Committee Reports > List of Committees > Dáil > 1990 > Committee of Public Accounts > Final Report - Appropriation Accounts 1988

AN COISTE UM CHUNTAIS POIBLÍ

(Committee of Public Accounts)

Déardaoin, 18 Deireadh Fómhair, 1990

Thursday, 18 October, 1990

The Committee met at 11.10 a.m.

Members Present:

DEPUTY G. MITCHELL in the chair

Mr. P. L. McDonnell (An tArd-Reachtaire Cúntas agus Ciste) called and examined.

VOTE 45 — FORESTRY.

Mr. J. Loughrey called and examined.

Chairman.—The Public Accounts Committee of Dáil Éireann are this morning resuming their examination of the Energy Vote, specifically on the Forestry Vote, Vote 45. The Accounting Officer for the Department is Mr. John Loughrey, Secretary. You are welcome, Mr. Loughrey. Before I ask Mr. Loughrey to speak I also want to welcome Mr. Yves Borius, Director of the Budget and Finance Office of the Organisation for Economic Co-operation and Development who is on a visit here who is also the Mayor of Sarzeau. One or two of us had the opportunity to meet him in Paris and we will have an opportunity to have an exchange with Mr. Borius before the meeting ends on some of the current developments in the OECD.

Paragraph 68 of the report of the Comptroller and Auditor General reads:

Coillte Teoranta

Under the provisions of the Forestry Acts, 1946 to 1976 the Minister for Energy was responsible up to 31 December 1988 for all matters relating to the management and development of forestry in the State and the expenses of the Minister were charged to the Forestry Vote. Revenue generated from forestry activities, mainly the sale of timber, was appropriated in aid of the Vote.

Following the enactment of the Forestry Act, 1988 the Minister for Energy, by statutory order, fixed 1 January 1989 as vesting day for Coillte Teoranta, a private company established under the Act for the purposes of carrying on the business of forestry and related activities on a commerical basis and establishing and carrying on woodland industries.

Under the Act, land and property to a value of £575 million, approximately, previously vested in the Minister, were transferred to the company on the vesting day, with the exception of land previously earmarked for sale by the Minister, which was retained under Section 39 of the Act. The Act provides for the issue to the Minister for Finance of shares in the company to the value of land and other property transferred to it.

The Act also authorises the Minister for Finance to provide moneys for capital works to the company from the Central Fund by way of repayable advances, share subscriptions or a combination of both, subject to an overall limit of £100 million. An additional amount, not exceeding £3 million may be made available for working capital in return for shares in the company. The company is also authorised to borrow for capital purposes, including working capital, up to a limit of £80 million subject to the consent of the Minister for Energy and the Minister for Finance. Such borrowings may be guaranteed by the Minister for Finance subject to certain conditions.

Under the provisions of the Act an annual grant for the administration and current expenses of the company may be paid from the Vote for a period of up to four years from vesting day subject to an overall limit of £30 million. All revenue previously appropriated in aid of the Vote arising from operations now carried on by the company will in future accrue to the company.

Accounts of the company will be audited by auditors appointed by the company with the consent of the Minister for Finance. The audited accounts will be laid before both Houses of the Oireachtas.

Mr. McDonnell.—In paragraph 68, which is really for the information of the Committee, I am dealing with the setting up of Coillte Teoranta as a semi-State body to take over the responsibility of managing and developing State forests and to carry on the business of forestry on a commercial basis. What I am doing there is referring to the financial arrangements in respect of that. Under the Act establishing the company, which was the 1988 Forestry Act, it has the general duty to generate sufficient revenue to at least break even on its revenue account, taking one year with another, to cover a reasonable proportion of its capital needs, to remunerate capital and borrowings and to operate in a cost effective way. It is also required to have regard to the environmental consequences of its activities.

You will see there in the paragraph, Chairman, that land and property to the value of £575 million was transferred from the Minister to the company, for which he got shares in return. Just to update you perhaps a little bit, in 1989 the company got a further £15 million by way of share capital as a cash injection. As well as that they got about £3.9 million towards the cost of administration and current expenses. There was another item which they got in 1989 of £5.75 million, that was to meet stamp duty for which the company was liable on the formation of the company. That, of course, went back to the Revenue Commissioners. At the end of 1989, according to the company’s account, it owed the bank about £6.8 million. But the paragraph, Chairman, is essentially for the information of the Committee and that is just a general sketching of the financial arrangements.

