Expert warns against semi-state 'fire sale'

A trade union advisor today warned against the sale of semi-state companies to cover the cost of bank bail-outs.

Paul Sweeney, economic advisor for Congress, claimed the businesses would be offered on the stock market in a badly timed fire-sale which would be disastrous in the long term.

“For a start, asset prices are on the floor at the moment, so it is a very, very bad time to sell,” he said.

“Secondly, these companies generate an income stream for Government which would be lost in favour of a one-off payment. That makes no sense and smacks of desperation from a Government that knows its policies are not working.

“It would amount to a fire-sale, with the proceeds simply funnelled into the banks.”

The Government is planning a stock-take of semi-state companies ahead of the Budget but officials insisted the evaluation will not lead to a major sell-off of utilities.

An expert review group is being set up to evaluate organisations including Bord Gais and the Dublin Airport Authority as part of the drive to deal with the crisis in public finances.

The panel, expected to be headed by An Bord Snip Nua chair Colm McCarthy, will examine the assets and liabilities of the companies and determine whether they are making the most efficient use of taxpayers’ money. A report is expected later this year.

But Mr Sweeney warned of a repeat of the sell-off of telecoms giant Eircom, which saw the stock price collapse and the company taken back into private hands three years after being floated.

“Have we learned nothing from the Eircom debacle?” Mr Sweeney asked.

“We have some of the worst communications and broadband systems in the EU and a once-healthy company that is now weighed down with debt. The definition of stupidity is to keep doing the same thing and expect a different outcome.”

Mr Sweeney said the opportunity was there for the Government to examine how semi-state firms can help create jobs.

Fine Gael called for proceeds from any sale to be ring-fenced for investment in jobs and infrastructure. Sinn Féin said selling off state enterprises would not fix the economy.