Committee Reports::Report No. 21 - A review of state expenditure on The Forest and Wildlife Service::17 October, 1986::Report

1.In reviewing under its mandate £50 million public expenditure dedicated to forestry and wildlife services, the Committee has the advantage of a wide range of useful recent reviews. This helped to provide a very useful background of information and expert judgements on the various issues arising and was of considerable assistance to the Committee in assessing the justification for and the effectiveness of this particular expenditure programme.

2.Government policy, for some considerable time now, has set as its objective the attainment of annual planting of 10,000 hectares of forestry.

3.In recent times has been redefined to include 2,500 hectares of private afforestation and new incentive programmes have been introduced to facilitate this. No adjustments have been made in manning levels or the management structure of the FWS to take account of this 25 per cent reduction in the policy goals of the programme.

4.The promotion of private afforestation has not succeeded, in stimulating more than a token response to date and State planting has been well short of target. Yet no adjustments have been made either to the policy target set by successive Governments of 10,000 hectares, or in the means of achieving it.

5.In its planning document “Building on Reality” the Government undertook to set up a review group “to examine urgently the present structure of the forest and wildlife service and with due regard to the role and function of the National Development Corporation to make recommendations on the most appropriate methods of exploiting the expanding forest asset to the best advantage.” The same Government publication (page 66) stated “the over-riding objective in the exploitation of this (forestry) State-owned national resource will be the maximisation of the benefit captured by the State on behalf of the Community”. The Review Group, in its report, published in November, 1985 state that “optimum efficiency has been impeded because

(ii) the F.W.S. as currently integrated into a Government Department and the management structure that hinders it from being run as a profit-conscious business”.

It was against this background that the Committee on Public Expenditure undertook its task.

CHAPTER 1

The Committee’s approach

6.In preparation for a series of public meetings with officials of the Forestry and Wildlife Service of the Department, the Committee requested its Business Advisory Panel to establish a group to review expenditure on forestry. The panel submitted a comprehensive report to the Committee on Public Expenditure (Appendix 1) which was, in turn, submitted to the Department of Tourism, Fisheries & Forestry for their comments, reaction and observation. From this followed a series of meetings at which the Committee heard evidence from officials of Forestry and Wildlife Service. This was interspersed with a series of written questions to officials in the Department.

7.The Committee then invited the full range of trade interest groups in Forestry and the forest products industry to appear before them. They made submissions and responded to questions. A deputation from the Committee then undertook a tour of forestry, forestry training and forestry nursery facilities arranged by officials of the Department. The Committee delegated the task of drafting a report to the sub-committee under the chairmanship of Deputy Richard Bruton. This sub-committee undertook further informal consultations before preparing a draft report which was finally considered by the Committee in plenary session in September 1986.

8.The task undertaken by the Committee was to assemble and to assimilate all the information relevant to making judgements on the immediate issues impinging on the justification for and cost effectiveness of the public expenditure programme on forestry which amounts to some £49.4 million in 1985 of which £36.5 million was provided directly by the Exchequer.

9.The national forest estate of 321,000 hectares accounts for 5.6 per cent of the total land area of Ireland and 95 per cent of the total forest area. The value-added from forestry and in downstream native timber processing is about £51 million, of which £34 million is funded by the Exchequer. The total value-added amounts to 0.3 per cent of G.N.P. though it absorbs 0.5 per cent of public expenditure. The Committee found that, although output from the State’s forest had increased considerably in recent years, it was still substantially behind the forecast set jointly by the Forestry and Wildlife Service and the I.D.A. in their strategy for the development of the timber industry. But the major growth in output resulting from the accelerated planting programme of the ‘30’s will take place before the end of the century and will treble today’s output.

10.The Committee found that the interface between the Forestry and Wildlife Service and the timber industry was unsatisfactory and that relations were not conducive to a constructive partnership or to dealing satisfactorily with substantial impending growth. The Committee found that, while the report of the Review Group on forestry was generally supportive of the Forestry and Wildlife Service it concluded that there was an urgent need for a change of structure. Though urgent this has unfortunately not yet elicited an official response.