Chairman.—Mr. Loughrey, will Coillte now come under the remit of the Committee on State-Sponsored Bodies?

Mr. Loughrey.—There is no reason it should not.

Chairman.—So it will be subject to parliamentary scrutiny?

Mr. Loughrey.—Absolutely.

Chairman.—In relation to the expectation that as between one year and another Coillte should break even, what is the current situation? When do you expect they will break even or make a profit?

Mr. Loughrey.—Coillte is a body, it is set up as a private company rather than as a statutory corporation. I suppose part of the thinking behind that is that we have an opportunity here not only to do something that is of strategic importance to the economy in general and to rural areas in particular, but also to give a genuine worthwhile return to the State and the taxpayer. While there is the normal stipulation of breaking even taking one year with another, as the Comptroller and Auditor General has just pointed out, I think the Minister would be disappointed if it did not move into a financial position, sooner rather than later, where not only would it be able to carry out without a current grant-in-aid but also, more importantly, would be in a position to remunerate its capital to generate significant amounts of internally generated funds. In other words, that it would once again, sooner rather than later, be able to finance a good deal of its capital expenditure from internally generated funds but, most importantly of all, that the taxpayer and the State who have been very patient and farseeing investors in State forestry would now quickly begin to see a rate of return and a dividend on all the investment capital that has been put into State forestry to date.

Chairman.—So we can expect that Coillte will break even this year?

Mr. Loughrey.—The legislation allowed for a breathing space of four years because when it was under the direct control of the Forestry and Wildlife Service it was run as a direct Civil Service opertion. In fact, the cash injection was much greater. We have only contributed less than £5 million in the last two years. The legislation provides for a total of £30 million by way of current grant-in-aid. The Minister, and indeed the Department, would be very disappointed if the performance of Coillte — while it will certainly match that — did not improve on it. In a word, we would expect Coillte not to operate without a current grant-in-aid, certainly in 1991.

Chairman.—Can we note this paragraph? In subhead B.2 — Postal and Telecommunications Services — Mr. Loughrey, there was an excess of £151,000. You say it was due to the excess in telephone usage. I would have thought that that was self-explanatory. Why 25 per cent? Why was the excess so great?

Mr. Loughrey.—In a sense when Government are looking for efficiency — or indeed when any company are looking for efficiency — I suppose the nearest analogy I could give is squeezing a sponge. When you squeeze a sponge the water does not always come out in equal parts from every corner. We wanted to make sure that we stayed within budget so we cut travelling expenses. When you cut travelling expenses, which is a far larger budget, it means that in a lot of work which would have been done on the level of inspector to client, or forester to client out in the field, recourse increasingly had to be made during the year to the use of the telephone and indeed long distance calls. In a sense that merely reflects the savings that had been effected on the travel subhead.

Chairman.—On the question of grant for afforestation purposes, including promotion thereof, how many grants were paid in that particular year? What was the average amount paid?

Mr. Loughrey.—In the grants for afforestation purposes there was a total excess of £1 million which is a very considerable amount. It is more than 50 per cent of the original budgeted amount. As an Accounting Officer, normally I would be very unhappy wherein a budget planned in the prior year, there was an excess of £1 million but, in this instance, it can be explained by the phenomenal take-up of grants, notably under the western package scheme. As for the number of grants, I may have the information with me here or I may have it for you a little later in the meeting.

Perhaps I could just best illustrate it by saying that your introductory remarks about Coillte were in a sense referring to the role the State has had to play in forestry in Ireland, and that private sector involvement was so little. Starting from say the last decade, private forestry was effectively non-existent despite the fact that there were incentive schemes in place but the western package provided the catalyst for private forestry to grow, notably in the disadvantaged areas, and that growth has taken us all by surprise to some extent. It has grown exponentially and part of that was that each year for about two or three years we under-provided — which is not a thing we normally like to do — for the simple reason that the private sector take-up of grants was at an extraordinarily high and growing level. I have those figures for you now.

In 1980, 1981 or thereabouts you had a private grant take-up of about 250 individuals and these would obviously be in the western package. These would be part-time farmers for the most part but by 1988 that had grown to 5,250, a multiple of 20. Even from 1987, the 1988 estimates are drawn up on the 1986 and 1987 experience and you extrapolate that experience. In 1987 there was a take-up of 3,200; in 1988 that grew by a further 2,000 and not only did it grow in terms of numbers taking up these schemes but in terms of acreage. Acreage grew very extensively, it grew from 7,915 hectares, that is total planting, in terms of public planting and in terms of private planting it grew — and I am just doing this by rough deduction — from about 3,000 to nearly 5,000. So once again, both in terms of acreage and in terms of the number of individuals applying, there was an extraordinary jump between 1986, 1987 and 1988. That is basically the reason for this under-estimation.

