Seanad debates

Thursday, 17 December 2009

Forestry (Amendment) Bill 2009: Second Stage


Question proposed: "That the Bill be now read a Second Time."

6:00 pm

Photo of Tony KilleenTony Killeen (Minister of State with special responsibility for Forestry, Fisheries and the Marine, Department of Agriculture, Fisheries and Food; Clare, Fianna Fail)
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The purpose of the Forestry (Amendment) Bill 2009 is to increase Coillte Teoranta's statutory borrowing limit. The Bill proposes to amend section 24(1)(b) of the Forestry Act 1988, which provides for borrowings by Coillte Teoranta for capital purposes including working capital.

Section 1 provides for an increase in Coillte Teoranta's statutory borrowing limit from £80 million, that is, approximately €101.5 million, to €400 million. It amends section 24(1)(b) of the Forestry Act 1988 in which the existing borrowing limit of £80 million is stipulated.

The existing statutory limit was set in 1988, when the legislation providing for the establishment of Coillte was enacted, and has not been increased since then. Coillte has a significant capital investment programme each year. That includes reforestation, investment in forest infrastructure and plant and equipment. It is necessary to increase the statutory borrowing limit to make adequate provision for the borrowing requirements of Coillte for its capital expenditure programme.

Section 2 provides for the Short Title, collective citation and construction of the Bill and is a standard provision.

Coillte Teoranta is the national forestry company, established as a private commercial company under the Forestry Act 1988. The Act provides that the principal objects of the company are to carry on the business of forestry and related activities on a commercial basis and in accordance with efficient silvicultural practices; to establish and carry on woodland industries; to participate with others in forestry and related activities consistent with its objects, designed to enhance the effectiveness and profitable operation of the company; and to utilise and manage the resources available to it in a manner consistent with these objects.

In the intervening 20 years since its establishment, Coillte has increased its forest estate by 37,000 hectares, developed its recreational facilities and extended its business base to include panel products. Coillte currently manages 445,000 hectares of forest land, of which 79% is forested with the remaining 21% encompassing open spaces, water, roads or land above the tree line. Such management induces maintenance of the forest estate, felling as appropriate and replanting. The company supplies logs to the timber processing industry including sawmills, panel board mills and the emerging energy supply businesses. While the company provides direct employment, it also engages harvesting and haulage contractors thereby sustaining employment for a far greater number.

The company also owns two panel board businesses, namely, Smartply in Kilkenny and Medite in Tipperary, both of which I visited recently. These manufacture OSB and MDF boards, respectively, with more than 80% of their output being exported. There are significant investments currently in train in both plants. Coillte has also entered into a joint venture arrangement with ESB to develop a windfarm in Garvagh Glebe, County Leitrim.

It is also important not to overlook Coillte's contribution to recreation by way of its forest parks and trails and its involvement in Lough Key Forest Park in Roscommon. The company now has an extensive remit.

Colleagues on the Joint Committee on Agriculture, Fisheries and Food met with Coillte at the end of October to discuss the company's annual report for 2008, at which Coillte informed the members of its current structure and its businesses. This was a valuable opportunity for members to raise issues directly with Coillte such as its performance, current business environment and plans for the future. The company similarly met with the committee in June 2008 to discuss the company's annual report for 2007. Such meetings facilitate accountability and transparency and I am sure the company also welcomes the opportunity to brief Members of both Houses.

The purpose of this brief outline of Coillte's business interests is to put in context the proposed increase in the statutory borrowings level for the company or, in reality, the group, as the limit on borrowings applies to the aggregate at any one time of borrowings by the company and its subsidiaries.

The limit on the company's level of statutory borrowings is currently €101.5 million. The business environment in which Coillte, as a commercial company, operates is vastly different from the business environment in which it operated in its earlier years. There is a provision in the Act whereby Coillte may seek approval for temporary borrowings. Coillte has sought and received approval under this provision on a number of occasions over the past number of years. However, it is considered sensible to increase formally the statutory borrowing limit rather than have any concern about the interpretation of "temporary" in the context of borrowings.

While it was generally accepted in principle that the company's statutory borrowing limit should be increased, there has been a lot of consideration as to the most appropriate level. Inflation alone would allow an increase in the borrowing limit from €101.5 million to €182.5 million. This is based on inflating the €101.5 million limit in 1988 by Ireland's inflation rate up to October 2009.

Coillte has a significant capital expenditure each year. In its annual report and accounts for 2008, Coillte states that its capital expenditure in 2008 was €58.1 million and explained that a significant proportion of the expenditure was incurred in enhancing and maintaining the forest estate and expanding the road network within the forest and added that expenditure also included a substantial investment in Medite Europe Limited that will increase production capacity and improve operational efficiency.

The figure for capital expenditure in previous years was €58.4 million in 2007 and €49.4 million in 2006. This level of ongoing capital expenditure was a consideration.

Coillte has outlined its strategic plans to 2012 in its document, Destination 2012, to which it referred in its discussion with the joint committee. This document focuses on Coillte's four business areas and contains many proposals, including proposed investment in renewable energy, especially wind energy. This strategic plan requires in-depth consideration to which I will refer again.

In regard to determining the most appropriate level to which the limit should be increased, it was concluded that €400 million would allow Coillte sufficient headroom for core activities, working capital as well as approved investments.

