Éamon Ó Cuív (Galway West, Fianna Fail) | Oireachtas source

I welcome David Gunning and Gerry Egan to the meeting this afternoon. I have, in various guises, had quite a bit of contact with Coillte over the years. Coillte encapsulates what a State company is about. Mr. Gunning put it in one sentence. It is about a successful commercial operation with a social role and seeing that the shareholder is the State on behalf of the people. Therefore, the ultimate measure of its success is not just the bottom line, which is important and to which we will come, but the good it does in Irish society. I had direct contact with Coillte in respect of its rural recreation role, which we will come to shortly.

It is fair to say that from the time the forests were planted to the time that they were transferred to Coillte, there was a dramatic shift in the way our forestry industry was run. We should never forget the first planters or re-planters of forests in Ireland who put the forests there because it was a long-term project from the outset and much good work was done in the earlier years of this State. It is very significant that Coillte owns 7% of the land mass of the country because, as it has proved, where it was initially just trees, that land mass in itself has many other values now that were never foreseen by the initial developers.

Mr. Gunning said that 70% of the products of forests is exported either directly or indirectly. He said that 80% of the product during the height of the boom was being used in the Irish construction industry. However, if we roll back about ten or 15 years from there to just before and during the Celtic Tiger era in Irish industry, we can see that the amount of Irish timber being used in the construction industry had gone from being of a very low quality and quantity - Mr. Gunning might be able to give us the figure - to being the dominant player in construction in Ireland. That took a technical revolution to compete with Scandinavian timber in terms of stress testing, kiln drying and all those very dramatic developments that took place. So the figure of 80% was the result of years of basically taking over the Irish market and displacing imports. Within two years, it has all turned around because the local market closed and Coillte and the timber mills managed to get 70% of the product on to the export market.

One of the most extraordinary untold stories of the collapse of the construction industry has been that none of the major timber operations in the country have closed. The big mills are all intact, as are Coillte's factories. If one had predicted the collapse in the construction industry, one would have also predicted the collapse of our native timber manufacturing industry but that did not happen. It did not happen because there was huge co-operation - I know there were tough debates - between Coillte as the biggest supplier of saw log and the milling industry and because they were able to break into the British construction market and replace all their lost local sales through sales abroad.

We have seen the figures for the employment involved here. There is huge employment which is spread around the country in places that do not have any other employment. It is fair to say that we must examine how this happened and how it could have been different if a different approach had been taken to the crisis. My knowledge is that most of the major mills were on short working weeks for a short time in 2010, although I may have the wrong year, but very quickly returned to full production and many can sell all their products at the moment. That is very important because it could have been a disaster. When we are looking at selling the crop, we need to look at whether it would have been different if Coillte did not own the crop.

Wearing my other hat, I had a huge connection with Coillte through Mr. Gunning with regard to rural recreation and with Bill Murphy who did an outstanding job on this issue. It is worth noting that 45% of the waymarked ways around the country are on Coillte properties. If rural recreation was fully developed, we could create 3,000 jobs. A fair amount of work was done and Coillte was central to this work but much more could be done. Coillte started with walking, including long-distance walks, and rambling and then got into mountain cycling where one has the five tracks. That is in its infancy and there are all kinds of world championships to be bid for in the future if we can develop the right quality product. There are many other things that can be done because Coillte owns Mountain Top. I know Mr. Gunning spoke about a big wind farm in this area in north Mayo. Anything that would interfere with that work and the availability of that land to people would not only be an economic disaster but would also have a huge effect on the quality of life within the country. That is very much where the social side of Coillte comes in.

We used to have debates on how much money Coillte was putting into rural recreational amenities and we did try to help a little. I know that a significant part of the Estimate was allocated to wildlife and rural recreational amenities to achieve a national economic return, but there was no direct economic return to Coillte. However, since the taxpayer is the shareholder, that is no harm. It is important, however, that we be informed of the amount of money being invested in wildlife and rural recreational amenities, given that it does not generate a commercial return for Coillte but a social return to the nation.

I will now deal with the issues of renewable energy and telecommunications masts. What has struck me in recent years is that with the changing nature of business, both in Coillte and much more so in Bord na Móna - a big landowner in the country - there are synergies to ensure greater co-operation and a joint effort in providing comprehensive State packages for various telecom companies and also renewable energy projects, in respect of which I understand Bord na Móna has plans. Do the delegates have an opinion on how they might be best managed to ensure the significant areas owned by the State, in the case of both Colllte and Bord na Móna, are used in a co-ordinated fashion for the benefit of the taxpayer?

I have serious reservations about the sale of the crop. In the Dáil last week the Minister mentioned a figure of €700 million. It is the equivalent of receiving €700 if one has an annual income of €50,000. It would be the same as giving a person with an income of €50,000 a once off payment of €700, thinking it would make a significant long-term difference. In the greater scheme of things, the figure is quite modest. I have the following reservations about such a sale. It appears from a quick perusal of the Coillte accounts that it has made a profit each year for the past five years, despite the downturn in the economy and primarily selling into the construction industry. How would this proposal affect the profits of Coillte into the future and its ability to pay a dividend to the State? Second, this is harder to measure, but I am really concerned about it. My belief is that if it had been sold to a private pension fund, even if Coillte was managing it for it, and ownership of the crop had rested with private interests during the period 2008 to 2011, the national outlook would not have take precedence and the approach would not have obtained that the national interest was wider than just the pure profit figures. I do not believe all of our timber mills would still be standing today. The greatest non-story of the past five years which should have been the greatest is that none of the major timber mills went down and that they are all thriving businesses today. Coillte took a pragmatic approach to pricing the saw log that allowed it to displace other players in the British market and thus sustain its position. It was then able to get its price up again. An industry approach was taken which was very successful. Both the timber miller and Coillte took a very pragmatic view that they had to change tack very fast and that they had to be competitive in the British market to get a toe hold in it to displace others. I am not sure if a private company owned those interests that it would take the same view, which worries me very much. If one sells the trees standing in a forest, who will meet the cost of replanting? I understand that as Coillte sells off the timber to the various millers, it factors in to the transaction the reuse of the land, unless it has been decided for some reason not to replant it, but in the vast majority of instances, it replants the forest and starts the cycle all over again. The cost of this is built into the sales price. I would like to know if the new arrangement was to be agreed to, if there would be an obligation to replant and who would bear the cost of replanting. If one sells now and ends up with the cost of replanting, one is effectively taking out a short-term loan, but one must bear the costs into the future.

In all of my discussions and interactions with Coillte, when it is harvesting, there is always significant consideration given to how the interruptions in terms of rural recreation and so on can be minimised. One does not suddenly find strategic mountain passes blocked; walkers do not suddenly find half way through a trek that they can go no further. How could one ensure in practice that private operators would have the same respect for the need to keep the non-core business going? If the crop is to be sold, will it affect the profitability of Coillte into the future? If the Government had not come to Coillte to state it wanted to sell it, would the chief executive sell the crop up front? Is it in the company's interest to sell the crop upfront, or would it have continued as it had always done and held on to the most important part of the industry - ownership of the crop? Is this coming from the Government rather than from the board and the executive in terms of what they would have recommended had they not been asked to do this by the Government?