Chairman.—In terms of numbers of individual trees and forests, what has been the trend? Is the stock of afforestation good; by how much does it need to be improved; what has been the situation in the past and what is the world situation?

Mr. Loughrey.—We grow trees for the most part to sell them, but there is an amenity dimension here. We are in the business of growing trees for economic activity and the benefits that can bring. We are in it for financial reasons and that is a matter of growing trees so that we can sell them. That is an important message to get across, because even though the amenity dimension is there all the time, the underlying motive is we grow trees, for profit, Will we have a market? This refers to the world situation which you asked about. I will take your question in reverse order. The answer is particularly good news here. The futurologists say there will be a deficit in terms of timber in Europe for the next two or three generations. Therefore even in long-term plans, we are looking at growing trees up to the year 2050. It is important to note that, because many of the broadleaf trees we are planting this year, at the earliest will take about 65 years to mature. Therefore, as regards the decisions we are taking today for some of our forests we have to look at the market situation or the possible market situation in 2050. Normally when you are looking at a risk reward ratio for such a long time you cannot plan with certainty but all our competitors for timber are in the same position but in comparative advantage terms are worse off. Trees in Ireland grow more quickly. Certainly Northern hemisphere coniferous trees grow more quickly in Ireland than anywhere else, so the extent of the market is assured. This is a very positive message for rural Ireland. This is not the forum to talk about the constraints on agriculture or the GATT background particularly in regard to agriculture but there is one element of land use in Ireland at present and that is growing timber for which there is a guaranteed market, not only in this decade but for the next foreseeable decade. The European market will be there.

The gap between the Community’s imports and its production will be at best static in relative terms over the next three generations and most forecasts show it disimproving. In other words, there will be a growing market for home-produced timber in the EC for the next three or four generations and that is all the planning horizon you could take in terms of timber growth.

How are we faring in Ireland? We started with the best will in the world and it is easy, with hindsight, to be critical but we did not particularly play to our strengths in the last few decades in terms of forestry. The forestry policies of the thirties, forties and fifties had as their backdrop an attitude that put the highest possible premium on using land for agriculture. In other word, the Land Commission at the time which was responsible for land use policy opposed the use of afforestation on all but the most marginal lands. That means we were getting what the trade calls a very low yield class. It means that you were not getting a lot of output for your input because you were using poor quality land. That policy has changed dramatically in the last few years and the Forest and Wildlife Service previously in the Department, now Coillte, are putting a premium on using the highest quality of suitable land. It is not as if they are going out with the cheque book looking for land that would be prime agricultural land, but there is at least another million hectares in Ireland that will produce very high yield in terms of forestry. When I speak about high yield I am talking in terms of a concept of 25 to 28 cubic metres a year for each year of growth, which would be over double the average land in the Coillte estate at present. Our forestry policy has changed. We are going for high growth, high production areas but not at the expense of agriculture. The market will be assured for the foreseeable future. It is a sensible policy with a clear strategic line and the worry we would have in terms of market share is to keep out operation competitive in Ireland. So long as we keep competitive the market will be there.

Deputy Cullimore.—I welcome the increase in acreage for the plantation of trees but I would like to address the question of the type of tree that we are planting. Over the last number of decades we have failed to plant hardwoods. Even at the turn of the century the last generation provided for our generation by planting hardwoods but we have made no provision over the last 20 or 30 years for future generations. Will that be corrected now under Coillte?

Mr. Loughrey.—I will reply to Deputy Cullimore’s question in the sense that it is particularly timely. My Minister over the last few days has addressed this question publicly where a greater effort is being put into the question of planting hardwoods. Perhaps I could address the question in two ways. Looking after posterity in terms of both the commercial and the amenity side of broadleaf trees is very important. I will deal with each one separately. In terms of amenity the Departments have always been aware that we have a heritage both to protect and to hand on, and from that point of view hardwoods cannot be ignored. On the other hand, from a commercial point of view you need to have a lot of patience to grow hardwoods as a commercial crop. There are two types of hardwoods. Those we can grow in Ireland are traditional species like oak, ash, birch and beach. These are types on which we put a high premium. What we are doing at present as well as planning for increased planting in terms of hardwoods is making an increased research and development effort to make sure that as we are increasingly getting into hardwoods we are getting into the right hardwoods for Ireland.