Returning to the consideration of Coillte's strategic plan, the Seanad is aware that under the new programme for Government, I am committed to reviewing State forestry policy to take account of its critical role in relation to climate change and its importance to construction, bio-energy, bio-diversity and its potential to deliver long-term employment in other downstream industries. The review will include the role of Coillte and its functions and operations. It will also assess the effectiveness of current forestry grant schemes and make recommendations on how best to deliver supports in the future.

Three working groups are being established to carry out the review with each group assigned a specific aspect. The respective groups will be reviewing forestry grant and premium schemes, State forestry policy and Coillte's role, functions and operations.

In regard to the review of Coillte's role, function and operations, the working group will also consider the Coillte strategy document, Destination 2012, to which I referred earlier. Pending the outcome of those reviews, my initial view is that Coillte, with its extensive experience in forestry management and knowledge of the timber market, has played a significant role in the development of Irish forestry and that it is timely to look at its role, functions and operations to optimise its contribution to forestry and the economy. I look forward to the output from the Coillte review group.

In regard to the proposal before us to increase Coillte's statutory borrowing limit, it is important, in view of its current contribution to the economy by way of employment, both direct and indirect, and the export of its products, that it be provided with the means to acquire adequate funding for investment in its businesses. There are also the numerous other benefits which we derive from Coillte's management of the forestry estate, such as carbon sequestration, bio-diversity benefits and the provision of recreational facilities.

I stress that an increase in the company's statutory borrowing limit does not automatically mean the company may go out and borrow to that limit. Under section 24(1) of the Forestry Act 1988, the borrowings of the company require the consent of the Minister for Finance and the Minister for Agriculture, Fisheries and Food. When the company sends a request outlining its expected borrowing requirements, the request is closely examined by the Department and the Department of Finance and, if considered reasonable and soundly based, it will be submitted to the Ministers for consent. The level of borrowings is also reported to the Departments on a monthly basis. This requirement is in addition to the reporting requirements provided in the code of practice for the governance of State bodies.

Significant investment proposals also require the approval of both Ministers. In regard to reporting requirements, I draw particular attention to the requirement in the code of practice that:

the Chairperson of each State body must furnish to the relevant Minister in conjunction with the annual report and accounts of the body, a comprehensive report covering the Group...outlining all commercially significant developments affecting the body in the preceding year, including the establishment of subsidiaries or joint ventures and share acquisitions, and major issues likely to arise in the short to medium term.

In regard to the code of practice, I take the opportunity to welcome the revised and updated code of practice for the governance of State bodies published by the Minister of Finance earlier this year. The reporting requirements, which it stipulates, and ongoing communication between Departments and agencies under their remit are vital elements in the oversight of agencies.

I have focused so far on Coillte and the basis for seeking an increase in its statutory borrowing limit and also the controls on borrowing levels. However, it is important, for contextual reasons, to look at Irish forestry and to appreciate the significant role played by Coillte.

Investment in forestry has been a part of Government policy since the foundation of the State. This investment has contributed to a thriving wood processing sector which employs many thousands throughout Ireland, in both rural and urban areas. COFORD recently published a number of information papers on forestry, which serve to illustrate the importance of forestry. For example, the forest industry, comprising growing, harvesting and processing of forest products, makes a significant and growing contribution to the Irish economy with output in 2008 estimated at €1.89 billion or just under 1% of GDP.

Another point to note is that harvest from Irish forest in 2008 was 2.3 million cu. m, of which 2.1 million were from Coillte and the balance was from privately owned forests. While new planting is now undertaken predominantly by private growers, it will take some time for significant volumes to come from the sector. Until such time as the privately grown timber becomes available, Coillte will continue to have a major role in the provision of timber for the wood processing sector.

Forests provide a range of raw materials for industry as well as services to society, including climate change mitigation, enhancement of bio-diversity and provision of recreational activities. A well-balanced age structure is needed to sustain the production and the provision of services so afforestation, that is, new planting of forests, is vital. I was pleased, therefore, with the recent decision of the Government announced in the budget last week to allocate significant funds for new planting.

In regard to the role of Coillte in afforestation, when it was first established in 1989 the company actively engaged in land acquisition for afforestation purposes and expansion of its estate. In latter years, it has reduced its land acquisition programme for a number of reasons, including reduced availability of land for sale, rising land prices and the company's ineligibility for forestry premiums. Since 2000, the company has focused on contributing to the afforestation programme through its farm partnership schemes, by providing forestry services to farmers and by promoting forestry investment.

Coillte is currently engaged with Bord na Móna in a joint venture to afforest cutaway bogs. The pilot phase of this project will commence next year with the planting of 200 hectares initially. It is proposed to plant up to 5,000 hectares over a number of years which would be a significant contribution to the national afforestation targets.

In the wider context, Coillte also has a pivotal role to play in renewable energy. The Government White Paper on energy policy set a target of 12% of thermal energy to come from renewable sources by 2020. Biomass is expected to play a significant role in achieving this target.

