Select Committee on Enterprise and Economic Strategy debate -
Wednesday, 3 May 1995

SECTION 5.

Mr. N. Treacy

I move amendment No. 2:

In page 2, subsection (2), line 8, to delete "such fees" and substitute "maximum fees of £25,000".

It is important to recognise that mining and mineral development results from highly qualified professional geologists, often without resources, exploring and discovering a positive prospecting deposit. They have a licence to prospect and explore and try to attract international investment to form a consortium or a corporate entity to develop the deposit.

It costs them large sums of money. They use high risk cash and often wait a long time before they get any return on it. Up to £20 million will be expended on Galmoy before there is any return on that capital. The same is true of all mines. This section, as drafted, is definitely a disincentive to the professionals to continue their work in the interest of economic development, particularly in the mining area. It is vital that we amend this section and provide that the maximum fee payable to the Department would be £25,000.

There are highly qualified public servants doing a good job on behalf of the country. They have to be paid by the State whether or not there is an application for a prospecting or mining licence. The GSI is an eminent professional State agency. The State mining board is made up of professional people working on behalf of the State excluding the chairman who is an independent legal person appointed by the Minister and ultimately the Government. There has to be an application for planning permission which is also dealt with by professionals in the public sector and an appeal to An Bord Pleanála can result. We must recognise the cost and impediments imposed on the professional or corporate entity making the application.

The risk must be taken into account and we cannot extract the maximum out of these people. In general the State is the legal owner of the minerals except in certain situations pertaining to land title and it has a duty to make its contribution. It would be unfair to put further exorbitant pressures on people by extracting further cash. I hope the Minister can accept this simple amendment.

Mr. Finucane

Will the Minister indicate, based on custom and practice, the variety of fees imposed in the past? I am reluctant to see any maximum fee inserted in legislation of this nature. It should be a discretionary amount depending on the scale of the mine. If one considers Galmoy and Lisheen in County Tipperary, one of the more recent mines indicated as having future potential, I doubt if a maximum fee of £25,000 would deter investors. What fees have been charged in the past?

Mrs. Doyle

I thank the Deputies for their contributions and Deputy Treacy for his amendment. I regret that, despite his reasoned case, he has not persuaded me to his line of thinking on this matter. Mine projects vary considerably in nature, size, financial, environmental and planning implications. Examination of mine development proposals by the Minister and the Minister's Department must reflect that huge degree of difference in the different projects. For example, base metal projects present far more complex issues for consideration than small industrial minerals projects. There can therefore be no standard application fee. The Minister is committed to keeping application fees as low as possible consistent with carrying out a thorough examination of each application as expected by the public. Applicants for State mining licences and leases should bear in mind that their proposals should be soundly based from the start so as to assist examination and I hope approval of their proposals with the minimum delay.

In response to Deputy Finucane's point, we should bear in mind that section 5 as drafted is an enabling section leaving the application fee to be determined on a case by case basis. We should note also that a fee in excess of £25,000 would only arise in the case of complex major projects and that a fee of only a few thousands pounds at most would be chargeable in the majority of cases involving small straightforward projects. Over the last 20 years only one or two proposed operations or developments with a fee in excess of £25,000 come to mind. They are the exception but we must leave the room for the Minister to decide the fee on a case by case basis.

It is Government policy to encourage responsible development of the nation's mineral resources and therefore all bona fide mine development proposals are considered as thoroughly and quickly as possible. External experts have to be engaged by the Minister to assist in examining mine development proposals so as to help clear the way to permitting proposed mine developments. We cannot grant licences and leases unless the State is in a position to understand and investigate and have the experience to assess the application properly. It is therefore proper that developers should be required to pay a charge for the service which is focused on advancing mine development proposals in a sound way.