That is all good aspirational stuff but what does it mean in practice? Earlier this year we launched a complete new set of incentives for growing trees in Ireland. Deputy Cullimore will be aware that the grants now provided for hardwoods are on average set at 50 per cent higher than the grant for coniferous trees. In other words if you are planting trees on previously unenclosed land the maximum grant you could get is £800 per hectare for planting and for hardwoods it is £1,200. There are also two new categories introduced to encourage the planting of hardwoods. Many of our existing hardwoods are in a derelict or dilapidated state. They have not been managed well. We have also provided new grants this year to revive existing hardwood plantations that have fallen into dereliction. Once again the grants are set at the highest possible rate — £1,200. In the event of a disaster such as that which hit south east England three winters ago when over one million trees were knocked down, which were mainly hardwood, or in the event of storm damage or fire, grants at the same high level will be available, and only for hardwoods at £1,200 per hectare. What we have introduced now will put beef into the general policy of facilitating the growth of hardwoods. There is one other dimension and that is we will always have to import hardwoods. there will always be a species of tropical hardwoods that will be needed for specialised work and from a climatic point of view there is no way we can grow some of these. We will never have a total self-sufficiency in hardwoods but, as regards the point raised by the Deputy from Wexford, there will always be a plentiful supply of good ash hurleys for Wexford and, we would hope for the rest of Ireland.

Deputy Allen.—Under the 1988 Act, Coillte Teoranta we were set up to——

Chairman.—We are on the vote.

Deputy Allen.—I know that. Coillte Teoranta were set up to carry out the business of forestry and related activities on a commercial basis and to establish and carry on woodland industries.

In relation to subhead H — Appropriations-in-Aid, £24 million — £22.5 million comes from the sale of timber. Could I get a run-down on the type of activities operating there? Is it the sale of timber for processing in this country or is timber being exported? I would like also to ask the Secretary if he would develop and expand on Coillte Teoranta proposals to set up commercial activities that would exploit fully the potential we have. Could he also give me this throughts on what line of action Coillte Teoranta have taken in relation to the development of industry that will exploit our resources? Finally, in relation to the Appropriations-in-Aid, the figure for the sale of vension and live deer is £26,000. Could I have a run-down on that?

Mr. Loughrey.—There are two hard questions that I could address and one easy one. Perhaps I could take the sale of vension as my first and we will put that aside. Deer are both an asset and a pest in terms of any land use, whether it is agriculture or forestry. They are an asset in terms of red deer being natural fauna, but in terms even of imported Sika deer, they are a very valuable asset both in terms of amenity and hunting and shooting rights. Having said that, they are capable of doing damage, notably to young plantations. In conjunction with the Wildlife Service, the FWS, as it was in 1988, had a very careful and humane policy of culling excess numbers. This was done for the most part by their own trained marksmen. It was a very careful and humane approach to keep down numbers. Naturally when deer were shot — being naturally culled at the right time of the year — there was venison and since the taxpayer should benefit from this windfall, it was sold on a competitive basis in the marketplace. That is where the most of that income is generated. Shooting clubs did have limited rights and these rights come at a cost, and once again payments were made to the Exchequer for these shooting rights. There is and was an overall policy of approach on the shooting of deer. It is carefully monitored in conjunction with the Wildlife Service.

One of the other two question is a serious and major question for the future. First, on subhead H, Appropriations-in-Aid — £26.2 million was realised in 1988. Once again, for the most part, this was from the sale of timber. Timber is sold in a number of ways. We could go into that if you wish, but in aggregate the amount was £22.5 million. For once — and I do not say this apologetically — we got it about spot on. We had forecast in the Estimates that it would be £22.5 million and we hit it on the nail. The other main element that goes into the Appropriations-in-Aid is the now increasingly important recoupment from the EC in terms of grants for private forestry: that amounted to £2.2 million. That was the additional element in the Appropriations-in-Aid.