Coillte is strategically positioning its forestry business and biomass resource to play an important part in contributing to the reduction in greenhouse gas emissions and climate change mitigation for Ireland. While much of Coillte's timber supply is destined for processing, the production of biomass for energy will still be significant for the company. The company is working with the key stakeholders in the market and, in particular, with the bio-energy group under the auspices of the Department of Communications, Energy and Natural Resources. In order to refine its business model and strategy for approaching the market, the company has established a pilot depot in County Mayo. Coillte is also currently seeking to align itself with a leading technology company with demonstrable experience and a proven track record in the larger industrial biomass sector.

Wind energy is also regarded as playing a major role in the achievement of the renewable energy targets. Coillte has outlined its long-term proposals in its strategy document Destination 2012. As I mentioned, the Coillte review group will be considering the company's strategy documents and those proposals in the context of the overall review of Coillte's role, functions and operations. A representative from the Department of Communications, Energy and Natural Resources will be a member of that particular review group as it is important that those proposals are considered in the context of ongoing developments and policy for renewable energy.

As I am sure members appreciate, Coillte has developed significantly from the time of its establishment and, for commercial and operational reasons, it is timely to revisit the level of statutory borrowings set down in the 1988 Act. As I indicated, the most appropriate level received much consideration and €400 million was the amount considered appropriate at that time. I have outlined the range of businesses in which Coillte is involved, the significant role it plays in the economy and society and its potential role in renewable energy.

It is important that a commercial company is in a position to access funding to facilitate its ongoing development and investment programme. The company's statutory borrowing limit has remained unchanged since 1988 so this needed to be reviewed and updated. I remind the House that agreeing to this increase does not mean Coillte may automatically borrow to that level. The consent of both Ministers is required for the level of borrowings and the requests will be the subject of scrutiny by both Departments. It is not envisaged that this proposed level will be sought in the immediate future; however, when it is being amended, it is important to provide for a sufficiently high level in the medium term.

Photo of Paul BradfordPaul Bradford (Fine Gael)
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I welcome the Minister of State back to the House and the legislation, which I appreciate is brief in nature. It is also important for Coillte's long-term planning. I am reminded of the line from the poem we learned in school, "Cad a dhéanaimid fasta gan adhmad". If this Bill and its intentions come fully to fruition, the poem need not be on the curriculum any longer.

We have had interesting discussions, as the Minister of State is aware, in this House, the Lower House and in political life over the past number of months on the state of our economy and the need for a stimulus plan to generate jobs. This leads to the Copenhagen summit and the question of climate change, as the environment is very much back on top of the political agenda. This legislation provides for the long-term future of a company that in regard to both the environment and the economy can provide us with a win-win solution. The statistics have been given and there is no need to go over them.

Since the inception of Coillte in 1988 it has been very successful, although there have been concerns, worries and some problems in recent years about planting targets. This was particularly relevant to farmers intending to invest in forestry. There have been disappointments concerning the reduction in forestry premia and the difficulty in resolving the payment of establishment grants. If our targets are to be met, we must ensure forestry can continue with farmers and landowners in mind, as it should be seen as a genuinely long-term source of income. It must be a solid and sound alternative farming enterprise.

As a country our proportion of land under forestry is still very low by European standards. To the best of my knowledge we are, to put it mildly, struggling to meet forestry targets. Any further assistance, drive and enthusiasm provided through Coillte must be welcomed.

The purpose of the Bill is to provide borrowing capability and flexibility. I accept what the Minister of State said and we have all been discussing the state of the economy so frequently here that when we provide for any organ of the State or semi-State bodies to be in a position to borrow further, we must ensure there are very firm guidelines and rules in place. It is taxpayers' money that is always at risk. We may have one or two questions on Committee Stage regarding the formula which is presented, and the aspect of temporary borrowing in particular. That concept must be kept to the fore of our deliberations and we must ensure the temporary borrowings are transparent. There should be a strong illustration of these in the annual reports and no relevant financial facts should be covered.

I accept fully the need for the legislation and I am sure my party strongly supported the legislation in the Lower House. We see the strong role that Coillte has and, I hope, can continue to play into the future. The Minister of State and some of his Government colleagues will be aware of the broader Fine Gael proposal on the future of the economy. We made a suggestion through our spokesperson in the other House, Deputy Coveney, that Bord na Móna and Coillte be amalgamated, which is part of our alternative economic strategy, NewERA. We see strong possibilities of a tie-in between Coillte and Bord na Móna from an energy and environmental perspective, particularly as it deals with renewable energy.

The Minister of State briefly mentioned the role of Coillte with wind farms, which is a very exciting departure. We must recognise that we are so dependent on fossil fuels and foreign imports that we must make serious strides at the end of the first decade of the new millennium to become independent in that way. Coillte has a major role to play with our forestry, and it can help in wind generation and using our seas to generate energy. We should put that on the agenda and as a result of the financial facilities afforded to Coillte by this Bill, progress will be made.

I have one or two questions to pose on Committee Stage and there may be one or two items to formally pursue by way of amendment. Everybody in this House supports the concept of further strengthening and developing the Coillte concept, management of our forestries and the further growth - excuse the pun - of forestry potential. Much has been done but there is more to do. We look forward to the Bill being enacted allowing Coillte make further strides in future.

