Seanad Éireann - Volume 118 - 18 February, 1988
Adjournment Matter. - EC Directive on Beverage Containers.
An Leas-Chathaoirleach An Leas-Chathaoirleach
An Leas-Chathaoirleach: I have notice from Senator Brian O'Shea that he proposes to raise the following matter: the problems arising for a certain company in proposals of the Department of the Environment in relation to the EC directive on containers for beverages. Before I call Senator O'Shea, may I just point out that the Chair would be obliged if individual companies or persons were not named.
Mr. O'Shea Mr. O'Shea
Mr. O'Shea: Go raibh maith agat a Leas-Chathaoirligh. Ba mhaith liom buíochas a ghabháil leis an Aire mar gheall ar an seans atá agam an cheist seo a phlé san Seanad mar cheist í seo atá anphráinneach i mo cheanntar féin.
The Clerk of the Seanad informed me earlier that I was not to name the company involved and I thank the Leas-Chathaoirleach for his guidance on that. I am here primarily to plead for the security of 105 industrial jobs in Waterford city and to ensure further expansion of the particular company involved here. This expansion is also very much in the pipeline.
The company of which I speak has  been operating for the past six or seven years on the industrial estate in Waterford city and it employs 105 people. During that period there have been no lay-offs at the company, there has been no short-time and indeed there is a fairly high level of overtime at the plant which means that, in effect, these are quite well paid jobs. In a city like Waterford which lost 900 industrial jobs through rationalisation in Waterford Glass late last year, these jobs are very important. To give some idea of the scale of the company, the annual wage bill is in the region of £2 million. The receipts to the Exchequer in terms of PRSI and PAYE payments would be in the region of £800,000.
Obviously this company is a very important employer in Waterford and there is a very definite prospect of a $3 million expansion to the plant either late this year or early next year. This expansion would provide an extra eight jobs. There is a programme under consideration with the principals of the parent company in the USA relating to the adaptation of the company's present equipment to change the size of can tops which this particular company produce. At present they produce a 209 millimetre can top. By the year 1990 it is reliably stated that the demand in Europe will be for a 206 millimetre can top and that 80 per cent of the demand in Europe will be for this particular can top. In order to adapt the company's plant and machinery to bring about this change, it will require an investment of $7 million over a two to three year period. It will also effect quite a saving in material costs in terms of the manufacturing of the can tops.
There is the prospect of a $10 million investment in that company. A request for that appropriation has gone from the Waterford subsidiary to the parent company in the States. There is confidence in Waterford that the request will be successful, all things being equal, but this is where the problem arises. The Department of the Environment in response to EC Directive 85/339 relating to the packaging of beverages, in January  1987 came up with a programme, part of which was to outlaw cans for beer. On the Irish market beer in cans accounts for about 1 per cent of the market. This would be small, but we have to look at the company's co-operation.
In terms of the company's produce, the production for the Irish market would be very small. The company depend on exporting to the member countries in the EC, and the major worry that the American principals have is that there will be a knock-on effect in other member states. Ireland is the only member state which has come up with proposals to curtail the use of cans, and it seems the company are interpreting this as a hostile act against the industry. I would have to say in fairness, that I do not consider that that was what was intended by the Department. Indeed, I am sure it is not. If we look at the company's operation — I am talking about the parent body and its subsidiaries — there is a subsidiary in Norwich and a subsidiary in Rhymney in Wales. The programme in response to this EC Directive from Britain has contained nothing relating to the curtailment of the use of cans. I understand that as this programme has been processed through the Community, there has been a response from the environment and consumer protection directorate saying that they cannot recommend the acceptance. I understand this emanated from Britain along the lines of consumer affairs rather than environmental affairs. What Britain does, or does not do, is something that I am not concerned about here. Essentially what I am concerned about is protecting the 105 jobs in Waterford and the prospect of eight more, and ensuring that the eight jobs that I mentioned earlier will, in fact, come to fruition.