11.The Committee considered other recommendations on the restructuring of the management system for the State Forestry Programme. The Committee also found a considerable variation in expert opinion on the present value of the national forestry estate and of the means used by the Review Group to determine its value. These two issues were central to the Committee’s considerations of the Public Expenditure Programme on Forestry.

CHAPTER 2

The cost-effectiveness of F.W.S., Forestry Estate Management and development

12.The forestry operation of F.W.S. involves a wide range of activities including the management of sawmills and nurseries, the acquistion of land, planting, maintenance and management of trees, the harvesting and disposal of timber, including Christmas trees by a range of means and the support and development of private afforestation programme, including the provision of a technical advisory service.

13.None of its separate commercial operations are properly accounted for nor, perhaps is it possible to account for them under the system of accounting adopted by Government Departments.

14.Not all of these activities are peripheral to the management of national forestry estate.

15.There seems to be universal agreement that this can be done more cost-effectively with less staff, and particularly with less administrative support and with a higher return on the considerable Exchequer investment in forestry. On the other hand, the Forestry and Wildlife Service argue that their cost of planting on a standard basis compareswell with their British counterparts and with private planting in Ireland and that the historic diseconomies arise as a result of land acquisition policy and poor species performance in the early pioneering days. Thus where small parcels of land or land of low yield class were bought for forestry it would be expected not to conform with commercial norms in contrast with higher yielding land bought in lots more conducive to economic afforestation.

16.The timber industry argues that it is being forced through the monopoly power of the Forestry and Wildlife Service to carry these high planting costs. The Forestry and Wildlife Service on the other hand state that they have achieved a profitability level of 2 per cent over inflation on the historic investment and now set as their objective a 4 per cent return. Other submissions to the Committee suggest that the cost of managing and developing the national forest estate could be reduced by between 33 and 50 per cent.

17.In any event it is a matter of fact that the administrative cost of the Department has risen even while the acreage of planting has been reduced and that there seems to be considerable capacity to expand the acreage at reduced marginal cost.

18.The Forestry and Wildlife Service argue that the value of the estate to-day represents value for money and some real return over the cost of the investment in it. This is based however on taking a 2% real cost of funds and allowing for some increase in timber values over inflation. Their case is based on work done on behalf of the Forestry Review Group giving a range of possible values from £1692 to £192 millions.

Conclusion

19.The Committee however is forced to conclude that it is not cost-effective that the F.W.S. programme, in so far as it can be judged reveals a deficit over the real cost of the State’s investment in forestry. This deficit is of the order of £2 billion if no real price increase is assumed in the value of timber over time and the 5 per cent real return set by the Department of Finance for public capital programmes is applied.

CHAPTER 3

Non-forestry Issues

20.Forestry and Wildlife Service is also responsible for managing the national forest parks as amenities and for the protection and development of game and wildlife. The Department is also responsible for a major programme of work being undertaken by the Institute for Industrial Research & Standards with a view to establishing standards for Irish timber and timber products. Forestry and Wildlife Service is responsible for advisory information, research and development service, for forestry and the timber industry and the general public and to support its own forestry programme. Forestry and Wildlife Service has a long list of publications, some of which are sold, many of which are distributed free on request and the sum of which have an attributed cost within the Government Publications Office of £66,000. Forestry and Wildlife Service participate in meetings of various bodies within the EEC, the Council of Europe, the U.N. the F.A.O., I.L.O., and E.C.E. and officials attend and participate in conferences and organisations. The Forestry and Wildlife Service has invested £1.7 million in a holiday village in Killykeen Forest Park, Co. Cavan with support from the E.E.C.

21.The Forestry and Wildlife Service is responsible for game development and provides grants to the National Association of Regional Game Councils to assist them in their work. The Department issues hunting licences and firearms certificates and sells shooting rights by public tender. The Forestry and Wildlife Service estimates this service costs about £1 million annually.

22.None of these services is separately accounted for but it would appear that none of them is self-financing.

Conclusion

23.The Committee could find no reason why each of these non-forest operations should not establish a separate accountability on or why many of them should not become self-financing within a two-year period. In particular, the Committee would wish to see hunting and gaming licences and grants to game councils brought into balance with the direct costs of supplying the services. The Committee would wish to see the publications list revised and all publications priced at a level that would cover at least the direct cost involved. The Committee would wish to see consideration given to alternative means of management and operation of forest parks and other amenities including the sale of franchises for ticketing and of services. As a minimum the Committee would wish to see independent accountability for these operations as separate cost centres.