I would hate the industry to see an application fee as a type of deterrent to mineral development in any way. Both the Department and the industry have a responsibility to put the "feel good" factor back into mining and mineral development. Historically, and not without just cause, there has been bad press about some of our mineral developments over the years. They were the exceptions but unfortunately they are the ones that most people will still refer to and remember. The prospect of mineral exploration or prospecting in any area only has to be mentioned and one can then write the script about the concerns of local people, environmental groups, local authorities and above all, our citizens. There is no feel good factor in mineral development and that needs to be changed. With modern state of the art technology, there is no need for these huge concerns which were justified by some of the worst examples from our recent history.

We have a responsibility to our citizens and the environment to allow for the proper development of our mineral resources, but all development will impinge in some way on the environment. Where there is a benefit, there is also a risk. The Department of Transport, Energy and Communications has a system that thoroughly scrutinises every application. I hope that when it does its job properly, especially if there is an application fee consistent with the job it has to do, it will be able to speed up the processing. The Department should be able to get outside expertise if necessary because all of the expertise, particularly for the bigger proposals, will not be available in the Department itself. If those experts were all in the Department, they would be doing their own work in the field. There are occasions when the Department must go outside — usually out of this county — for particular expertise, especially with new developments and state of the art technology. It is in all our interests to insist on state of the art technology to ensure the best possible mineral development and treatment of the environment in which the proposed development will take place.

It is only reasonable that the Minister can charge an application fee for processing an application, but the fee must be commensurate with the work that will have to be done in the Department. If there is ever a question of it charging more than necessary to process an application, there is nothing to stop us coming back again to look at this section. We must leave some latitude with the Minister and his advisers to charge a fee that equals the service given by the Department in processing the application, engaging the necessary expertise our citizens need to ensure that it is as it should be and involves state of the art development.

I understand the point put by Deputy Treacy and the concerns of my colleague, Deputy Finucane, but I regret that I am not able to accept Deputy Treacy's amendment.

Mr. Molloy

I support the stand taken by the Minister, who has outlined clearly the practice in regard to the granting of licences and leases for mining purposes. The difference in recent years has been the necessity to have an environmental impact statement and an assessment of that statement carried out before decisions are made on the application. That can involve expensive work by consultants who are normally employed by the Department.

The Department should not be at a loss because of any work it has to undertake in evaluating an application under this Act and it should seek only to recoup the costs it has incurred in carrying out the evaluation and assessment. It should not seek to make a profit and I do not believe it has sought to do so up to now. I am not aware of any representations or complaints from the mining industry — if there has been any, I would like the Minister to inform us about it — that the level of fees charged by the Department had been excessive, exorbitant or unfair. If complaints have been made, they have only come about in recent times because I was not aware of it in previous years. The costs that could not be incurred by the Department could be substantial because of the desire on its behalf to ensure that the environmental considerations are fully taken into account and carefully assessed. In some cases, the cost to the Department may exceed £25,000.

There seems to be an implication in the amendment that no matter what the costs are to the Department in assessing an application, it should never be allowed to charge any more than £25,000. The charge has been much less than that in many of the cases that have come before it, but when there is a major application like the ones that have been mentioned, there is a chance that the costs may be very much greater. I do not know if this could be the case, but one could not give an estimate now of what the costs might be in the future. The Department may be involved in a lengthy process and incur a lot of expense in a long drawn out case in the future.

The people making the investment in the mining project are well aware of the costs they have to take into account. The fees they are obliged to pay to the Department would not be considered by them to be a major item. They are increasing because of the stricter environmental controls and the need for the environmental impact assessment, but I do not know if any concern has been expressed by the industry. If it has been expressed, I would be interested to hear it, otherwise I would be happy to support the Minister's stand on the issue.

Mrs. Doyle

I am not aware of any formal case put by the mineral industry on the fees issue. The National Mineral Policy Review Group may have something to say on this. I would know the case I would make if I was writing the script for the industry. They would hope that a cap of £25,000 would be put on these fees and that is understandable. It would be in their interests if they could ensure that this cap was imposed, irrespective of the size of the development. Each application fee is negotiated on a one to one basis with the Department and that often results in a reduction of the fee if a good case can be put by the industry concerned.