Photo of Francis O'BrienFrancis O'Brien (Fianna Fail)
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I welcome the Minister of State, Deputy Tony Killeen, with this very important legislation. I support this Bill and the need to amend the Forestry Act 1988 to increase the statutory borrowing limit. Section 1 of the proposed Bill provides for an increase in Coillte Teoranta's statutory borrowing limit from £80 million, or approximately €101.5 million, to €400 million. The existing statutory borrowings limit was set in 1988 at the time of enactment of the legislation providing for the establishment of Coillte and has not been increased in the mean time.

Over the past number of years Coillte has been able to avail of the temporary borrowing provisions in the Forestry Act 1988 and its level of borrowings at the end of 2008 was €161.2 million. The company currently has approval to borrow up to a total of €260 million under sections 24(1) and 24(2) of the Forestry Act 1988.

The business environment in which Coillte operates, as a commercial State company, is a world apart from the business environment in which it operated in 1988 when it was first set up. Coillte has a significant capital investment programme each year and this includes reforestation, investment in forest infrastructure and plant and equipment.

It is necessary to increase the statutory borrowing limit to make adequate provision for the borrowing requirements of Coillte for its capital expenditure programme. In 2006, the Coillte group was reorganised around three key operating divisions - Coillte Forests, Coillte Enterprise and Coillte Panel Products. The average number employed by the group in 2008 was 1,250. Since it was established 20 years ago, Coillte has increased its forest estate by 37,000 hectares, developed its recreational facilities and extended its business base to include panel products. The agency currently manages 445,000 hectares of forest land of which 79% is forested with the remaining 21% encompassing open spaces, water, roads or land above the tree line. The company also owns two panel board businesses, namely, Smartply in Kilkenny and Medite in Tipperary and it has also entered into a joint venture arrangement with the ESB to develop a wind farm in Garvagh Glebe, County Leitrim. Coillte also contributes greatly to recreation by way of its forest parks and trails and its involvement in Lough Key Forest Park in Roscommon.

I welcome the Minister for Finance's announcement in last week's budget speech that he will provide €121 million for forestry and bioenergy. This includes a capital provision of €116 million to plant a further 7,000 hectares of trees next year, which demonstrates the Government's continued commitment to this vital sector as set out in the renewed programme for Government. Coillte has developed its business interests significantly over the past 20 years and it faces a positive future as it expands into the renewable energy sector and as Ireland commits to reducing its level of carbon emissions through increased forestry cover. It is, therefore, timely to revisit the statutory borrowings set down in the 1988 Act. The amount required was debated at great length and €400 million was considered the appropriate limit.

It is important that a commercial company such as Coillte is in a position to access sufficient funding to expand its essential business interests, which are critical to our economy and the future of the environment. I support the Bill and the need to amend the Forestry Act 1988 to increase the statutory borrowing limit. The commercial context in which Coillte operates is vastly different from that when it was set up in 1988 and I commend the Bill to the House.

Photo of Paudie CoffeyPaudie Coffey (Fine Gael)
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I welcome the Minister of State. The Bill provides us with a good opportunity to reflect on the forestry sector, management of our forestry resources, the sustainability of our forests and on new opportunities to exploit this significant natural resource to its full potential. Coillte has played a major role since 1988. Its remit has expanded and it is engaged in many activities other than planting forests such as the manufacture of panel products. Two of its companies are close to my constituency - Medite in Clonmel, County Tipperary, and Smartply in County Kilkenny. It is important that support is maintained in order that Coillte can avail of new opportunities.

The development of our carbon sink presents an opportunity. The more forests that are planted in a sustainable way, the better we will be able to counter carbon emissions. All parties are developing good green policies and it is important that Coillte plays its role and is seen to be productive in managing forestry plantation sustainably.

I am not sure why the borrowing threshold is being increased. I am conscious of one high profile case in which Coillte was involved last year relating to lands in County Waterford. The agency had a 150-year lease with a landowner, which was taken out in 1933 but, unfortunately, due to its failure to maintain the lands, a High Court action was taken against it. The outcome of the case was that Coillte should purchase 400 acres of the 900-acre estate it had leased at a minimal cost for €3.7 million. This resulted in a significant loss to the taxpayer, which is a pity. I hope similar cases will not recur in the future because we depend on State agencies to manage our resources to the best of their ability on behalf of the taxpayer.

What is the rationale for this legislation? Have all Coillte's borrowings to date complied with the current legislation? Is there a compliance issue? It is important that we learn from the past. The recreational opportunities our natural resources offer are positive. I visited Northern Ireland last summer. The Minister of State referred to only one forest park in County Roscommon but I appreciate his remit is wide. I visited four forest parks in County Down within ten miles of each other, including Tollymore Forest Park and Castlewellan Forest Park. They are more developed from a tourism perspective than our forest parks. We more or less allow people to walk around and orienteer in our forest parks. Caravan facilities, well signposted walking trails and other services for families are provided in Northern Ireland. They are a huge attraction, they are well promoted and they provide a cheap holiday for families. I appeal to the Minister of State to impress on the officials in Coillte the opportunity that exists to develop forest parks to attract domestic and foreign tourists. If they can do it in Northern Ireland in very similar circumstances, there is no reason whatever we cannot do it here also. There are lessons to be learned in this area.

