A Supplementary Estimate has been referred by the Dáil to the select committee. Our task is purely to consider it and report back to the Dáil. On behalf of the select committee, I welcome the Minister for Agriculture, Fisheries and Food and his departmental officials. I invite the Minister to make his opening statement.
Vote 31 — Department of Agriculture, Fisheries and Food (Supplementary).
I thank the Chairman, members and spokespersons for facilitating us to advance the Supplementary Estimate by having this meeting of the select committee.
I am grateful for the opportunity to present this request for a Supplementary Estimate for the farm waste management scheme. As the select committee will be aware, a revised version of the scheme was introduced by the Department of Agriculture, Fisheries and Food in March 2006 to assist farmers in meeting the requirements of the EU nitrates directive. The revised and improved scheme was introduced in the context of the finalisation of Ireland's nitrates action plan which had been approved by the European Commission. The scheme, with much improved conditions, was launched following a comprehensive consultation process.
The major changes introduced to the scheme included an increase in the standard rate grant to 60% from the previous 40%, the extension of the scheme to the pigs and poultry sectors, an increase in the maximum eligible investment ceiling from €75,000 to €120,000 and the removal of any minimum income requirement, subject to certification of economic viability, in order that all small farmers could participate. A higher grant rate of 70% was available for young farmers and those in the four zone "C" counties of Donegal, Monaghan, Leitrim and Cavan.
Due to the exceptionally generous level of the grant rates, the scheme required specific EU state aid approval before it could be introduced. These, together with the deadline for completion of works of 31 December 2008, were agreed by the Commission on the clear understanding the scheme represented a once-off opportunity to enable farmers to meet the requirements of the nitrates directive. In doing so, they would also be protecting their single payment scheme entitlements which are now subject to cross-compliance requirements.
The closing date for the submission of applications was 31 December 2006. The scheme proved to be extremely attractive to farmers and, in all, 48,580 summary applications were received from farmers prior to its closing date, more than 30,000 of which were received in the final month before the deadline. In order to accommodate as many farmers as possible, the Department allowed farmers to submit fully documented applications up to 29 June 2007. A total of 46,132 completed applications were received and more than 42,200 approvals to commence work have issued.
The scheme has been an outstanding success, as demonstrated by the enormous level of applications received and approvals granted. When the 2008 Estimates were framed, we could not have anticipated what liabilities would arise. We provided funding of €150.6 million, with a commitment to keep that figure under review until we had a clearer picture of what our liabilities would be for the year. Already I have ensured savings of €31.2 million from elsewhere in my Department's Vote have been reallocated to supplement the original allocation, bringing expenditure to date this year to €181.8 million. On the basis of the information now available to my Department, in terms of confirmed completions and indications of ongoing work, we estimate we will need a further €195 million before the end of the year.
I am very pleased the Minister for Finance and the Government recognise the value of this scheme and have already provided substantial funding this year and that, in the current economic circumstances, the Minister is prepared to provide an additional €195 million to meet our liabilities this year. Therefore, expenditure for the year will increase by 150% over the original allocation.
As we debate the Supplementary Estimate, the Government is working on the 2009 budget and spending plans against a background of a significant deterioration in the public finances. The 2009 budgetary situation will have to reflect the new economic climate and I, along with my colleagues, will have to take some tough decisions in regard to spending next year. These decisions are being taken with a view to ensuring that the economy is well positioned to benefit from an economic recovery and restored growth.
The completion date for the scheme means that there will be a significant carry-over of payments into 2009 and I will seek further substantial funding for the scheme in the context of the preparation and discussions with the Minister for Finance on the 2009 Estimate for the Department of Agriculture, Fisheries and Food.
We are very fortunate to have been able to provide the amount of grant aid we are providing. Between last year and this one, the Exchequer will have contributed almost €500 million in grant aid to thousands of Irish farmers under this scheme alone. This is already more than double the allocation under partnership for the scheme and represents a massive level of public support by any standards.