I am not aware of any application fee that went beyond 1 per cent of the development project involved. Most of them are much smaller — around 0.1 to 0.3 per cent of the cost of the project. This costing is taken into account by companies when they are getting their applications together and putting their proposals on paper.

Each application is treated and negotiated individually, depending on what is involved, and it is a matter between the company and the Department as to what that fee will be. That has worked reasonably well. None of us wants to pay more than we have to for anything — that is human nature — but we must leave the flexibility and discretion with the Minister to ensure that he can charge a fee that reflects the actual cost to the public service of investing each application. The rest of the taxpaying public should not have to pick up the excess cost in this area. The developer should pay the genuine cost. If there is a genuine complaint that the Department in any way is not operating on that basis, we can come back and talk about it. One should pay this fee in the same way as any service fee which is part and parcel of our current public service system. One pays for the service that one gets and that is all we are asking for in this case.

Mr. N. Treacy

I am disappointed that the Minister has taken a narrow view. Deputy Finucane asked specific questions about the fees paid recently. The fees charged in the recent Arcon case, for example, were much higher than £25,000.

Applicants for a mining licence have to employ eminent consultants to put their application together so they can fall within the law and adhere to the criteria that it obliges them to meet. The local authority who considers the application appoints consultants of the same qualification to assess it. The Department also appoints similar consultants to assess the application. Therefore, there are three consulting groups with the same qualifications assessing the same application. The applicants are obliged to pay for their own consultants and those of the Department. Will they also have to pay for the consultant representing the local authorities? Unless they do, then the case made by the Minister does not stand up.

The Minister spoke about previous mining operations which history can now judge. Planning law in this country is not yet 30 years old and many mining developments took place pre-mining or close to the implementation of the planning Acts. With time and the professional attitude adopted by modern mining companies, there has been a major change. Professional companies are also aware of public concern.

We must take into account that applicants carry the risks, in return the State gets royalties and corporation tax from the operation. Those on the operation pay PRSI, while the corporation pays VAT on the goods and services which it purchases and provides many jobs which are vitally important to this economy. We are now telling those people to take chances, carry the risks and employ consultants, but that they must pay for the consultant. There is no incentive to exploit the natural resources of this island for the well-being of the people in this proposal.

I ask the Minister to be equitable in the interests of economic opportunity and equality because other applicants who propose developments do not have to pay similar fees to other Departments for applications. We should impose a cap and put down a specific figure because it is a high risk business. We cannot expect consultants to be employed by three different entities, but to be paid by one applicant because it would be unfair. I ask the Minster to reconsider in the interests of mining and of the country.

Mrs. Doyle

I agree with Deputy Treacy that as parliamentarians we need to take a long look at how we encourage the mining industry. Deputy Treacy mentioned equity and that people who make applications to other Departments do not pay. I would like him to list them for me. I believe everyone should pay for a service they get from any Department of State because if they do not, the taxpayer must pick up the tab.

I will not go into the specifics of what any one company paid. However, Arcon's appliction fee was less than 0.2 per cent of its development costs. If we were discussing an amendment based on a percentage of development costs being the cap, we might go a little further down that road, but not when it is a straightforward figure of £25,000, as it would be unacceptable.

The Deputy made a reasonable point about the planning application and the consultants involved there and with the development company and the Department of Transport, Energy and Communications. The Deputy makes a case for looking at the regulatory environment of mineral development and I support him on that. We need an integrated system of licence application so there is no duplication of consultants at the different levels but that is another day's work and for other amending legislation.

I agree that the regulatory environment of mineral development is anti-development because proposed developers must hawk their plans from local authorities to the Department of the Marine if they are near the foreshore, to the Department of Transport, Energy and Communications to get their licence or lease and to the environmental section for environmental impact studies. It is a difficult and complicated process to take in the gamut of necessary stops in terms of getting one's application in order. Although there has been some progress, it has not been enough.