CHAPTER 4

The F.W.S. timber disposal system

24.This was the single most contentious issue addressed by the Committee on Public Expenditure within its review of public expenditure on forestry. The following factors contributed to the dissension between the Service and their customers the forest products industry:

1.Forestry and Wildlife Service has a virtual monopoly of timber supplies and has substantially increased the price in the past year or two with dramatic consequences for losses and lay-offs within the sawmilling sector. Forestry and Wildlife Service made detailed submissions to the Committee on allegations of collusion within the timber industry designed to reduce the number and level of tenders submitted for various lots of timber on offer.

2.The fact that supplies of sawlog have fallen substantially in arrears of those forecast in the joint F.W.S./I.D.A. strategy for the development of the industry has added to the tension between the Forestry and Wildlife Service and the sawmilling industry. This in turn has been compounded by the nature and extent of the supply contracts for pulpwood undertaken between the Forestry and Wildlife Service and pulpwood processors. This directly affects the profitability of the sawmilling industry, 50 per cent of whose raw material is disposed of in the form of waste chip for pulpwood processing. The result of the terms of supply by F.W.S. have led to the sawmill by-product “chip” being disposed of as waste or, in some cases, being exported because of lack of a market in Ireland for chip for processing.

3.The amount of sales of raw material outside Ireland, and particularly to Northern Ireland, has exacerbated the supply problem for Irish sawmillers.

4.Perhaps as a result of these various factors, relations between the Forestry and Wildlife Service and the sawmilling industry, from which the future timber processing industry must emerge, are unsatisfactory. This in turn has given rise to some overall cost inefficiencies for one or both parties and this has manifested itself most particularly in the past in excessive transport costs.

5.As a result there is inadequate consultation or dialogue on the various systems of selling. This in turn made it more difficult for the Committee to assess or to evaluate the different systems.

1.The disposal of pulpwood under contract (to Medite and Finsa the two pulpwood processors in Ireland).

2.Disposal of sawlog by tender.

3.Disposal of sawlog under quota to those emerging national millers who have improved their facilities in accordance with an agreed scheme.

4.Disposal by auction, which was tested in 1985.

5.Local sales of harvested timber to farmers, small sawmillers or other private users either for firewood or other use.

25.For the most part, timber is disposed of standing. In some cases, however, the Forestry and Wildlife Service undertakes its own harvesting operation and, in the case of sales of pulpwood under contract, recover their costs at the standard costs of their customer.

26.The contract system of selling pulpwood to processors arose in recent years after the failure in the ‘70’s of the four outlets in Ireland then available to the Forestry and Wildlife Service. In 1981 and 1983 two international firms were attracted into Ireland to process pulpwood on the basis of highly attractive supply contracts for pulpwood.

27.The Forestry and Wildlife Service on the advice of the Attorney-General decided that it was obliged to decline the Committee’s request to furnish copies of these contracts on the basis that the contracts specifically debarred disclosure of confidential information to third parties.

28.Since these contracts became the primary assets of the processors involved and one of the firms had been offered for sale in recent years the contracts were freely available. In fact, the Committee had access to copies.

1.Whether it is reasonable and appropriate for a Government Department or agency to undertake a commercial contract on a basis which excludes the right of the Dail and in particular the Dail Committee on Public Expenditure to examine it.

2.Whether in the particular case the Dail can be considered a third party in a contract between a Government Department and a private firm.

3.Whether these forms of contract would disrupt the natural and logical structure of a forest products industry by securing supplies to pulpwood processors and thereby rendering their by-product waste.

4.Whether the terms of the contract itself in seeking to provide security of supply to new processors give a reasonable basis for remunerating the State’s investment in forestry and for equity between pulpwood processors and the rest of the industry.