The company have Italian and Spanish subsidiaries. Obviously the plants in Britain and the plants in Italy and Spain will be looking for the type of investment from their parent that should be coming to Waterford. In conversation this morning with the managing director of the company, he stressed that the expansion programme in Waterford is at risk unless there is a favourable decision. What is  meant here by a “favourable decision” is that the Department of the Environment would decide not to go ahead with their proposal to ban beer in cans. Because of the way production is moving in Europe — where it is expected that by the year 1990, 80 per cent of cans will be of a smaller type — if the plant in Waterford does not get the investment from the parent company in the United States, obviously the operation in Waterford would be to some extent at risk.
The week before last I brought a delegation from the trade union in the job to meet officials of the Minister's Department. We were very well received and a very good case was made by the trade union personnel. They stressed they were there to protect jobs, to ensure their employment and to ensure that the company continued to prosper in Waterford. They felt — and I agree with them — that initially when this proposal was made the reaction of the parent company in the United States was not envisaged. Indeed, the managing director told me that there had been no discussions with the company prior to this particular programme being forwarded to the EC.
I am putting it to the Minister, therefore that in terms of protecting and cleaning up our environment, the Labour Party, myself and the trade union movement generally, like the people who came here last week, are interested in a clean, pollution free environment, but this whole question must be put in context. There is an ongoing problem at all times between environment and jobs. In our present situation where there is a high level of emigration and a very high level of unemployment, putting at risk a company such as the one I describe for what, in effect, would have a fairly minimal result on our environment, in terms of making it a cleaner environment could have a profoundly damaging effect in the general area of employment. This directive relates to containers for beverages and not just to cans. Because there are other containers which, in my view, are equally as damaging to the environment I feel that the number of cans involved  will have no serious impact environmentally.
This directive relates to containers for beverages and not just to cans. Because there are other containers which, in my view, are equally as damaging to the environment I feel that the number of cans involved will have no serious impact environmentally.
The pundits tell us that by the year 2000 more than half the jobs in our country will be in the tourism/leisure related areas. This enforces the idea of a cleaner environment, but this particular aspect of the programme has a certain cosmetic effect. It is something that is there. It sounds as if we are making a lot of progress environmentally, but I would submit that we are not making that type of progress at all. It worries me greatly, having spoken to the unions and to the managing director of the plant, that the programmes I have described — the expansion programme and the programme for the conversion of the present equipment for the manufacture of smaller cans — are under consideration in the United States. I will repeat myself and say that the company feel that a Government who did a great deal, and rightly so, to encourage them to set up a manufacturing plant in Ireland now appear to be doing something that could be very damaging to the company's whole operation in Europe because the parent company is the largest manufacturer of packaging in the world. I hope their investment and presence in Ireland will increase rather than diminish.
I appeal to the Minister to have another look at this and make a decision in favour of protecting 105 jobs, ensuring the creation of eight more jobs and that £2 million is not withdrawn from the local economy in Waterford. In regard to the Minister's Department I should like to say that the package of incentives introduced by the previous Government led to great progress being made by Waterford Corporation. A new shopping complex is about to commence in the city. The rationale behind that complex is based on consumer spending and if £2 million  is withdrawn from the local economy or is decreased what Waterford Corporation are trying to achieve will be damaged. Under the programme for the shopping development, many historical and archaeological sites in the city will be developed and the city council are going out to sell the city as an area for tourism much more forcibly than has been done in the past. Every investment that improves the local economy in Waterford is absolutely vital. Therefore, at the end of the day if the present 105 jobs in a company that has not seen any lay-offs, where there has not been any short-time working and where there is a high level of overtime, are put at risk what the city council are trying to achieve in developing Waterford in terms of its commercial and service sector will be devastated.
At the end of the day £800,000 will be going back to the Exchequer in the form of PRSI and PAYE payments. If, for instance, those people were to lose their jobs — that is a prospect I do not want to contemplate — instead of being net contributors of £800,000 to the Exchequer they would be in receipt of money from the Exchequer. The impact of this part of the programme, this proposal to outlaw beer cans, on Waterford must be taken into consideration. When considering the effects environmentally we must bear in mind the effect on 105 families in Waterford and, indeed, on the economy generally if the sale of canned beer is outlawed. I hope the Minister will look at this case sympathetically.