I would like a one-stop shop system where a proposed developer may come to get advice and direction and where there is no duplication of consultants. Until we have an integrated application system, the Mineral Development Acts, 1940 to 1979, require the Minister to be satisfied that the public interests would be served by granting any State mining licence or lease in any case. The Minister is required by the Acts to investigate the application and to be satisfied from the point of view of the Department of Transport, Energy and Communications that it is in the public's interest that such an application be granted. As the law stands, the Minister must get the necessary expertise and assess the application through the Department.

Perhaps we could debate the point made by Deputy Treacy about duplication on another day because I am not unsympathetic to it. Until the law is consolidated in this area or until we have a one-stop shop type application system, which I would like because our system is a deterrent to would-be developers who must hawk their proposals around to separate State agencies, we must operate within the law which requires that the Minister must be satisfied that the public interest is served by granting any State mining lease or licence. To do that, the Minister must investigate, hire consultants and check that the application is as it should be and it is reasonable for the developer to pay the service cost of investigating the application.

Mr. Sheehan

I am amazed at Deputy Treacy's attitude and the fact he tabled this amendment which puts a cap of £25,000 on fees for applications for mining complexes. Section 5 copperfastens the long-standing practice requiring applicants for State mining leases and licences to pay an appropriate fee to cover the Minister's costs in considering those applications. I understand that in the case of applications for major complexes in the past decade the advice given by the external consultants cost £80,000 to £200,000.

Does Deputy Treacy want the taxpayer to foot the bill for mining moguls who come here to develop and to explore potential mineral resources? If they want to do so, it is right that they, not the citizens, should pay the consultants' fee. I ask Deputy Treacy to withdraw the amendment so that the Minister will have the opportunity to level the relevant fees accrued from the investigation of applications. The citizens should not be asked to pay for exploration companies who have accumulated considerable wealth in this country.

Mr. Power

Is Deputy Sheehan not supposed to be impartial?

Mr. Sheehan

I am entitled to give my views.

Mr. Molloy

I would like to comment on something the Minister said. I caution her to proceed slowly as regards the idea of a one-stop shop to which she referred. I remind her of the disaster we had when the Office of Public Works was the one-stop shop as regards heritage proposals and decided all the issues. We know where that got us. One of the important things about the environmental impact statement and its assessment is that there is an independent assessment of the EIS so that there is another opinion on what the consultants or the first group of experts think. That is necessary as a precautionary measure to ensue that the decision ultimately made is in the interests of the best environmental practice.

I would be wary of rationalisation or of bundling everything together where one group would decide the issue for the applicant, the Department, the county council and the public, that one view would prevail. That is a recipe for disaster as far as the environment is concerned. We only need to look at recent practice in that area to see some of the mistakes made. One of the essential requirements is that somebody else gives an independent view on the environmental aspects of any EISs carried out.

Mr. N. Treacy

I was pleased to hear Deputy Sheehan's contribution. He consulted widely and has been well advised. I concur with the figure of £200,000 which he gave.

I am worried about the tremendous power this section gives to the Minister and the Department. The Department is the permanent administrator and the Minister may take its advice or he may overrule it. If he overrules it, the media will say he should not have done so. The Minister has no power. Politically he makes the decision, therefore he cannot be right no matter what he does. He is wrong if he makes the decision and he is wrong if he does not accept the Department's decision. That is the difficulty. We have only one chance with legislation although the Minister said we could look at this again.

The point was made that I appointed a minerals policy review group and this Bill has been introduced before the group's report is made available to the public and that we should have waited and drafted a proper Bill.

The Minister is privileged to have the advice of the Attorney General and the Department is privileged to have the advice of the Chief State Solicitor and his staff. People may say it is not intended to charge for these State services, but there is nothing in this section which precludes the Minister or his Department from charging an applicant company for them. The Department is looking for huge fees.

