ECONOMIC CHALLENGES MEAN SELLING OF SOME STATE ASSETS

Posted on March 8, 2012 2:58 PM   |   Permanent Link   

I understand the reluctance that many people have in relation to contemplating any sale of our State Assets. Nobody in the Labour Party is enamoured at the idea. Our commercial State companies have served this country well since the foundation of the state. Many of them have been and continue to be, a core part of our economy, they are involved in delivering strategic infrastructure and key services across a number of different sectors.

They have developed significant expertise and technical knowledge and skills. They have generated significant employment throughout the country. It is for that reason, and I want to make it very clear, that the Government remains committed to ongoing state involvement in critical areas of our economic development.

However - and all of us in this House know this - Ireland is facing unprecedented economic challenges. I have to point out that due to Fianna Fáil's awful governance, Ireland is currently dependent on the financial assistance provided under the EU/IMF funding programme for the continued day-to-day operation of the State. We can't go anywhere else for loans - the markets won't accept us at the moment. We're stuck with the Troika.

This year the gap between Exchequer revenues and spending will be around €15 billion, even after the costs associated with repairing the banking system have been excluded. This is simply not a sustainable position. Ireland can't afford it.

Having witnessed the past mistakes of Fianna Fáil when they privatised State Assets, the Government is determined that Ireland will not relinquish any control of any strategic assets without appropriate safeguards being in place to ensure that investment in such assets is maintained at appropriate levels. This Government will do it right - unlike Fianna Fáil when they made an absolute mess of Telecom Éireann - now Eircom - when they privatised it.

However, the disposal of assets will only be undertaken when market conditions are right and when adequate regulatory structures are in place to protect consumer interests. The State will not sell equity in ESB at a "fire-sale" price.

At the very first engagement between the Troika and the new Government, it was made plain that their expectation was that €5bn of assets would be sold off and the proceeds used exclusively to write down debt. No figure was used in the original Memorandum of Understanding presumably because a General Election was imminent.

Gradually the new Government has persuaded the Troika that asset disposals to the scale of €5bn was unrealistic in the lifetime of the Programme and even more importantly that it was in the best interests of the revival of our economy that the Government be free to reinvest a significant proportion of the proceeds. Against that background, the outcome announced by my colleague Minister Howlin is a very large improvement.

Therefore in the circumstances, where there is only one lender available to the State, this Government has done exceptionally well to secure approval from the Troika that one third of the proceeds will redound to the State for reinvestment purposes.

The overwhelming public interest now is to bring about sustainability to the public finances and to foster economic growth.