Deputy Allen’s main question is how can we get as much economic value, added value, in Ireland based on the natural resources that timber gives us. History has not always been happy as the Deputy knows. We had four wood processing plants of one kind or another about ten years ago and for one reason or another they all went out of business mainly in terms of competition, notably from other countries longer in the business and with a scale of activity much larger than ours. Happily one of them, the Finsa operation in County Clare, is a direct successor of one of those mills. However, there is a success side to it as well and that is the Medite, the fibreboard operation in Clonmel. Not only have they been a success to date but they are planning to increase production, and to increase their penetration of the European market. Between Medite and Finsa there is in one case at least a fairly assured future in terms of economic activity.

Because of the great increase in output from our forests, we are going to need an outlet for pulpwood and thinnings in the next three to four years. That is why Coillte must have a role to play. It is the dominant player in the market. It is already consolidated and has already shown excellent performance to date. It has already exceeded the financial targets set for it. The Minister and the Department are confident that Coillte will play a role in making sure that a new generation of pulpwood plant will be in place in Ireland for the mid-nineties to begin to use the take-off from our rapidly increasing forest base.

Chairman.—That is a very comprehensive reply, Mr. Loughrey. Let me point out, for Deputies who were late coming, that we have the OECD Director of Budget and Finance of the OECD and we want to spend some time on that. Deputies Connor and Flood are offering. Perhaps Mr. Loughrey could keep his replies a little briefer.

Deputy Allen.—Arising from the reply, how much of the £22 million worth of products are being exported? Could you compare the type of material being exported to what is being used in this country?

Mr. Loughrey.—The output of Irish forests actually is used mainly in construction and in things like pallet making. As we were coming from a very low base, in other words 90 per cent of Ireland’s construction timber, say ten years ago had to be imported, we are now moving past 50 per cent self-sufficiency towards 60 per cent. The aim is to be totally self-sufficient in aggregate by roughly five years’ time. That does not prevent progressive Irish companies exporting, and already they are beginning to do so — not on a large scale. The sort of sawmills and operations we will have to have in the next three to five years — and we are working on this and the IDA are working on this as policy — will be ones with sufficient scale for and sufficiently attuned to the UK and European markets to be able to export. The short answer is that the immediate target is to reach self-sufficiency in Ireland, notably in construction timber; we will move in a big way beyond that into the export market.

Deputy Allen.—What would the projected employment potential be if your objectives are achieved?

Mr. Loughrey.—It depends on what productivity and technology assumptions you make for the medium term, but certainly over the last two years, between part-time and full-time jobs, up to about 2,000 jobs were created. Many of these will be part-time, but many of them being in remote rural areas, they will be a very valuable addition to the economic wellbeing of rural areas. Projecting that, you will see you can get substantial numbers of additional jobs. It is not a straight multiplication jobs because clearly scale and increasing technology will affect numbers. Forestry, I can assure you will be a healthy net supplier of jobs to the Irish economy, and notably the Irish rural economy, over the next few years.

Deputy Allen.—I asked how much of the £22 million is being exported.

Mr. Loughrey.—I do not have an exact figure for that, but my guess is that very little is being exported.

Deputy Flood.—With regard to the pulpwood mill, did you say we are going to have one in place by the mid-nineties?

Mr. Loughrey.—Yes I did. Coillte will have a key role to play in this large and capital-intensive project. The rough ball park figure being mentioned is £150 million for the hardware alone, with increasing working capital requirements. Coillte have been and are looking for a partner who will both fulfil the highest possible standards, in terms of technology and have a presence in the international markets in terms of the sale of this product. It is no longer a State secret that discussions have been going on regarding a potential link up with STORA. Europe’s No. 1 timber and wood processing firm, Coillte and the Minister, for some time now. The Minister is particularly hopeful that these will come to fruitition shortly so that we can plan with confidence for this development for the mid-nineties.

Deputy Flood.—Have they chosen a location yet? Will it be Galway-west or Sligo-Leitrim?

Mr. Loughrey.—That is an important question. The Department of Energy have a clear view on this. The centre of gravity for marginal afforestation has moved towards the north-west. The ideal location, as far as the Department are concerned, would be the north-west because that is where the timber will be. However, unless you are picking up the tab entirely yourself, other potential shareholders or partners will have a view on this. With regard to a major pulp mill, there are environmental considerations. For example, it is a major user of power and clean water with the result there will be both clean and dirty water considerations. There is also the question of access. We will be giving location the closest possible attention but the preferred location would be the north-west.