Another area in which there is huge potential is that of mountain bike recreational facilities. It is developing massively, not only in Europe but across the world. I acknowledge that there are parks for mountain biking in Ballinastoe, Ballyhoura, Derroura and Portumna on Coillte lands. However, proposals have been made to develop a similar facility in the south east. More than 1,000 people use the Ballinastoe facility every month. This creates a demand for bed and breakfast accommodation, restaurants and public houses and a new dynamic is created. In Wales, a short trip from here, the Government invested heavily to derive benefits from mountain bike parks. It estimates that more than £5 million is generated for local economies from each mountain park created. Each park also creates between 54 and 60 maintenance jobs. It is a natural resource that does not involve huge overheads. It takes thinking outside the box to develop these facilities that will attract people, not only from the United Kingdom but from elsewhere in Europe and much further afield. We already have the natural facilities which they could be further developed at very little cost.

Outside the structural issues and the hard work of Coillte, there are recreational facilities and opportunities that should be exploited. Tourist facilities for families in forest parks is one such area, as is mountain biking. Proposals have been made in Waterford where the local authorities are engaged with Coillte. I appeal to the Minister of State that they be given every facility. We should think not so much in the old way but outside the box and facilitate the new ideas presented to Departments or agencies such as Coillte. Everyone would benefit, including the State and the communities in which the facilities would be operated.

Photo of John CartyJohn Carty (Fianna Fail)
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I welcome the Minister of State and thank him for his very comprehensive contribution on why the borrowings figure should be raised for Coillte which is to complimented on the work it has done in the 21 years since 1988. Senator Coffey spoke about many aspects of forestry which I we can enhance, particularly with reference to recreational facilities, on which much work has been done. I come from County Mayo where in Belleek woods, a hardwood forest on the verge of Ballina, the red squirrel has been reintroduced in recent years in conjunction with the Department of the Environment, Heritage and Local Government. This has been a huge success and added much to the tourism aspect of Ballina, where fishing is the prime attraction. The people involved are to be complimented. They received tremendous assistance from Coillte, the forestry service and the Department of the Environment, Heritage and Local Government.

It is delightful to see Coillte getting involved in a wind farm in County Leitrim which I hope will be a tremendous success. In these times we have to produce as much energy as possible and not depend on imported energy resources such as oil. I note that under the renewed programme for Government it is proposed to diversify forest culture with an emphasis being placed on native trees and to plant a minimum of 30% broadleaves annually in order that by 2030 there will be a major increase in plantations. That is very important. Now that the price of land has decreased, I appeal to Coillte to try to purchase large acreages of good land which could be used to produce hardwoods which take a long time to mature. I do not suppose anyone in the Chamber will see the day when they will mature, but it is important that we grow them for the generations to come. That is for whom we should plan.

Forestry provides much local employment. In County Mayo one of my family members is involved in the production of stakes using various timbers and employs five or six people. It is great to see the business, based in the countryside, doing so well and it could not operate without the raw material.

Between 2005 and 2008 the profit figures were €19 million, €22 million and €40 million. However, in 2008, the profit figure was €9.2 million, even though turnover was €249 million. I know dividends of €2.6 million were paid, but why was the profit figure so low? I am not giving out; many companies would be delighted to make a profit of €9.2 million and the employment of an average of 1,250 people is a huge bonus. Coillte is to be complimented on the work it has done. It has diversified into other businesses and has a huge export market; it exports approximately 80% through Smartply Europe based in Waterford and Medite Europe based in Clonmel. That is very good for the economy, as it proves that if we put our minds to it, we have the people and expertise to produce high quality timber products and diversify into other lines, which is of huge importance.

I commend the Bill to the House. I have not doubt it will be passed and give Coillte more flexibility. It was only able to borrow approximately €101 million, which figure is being extended to €400 million, which will enhance its position.

Photo of Niall Ó BrolcháinNiall Ó Brolcháin (Green Party)
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I welcome the Minister of State, Deputy Tony Killeen. I have to commend him because the ink is not even dry on the renewed programme for Government and he is already acting on it. The Bill provides for a 400% increase in the statutory borrowing limit for Coillte, which is fantastic. I also commend and agree with Senator Coffey that all parties are developing good green policies. Senator Norris has stated we are not developing indigenous green shoots; I can tell him that we are, as this Bill is all about indigenous green shoots.

I understand that nearly €2 billion, or 1% of our GDP, currently comes from forestry. That will be increased significantly. Currently, 11% of the country is covered by forests and we want to increase this to 17% by 2030. Nearly one third of Germany is covered in forestry, so it shows that we have a long way to go. There has been an increase this year of nearly 6,000 hectares of new forests, which has led to nearly 1,000 new jobs. If we reach the target of 15,000 hectares per annum, then we need to ramp this up. We could create 2,500 jobs in parts of the country where it is difficult to create jobs. I commend various Members who have spoken about ecotourism, renewable energy and the carbon credit system. There are 16,000 people currently working in the industry.

Ten per cent of the land area in my county of Galway is covered by forestry, while only 3.96% of Dublin is covered. There are many different areas in Dublin that are suitable for forestry, so we should increase that figure. Wicklow is the county containing the highest percentage of forestry, at 21%. Forests take out 2.2 million tonnes of carbon per annum in this country, and that is saving the taxpayer €44 million, which is fantastic. There have been 18 million ecotourism visits to forest parks, which generates €268 million indirectly. I am baffling myself with statistics, but this is a win-win story for Ireland. It is a long-term issue, as the targets are set for 2030.