However, for the future, difficult choices will have to be made and in the current climate, it is absolutely vital we insist on getting the best possible value for money from public expenditure across the board. Besides exercising prudence in the use of the funding available, we must focus investment on measures that will contribute to the development of a sustainable agri-food sector. We must compete on the basis of quality, productivity and efficiency and ensure we meet the needs of consumers and society generally. We must also ensure that the sector operates in a manner that is consistent with the preservation of the natural environment.
Investment in the farm waste management scheme is consistent with all of these priorities. The scheme represents the biggest ever investment by the Government in farm infrastructures and is an enormous vote of confidence in the sector. This is well justified on the basis of our export performance. As this committee will know, over the past two years, Irish agri-food exports rose by over 10% and 5%, respectively, to reach €9.2 billion in 2007. More importantly, a recent analytical study showed that the agri-food industry contributed over 30% of net foreign earnings from the manufacturing sector.
While commodity prices have eased a bit in 2008, following the peaks of 2007, the medium term price outlook remains strong and there is general agreement from both the OECD and the Food and Agriculture Organisation that prices are unlikely to return to their historically low levels prior to that recent period. It is estimated that global demand for meat and milk will double over the next 40 years and Irish agriculture, with the benefit of the investment under the farm waste management scheme, will be well positioned to take advantage of these trends.
In addition to the funding of the scheme, I realise the other issue which will be at the forefront of the committee's concerns is the deadline for the completion of work and the submission of claims. With the Chairman's agreement, I will set out the position on that point and I will do so by emphasising again some of the points I have already made. The EU state aid approval, which I referred to earlier allowed us, as an exceptional measure in the context of the nitrates action plan, to offer very generous grant aid under the scheme as a once-off concession on the strict condition that works would be completed by 31 December this year. Agreement was reached only after protracted negotiations with the European Commission and the closing date was a key element in the negotiations on the state aid approval. At the time we agreed to abide by the date and have operated the scheme on that basis from the outset.
The position in regard to the deadline was made clear from the outset. It was included in the terms and conditions of the scheme and was widely publicised so that all those involved, including farmers, planners and builders, were clearly aware of the critical need for to adhere to it.
I, my predecessor, the Tánaiste, and the Department have consistently stressed to farmers the need to meet the deadline. In April, the Department wrote to notify formally and remind all farmers to make the necessary arrangements to get work completed. We also wrote to the planning authorities requesting their co-operation in expediting the large number of planning applications involved and I acknowledge their assistance in this regard. More recently, we wrote to farmers outlining the arrangements for the processing of claims at year end, including guidance on the type of discrete units of work which would qualify for grant aid.
Given the economic climate and the need for careful management of the national finances, it is no longer possible to operate on the basis of open-ended schemes. I should also point out that farmers still have three months in which to complete their projects and there is capacity in the building industry to ensure that projects are completed by year end. For all of those reasons, the deadline of 31 December will apply and I have urged farmers to proceed with the completion of their projects as quickly as possible.
The farm waste management scheme has been hugely successful and has very significant benefits in terms of the environment and competitiveness for the entire agriculture sector in Ireland. This Supplementary Estimate of €195 million is essential for my Department in meeting its commitments under the scheme in 2008 and I earnestly recommend it to the committee for support. I thank the Chairman, spokespersons and members of the committee for facilitating us in bringing forward this Supplementary Estimate.
I welcome the Minister and this proposal. He makes a welcome change from his predecessor who, I am sure, was top of the class for a number of years for handing back unspent moneys from the Department. It is good to see a Minister with his hand out looking for more money rather than with his hand out handing money back. He will not be surprised that the concern on this side of the House is that his hand should be out looking for even more money.
In terms of the construction industry in rural areas, this scheme is the only show in town. I accept the Minister's outline of the scheme, the success of which is unprecedented. Farmers have responded magnificently to the terms and conditions of the scheme and its success is evident from the numbers who applied for it. Over 42,200 applications have been approved.
It must be said, however, that there is no financial gain for farmers from this and that it is to meet environmental standards. All of us approve of those higher environmental standards. It does not enhance farmers' incomes but, notwithstanding the generosity of the grant which has been pitched by the Minister at 60% in certain cases, when one takes in real costs, it is not that generous. It is, however, a generous grant scheme and I will not quibble over that.