Deputy Flood.—With regard to forest development and management and the growing of trees for profit, do you grow trees for sale to garden centres and local authorities for their tree planting programmes? I ask this because Dublin County Council placed an order for trees — I am not sure whether it was with your organisation — which were not delivered on time. Do Coillte grow trees for this type of use which could be highly profitable?

Mr. Loughery.—The answer is yes. It is potentially highly profitable. Not only are they looking at this market in Ireland but also overseas because that will generate additional employment. I am disappointed to hear what the Deputy had to say because whether private industry or Coillite were involved, the highest professional standards, including delivery on time, must be part and parcel of competitive Irish industry. I am sure this will be the case in future.

Deputy Connor.—When you replied to questions on subhead D, you spoke about the success of the western package which expires in April, and there is some doubt about whether it will be renegotiated in its present form or if it will be renegotiated at all. Are you satisfied that your Department, in cooperation with Coillte, in the context of grant aiding private forestry, have plans, in any future negotiations on the western package, to protect and guarantee the benefits we have been getting?

Mr. Loughrey.—I am. I can look back now on the western package and say it was a remarkable achievement for its time. Since I was not there at the time, there is no credit due to me personally, but it was a remarkable achievement and provided a fillip for the disadvantaged areas, notably in the western areas, that we would be very foolish to let go. It was always going to be a finite, ten year ad hoc package, for Ireland. In the context of a new forestry policy, the Community only started to look seriously at forestry in 1986. In 1989, we had a first Community declared policy on forestry. In that context and in the context of the Community support framework for Ireland, an operational plan has been devised and agreed with the Community which not only covers, in terms of forestry, what was in the western package but provides, both nationally and at higher reimbursement and absolute grant levels, a package of incentives that is an improvement, in terms of scope, scale and direction, on the western package, good as that package was at that time.

Deputy Connor.—My final question relates to the forest and wildlife parks which are now the responsibility of Coillte Teoranta. Coillte recently entered negotiations with a view to selling off, at least a share — perhaps more than half its share — in one of the largest forest and wildlife parks in the country. Are the Department interested in that development and will you satisfy yourselves that whatever deal is done eventually with an American consortium will be a good one and that the services already being provided in these forest parks — this may apply to others in the future — will be protected in terms of access for the public because this is a sale to private interests?

Mr. Loughrey.—The Department will be satisfied with a policy, be it Lough Key Forest Park, which is a major amenity in the west of Ireland or any other forest park, provided a number of key criteria are met. First, there must be a local involvement, in other words, effectively a local ownership in terms of initiative but not necessarily ownership. If the local community, for instance in Roscommon, Leitrim and the Lough key catchment area are not satisfied with the development or are not participating, clearly we would not be happy. Secondly, unless the new promoters or shareholders, be it a joint venture with Coillte or on their own, can demonstrate quite clearly — this could be done by means of performance clauses — that they are going to increase the investment to make it an even better facility and to enhance the local tourist and amenity attraction, we would not be satisfied. A mere change of ownership would not satisfy us. It would need to add to the economic activity locally. Thirdly there would have to be safeguards for the local community. For instance, since Lough Key is a national asset, access would have to be guaranteed as well.

Deputy M. Ahern.—With regard to the Vote, I notice on page 191 that £65,526 were written off for losses resulting from forest fires. I presume these losses bear no relation to the value of the timber. Are they insured?

Mr. Loughrey.—First, Coillte and the State had a portfolio which meant that we could spread the risk. If you had one plantation only, you would be crazy not to get a third party to cover the risk, but once you have a sufficient portfolio, you can carry the risk yourself. It is good value to carry the risk, and has proved to be good value to carry since the foundation of the State. The short answer is that we do not insure; we carry our own risk. With regard to forest fires, clearly the loss would be related to a net present value of the potential earnings, so if a 15 year old forest, which had not matured, was burnt down, you would not be talking about a loss of cheap timber thinnings but rather the replacement cost that would be taken into account.

Fire is always a constant threat and worry. You will note that in 1988 we wrote off approximately £95,000; happily the previous year the figure was about £50,000. However, we spend a large percentage of those losses on publicity and increased staffing levels to make sure, particularly at certain times of the year, such as late spring when the threat is greatest, that forest fires are kept to a minimum. Given the nature of the business, you cannot provide blanket coverage to something like that.

Deputy Taylor.—With reference to the package of incentives. I think this was promoted about a year ago rather extensively by Coillte. What was the outcome of that promotion? Was there a response from the private sector to any extent, was it regarded as successful or a failure?