The current Government is taking the issue very seriously under the Minister of State, Deputy Killeen. The Green Party believes we are dealing with ecotourism, renewable energy sources such as wood chip and wind energy under Coillte, which is saving on carbon emissions. I thank the Minister of State and I ask him to keep up the good work. I commend this Bill to the House.

Photo of Donie CassidyDonie Cassidy (Fianna Fail)
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I compliment the Minister of State and I welcome him to the House. He has a vast knowledge of the importance of forestry to rural Ireland, and I look forward to the passage of this Bill. My father was a forestry worker all his life and I have known the importance of the woods of north Westmeath to the community. We are privileged to be living in the lake district area of north Westmeath, with its forestry and bogs.

The programme for Government has highlighted and recognised the importance of forestry. The programme clearly states that forestry policy must take into account its crucial role on climate change and its importance to the construction of energy biodiversity, with its potential to deliver long-term employment in other downstream industries, such as ecotourism, furniture and crafts. The review will include the roll of Coillte, its functions and options, and I welcome this announcement by the Minister of State. It will also assess the effectiveness in the current forestry grants scheme and make recommendations on how best to deliver supports in the future. Following the review, there will be an overhaul and significant enhancement of the current situation, with hopes to improve plantation by 2030 to 17%.

I congratulate local authorities, the Department of the Environment, Heritage and Local Government and the NRA for the great work they have done over the last few years. They have transformed Ireland by linking Dublin with Cork, Limerick and Galway. Right before our eyes, we see all the young trees and shrubs that are planted on our drive to the capital city when we come to work in the Parliament. It is obvious that importance was put on this during the planning stages of these roads.

The programme for Government stated that we will be promoting a diversity of forestry culture, with an emphasis on native trees, to ensure that a maximum 30% of broad leaf trees will be planted annually. We have a serious love for beech trees in my part of the country. Will these trees be included for grant funding? Beech is a magnificent species of tree, and the Tullynally estate, the hills of Mullagh and Mullaghmeen all contain beautiful trees that have been planted.

We can become a net exporter of energy. Coillte is currently engaged with Bord na Móna in a joint venture to do this. There is a great amount of bogland and high ground where trees are being planted, such as Mullagh and Randoon, and where the farming community could be assisted with alternative farming income which would be of great significance to the Exchequer for energy costs. I welcome the pilot phase of the project that will begin next year with the initial planting of 200 hectares. It is proposed to plant up to 5,000 hectares over a number of years.

We have the right Minister of State in situ with the necessary attitude, and the Government has a determination to do everything it can to improve the environment and reap the return from our efforts. This is particularly the case for tourism, and it has been suggested that mountain bike tourism can provide an opportunity to make our youth fit. The greatest gift one can give is to make oneself fit. That level of fitness provides confidence and confidence can move mountains.

Photo of Paul BradfordPaul Bradford (Fine Gael)
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You might move towards a conclusion now.

7:00 pm

Photo of Donie CassidyDonie Cassidy (Fianna Fail)
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I welcome the allocation of €121 million in these difficult times. I wish a speedy passage to this Bill and I thank the Minister of State for bringing it to our attention. We will support it all the way.

Photo of Paddy BurkePaddy Burke (Fine Gael)
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I welcome the Minister of State and wish him well with the legislation. I am pleased to have an opportunity to say a few words on this exciting Bill. This is also an exciting time for Coillte. As Senator Ó Brolcháin stated, poorer parts of the country have a golden opportunity to make progress, through Coillte, in alternative energy and forestry.

I concur with Senator Coffey on orienteering and mountain biking, both of which are major sports on the Continent. While they are not yet major sports here, advances have been made in the south east and the sports could spread throughout the country. The local authority in County Mayo allocated €100,000 for mountaineering and to open new routes and walkways in the mountains. This presents an opportunity for it to work with Coillte. Other local authorities could make available funding for orienteering, mountaineering, mountain biking and other alternative pursuits. This would make Ireland more attractive, especially given our beautiful scenery. These pursuits could be developed if Coillte works closely with local authorities and the Department. There is no point talking unless action is taken. Such action must be spearheaded and I believe the Minister of State could do this by liaising with local authorities.

I agree with Senator Carty that we have an opportunity to plant hard wood trees. These take a long time to grow and few landowners will invest in them, other than perhaps by planting one corner of a field. The fourfold increase in the borrowing limit for Coillte and dramatic decline in land prices presents an opportunity for Coillte to enter this market.

In my parish when I was young there were 400 full-time farmers. At best, the majority of them are now part-time. I do not believe there is one full-time farmer left in my parish. Coillte has an opportunity to lease land for 40 or 50 years from some of these individuals or groups of individuals who are forming co-operatives.

I welcome the pilot scheme on biomass established in County Mayo and ask the Minister of State to elaborate on how it will operate. Will he also indicate how farmers could benefit from producing materials for biomass and help expand this sector and create more jobs? Employment opportunities are available in this area. As Senator Ó Brolcháin stated, all parties are pushing a green agenda and the nation has an opportunity to grasp this. The Minister of State can push this agenda forward through Coillte, the local authorities and the farming sector.