The Department is charged with the responsibility of developing a mining policy and issuing mining licences. The Minister mentioned the common interest. Every Minister, once he is appointed under the Constitution, must make his decisions based on the common interest or what he perceives it to be at that time. Will this be the situation in the future? Should we not take account of the fact that the granting of a licence affords the State an opportunity to receive huge returns by way of royalties and other taxes? If the licences are not granted, there will be no returns. The common interest must be served by giving an incentive to carry out exploration and mining development in an environmentally friendly way. Otherwise, we are only passing laws which impede development.

Mrs. Doyle

My colleague, Deputy Sheehan and others, will be glad to hear that no matter what the cost of external consultants we have not charged any applicant company £200,000, to use Deputy Sheehan's figure.

Mr. Molloy

The Minister gives that figure in the explanatory memorandum.

Mrs. Doyle

We have not charged it yet.

Mr. Molloy

It is the Minister's memorandum.

Mrs. Doyle

No company has paid £200,000 yet.

Mr. Sheehan

The costs could accumulate.

Mrs. Doyle

They could and there could be more as time goes on. However, no company has yet been charged and there have been some expensive external consultant's costs to date. The applicant will only be charged for external consultant's fees, not house-keeping costs in the Department. We will only charge when we need to get expertise which is not available in the Department.

Deputy Molloy made an important point about my comments on a one-stop shop type regulatory climate. I did not mean to give the impression that we would do away with the planning process, the environmental impact study process and the Departments and just have one body make a decision. There should be a one-stop shop in which the system can operate so that a developer who does not know the lie of the land could get assistance on the planning and environmental impact process, the requirements of the Department of Transport, Energy and Communications and other aspects, depending on the development. A reasonable case could be made that expensive consultant's fees could be triplicated or quadrupled if needed. I do not agree with depending on one set of decisions in this regard. I accept the point made by Deputy Molloy.

It has been said to me many times by the industry that the management of our regulatory climate for would-be developers is difficult because they still must go from one place to another trying to sort out the requirements. They should be directed to the local authority in question which could indicate its requirements, those relating to the environment and other aspects so that they have a package which responds to their interest to develop minerals. We should be as helpful as possible to would-be developers, while ensuring that we respect the rights of our environment and citizens. Environmental impact studies are essential, but social impact studies should come hot on their heels, particularly if there is a proposal to develop a difficult area. We should be in a position to consider the social, as well as the environmental impact.

It is my fault that we are now discussing matters beyond the scope of the Bill, but I wanted to give vent to my prejudice in relation to the regulatory climate, the need to tidy it up and to avoid any unnecessary duplication. That does not mean we should depend on any one set for an opinion. I respect the point made by Deputy Molloy on this matter.

Mr. Molloy

The point raised by the Minister is more relevant to the matters being discussed by the review group. During Second Stage the Minister announced that the review group's report would be available in April. However, we have not received that yet. This Bill is being taken in isolation and it is obvious that we will have to return to this subject when the review group's report is finalised and published. The Minister referred to matters which are the remit of the committee which is reviewing the minerals industry at present. I hope the Minister will introduce legislation shortly after the publication of the review group's proposals in order to achieve the objectives she has outlined, which are worthy of support.

Chairman

Is the amendment being pressed?

Mr. N. Treacy

I agree with Deputy Molloy. At the outset, I asked when the report would be published. However, the chairman said I had no right to ask it. I have served on many committees and I have never been stopped from asking the Minister a question and, as a Minister, I did not refuse to answer a question I was asked. Perhaps the Minister could indicate when the report will be published?

I agree with the Minister that a one-stop shop is urgently needed. We considered it in the past and, perhaps, if there had not been a change of Administration, it might be established now. I hope it will be established soon because people are confused about the agencies to which they must go before they can invest. That is not good.

I hope the Minister respects what I have said as I respect what she said. In order to achieve a consensus in the interests of the common good, perhaps she could reconsider the situation on Report Stage. I will withdraw my amendment if she is prepared to do so.