The only issue is the 31 December deadline. For many reasons, not least the weather, contractors are not in a position to complete works by that deadline. Many contractors fear being sued for their inability to complete works due to factors outside their control such as scarcity of steel and skilled labour to erect sheds and the weather.
I accept this is state aid and that we had to get permission for it from the EU arising from the environmental obligations which had to be met under the nitrates directive. Since the scheme was approved as state aid, it should not matter to the EU Commission whether the deadline is 31 December or 31 March. Given the winter period and the difficulty carrying out work in farmers' yards, certainly from the start of next month to the end of March, the likelihood is that there will be a requirement to extend the deadline until 30 June.
I do not believe the extension of that deadline would make any difference to the EU Commission. It was important to get approval for the scheme, and it was approved. The amount of money it would cost in terms of a state aid was approved. What is apparent here is that the Minister and the Government, for reasons of the budgetary difficulties they face, are hiding behind the EU Commission and the 31 December deadline. That is unfortunate because if one sticks rigidly to the 31 December deadline, a substantial number of the 12,000 applicants, who according to the figures have yet to start work, will not start. That will mean that many contractors, shuttering employees, steel erectors, roofing contractors, ready mix suppliers, plasterers and block layers will lose their jobs.
As the Minister and most of us who represent rural constituencies know, this is the only show in town in terms of the construction industry in rural areas. Readymix trucks and steel supply businesses will shut up shop. I have a letter in my possession from a Readymix supplier in Cork who states that he will be laying off 40 staff in Christmas week if this deadline is not extended. That will be replicated the length and breadth of the country.
I am asking the Minister to do the calculations on this. If he got the existing 30,000 commencements up to 35,000 or 36,000, which would probably be the maximum possible, and if he calculated the social welfare entitlement of those who will lose their jobs as a consequence, the net cost to the State to meet this would be virtually nil.
There are health and safety issues. There are people now working in conditions conducive to accidents in order to meet these deadlines. I would urge the Minister, although I do not want to be alarmist, to give the industry breathing space to ensure that the maximum number of farmers can improve their farmyard conditions so that they meet the highest environmental standards.
Lest there are taxpayers who are looking in and stating that this is their money, there is not a penny gain for farmers in this. Farmers are putting their own money into it. It does not increase their profitability one iota. It is a commitment being made by farmers to improve the environmental standards in their farms to meet the nitrates directive.
I appeal to the Minister to at least make a formal request to the Commission to extend the deadline by six months. He might provide clarification if there has not been a formal request made to date. I implore him to make such a formal request. I acknowledge that the Commission states it was a state aid and that the deadline is now 31 December, but the full weight of the Government has not been put behind the request to the Commission to extend the deadline. In proposing that we adopt this Supplementary Estimate, I ask the Minister to put the full weight of his Department and the Government behind the request because the net cost to the State would be nil given the costs that would need to be replicated otherwise by paying social welfare to those staff who would lose their jobs the length and breadth of the country.
Yesterday we received a briefing on this issue. One aspect that worried me is that it was suggested, given that the timeframe is 31 December and people were unable to get the work done by that date, that the Department was prepared to accept a scaled down version. That is not thought out. Do they mean a scaled down version in size, partial completion or what?
At the meeting my point, which I am sure the officials told the Minister about, was that all applications are subject to planning permissions. If one is talking about a scaled down version, one would have to resubmit the planning application, which will take a minimum of two months, and one would not be within that deadline.
The take-up is 42,200. It is practically impossible for that amount of people to complete or, in many cases, commence the work because of the shortage of experienced and capable personnel to build the necessary units.
I support Deputy Creed's position on that. However long it takes, it is necessary. The deadline should be extended, if 42,200 persons are prepared to put up these units and if it is not their fault because they cannot get contractors to do the job. In my area, there is a limited number of contractors involved in this and they are stretched to the limit. Every effort should be made to extend the deadline so that people can deliver on the existing opportunities.