Photo of Tony KilleenTony Killeen (Minister of State with special responsibility for Forestry, Fisheries and the Marine, Department of Agriculture, Fisheries and Food; Clare, Fianna Fail)
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I thank the Acting Chairman, Senator Bradford, and other Senators for their positive contributions and for the many and wide-ranging ideas which have emanated from all sides on the future role of Coillte and the value of forestry. It is encouraging to hear such positive views.

Senator Bradford referred to the 8% reduction in premia which was necessary in the April budget. This measure arose due to the economic circumstances. There was genuine concern, which I shared, that the impact of the reduction could be negative. As it transpired, however, the level of planting this year will be higher than last year and the indications are that it will also increase next year. Obviously, this increase cannot be attributed to the 8% decrease in the value of premia. A number of other considerations such as land use options came into play.

I separated this provision on the funding limits for Coillte from a much larger Bill which is under preparation in the Department and will probably run to 40 sections. Approximately half of the sections have been cleared by the Office of the Parliamentary Counsel. I will explain the reason for the urgency with the Bill later. Ideally, I would like to return to the House early in the new year with the main Bill which deals with many areas which were mentioned by various Senators.

Senator Bradford asked whether borrowing heretofore has complied with rules and guidelines. Having checked this matter carefully in preparing the legislation, I am satisfied that all the borrowing which has taken place complies with legislation.

I was pleased to hear Senator Bradford and other speakers take a positive view of the involvement of Coillte in wind farms. This is being done in a number of ways. The company is co-operating in a joint venture with the ESB in Garvagh Glebe in County Leitrim. Coillte may also be in a position to act alone in some instances. In specific circumstances it may be advantageous for it to arrange permissions and so forth before selling the site and investing the proceeds in an alternative forestry enterprise. I would like such flexibility to be in place and I am pleased Senators welcomed this idea.

Senator O'Brien also spoke in positive mode and cited a number of positive and exciting statistics related to forestry. Despite the visibility of trees, we tend to overlook forestry's value in terms of employment, recreation and other areas.

Senator Coffey is clearly familiar with the two panel board product facilities located close to his home in County Waterford. One of the plants is just inside the border of County Kilkenny at the Port of Waterford, while the other is in Clonmel. These companies provide employment opportunities. Substantial investment has been made in Medite in recent times and similar investment is required in SmartPly to facilitate exports and ensure standardised quality, speed and other factors which are important considerations when one is exporting 80% of one's product. I visited both plants recently and what I saw was positive. Senator Coffey also referred to opportunities in carbon sequestration, to which I will refer.

Given that the original borrowing limit was set at €101 million or thereabouts and has increased, through inflation, to approximately €188 million, people are entitled to ask the reason it is being increased to €400 million. It is being increased in the context of a draft strategy from Coillte for the period until 2012. This appears a short timeframe in some respects. The strategy envisages the company developing in non-traditional areas to ensure it is able to fulfil its commercial remit in the first instance and plays a much more positive role in afforestation, recreation and many other areas. This is a welcome development.

Initially Coillte indicated that its plans could involve borrowings of up to €700 million. Having consulted the company and examined its proposals and potential developments in the short to medium term, we decided that €400 million is more than sufficient to enable the company to do what is necessary for a considerable period.

Senator Coffey referred to an incident in Waterford involving a 150 year lease and so forth. While I was familiar with the case six months ago, I have forgotten the details. I will, however, obtain an update for the Senator because this is an important point. Part of the job the Houses are charged with is to ask hard questions about how public money or money in public companies is spent. The places in which to answer the question are these Houses and I will be more than happy to revert to the Senator with the details, as I do not have a sufficiently clear recollection to respond now.

Photo of Paudie CoffeyPaudie Coffey (Fine Gael)
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I appreciate that.

Photo of Tony KilleenTony Killeen (Minister of State with special responsibility for Forestry, Fisheries and the Marine, Department of Agriculture, Fisheries and Food; Clare, Fianna Fail)
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The borrowings have been in compliance with the provisions of legislation. We will deal with the matter on Committee Stage, as Senator Bradford has tabled an amendment on it.

I frequently visit Castlewellan and Tullymore in the North and they have good facilities that are widely used. They use a slightly different system, with The National Trust and the local authorities playing a slightly different role. Local authorities here are becoming proactive also. Senator Ó Brolcháin has made the point that, in respect of Coillte, there are 18 million visits a year, an extraordinarily high number, of which the value to the economy is estimated at €97 million. Senator Coffey's point is central to how we should examine what appear to be problems. However, alongside them, there are enormous opportunities. Where Coillte lands are not directly in State ownership but under State influence, there are opportunities to do things earlier than in the private forestry estate, which is also significant. I welcome the ideas that have come from several Senators.

Coillte is responsible for ten forest parks, 150 recreational sites and 50% of road walking routes in the country. This represents a significant contribution to the recreation industry in terms of the health-related recreation benefits arising. Members also mentioned mountain bike trails and other very important facilities. Perhaps it is a good time to focus on this aspect. Coillte oficials tell me they invest heavily and have a sense that it is not particularly appreciated at national level. The investment is appreciated by those who use the facilities, but the level of investment is not appreciated in the same way. A clear signal will be sent by this debate that it is appreciated.

I am also familiar with Belleek House mentioned by Senator Carty. He welcomed the establishment of wind farms and made the important point that we were dependent on oil. It costs us some €7 billion per annum and we are at the furthest end of a gas pipeline that extends to much less stable political entities. Security of supply is a major issue, as are environmental concerns.

