I am currently considering the recommendations of the McCarthy report on State assets and liabilities regarding companies under my responsibility and will forward my views to the Department of public expenditure and reform in the very near future. I expect that the Minister for public expenditure and reform will consider the responses of all affected Departments and bring proposals on the report to Government in due course.
It is accepted that the acute current and foreseeable fiscal situation facing the State demands that all measures that can assist in this regard be examined. There is no doubt that the McCarthy report is a comprehensive overview of the issue and its recommendations merit serious consideration. The study and recommendations of the review group encompass very significant areas of responsibility for my Department. Of the 16 commercial State bodies referred to on page 2 of the review group report, eight are under the aegis of my Department. In addition, the report also dealt extensively with regulation, and three regulators — ComReg, the Commission for Energy Regulation and the Broadcasting Authority of Ireland — are also my responsibility.
While I do not propose at this juncture to comment on specific recommendations, I strongly support the view that consideration of the sale of State assets should be set in the context of the wider public interest, including sectoral and economic policy and not simply as a revenue raising exercise. The report strongly recommends against a fire-sale of assets and underlines important complementary policy initiatives, which it concludes must be progressed in advance of sale of certain assets.
More generally, any disposal of State assets, especially those in the ownership of commercial State companies, must be undertaken on a fully informed basis and consistent with wider sectoral policy in the area. This must include best practice valuation of the asset, which it is proposed to sell, assessment of the impact of such a sale on Government policy objectives in the areas in question, appropriate consultation with stakeholders, and, in the event that disposal is deemed appropriate, timing of disposal to maximise value for the owner.
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Turning specifically to the energy State companies, the importance of the electricity and gas infrastructure and supply chain to national economic and social development cannot be emphasised strongly enough. Electricity and gas are the lifeblood of economic production in the high-tech ICT sector, the employment-intensive services sector and indigenous sectors such as farming. They are also fundamental to key social services such as health and education.
Because Ireland has such a reliable and relatively modern electricity and gas infrastructure we almost take it for granted. We must always remember that the creation of a modern and reliable energy networks system did not happen by accident. It arose from extensive and well executed investment by State owned companies, notably the ESB and Bord Gáis. These investments were funded without recourse to the taxpayer but on the back of well run and profitable State companies, which have garnered the trust of the capital markets to enable them to raise the necessary funding.
Good regulation, and professional management and operation of the transmission network by EirGrid have further contributed to our excellent networks infrastructure and the introduction of strong competition in the generation and supply business. The overall outcome is a modern electricity and gas sector and an evolution to average EU prices from a position where Ireland used to be well in excess of the EU average.
The importance of the electricity and gas sectors to economic and social development place the sectors in a unique position in the context of public policy and the national interest. Important issues in these sectors will fall to be addressed by the Government in the medium term. These arise in part from the report on the sale of State assets, about which the Deputy has posed his question, but more significantly, from EU legislative requirements and developments. We must prepare for the development over time of a pan-European energy market served by interconnection. Ireland will be a small part of a very large European regional electricity and gas market. This inevitable development must strongly inform energy policy, including that relating to ownership and structure of State energy companies.
Given the importance of the sector to the very economic and social functioning of the State, the State must continue to have a strong and direct presence in generation, networks and supply. This must be done in a way that protects overall economic competitiveness and does not deter private sector investment in generation and supply. This approach does not preclude extracting value from the strong and profitable State companies that we have built. The process of extracting such value and implementation of any other structural change within the State energy sector must meet the test that they are in the public interest in its widest sense.
The review group also proposed the sale of RTE Networks. This company is a key player in the major task of switching over to digital terrestrial television and switching off the analogue system. This is a hugely important project to be completed by 2012. I would not wish to see this timeline endangered by fundamental structural change.
The report also makes a number of other recommendations which impact on areas of my Department. I will give all recommendations serious consideration and make my specific views known to Government in the first instance.