I compliment the Minister on this worthwhile project. What worries me is the 12,000 people who received approval to commence work and who probably will not start work. There are 30,000 applicants who will finish at a cost of €411 million.
While they and everyone on this side of the House are looking for a six-month extension, I tabled several questions to the Minister because I have been contacted by so many farmers who cannot see any way of being finished by that deadline.
While we hoped that the Minister would take our concerns on board and extend the deadline for reasons outlined by my colleague, Deputy Creed, what really gets me is when I look at our colleagues who are farmers on the Minister's side of the House, including a former junior Minister. If they cannot give the Minister direction and push him to extend this deadline, what hope have we? We have heard nothing of the farmers in the Minister's party and the former junior Minister looking for an extension. It is necessary that this deadline is extended for the reasons outlined.
When does the Minister expect those who will be finished by 31 December would receive their payments? What is the deadline on that?
I would urge the Minister, and ask his colleagues, to apply what pressure they can.
They will speak on the matter. Deputy Sheahan ought not be worried about them.
Very good.
I fully agree with Deputy Sheahan but, I suppose, there are certain regulations.
A Deputy
Perhaps Deputy Scanlon wants to vote with him.
Deputy Scanlon said he would vote for the Estimate.
It is a regulation that must be adhered to, but no doubt it has been a successful scheme given the uptake at a cost of €500 million, which is double the predicted amount of money required for it. No doubt it has been beneficial. While the scheme puts money into farmers' pockets, one cannot quantify the benefit to the farming practice of farmers of whom I am aware who have availed of this scheme. A slatted house is as good as a farm of land because of the benefits to cattle, feed and manure for the land.
I want to record my support for the Supplementary Estimate. The impression was given nearly a month ago that there were people waiting for money and they would not be paid this year. That is wrong. There is nobody still waiting.
There are people waiting.
Yesterday I spoke to people who were concerned and I am aware of people who received cheques as recently as this morning. It was a little frightening for those people to think that they were not going to be paid. The Minister is conscious of the fact that those people are desperate for their money, particularly given the pressure under which the banks are putting them.
I fully support, and second, Deputy Creed's proposal.
This has been one of the most successful schemes for farmers. That has been borne out by the take-up and the amount of work that had already been done. I am well aware that there is much more to be done and my worry is that many of these schemes will not be finished in time.
The aspect that really worries me is one that I raised previously when this was discussed, namely, those who will have to leave farming if this type of work is not carried out. If this work cannot be carried out, environmental issues will put several farmers in my area out of business. People without the necessary holding capacity for slurry will find they have no business in farming and will not remain in farming. If nothing can be done with regard to the date, perhaps the Minister, as a compromise, might consider the position of those who cannot meet the deadline and allow them to at least put in place slurry tanks, underground tanks or whatever in order that they might remain in farming.
I call Deputy Sheehan, who already posed questions about this matter. I presume he does not intend to table further queries.
I fast-tracked the issue earlier.
I congratulate the Minister on his efforts to procure additional funding from the Department of Finance in order to meet the shortfall relating to the applications that were approved. The information provided indicates that a total of 46,132 completed applications were received, that over 42,200 approvals to commence work have been issued. This means that approvals have not issued in respect of almost 4,000 fully documented applications which were received by 29 June 2007. Will such approvals be issued? Will the people who made the latter applications be included in the scheme and will their approvals be issued in the near future?
Like Deputy Creed, I received a letter from a major firm in west Cork which was highly critical with regard to the completion deadline. As stated earlier, it has hardly stopped raining during the past six months and that this had a serious effect on those farmers and contractors trying to complete works in order to comply with the requirements of the scheme. If the Minister put a strong case to Europe, I am sure he would have no difficulty obtaining an extension — to 30 June, if possible, or at least 31 March — to allow such works to be completed. Many farmers will not be able to complete their works by 31 December.