30.The Committee considered it to be inappropriate gamesmanship to be drawn into an argument about whether it had the right to a document which it has in fact been able to procure independently of its appropriate and direct line of access. The Committee considers that its task in reviewing public expenditure is rendered a nonsense if the consequences of contracts entered into with significant financial implications were deemed to be privileged information inaccesible to the Committee. The Committee would therefore urge that the relevant Dail Committee be deemed not to be excluded by such confidentiality clauses as might normally apply and that it be ultra vires for any state sponsored body or Department to enter a contract which deemed to exclude the relevant Dáil Committee from information relating to it.

31.The Committee considers that the F.W.S. agreement to these contracts was a panic measure precipitated by a series of four failures in the pulpwood processing industry. It is probable that none of them would have failed had they had the contract subsequently provided by the Department to the successors. The panic may have been compounded by the fact that there was considerable thinnings coming on stream which had to be disposed of. Unfortunately, the nature of the contracts are such as to pervert the normal supply flow pattern of the industry. Instead of sawmillers being able to supply unsuitable material as chip to pulpwood processors, pulpwood processors are supplying sawlog to millers and dumping their chip.

32.This has major consequences for the future development potential of the sawmilling industry from which our forest products industry must be developed if the Forestry and Wildlife Service problems are not to be compounded when its output exceeds the 3 million cubic metres as it will in the new century.

-the sale of pulpwood expressed in bark-free oven dry tonnes though quoted to the Committee in cubic metres.

-F.W.S. to be compensated at Finsa’s average harvesting cost where they undertake harvesting.

-a price adjustment where timber is harvested outside a 100-mile radius of the buyer’s location.

*upward where average profits have exceeded 25% on sales for a period of 5 years and other contracts exist for a minimum of 10 years at higher prices.

*downward where profits are less than 15% on sales or additional haulage or other costs arise or the price per tonne may be increased to 9% of the finished primary product price.

*The right of the buyer to resell the material thus procured under the contract although they have contracted such sales.

*The price of certain finished boards and the sales to associated companies in allowing price reviews.

*indexation or any adjustments in product price in line with the market, inflation or FWS costs

*The information furnished to the Committee on these contracts is contained in appendix (iv).

35.The most immediate issue arising for the Committee in its consideration of these contracts is whether they offer value for money. Plainly they do not when the price is compared with prevailing prices for tender sales of pulpwood. And the Forestry and Wildlife Service were misleading in advising the Committee that there was a method of regular review built into the contracts.

36.In fact the review allows for a reduction in the price of pulpwood when the profits of the processor fall below 15 per cent return on sales and for an increase in price only when profits exceed 25 per cent of sales for five successive years and other long-term contracts can be shown to be paying higher prices for the same material and no provision is made for inflation on market price increases.

37.This is preposterous in an industry in which the world leaders are unable to sustain profits of 5 per cent on sales and the Departments on estimates of estate valuation include real growth in-product value.

Tendering

38.The tender system for selling has its origins in the 1857 Disposals of Property Act. The issue was examined in recent times by an inter-Departmental committee which concluded in favour of its continuance despite some criticisms of its operations and some recommended amendments in the system.

39.This report also referred to the quota scheme introduced in recent years for mills which are deemed to have the technical potential to improve the image of Irish timber and of achieving import substitution. Though the tender system is the means by which the sawmillers were not represented within this review.

40.One of the consequences of the review was a pilot test for an auction system. The auction system tested in the course of 1985 resulted in substantially higher prices being paid over the values estimated by the Department. However, it is understood that the normal requirement of the payment of a 25 per cent deposit was not applied to these auctions and that much of the material purchased was in fact with the F.W.S. by the end of the year.

41.The quota system was developed in consultation with the industry. However, it has developed a number of quirks over the years which pose some difficulties for the industry. It ensures 30 per cent of the supplies to those 14 or so firms which meet certain requirements. One of these firms was in Northern Ireland. This particular quota resulted in about 50,000 cubic metres of sales of raw timber being exported each year while the sawmilling industry in this country is forced to cope with the consequences of having a supply capable of meeting only half its capacity.

42.Department officials gave evidence of what it considered collusive action by sawmillers in the course of 1985 designed to undermine the tendering system.

43.Witnesses related a change in the pattern and the level of tendering to a meeting which took place in a midlands hotel in autumn, 1985. Before this meeting they claim that tender prices were 9 per cent above the F.W.S. valuation while they fell to 4 per cent below the F.W.S. valuation after the meeting. The number of tenders per lot fell from 5 to 3 and the successful tenders increased from 15 per cent to 29 per cent.