The Senator also referred to employment. One of the beauties of employment in the forestry industry is that it is frequently in areas where there are few other opportunities. The profit drop to which he referred is largely attributable to the decline in the construction industry. It is also attributable in part to the difficulties that arose with the sterling euro exchange rate. Many exports are to the United Kingdom. That market remains robust in terms of quantity but is less positive in respect of the income derived from it.

I welcome Senator Ó Brolcháin to the House and wish him well in his political career. He mentioned that this was an indigenous industry and referred to points made by Senator Norris, one of which was that some of the most positive green shoots were attributable to foreign direct investment, but indigenous sectors of great importance are doing reasonably well. Some of the ideas presented can be put to use and great advances can be made. As Senator Ó Brolcháin pointed out, the challenge is to increase the percentage of our forest estate from 11% to 17%. Reaching this level of land cover in forestry seems like a major challenge. However, if one looks back 100 years, some 1% of the area of the country was covered in forestry. We have increased this to 10%, a tenfold increase; therefore, the challenge seems less daunting.

There are competing land use possibilities, which represents a challenge for forestry which is relatively difficult to address. Some 16,000 people are employed in the industry, a significant number. A number of speakers referred to the potential for tree planting in areas that were neither urban nor woodland. I refer to the little groves one sees frequently on the Continent. That is not attractive for commercial reasons or to Coillte because it is involved in the board business, among others We could examine the matter in the context of the new legislation to encourage people to grow small groves of trees that would have the same impact in terms of carbon sequestration as if they were grown on sites of 200 acres. There maybe possibilities in this regard.

I acknowledge the role played by the Green Party, in particular by my colleague in the Department of Agriculture, Fisheries and Food, Deputy Trevor Sargent. I also acknowledge the role played by the Minister for Communications, Energy and Natural Resources, Deputy Eamon Ryan, and the Minister for the Environment, Heritage and Local Government, Deputy John Gormley, with whom I worked for the first year of the Government's term. They have been very supportive of forestry.

Senator Cassidy referred to climate change and made the important point that there were obstacles to increasing the level of afforestation. We must examine these issues closely. The Senator also referred to the role of the NRA, the local authorities and the Department of the Environment, Heritage and Local Government in growing trees along the roadside. Apart from being beautiful and preventing wind damage, it sends a positive message about afforestation.

The Senator asked if beech was a native woodland or broadleaf species. It is classified as a broad leaf species for grant assistance purposes but there are separate schemes for native species. There is no native species of beech tree. When dealing with forestry, I am often worried that people will ask me very specific questions because there are a range of schemes in place. Some say we should simplify them, but there are good reasons we should promote native species and broadleaf species. In this instance, beech qualifies as a broadleaf species but not as a native species. There are considerable differences in the premium rates payable.

Photo of Donie CassidyDonie Cassidy (Fianna Fail)
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Is there a small grant?

Photo of Tony KilleenTony Killeen (Minister of State with special responsibility for Forestry, Fisheries and the Marine, Department of Agriculture, Fisheries and Food; Clare, Fianna Fail)
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There is a significant grant payble.

The Senator referred to the wind energy sector. There have been landslides related to the construction of wind farms. That is a concern I have about such sites, but the matter is difficult to predict. The Senator also referred to the budget allocation, which sends a positive message to the industry.

Senator Burke mentioned that this was an exciting time for Coillte and that there was a golden opportunity for the country in the provision of recreational facilities and employment. I have not thought much about his point that there are opportunities to involve local authorities. This was mentioned by many speakers and it is a matter I will pursue in the context of forestry policy. Coillte has close associations with local authorities in amenity areas. Sometimes these take the form of good joint ventures in the Dublin area and elsewhere. Perhaps I need to examine how the Department interacts with local authorities and I will be more than happy to do so.

The increase in the number of hardwoods grown is interesting. In years we have exceeded the 30% target for the planting of broadleaf trees. This is to be welcomed, although those involved in panel board and sawmills say one must wait much longer for the product to reach the stage where one can benefit from it. Ensuring a mix is the best way.

Senator Burke referred to the changing role of farming and the opportunities available in respect of the long-term lease of agricultural land by Coillte. I will mention this to the company because it is true, despite the fact that land prices have dropped, that this presents a significant challenge when Coillte does not benefit from the premium payments from which others benefit. There is a good scheme under which it co-operates with landowners and provides technical expertise for them.

Senator Burke also asked about the biomass scheme in County Mayo. As he is aware, there are many proposals with regard to availing of alternatives and the use of biomass. One of my concerns is that the industry is in its infancy. Many are becoming involved in it. The challenge is to provide the level of biomass the industry has the potential to require, particularly if the price of commercial timber remains high relative to the price of wood as a fuel product. That is one of the challenges we face. I would not rule out the possibility that in the short term we may be importing substantial amounts of timber and timber products to meet that particular industry.

I thank Senators for their co-operation and for the very positive messages.

Question put and agreed to.

Photo of Paddy BurkePaddy Burke (Fine Gael)
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When is it proposed to take Committee Stage?

Photo of Donie CassidyDonie Cassidy (Fianna Fail)
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Agreed to take Remaining Stages today.