Mrs. Doyle

The minerals policy review group's report was formally presented to the Minister for Transport, Energy and Communications, Deputy Lowry, on 26 April. I expect it to be before the Government next Tuesday. Those Deputies who have been Cabinet Ministers will know that can be a moveable feast. As far as I know, it is scheduled to be on the agenda for the Cabinet next week. Three parties will consider it and, all going well, I expect publication in a few weeks after that. However, I am not in a position to be definitive because I am not in Cabinet for that matter.

Mr. Molloy

Is it intended to publish it?

Mrs. Doyle

Yes, and each Member of the Dáil and Seanad will be provided with a copy of the report.

Mr. N. Treacy

Perhaps Deputy Molloy and I, as former Ministers, might be invited to the launch.

Mrs. Doyle

I might even be invited.

Mr. N. Treacy

The Minister will probably issue the invitations.

Mrs. Doyle

I have no difficulty deferring this amendment to Report Stage, but I would be dishonest if I gave the impression that I, or the Minister, could change our minds between now and Report Stage. I have no difficulty deferring it if it tidies up this afternoon's business. However, I do not want people to think that the Government will change its mind because it will not. I want to be straight and say it will not change the situation. We can dispose of it now if the Deputy likes or we can wait until Report Stage.

Mr. Molloy

Could we have an assurance from the Minister that Report Stage will not be taken prior to the publication of the review group's report?

Mrs. Doyle

I have no idea when Report Stage will be taken and I am not in a position to give that assurance.

Chairman

I think that would be outside the Minister's remit.

Mr. Molloy

Is this because Deputy Doyle is a Minister of State?

Mrs. Doyle

I do not schedule the Stages of Bills or the sittings of this committee.

Mr. Molloy

It is at the discretion of each Minister when his or her legislation is brought forward.

Mrs. Doyle

I am a Minister of State. This matter is at the discretion of the Minister for Transport, Energy and Communications, Deputy Lowry.

Mr. Molloy

Will the Minister of State consult with the Minister and convey to him the view of at least one member of this committee that we would rather if Report Stage was not taken until we saw the review group's report, which is now in the possession of the Government? This is a reasonable request.

Mrs. Doyle

I note the point the Deputy made.

Mr. Crawford

Has Deputy Treacy any proof that the absence of such a provision would block any exploration? We are talking about people who are likely to gain fairly massive amounts of money and we do not have to worry too much about the size of the amount. Has the Deputy any proof that the absence of a £25,000 limit impeded any exploration in the past?

Mr. N. Treacy

The position is that no charges were imposed on applicants for licences until 1994. It was because there was a big application in 1994, which was subjected to very detailed analysis at all levels by various agencies and, ultimately, the courts, that the Department was faced with a certain expense. I have no doubt about that because I was deeply involved in the matter. The involvement of the then Minister, Deputy Cowen, and I, was to ensure that everything was fully clarified, others tried to discredit our efforts. When people subsequently found themselves in different chairs, there was no difficulty whatsoever.

I have spoke to people in the industry, particularly geologists. There are not that many jobs for qualified geologists. They cannot get jobs and do exploration work to make a living. It costs them a great deal of money and they carry many risks. They have a contribution to make to the State. This fee would certainly impede the incentive that existed heretofore to proceed down the exploration road. I have the utmost confidence in the Minister of State's board objectively. I am sure that if she consulted with her officials and people in the industry she could come back with an amendment which would satisfy everybody's interests and her own.

Mrs. Doyle

I know the views of the industry. There is no need to consult them further.

Mr. N. Treacy

I am asking the Minister to consider this for Report Stage.

Mrs. Doyle

The taking of Report Stage is a matter for the Whips.

Chairman

We have had a lengthy discussion on this amendment.

Mr. N. Treacy

Based on the fact that the Minister of State will consider the matter before Report Stage, I will withdraw the amendment.

Amendment, by leave, withdrawn.

Section 5 agreed to.