44.The Committee is satisfied that any attempted collusion by an industry consisting of 150 or more prospective buyers could not counter the strength of the one seller. On the basis of the F.W.S. evidence, the Committee was satisfied that the sawmillers were paying a monopoly profit to the F.W.S. through the tender system. This is further compounded by the fact that the auction provided for a 20 per cent premium over the F.W.S. valuation on the basis of their own evidence.

45.While the Committee would insist on the most cost-effective method of marketing the produce of State forests, it would also seek to ensure that this was consistent with the development of the sawmilling and forest products industry in accordance with stated National policy rather than its exploitation.

46.The Committee is satisfied that the effect of the range of selling methods employed by the Department is not conducive to the realisation of the full potential of the value of forest products or of the job creation potential in the sawmilling industry. Nor is it satisfied that the attitudes emerging from the frustrations and deficiencies of the system on both sides are conducive to the creation of more satisfactory alternatives.

47.That the matter is critical is borne out by the dramatic decline in the fortunes of the sawmilling industry in 1985 which seem to be continuing into 1986 with substantial layoffs and continuing unprofitability and the fact that forest output will increase threefold by the end of the century.

48.In fact the Committee has reasonto believe that major disinvestment is planned in the industry if the selling system is not immediately addressed.

CHAPTER 5

Concerns Arising

The Review Group Report

49.The Committee found the report of the review group on forestry most helpful as a background document and has drawn on it extensively in its consideration of the major issues in relation to forestry. It concurs with its broad conclusion that the need for the commercialisation of operations of the Forestry and Wildlife Service is urgent. However, it would consider the basis of the valuation range of the State forestry estate to be deficient in ignoring the real return of 5 per cent set as a criterion for public capital expenditure and in building in real price increases for its products in the future. This Committee does not wish to be drawn into the debate as to whether the new national forestry estate should be given commission status in the civil service as recommended by the review group or should be established as a semi-State agency as recommended by the National Economic and Social Council. The critical and urgent requirement is that it be established on a commercial arm’s length basis with proper accountability and that its monopoly authority be both regulated and diluted.

50.This can best be done to national advantage by giving the new agency the freedom to dispose of those parts of the estate which, because of considerations of scale or yield class or species, the disposal of which is likely to increase the average value of the State’s forestry investment portfolio, when the proceeds are reinvested in new plantings.

51.Since the evidence suggests an historic performance of 2 per cent real return and at best that the target performance for new investment in forestry is a return of 4 per cent in real terms, there seems to be considerable room for improving the investment portfolio through changing the mix through disposals replaced by new plantings, provided sales of mature or semi mature states are of realistic values.

52.On the basis of evidence provided by financial institutions, this would seem to be consistent with the national interest because of the growing involvement of pension funds and others in new plantings.

53.When such funds engage in new plantings, they seek to balance their forestry investment portfolios with some established and mature estates. Because the State holds the monopoly and has not hitherto considered disposal in Ireland, they have had to make these investments abroad.

The other means by which the national interest can better be served by diluting the monopoly of the State in the disposal of timber is by the effective promotion of private afforestation.

55.The present target of achieving 25 per cent of the national plantings privately is modest. The Committee considers that this could and should be increased to 40 per cent in light of the high cost of borrowings on the Exchequer and the rising costs of debt servicing to taxpayers provided the cost in terms of grants is commensurate with the benefits arising. However, the first objective should be to organise the operations of the Forestry and Wildlife Service to achieve existing laid-down policy.

56.To date the promotion of private afforestation has been a failure with about 10 per cent of the targeted acreage achieved under the Western package and less than half the targeted acreage overall.

57.There is a number of reasons for this failure. Among them the Committee considered the following to be most significant:-

1.despite the attractive grant inducements available for private afforestation, they were not widely known or promoted,

2.despite the considerable breadth and depth of technical competence within the Department, there was no seperate technical advisory service and the servicing of the private afforestation programme was a secondary by-product to the normal work of managing the national forestry estate.

3.the lack of the prospect of acquiring mature established forests limited the willingness of pension funds to become involved in new plantations despite the fiscal attractions.

