Time to cut down new orthodoxy for an older, reliable wood

If the fiasco of the Abbotstown pool tells us anything it is that the new orthodoxy of privatisation is even worse than the old orthodoxy of public companies. The notion that the private sector is the panacea for all ills, that its can-do, go-getting mentality will deliver efficient services is being exposed as a myth. If you want proof that this truth operates at a deeper level, look at the trees.

Ireland is a good place for trees. They grow faster here than almost anywhere else in Europe. Yet in the early 1990s, forests made up only 8 per cent of the State's land area, the lowest in the EU, and we were importing most of our wood. It makes complete sense to grow more forests and to use them, at least in part, as an economic resource.

What we've actually done, however, has been entirely determined by right-wing orthodoxy. First, the State forests were handed over to Coillte, which is being fattened up for privatisation and is obliged to operate as a commercial company in the narrow, short-term sense.

Second, this policy has involved an alliance with the private sector in the form of a number of multinational pulp mills. The result is sheer madness: the spending of massive amounts of public money in return for little sustainable economic benefit, a blight on the landscape, an impoverishment of the environment and the strangulation of some rural communities.

We are at the moment in the early stages of a 35-year plan to more than double the size of Irish forests, from 570,000 hectares to 1.3 million hectares. Only 20 per cent of the trees to be planted will be broadleaves such as oak, ash and beech. The rest will be cheap, fast-growing conifers. The plan calls for an investment of €4 billion of public money.

After just five of those 35 years, however, it is already clear that the plan makes no economic or environmental sense. The one serious objective study of the economic costs and benefits, Dr Peter Clinch's Economics of Irish Forestry, calculated that the value of the timber to be grown under the plan was £887 million in 1999 prices.

The direct cost of producing this timber (land, labour and materials) is £857 million. In raw economic terms, therefore, the benefit is tiny: around €1 million a year. This is well below the level of return that the State sets as a minimum to justify public investment.

And when other real costs and benefits are included, even this small profit disappears. Peter Clinch reckoned that the plan will bring benefits of about £175 million from the reduction of carbon emissions and from recreational uses. Against this, the cost to the economy of the public subsidies involved is £636 million and of the water pollution caused by conifer plantations is £10 million. Overall, then, the plan leaves us at least €500 million in the red.

This is bad enough.

What the public is getting for this investment, however, is the mass production of a cheap, poor quality product for which international demand is falling. The planting of huge tracts of Sitka spruce was followed by a policy of attracting in companies like Louisiana Pacific (LP) to turn pulp into what is called oriented strand board (OSB). Never mind that LP had a dreadful environmental record in the US, or that the manufacture of OSB is heavy on toxic chemicals. The plants would justify the policy by turning out a commercially viable product.

At the moment, however, Coillte is in the process of buying out LP's majority stake in the Waterford plant that was established in 1996 as a joint venture. Why? Because the market for the stuff that LP and Coillte are producing is bad and getting worse. LP is getting out of the pulp business at a huge loss because there is a huge oversupply of OSB on world markets. Yet, because Coillte has to find something to do with all the cheap pulp it is producing, another £33 million of public money is being spent to buy out LP's stake.

Coillte's most recent annual report, for the year 2000, shows profits of €25.5 million, which looks fine. However, revenues of €38.8 million were attributable to what are described as "non-timber" sources, among them the sale and leasing out of land. Take away these revenues and it is clear that Coillte is operating its timber business at a substantial loss. Since the EU grants on which the whole strategy was predicated are drying up, the prospects for the future are no better.

In purely financial terms, this pulp fiction is costing the public as much as the Bertie Bowl, even before the larger costs - loss of biodiversity, water pollution, the destruction of landscapes - are factored in.

And all of this is the result of a narrow doctrine of commercialism that holds that turning out a short-term profit and making alliances with private companies are good things which must not be questioned.

It is not too late to rethink the whole strategy by taking privatisation of Coillte off the agenda, looking at the long-term economic benefits of planting native species and counting environmental costs as real losses. But to do that, we would have to be able to see the wood of genuine profit for the trees of fashionable orthodoxy.