Minister for the Environment (Mr. Flynn) Minister for the Environment (Mr. Flynn)
Minister for the Environment (Mr. Flynn): We must always be careful that we do not indulge in a lot of double talk in so far as environmental protection and control are concerned. It appears that many people are all for the environment, but at a price. It is all right in any circumstance as long as it does not affect themselves and, unfortunately, that applies to some other aspects of life. It is all right to put it anywhere you like, but do not put it next to me or do not put them next to me. I am trying to get away from that. The environmental programme I have is not a cosmetic exercise  in any sense and, for the first time since the foundation of the State, I am stiffening up the environmental division of the Department of the Environment so that it can respond to the environmental requirements as I understand them and as the people want to see them developed over the next number of years. That was not always the case.
How can we make progress on anything if every project or proposal we put up is challenged by some sectional interest or group? That has always been the case. When the Senator speaks about urban incentives and the advantages that have been taken of them, he must remember that it was not a Coalition proposal at all. It was a Fianna Fáil proposal in 1982 and the Coalition left it aside for four years until they reactivated it and saw the usefulness of the programme we had suggested. It is we who have brought that to fruition now in the Custom House Docks area and in the other designated areas. We must get our facts right. I am concerned that we do not end up with a lot of lip service in this country on improved environmental control. That is what has bedevilled the whole effort to bring about a cleaner environment for far too long.
There is an awareness now that the apathy that existed in so far as environmental protection and development were concerned has passed and I would like to think that collectively we would see the need to take positive steps. It is not always possible to accommodate everybody, but if it is in the national interest and if it is in the interest of protecting and preserving an asset which is absolutely essential for the environment, including what the Senator said about the tourist development programme, then so be it.
The proposal to prohibit the sale of canned beer here was an important element of the national programme for the implementation of the EC Directive 85/339/EEC. This directive, which was notified to member states on 27 June 1985 obliges member states to draw up four-yearly programmes, beginning in 1987, to reduce the volume and tonnage of beverage containers discarded into the  waste stream. That is what we were asked to do. This objective can be achieved either by legislative or administrative means but the measures chosen must be geared to achieving economies in raw material utilisation, reduction in energy consumption and improved environmental standards. They are not my requirements. They are the requirements of the EC Directive. Within the framework of the national programme the measures to be pursued can include encouragement of refilling and recycling of containers, the promotion of selective collection and retrieval of non-refillable varieties for economically feasible uses and for the development of consumer education.
The initial Irish programme was presented to the EC Commission in January 1987 and was the first such programme to be submitted by any member state. Hurray, we were first for once in the European sense. It was formulated following detailed consultation with the trade interests in the various beverage marketing sectors and the Department of Industry and Commerce. These included the beer, wine and spirits, soft drinks and liquid milk industries which are the main beverage container users here. The programme took account, as it was required to do by the directive, of the current level of industrial activity and the extent to which particular forms of container were used in the various drinks sectors.
While it became clear that the use of cans in the soft drinks trade should be allowed to continue indefinitely because of the extent to which this form of container was used in the trade, the situation in the beer sector was radically different. Unlike other member states the Irish beer market is almost totally dictated by consumer demand for either draught or bottled beer and can function effectively without canned beer. This country has the highest European percentage of beer sales in draught form. I am informed that the total beer market here is in the region of 700 million pints and that approximately 86 per cent of this is supplied through draught beer deliveries to the licensed trade. Of the balance, some 13  per cent is sold in glass bottles while only 1 per cent is sold in cans. There is widespread acceptance in trade circles here that marketing requirements can be met satisfactorily by confining beer distribution to sales in draught or in glass bottles and it was, therefore, a logical step to move towards prohibition of this form of container.
