Valuing state assets - State firms about more than money

Yesterday’s announcement on the sale of State assets was sweetened by a troika concession that €1 billion of the targeted €3bn may be used to fund job-creation projects.

The programme for government proposed selling assets worth €2bn, the troika wanted a package that would generate €5bn so the final figure is a compromise made all the more palatable by the jobs creation element.

Whether the assets earmarked for auction — Bord Gáis Éireann’s retail division and some of the ESB’s power generation facilities — have the potential to realise €2bn remains to be seen. Repeated Government promises that these resources will not be sold at fire-sale prices are reassuring — though how patient the troika might be in realising optimum prices also remains to be seen.

Almost inevitably, unless our economy surpasses the most optimistic predictions, more of the family silver will come into play if the €3bn target is not reached sometime next year, a time scale suggested by Taoiseach Enda Kenny.

ICTU general secretary David Begg reflected the views of a great many people when he expressed relief that the wholesale sell-off of assets, as had been proposed in the July 2009 McCarthy report, has not materialised — as yet.

The ESB — and possibly an entity yet to be established, a national water supply company — was the focus of most concern. The energy company is such a cornerstone in this society that even the most ardent neo-conservative might have baulked before surrendering it to the highest bidder.

Ironically, the prospect of confronting a well-organised and “spoilt” workforce and the company’s pension deficit — something in the region of €2bn — may have made the organisation less attractive to international investors than might be imagined.

If Mr Beggs reflected the immediate relief yesterday President Higgins, speaking in London on the eve of the announcement, was far less compromising about privatisation, voluntary or forced.

The President described the process as “the road back to autocracy” and warned that it “will leave a hollowed-out state bereft of anything to attract the support of citizens”.

The betrayal of many societies by laissez-faire governments, reckless, amoral banks and too many citizens blinded by greed may have convinced some people who would have once rejected this argument to change their mind.

Maybe this shift might make it more difficult in the future to force the sale of assets nurtured by this society for the benefit of all citizens to hedge funds and privateers whose moral compass does not even recognise social development or protection.

We should consider too how much our situation might be changed by selling State assets. If yesterday’s announcement comes to full fruition subsequent sales will cover about 2% of our national debt. If we decide to sell our strongest assets it is unlikely that we could pay much more than 10% of our debts.

Are we, even at this low ebb, really prepared to sell institutions that, for all their faults, stand between us and what may be the very worst manifestations of market forces to achieve that?

As Mr Higgins so correctly stated the consequences would be far greater than just monetary.