Gas Regulation Bill 2013: Second Stage (Resumed)

Question again proposed: "That the Bill be now read a Second Time."

In my contribution last evening I spoke about the possible massive impact the proposed industrial turbines might have. It is a highly controversial issue in the midlands. Those corporations which have the contract to try to build these wind turbines will in the next few weeks begin a public consultation process in an attempt to allay people's concerns about the plan for their lands. It has been stated at public meetings which I have attended that if the corporations continue with the hidden clause style of doing business, they can engage in all of the public consultations they want, but they will not convince anyone.

While wind energy projects are welcome, wind farms must be located or sited away from people's homes, schools and areas of natural beauty. On behalf of many people in the Longford-Westmeath region, I tabled a priority question to the Minister requesting a moratorium on the wind farm development process until new guidelines and regulations were in place. In his reply the Minister stated the request for a moratorium was based on a "misapprehension regarding the current planning regulations in Ireland." The people of the midlands are under no misapprehension; they have shown serious opposition to any process that is rushed and lacks detail. We must send a message that proper planning and sustainability guidelines must be adhered to in any proposed development in the siting of wind farms in the midlands. It is up to every citizen in Ireland to protect the environment. Councils also need to strengthen environmental protection measures and policies on wind energy projects. I am glad to say local authorities in Longford and Westmeath are putting the correct measures in place in as far as legislation allows. These are the only counties I can speak for as they form part of my constituency. There is a need for detailed consultation with local communities at public meetings. There must be public participation in decision-making and all decision-making must be transparent and fair. It is important to send a message that an environmental impact study is necessary for projects of this size. I ask the Minister to ensure this study will be carried out.

The current regulations governing the operation of wind turbines and the guidelines work against the environment and our tourism interests. It is very important that the State ensure the rewards from wind energy projects do not accrue to others at the expense of the people. Further research and policy analysis are essential to get the proposals right and avoid the development of a blight on the Irish landscape for years to come.

Europe and Ireland's comparatively high energy costs are increasingly a source of concern for those working in industry.

They will say the high cost of energy is a real problem, and I fear we will lose our competitiveness, particularly in energy-intensive sectors. Last year in the US, gas prices were about four times lower than in Europe and electricity prices were about 50% lower. We should be concerned about that because we are currently attracting American industry to the country and we must not have prohibitively high energy costs affecting other costs associated with development and industry.

Critics have stated that two factors are driving the divergence: the US shale gas revolution, which has lowered natural gas prices for US industry and, more controversially, European climate and energy policies, including emissions trading and renewable energy subsidies. In a recent Accenture study approximately 58% of business leaders surveyed were pessimistic about whether European industry will still be cost-competitive from an energy standpoint in three years compared with rivals such as the US, China or Russia. Ireland's ability to attract and retain foreign direct investment and support fresh enterprise depends on guaranteeing energy supplies at a competitive price at all times.

The Longford and Westmeath areas have shamefully been disregarded in respect of the natural gas scheme. Ten or 12 years ago, when gas pipelines were being brought from the west coast to Dublin, there was a proposal that the route should run through Edgeworthstown in Longford and Mullingar but, following political intervention, the gas pipeline was brought via Athlone. I have no difficulty with that but I am of the view that a spur line could have been built to Longford. The gas line was also quietly and mysteriously run through a place called Clara in County Offaly, the home village of a former Taoiseach and Minister of Finance at the time. That was political opportunism at its worst.

The Deputy should not make allegations like that in the Chamber.

There is an urgent need for innovative proposals to counteract the neglect of smaller counties such as Longford by State agencies, particularly IDA Ireland, especially given the increasing number of people on the live register and the loss of economic stability in the region arising from the closure of several industries and businesses.

Ireland has gone through a raft of changes in the last few years, with many in financial hardship due to the recession that hit following the 2008 banking crisis. The last thing a family needs is rising energy bills, which force them to spend more than they can afford simply to keep the lights on and house warm. We need to reduce our society's exposure to energy bills.

This Bill addresses legislative amendments to allow for the sale of Bord Gáis Energy, a division of Bord Gáis Éireann. It also provides for the restructuring of Bord Gáis Éireann through the establishment of a gas network subsidiary company. The Bill also facilitates the sale of the Bord Gáis Energy business and changes the ministerial ownership and control provision for Bord Gáis Éireann.

Bord Gáis Éireann is a major energy provider, supplying gas and electricity to homes and businesses throughout the island of Ireland. Established in 1976, it is majority-owned by the Government through the Minister for Finance and the Minister for Communications, Energy and Natural Resources. Bord Gáis Energy is a division of the Bord Gáis group, operating in both the Republic of Ireland under the Bord Gáis Energy brand and in Northern Ireland under the Firmus Energy brand. It is a dual-fuel all-island business serving more than 825,000 gas and electricity customers. The sale of Bord Gáis Energy is part of the Government's State assets disposal programme, and is being pursued as a commitment under the EU and IMF programme.

The Government announced its intention to sell Bord Gáis Energy in February 2012. Reports anticipate the sale could generate proceeds of between €1 billion and €1.5 billion, although some of the most recent estimates have been towards the lower end of that scale. Half of the sale proceeds will be available to fund employment-enhancing projects of a commercial nature and the other half is destined to eventually pay down debt.