4.no serious attempt was made to overcome the particular obstacles for smaller holdings and older farmers in the disadvantaged areas in becoming involved in forestry and, in particular, in facilitating pilot projects of joint ventures involving farmers, financial institutions and the State or in combining the headage payments scheme with the afforestation programme as provided for under the Common Agricultural Policy or in promoting co-operative forestry.

5.the grant scheme available outside the Western areas was not integrated into the E.E.C. package of supports which denied either farmers or the Exchequer of a 25 per cent grant.

6.the legislation governing the acquisition of land by Companies is hostile to the participation of financial institutions in afforestation, and the requirement under Section 45 of the 1965 Land Act to get Land Commission consent causes considerable delay.

58.These issues must be tackled before Government policy can be effectively implemented and certainly before consideration of higher levels of private afforestation can be considered an achievable objective.

Species Mix

59.The Committee’s work in reviewing forestry also brought it into touch with issues such as the species mix and amenity considerations.

60.Forestry already has a long-term investment horizon. This would be further extended by greater concentration on broad leaved species. Yet much expert opinion considers that with the erosion of the virgin tropical forests hardwoods will be a much more attractive proposition in the future. In terms of oak that future, if we were to seek to capitalise on it, is 200 years off. Nevertheless amenity and other considerations would suggest that some increase in the planting of hardwood and broad leaved species is worthy of consideration.

CHAPTER 6

Conclusions & Recommendations

1.That Ireland’s much vaunted natural advantage as a grower of timber is not being adequately availed of and that the very considerable acreage of marginal agricultural land suitable for forestry should now be targeted with a view to considerably increasing the rate of planting and not necessarily by the State.

2.The methods of disposal and harvesting of the existing forests estate are not consistent with the best interests of the State or the maximisation of added-value in a developing timber industry.

3.That the F.W.S. enjoys a monopoly profit in the disposal of timber by tender and that this militates against the full development of a forest products industry.

4.That the relations between the F.W.S. and the Sawmilling industry are unsatisfactory given their interdependence and inconducive to the achievement of their shared objective of developing a forest products industry.

5.That the national interest is not served by providing a preferential basis for the export of raw timber.

6.That the national interest is not well served by the contracts entered into by the Forestry and Wildlife Service with pulpwood processors.

7.That the mandate of this Committee is undermined by the exclusion of the consequences of commercial contracts undertaken by Government Departments from their right to access information.

8.That Forestry and Wildlife Service has failed to achieve the Government’s policy objective of promoting private afforestation to achieve 25 per cent of total national plantings; that it has failed even to achieve its own planting target and that it has failed to produce the volumes of timber it forecast would be available for the industry in its industry strategy prepared jointly with the I.D.A.

9.That the present structure of the Forestry and Wildlife Service is not appropriate to the optimum commercial exploitation of its very considerable forest resource.

10.That the costs of forest management and new plantations in the Forestry and Wildlife Service are unsustainably high and that its operations would much more appropriately be undertaken and accounted for through a seperate autonomous agency whether that be a semi - State body or an agency within the civil service with commission status.

11.That until this issue is resolved the Exchequer will be denied an adequate return on its investment in forestry, taxpayers and the public will be denied an adequate account of the investment and the timber industry will be denied an appropriate and adequate supply line.

12.That the structure within which many of the other non-forest operations of the Forestry and Wildlife Service are undertaken is not conducive to their optimum development. Their accounting system is incomprehensible in commercial terms and a number of the activities should be made to be financially self-sufficient.

13.That consideration of the value of the national forest estate should take into account the requirement to achieve a 5 per cent return on public capital programmes.

Recommendations

62.The Committee makes the following recommendations with a view to facilitating the process of tackling those issues which it found to be most critical in impeding the cost-effectiveness of the Exchequer investment in forestry.

1.The Government should with all haste provide for the establishment of an appropriate management and reporting system for the management and development of the States Forestry Estate along the lines of the recommendations already made to the Government last year by the Review Group it established for that purpose.

Delay not only ensures the continuation of an inadequate and cost ineffective management system for the control of this substantial asset and continuing investment programme but also ensures the continuing decline of the forest products industry in Ireland with further consequential job losses.

