shares, and the disposal of them, and stated that it would be inappropriate to do so.
I referred to the 1983 Act in this context because it incorporated a number of very satisfactory provisions as far as staff were concerned. The results in these companies indicate the soundness of the line adopted at that time. The Senator accused me of using provisions of that Act when it suited me but I must point out to him that I have not used them any more than he, and his colleagues, did when trying to prove their point. It is important to point out that the forestry company will have its own distinctive features. It is not my intention to blindly copy any provision in previous legislation. I want to have the best legislation possible for the services I am responsible for.
That is one reason the Minister should not be quoting the Act when he introduces provisions that are similar to those in it.
I stand over the provisions in regard to staff which are similar to those in the 1983 Act.
Amendment, by leave, withdrawn.
Amendment No. 18 not moved.
Section 43 agreed to.
SECTION 44.
Amendments Nos. 19 to 22, inclusive, not moved.
Section 44 agreed to.
Sections 45 to 49, inclusive, agreed to.
SECTION 50.
Question proposed: "That section 50 stand part of the Bill."
This section refers to the vesting day. There is concern among the staff as to when vesting day will take place. They are concerned about the legal procedures that will follow after vesting day.
The company will be registered as soon as possible after the passage of the Bill. Vesting day will be some months later. It is difficult to give an exact date but we hope it will take place before the end of the year, or in or about that time.
Question put and agreed to.
Sections 51 to 53, inclusive, agreed to.
First Schedule agreed to.
Second Schedule agreed to.
Title agreed to.
Bill reported without amendment.
Agreed to take remaining Stages today