The delay in completions is solely due to bad weather. The Minister, therefore, has a good trump card to play in Europe when seeking an extension. I have always had faith in him since he became a Member of the Dáil. He did great work persuading the Minister for Finance to provide an additional €195 million, particularly when one considers the extreme financial difficulties that exist at present. The Minister pulled a masterstroke in that regard and I congratulate him on it.
I support the Supplementary Estimate. I congratulate the Minister and the Government on initiating the farm waste management scheme, which has been extremely successful and which has been taken up by 42,000 farmers. Much of the work relating to the scheme is being completed.
I disagree with Deputy Creed's contention that this will not have any net benefit for farmers. I am a farmer——
I stated that it would not be any financial benefit.
——and I am aware that revamping one's buildings, etc., and improving ways of storing slurry and using it in a better and more efficient manner — particularly in light of the price of manure — will give rise to a net benefit. Why would we spend the amount of money involved unless there was going to be a net benefit to farmers via increasing their incomes and improving the efficiency with which their farms operate?
I refuse to accept that the Government is hiding behind the current financial difficulties, particularly as the purpose of this meeting is to approve the spending of an additional €195 million. This Supplementary Estimate is a support mechanism for farmers and others involved in agriculture. I compliment the Government on its introduction. It is complete nonsense to state that the current financial difficulties provide a reason for not supporting the Supplementary Estimate. The Government has provided a commitment that further money will be provided in 2009 for the scheme to be completed.
Members have all been approached by farmers who are experiencing problems in the context of completing works before the deadline of 31 December. I urge the Minister to try to obtain a derogation — of six months, if possible, but certainly of two or three — from the EU. I accept that the Union has indicated that the scheme must be completed by the end of the year. However, we have endured an period of extremely wet weather. The Government and farmers have invested money in the scheme and it would be sad to see anyone being left high and dry. I hope a derogation of two or three months will be obtained.
I agree with previous speakers that this is a wonderful scheme. When it was established, however, there was some concern as to what might happen to Irish farmers. I come from an area in which farming is strong. I have not been approached by any farmer in my constituency who will not complete his or her works before the deadline. If the scheme is not extended, however, there is no doubt that the number of people on unemployment will increase. Building and other contractors are delighted with the work that has come their way as a result of the scheme, particularly in view of the downturn in the housing industry. There are 90 days left before the deadline and I am confident that only those who are either dawdling or inefficient will fail to have their completed their works in time.
What is the position in respect of the other farm improvement scheme? What has been the level of uptake and what are the costs attaching to it? The scheme to which the Supplementary Estimate relates will eventually cost €376 million, which is a significant amount of money. Any Government which invests that much in agriculture must be congratulated. Agriculture will be in safe hands while the Minister is in office because he understands the needs of those involved in farming, particularly people with smaller operations.
There have been some 42,000 approvals under the scheme. I am somewhat taken aback that a small number of farmers did not, for one reason or another, make applications. However, one cannot lead everyone by the hand. We are doing well in this area and if we obtain the co-operation of the Opposition, the scheme will have been a great success.
I thank Members for welcoming this Supplementary Estimate of €195 million. I appreciate their co-operation in approving it. It goes without saying that the scheme has been hugely successful.
On the points raised by Deputies P. J. Sheehan and Edward O'Keeffe. Some 48,580 applications were made and approvals issued in respect of 42,200. It is generally the position with a scheme that so many approvals would issue but 20% of applications do not proceed for whatever reason. People may, for example, opt out. In some instances relating to this scheme, multiple applications were made. There has already been a huge take up and I can provide further details in writing to the Deputies in that regard.
Deputy Edward O'Keeffe also inquired about the farm improvement scheme. A total of 12,675 applications were received up to 31 October 2007. Applications received prior to 21 October 2007 are being processed first because they will lead to the expenditure of most of the €79 million allocated in respect of this scheme. If that allocation is not exhausted, applications received after 21 October 2007 will be considered in date order. Approximately 6,500 approvals have already issued.
Deputy Christy O'Sullivan stated that some of his constituents may not be able to complete their works. We issued a "discrete units" letter to applicants informing them that there was provision for people who wanted to do so to scale back on what they initially set out to do and proceed only with parts of their projects that can be completed on time. We will send the Deputy a copy of the letter outlining how people can be facilitated.
