Selling state assets - Invest sale proceeds in this country

IT now seems unavoidable that minority stakes — at the very least — in pivotal semi-state companies will be sold to try to sustain investment in essential capital projects.

Though nothing is finalised it is believed that work is progressing well on plans to sell minority interests in the ESB and Bord Gáis.

The process, under the management of the New Economy and Recovery Authority (NewERA), is expected to reach a position some time in the autumn and it is hoped that at least €2 billion might be raised to finance vital work in water supplies and broadband.

These areas are sources of considerable friction, especially water supply. We will all have to pay domestic water charges in the not-too-distant future to fund the €2bn-a-year service but opposition to the charge is exacerbated by the fact that so many water supply schemes are so terribly inefficient. In some instances over 50% of water processed to drinking standard is lost through leaky pipes long past their replacement date. There is a natural resentment to the idea that we are being asked to pay to sustain inefficiencies but these sales, however reluctant, may fund the modernisation of our water supply scheme, an obligation shamefully neglected by recent governments.

The proposals, which will need the approval of the country’s IMF/ECB/EU supervisors, have been developed considerably since the publication of the Programme for Government. That programme proposed the sale of non-strategic assets to allow investment in digital communications, water supplies, electricity and gas networks, as well as bio-energy and forestry.

However, opposition from Labour and trade unions means that no more than a minority stake might be offered for sale in any of these entities. This opposition, it must be assumed, is based as much on trying to preserve the exceptional pay rates enjoyed by some semi-state employees as it is on trying to protect the long-term interests of Ireland Inc. Whether the minority share limit will make any sale problematic or not remains to be seen but, as any Aer Lingus employee will confirm, international investors do not pay rates much above international norms.

It is a tragic consequence of our economic collapse that there has never been a proper debate about the privatisation of the state’s utilities companies. In the fullness of time their forced sale, and that is what this is, may be seen as one of the most damaging legacies of the Fianna Fáil-sponsored decade of hubris and insanity. The founding fathers of that party would certainly think so.

The revised agreement between the Government and the IMF/ECB/EU troika, published by the Department of Finance last Friday, contains the most direct and unambiguous commitment to flogging the family silver yet. It says the Government will consider an “ambitious” programme of sales, prepare any regulatory amendments necessary and follow an agreed timetable.

The most we can hope for, it seems, is that the proceeds will be reinvested in this bankrupt country rather than go to pay off a tiny portion of our debt. Is it too much to ask that we be given this reassurance?