Tom Sheahan (Kerry South, Fine Gael)
Link to this: Individually | In context

I wish to share time with Deputy Creed.

Is the 8% reduction in forestry premia announced in the supplementary budget last month legal? More than 20,000 people are employed in forestry and 16,500 farmers have invested in forestry. Forestry premia and forestry-related activity such as road building and planting cost the Exchequer a total €122 million annually and the 8% reduction will cost farmers in excess of €7.5 million. For that reason other farmers do not have the necessary security or confidence required to get involved in planting. Farmers are worried that there will be another 8% cut in November or in April 2010. Farmers have come to me who wish to invest in forestry but they have lost confidence and are shying away from it. Will the Minister of State outline his ongoing plan for forestry that will give confidence to farmers and demonstrate that the Government is dedicated to the sector?

I have some suggestions on where one might claw back the sum of €8 million. If we were to suspend the roads programme for one year, that would result in savings of €4 million that could be used for the forestry programme. Planting tenders have dropped by between 10% and 15% but Coillte, Green Belt and other companies are not passing on the benefit of the cut to the man who is planting the trees. A cut in the planting grant by 10% would yield a sizeable sum. Will the Minister of State outline a plan for the future for forestry to show that the Government is dedicated to the sector and support the farmers who wish to develop forestry? I suggest that, when forestry premium payments finish, perhaps in year 21 one could pay the 8% to farmers.

Michael Creed (Cork North West, Fine Gael)
Link to this: Individually | In context

Forestry involves a commitment of 30 to 40 years on the part of landowners. At the simple stroke of a pen not only has the Minister for Finance and his Cabinet colleague, Deputy Smith, in the Department of Agriculture, Fisheries and Food taken money from farmers' pockets but they have simultaneously undermined their ongoing commitment to future afforestation because there is a fear that the viability of forestry as an income source could be further undermined at another stroke of the pen. That is penny wise and pound foolish.

The Minister of State, Deputy Killeen, is aware that there are legal penalties and sanctions for a failure to meet our obligations signed up to at European level to reduce our carbon emissions. Forestry represents the easiest and fastest way to meet our carbon sequestration requirements. In the budget the Minister has dealt a body blow to the industry and the commitment of farmers as landowners to planting and meeting future targets.

Deputy Sheahan referred to the legal principle of legitimate expectation. People who entered into a commitment to forestry as a land use measure did so on the basis that they expected their level of income to be predictable for the period of the grant - up to 20 years - but that has been undermined. Has the Department taken legal advice on the matter?

I seek clarity from the Minister of State on another matter on which there is uncertainty. Is it the intention of the Government that income from forestry which up to now was tax exempt will be subject to the various levies introduced in the budget by the Minister for Finance? That would be a further breach of contract between the Department and farmers and sound the death knell of the afforestation programme. The Minister should be concerned that the target set in the programme is hopelessly behind schedule.

What the Minister has done is penny wise and pound foolish. There are other areas in which funding could be saved. Closing the stable door after the horse has bolted is something at which the Government has become adept. A round table of the various interest groups has been convened to give the Government cover on this issue and it would have been preferable for the Minister to have embarked on this. With this precipitative action he has dealt a fatal blow to the future of the forestry industry which is critical to our economic future.

Tony Killeen (Clare, Fianna Fail)
Link to this: Individually | In context

Gabhaim buíochas leis an mbeirt Teachta as an t-ábhar tábhachtach seo a chur faoi bhráid na Dála. I am pleased to have an opportunity to highlight the Government's commitment to forestry and my future plans for it. In essence, they are for the continuance of support for the forestry programme. The continued funding of forestry is an appropriate use of national funding from the Government's viewpoint, given the income it delivers to the rural community, the raw material it provides for industry and energy uses, the jobs it continues to sustain and the essential contribution forestry makes to carbon sequestration in furtherance of the national climate change strategy.

Deputy Sheehan has referred to the recent decision to reduce forestry premia by 8%. This reduction was necessary in view of the unprecedented pressure on the public finances and the need to work within limited resources. I acknowledge that this will have a significant impact on the annual income of premium recipients. However, it should be noted that, notwithstanding the reduction, approximately €58 million was paid to forestry owners this week in the annual premium run. I am sure the House will agree that this is still a substantial amount of money to invest in the rural economy. This is not the full extent of the amount to be paid out in premia this year as payments will continue to be made during the year.

The decision to reduce the premium was balanced by the need to maintain the establishment grants scheme, the lifeblood of planting and employment in the forestry sector. The continuation of the 100% establishment grants, coupled with expenditure on support schemes, is evidence of the ongoing commitment of the Government to forestry and our plans to continue that support of the sector. Forestry planting is labour intensive and the continued 100% funding of the establishment grants seeks to ensure continued employment in the nursery, planting and maintenance elements of the forestry sector. It should also be appreciated that, despite the financial pressure on the Department, the total amount of funding being made available for forestry and bio-energy is still approximately €120 million, only marginally over 1% less than that provided in 2008.

The rationale for continuation of support for forestry is the extensive contribution it makes to the economy, society and the environment. Evidence of this is the employment of some 16,000 persons in the forestry sector. Allied to this is the figure released by COFORD that Irish forest product exports for 2007 were worth in excess of €333 million to the economy, an increase of more than 14% in value on the previous year. This contribution is the outcome of the Government's commitment to forestry to date, as well as the investment by all of the stakeholders in the industry, from the nursery right through to the processor. However, it is essential that support is continued to facilitate an ongoing supply of raw material to use the capacity that has been developed to date and sustain the viability of the sector. The Department is seeking to ensure continued confidence in the sector in order to maintain this contribution into the future. To this end, I met today the forestry liaison group which consists of representatives of the stakeholders in the forestry sector to discuss proposals for a number of policy actions to ensure continued confidence in the sector.

Tom Sheahan (Kerry South, Fine Gael)
Link to this: Individually | In context

Did the Minister of State agree anything?

Tony Killeen (Clare, Fianna Fail)
Link to this: Individually | In context

I thank the Deputy for the alternative proposals, some of which were made by groups at today's meeting. I assure both Deputies that legal advice supports the Department's action. My understanding is that levies apply to all income, including that from forestry. We await the report of the Commission on Taxation.