Mr. Loughrey.—Perhaps I am not taking up the point correctly. First of all, there was the package of incentives which were launched effectively earlier this year about six months ago. These were directed notably at people holding land and for the most part they are farmers or land-holders of Ireland. There are also professional firms in the business of growing trees. The short answer to the Deputy’s question is yes. The incentives were very well received and we anticipate an acceleration in the already high level of growth in terms of private forestry. In fact, for the first time by the end of the current operational programme for forestry which will be the end of 1993, the new national planting target will be 30,000. For the first time since the foundation of the State — and the public sector has carried the bulk of this to date — private sector planting is projected to just bypass public planting for the first time. That is a measure of the take up.

You may have also wished to cover the question of sales to the private sector. That was the other dimension, if I picked you up correctly. There was a policy to try to see how the market would react to certain select sales of mature or semi-mature timber. That was not a success and it is not being continued.

Deputy Taylor.—There is a reference to Avondale House. Is Avondale House administered by the Department, or by Coillte?

Mr. Loughrey.—Avondale House is an asset that was transferred on vesting day to Coillte. It has an international reputation as a training centre for forestry.

Deputy Taylor.—The house itself?

Mr. Loughrey.—The house itself is being preserved, as it should be preserved, as an historic monument given the connotations and the Charles Stewart Parnell heritage.

Deputy Taylor.—If I may say so, the house is very well preserved and a very fine job is being done in connection with it.

Mr. Loughrey.—Thank you, Deputy.

Chairman.—One more question from Deputy Cullimore. Deputy Rabbitte is indicating as well.

Deputy Cullimore.—Just a brief question to Mr. Loughrey. On page 189 under the heading John F. Kennedy Park, could you give a detailed breakdown of the grant and the reason the full grant was not taken up?

Mr. Loughrey.—I will certainly do that.

Deputy Rabbittee.—May I push the parameters a bit by very briefly asking Mr. Loughrey one question. We welcome the statement he has made concerning the putting in place of a pulp mill. Has the Department, in so far as you are able to comment on it, abandoned entirely the prospect of any integrated industry specifically the question of a paper-making facility as a result of having a pulp mill or pulp mills in the future?

Mr. Loughrey.—The answer is no. The chemi-thermal pulp wood mill we have in mind would facilitate a subsequent development of a paper industry but the first step is to get a mill. That is absolutely essential if we are to get full value out of the tree-growing rotation. Thinnings will have no market in Ireland because they are a low value, high volume product. They do not travel well. Unless we have an outlet for them here in Ireland by the mid-1990’s the whole economics of the rotation will suffer. It is absolutely essential to get that in place. The good news is that effectively this will facilitate a possible paper-making process or processes afterwards. It will be the Department of Energy’s absolute priority that we maximise the value-added of the timber industry in Ireland. That would be a further step along that line.

Deputy Rabbittee.—I am sure everyone on the Committee would agree that it was rather sad last week to see the end, finally, of Clondalkin Paper Mills, the last paper-making facility in the country. If even towards the end of the decade we could work towards a paper-making facility being retained in the country it would be welcomed by everyone on the Committee.

Chairman.—Finally, Mr. Loughrey, on page 191, reference No. 9, the following items were written off: £52,975 losses in respect of thefts of property. What sort of theft was involved there?

Mr. Loughrey.—I do not have a detailed note in front of me. A healthy proportion of it was the citizens of Ireland who, carried away by the Christmas spirit, helped themselves to a free Christmas tree. But, as the Committee will know, there is no such thing as a free Christmas tree. It has cost the taxpayers dearly to plant it and put it in place. That certainly was a substantial element. The fact is that Christmas trees feature very largely but there is a comprehensive list here, it goes over a number of foolscap pages. It includes such items as barbed wire, chain saw starters and gas burners. There is £1,250 worth of it, also 120 trees that were ripe for hurley ash feature on the list.

Chairman.—How many Christmas trees? How do you value the Christmas trees that were stolen?

Mr. Loughrey.—The first item, for instance is 30 trees stolen at Athy and they were valued at £7.50 each. That is market value nowadays.

Chairman.—How many trees altogether were stolen?

Mr. Loughrey.—You are looking at the bones of 1,000 Christmas trees for a start.

Chairman.—That concludes the examination. We can note the Vote. I apologise for the cramped circumstances which is due to the televising of Parliament and the movement of offices.

The witness withdrew.

The Committee went into private session.