2.That a review of the system of marketing of timber (rather than disposal as it is now officially referred to) be the responsibility of that new agency as a matter of the highest priority with the provision that it meets Government policy objective of giving the maximum return to the State consistent with the objective of developing to its full potential the forest products industry. This review should include the forms and the nature of the contracts for the supply of pulpwood to processors which should be revised to render them consistent with the above objectives and the remit of this Committee in reviewing public expenditure programmes.

3.That in the present circumstances of chronic farm surpluses and considerable acreage of underutilised marginal land consideration be given to a change in the declared policy objective of the State’s forestry programme to increasing private forestry to 40% of National planting, once a programme has been established which is shown to be capable of achieving the present target of 25%.

4.Meanwhile that the State grant for Private Forestry be brought into alignment with the E.E.C. aid for Private planting so that funds can be recovered from the FEOGA

5.That special assistance be provided to support pilot programmes designed to develop direct private involvement in afforestation particularly under the E.E.C. Western Package for afforestation of marginal land.

Despite the apparent attractions this scheme has not succeeded because older farmers on marginal land simply cannot consider forestry no matter how attractive its investment horizon, may be without provision being made for the loss of headage payments and the funding of the forest crop.

6.The alternative route to private afforestation through the disposal of land to financial institutions has proven equally difficult. The Committee recommends that the provisions of Section 45 of the 1965 Land Act be amended specifically to allow for greater freedom of purchase by financial Institutions of lands found to be primarily suitable for forestry.

7.To coincide with the establishment of a commercial forestry management agency/commission that the non forestry activities of the F.W.S. be reconsidered with a view to bringing revenues from game licensing and shooting rights into line with the associated costs and where possible to license the ticketing and other services in the major amenity forests.

8.That new accounting procedures and integrated management structure be established forthwith to bring all commercial operations of the F.W.S. into compliance with commercial accounting requirements.

Acknowledgements

63.This review of the Forestry Public Expenditure Programme enjoyed a number of special benefits. The Business Advisory Panel established by the Committee established a forestry sub-group under the Chairmanship of Ms. Mary Finan, which produced a very useful briefing memorandum for the Committee and subsequently continued to brief the Committee on various issues arising.

64.The Committee, having heard all the evidence, established a sub-committee under the chairmanship of Deputy Richard Bruton to undertake the task of drafting this report;

65.This Committee and this report are indebted to the chairpersons of these two groups.

66.The Committee also enjoyed the usual cooperation and assistance of officials of the Department and representatives of the trade interest groups who appeared before the Committee, gave evidence and answered questions

67.In particular, we would like to thank Mr. P. Whooley, the Secretary of the Department and Assistant Secretary responsible for the Forestry and Wildlife Service,Mr. Tommy Rea, who with his colleagues, not only appeared before the Committee on four seperate occasions, but also responded to over 50 written and innumerable oral questions and organised a briefing tour of the Wicklow Forests for a delegation from the Committee.

68.The report focuses on the major problems and concerns arising from the Committee’s review. That is not to say that the Committee did not find much to commend. But its overall conclusion is that there is much to be changed before value for money can be derived from this annual expenditure of £50m undertaken on behalf on taxpayers.

DÁIL ÉIREANN

AN 21ú TUARASCÁIL ÓN GCOISTE DÁLA UM CHAITEACHAS POIBLÍ

ATHBHREITHNIÚ AR CHAITEACHAS STÁIT SA TSEIRBHÍS FORAOISE AGUS FIADHÚLRA

THE 21st REPORT OF THE DAIL COMMITTEE ON PUBLIC EXPENDITURE

A REVIEW OF STATE EXPENDITURE ON THE FOREST AND WILDLIFE SERVICE

Foreword

CHAPTER 1

The Committee’s approach

CHAPTER 2

The cost-effectiveness of F.W.S., Forestry Estate Management and development

Conclusion

CHAPTER 3

Non-forestry Issues

Conclusion

CHAPTER 4

The F.W.S. timber disposal system

Tendering

CHAPTER 5

Concerns Arising

The Review Group Report

Species Mix

CHAPTER 6

Conclusions & Recommendations

Recommendations

Acknowledgements