Deputies Ferris, Creed and Sherlock raised questions regarding planning permission. I understand, but we will check this, that where a farmer has approval, for example, for three items of work and only two are completed to Department specification prior to the deadline, the applicant will be paid his or her due entitlements under the scheme for those two items, provided they have conformed to the planning requirements. The farmer can complete the third item at a later stage in keeping with the conditions of the planning approval. If Deputy Ferris has a more detailed question on that, he can discuss it later with one of my officials. I am conscious that we are pressed for time.
At the briefing we got on Tuesday, it was intimated by officials that the Department was prepared to accept a scaled-down version.
That relates to the discrete unit. I am conscious we have run out of time. Mr. Prendergast will discuss the issues with Deputy Ferris later, if that is okay. We want to be accurate with regard to the knowledge we pass on to constituents or farmers with specific queries.
The Department sent a letter to every applicant last April stating that the deadline announced as part of the scheme is the deadline. Then applicants were written to recently indicating that if they were not going ahead with the full project, they could be accommodated within the discrete unit. There is significant work under way. We all know there is more capacity in the construction industry than 12 months ago and throughout rural Ireland there is significant work under way. I know from the completion notifications that have come into the Department that a significant volume of work has already been completed and am glad we are in a position today to move this Estimate forward to get the payments out to the farmers who have completed work as soon as possible.
As Deputy Tom Sheahan mentioned, in 2009 there will be significant demand on this scheme by applicants who notify the Department of completion at the end of this year. The necessary processing of those applications, the inspections and the processing and issue approvals will continue as rapidly as possible, but we can expect, because of the volume of notifications of completion of work coming in December, that there will be some delays in getting the processing and inspections done. However, we intend to get payments to farmers as quickly as we can. I thank the committee for its assistance in dealing with this Estimate.
There is a delay of approximately five weeks in getting VAT receipts back from Revenue, which will delay farmers' paperwork. Will the Minister take that into account in terms of the documentation required?
I will talk to the Minister for Finance through his Revenue people to see what can be done in that regard.
Will the Department make a request to Europe to permit us to extend the deadline?
The deadline was a specific part of the approval we got.
I appreciate that.
The Commission has reiterated that the criteria ——
Did the Department make a request? Was that on foot of a request to extend the deadline? I was told by the Commission the deadline is the 31 December.
There were discussions with the Commission and it reiterated the deadline in correspondence to others as well as us.
We will have to wait a while to get information on the request if we do not ——
It was an integral part of the approval we got. The phrase used consistently by the Commission has been "the exceptional extension to the end of December 2008". That has been reiterated.
The Commission has not been formally requested to extend it for another six months.
We have worked on the basis of 31 December, and this was outlined clearly to the Department. As we know, this state aid approval was granted as an exceptional measure to take account of the specific circumstances of this country.
I appreciate that.
At the time, the Department officials and the then Minister, Deputy Mary Coughlan, outlined there would be a high take-up. At the time there was not great capacity within the construction industry — this has changed now — but we have restrictions on work throughout the year due to our climate conditions. We agreed 100% pre-approval on-the-spot inspection by the Department before any work could commence and got a process set up whereby applications could be submitted without the full details being supplied. This was allowed to enable people access the system without a waiting period. The situation, therefore, is the deadline remains.
I want to get a clear message to the farming community. I have been consistent in this regard and understand other Deputies in the House, regardless of party, have given the same message. We want to send a clear message that work must be completed on the claims ratified by the Department by the end of this year. That is the position.
I take it the Minister will not request an extension.
It is all very well for Deputy Creed to ask that, but having voted "No" to the Lisbon treaty, the country has lost its influence. How does Deputy Creed expect the Minister to ——
Any excuse. All I want to know is whether the Minister will apply for an extension to the deadline.
That concludes the select committee's consideration of the Supplementary Estimate. On behalf of the select committee, I thank the Minister and his officials for attending today's meeting.