There is no question of the proposed prohibition being a barrier to trade. There is a well established pattern of foreign beers being brewed here to meet consumer requirements. Well known British, Dutch and German beer brands are marketed here in draught from and it is anticipated that this pattern will continue. There is also an established but limited traffic in imported bottled beer.
The primary objective of the EC directive in question is to reduce the environmental impact of used containers. This country's proposal to prohibit the sale of canned beer is a sound one from an environmental point of view particularly when seen in conjunction with the arrangements being made, and spelled out in the national programme, to step up the level of glass recycling.
Specific steps have already been taken by the Department to promote and financially assist the expansion of glass recovery and recycling operations which, unlike the recycling of metal cans, has been shown to be a practical proposition here. In the circumstances it makes sense from an environmental point of view to prohibit the use of cans in a market sector where glass has largely been used until now. The national programme emphasises the need of continuing the study of recycling possibilities in both the metal can and plastic container sectors and there is, furthermore, reservation in the programme that in the event of development here of commercially viable can recycling facilities the continuance of the prohibition could be reviewed. I would like to come forward now to comply with that request and do what is being done successfully in other countries. That would enable me to carry out a review in  a positive way and seek a solution to this matter.
Widespread publicity was given to the content of the national programme and, in particular, to the proposed prohibition of canned beer sales when the programme was presented to the EC Commission 12 months ago. There was no adverse criticism from anybody at that time and this continued to be the situation up until September 1987 when a draft of the proposed regulations was sent to the EC Commission, as required by Article 7 of the relevant directive. At this point the Commission chose to seek further information on the Irish programme which it had received no less than eight months previously and to raise a number of queries, some of which related to purely procedural aspects, on the proposed regulations. This was accompanied by a request that the making of the regulations should be deferred. The matter has since been the subject of correspondence and discussion with representatives of both the Environment and the Internal Market Directorates of the Commission as well as the Commission's legal services department. Well reasoned replies have been given to the points made by the Commission and the Commission has been informed that the making of the regulations as previously proposed is still under consideration in my Department.
It is difficult to avoid the conclusion that some of the procedural points raised by the Commission were unreasonably obstructive and they were motivated, at least to some degree, by a build-up of pressure from external trade interests. I want to make it clear that I am not criticising either the management or workers of the factory which has given rise to this debate for registering concern that the proposed prohibition of canned beer sales here might prejudice in some way their export trade. The company manufactures metal can ends and I understand that the entire product is exported. I can see no real grounds for concern that export outlets will be affected. Both the marketing and consumer patterns of the other member states are very different  from those which prevail here. Canned beer is widely sold in other member states and allowing for the directive requirement that market conditions must be taken into account in the formulation of programmes there is no reason to believe that they would follow the Irish lead.
Certainly no such prohibition is proposed in the UK programme, a draft of which was recently furnished to the EC. These points have been explained repeatedly in discussions between company representatives and officers of my Department and I am surprised at the continuing suggestion that proposals formulated to deal with a purely national environmental problem should continue to raise some industrial hackles. In some of the correspondence which I have seen the can prohibition has been described as “hostile” to the industry. I consider such terminology unnecessarily emotive as well as unfounded.
I will close by saying that the regulations, and their scope, are still under consideration and have not been finalised.  The programme to which they relate is a phased one and is reviewable at four year intervals. There is provision for ongoing consultation between the public sector and trade interests both to monitor the implementation of the programme and to consider further possibilities for achieving the objectives of the directive. I will be meeting some other interests in this matter in the immediate future. There is a willingness by me to consult in the matter. What I would like to see achieved is that a recycling process could be achieved internally, like the instance I have given of recycling glass. If I could get the operator the Senator is talking about and some of the bigger movers in the manufacturing of the product involved then we would have taken a step forward in the environmental sense and would be providing a satisfactory solution to all concerned. I hope that can be achieved.
The Seanad adjourned at 5.25 p.m. until 2.30 p.m. on Wednesday, 24 February 1988.
Seanad Éireann 118 Adjournment Matter. EC Directive on Beverage Containers.