The Gas Regulation Bill sees Bord Gáis Éireann split into two companies, one of which will take control of the physical gas network, while the other will take control of the energy business, with the possibility of its being sold by the end of 2013. The Bill provides for the reconstruction of Bord Gáis Éireann through the establishment of a gas network subsidiary which will remain in State ownership, and it deals with the technicalities of establishing those two companies. The Minister for Communications, Energy and Natural Resources will be the majority shareholder of the gas network company.

The Irish gas market was opened fully to competition in July 2007 following implementation of the necessary legislation, meaning that alternative supplies compete in all market sectors, including the residential sector. The Commission for Energy Regulation is responsible for the regulation of the Irish gas network and the supply or retail market. It regulates revenues recovered and network tariffs charged by the network operators and owners. Many large customers, such as power stations, avail of the options of connecting to the network and purchasing gas on the international market directly. The majority of small customers, including residential customers, are still supplied by Bord Gáis.

Bord Gáis Networks develops, operates and maintains the natural gas transmission and distribution network in Ireland and provides gas transportation services to suppliers and shippers, including Bord Gáis Energy. The natural gas network consists of 13,150 km of gas pipeline, including two sub-sea interconnectors with Scotland, from where Ireland gets over 93% of its gas supplies. This work is carried out on behalf of Gaslink, the independent gas system operator for Ireland.

Bord Gáis Networks is also responsible for new gas connections and for work on service pipes and meters at customer premises. It manages a full 24-hour emergency response service and handles over 20,000 call-outs per year. Bord Gáis Éireann is also a major employer in Ireland, with over 1,000 direct employees.

If the Deputy wishes she may do so.

I will give ten minutes to Deputy Martin Ferris.

I shall take five minutes.

The Deputies can have ten minutes each.

There is a slight dispute among the Sinn Féin Deputies. That is very unusual.

Give the Deputy three minutes.

Sinn Féin's position on the sale of State assets has been well voiced over months and years. Selling what is left of the family silver does not amount to a strategy and it is a decision of a Government that is all out of ideas. We know the sale of State assets is a policy being pursued by the Fine Gael and Labour Party Government and not one that is enforced by the troika, as the Minister and his colleagues would have us believe. Representatives of the troika have told us categorically that this is a decision of the Government alone.

To sell a successful, self-financing commercial State company such as Bord Gáis Energy makes no sense, either in good times or bad. The Minister is aware that last year Bord Gáis Energy had gross operating profits of €79.4 million, up from €44.3 million in 2011. The profitability of the company is not in question. Instead of flogging the last of the State's wealth for a quick buck, the Government should make commercial State companies part and parcel of the solution for creating jobs and delivering growth. The myth that privatisation and deregulation bring automatic improved competitiveness and efficiency has been well and truly debunked internationally.

Ireland is a small, open economy, and State control of strategic and valuable assets is central to the future prosperity of the economy and society. Our arguments against this course of action by the Government have been well rehearsed, not least in this Chamber, and it is now time to turn our attention to what will happen after the Government's sale of Bord Gáis Energy. What will happen to the workers who wish to remain as employees of Bord Gáis? If these hundreds of workers wish to return to their original employer, what will become of them? I ask this because I questioned the Minister for Public Expenditure and Reform on the fate of the An Post National Lottery Company.

He told the Dáil that the welfare, transfer and safeguarding of lottery personnel must and will be encompassed in the process. Unfortunately, this has not come to pass. Will the Minister of State clarify what discussions have taken place with the workforce over the past number of months? What options have been presented to employees? Has the Government along with management simply served up a fait accompli to them? If they wish to remain Bord Gáis employees, will the Government support them in that ambition? For those who are forced to make the move, will their current terms and conditions be maintained? What will become of their pensions? What about the Bord Gáis pension scheme in its totality? If workers move to the new company, will they be forced to park their original pension scheme and join a new scheme? What impact will this have on the workers transferring to the new company but also for the current pension scheme? Have those matters been considered? By any stretch, a potential loss of 300 contributors to the pension pot could have a significant impact. Has the Government measured that and considered it? Crucially, what impact might that have on the dividend to the State from the sale? Has the Government thought this out? Ministers have front-loaded their public commentary on the revenues and the amount that will be taken in from the sale of this State asset. They have boasted that some of the money will be used for job creation with the balance used to pay down debt, which is truly outrageous. Has the Minister quantified other matters within the margin, not least the pensions issue?

He has quite a challenge on his hands with the ESB's pension fund crisis. The ESB group of unions will present their case to Members next Wednesday at an all-party briefing in Leinster House. I hope the Minister and his colleagues might set aside some time to hear what the ESB workers have to say.

What of Bord Gáis's debts? The company has sought external assistance in the reorganisation of its capital structure, including its €2.2 billion debt. My understanding is that this debt will have to be divided between the energy and networks businesses. What will the ratio be? What impact will that have on the State's dividend? The ESB's dividend to the State from the sale of its 50% share in two power generation plants in Britain and Spain will only be paid after the company first pays down some of its own debts. Presumably, this will also be the case with Bord Gáis.

What will happen to the Bord Gáis brand? Will the brand be retained by the remaining holding in State ownership or will it be sold along with the retail side of the business currently known as Bord Gáis Energy?

The OECD report on privatising State-owned enterprises has reflected that restructuring and privatisation result in job losses even in cases where sectors are expanding and the economy is creating new employment opportunities. Has this been considered by the Government? Reports indicate that the sale of Bord Gáis Energy could generate proceeds of between €1 billion and €1.5 billion, although more recent estimates have been towards the lower end of that range. The Minister of State and his colleague have boasted about this revenue and the fact that half of this money will been used to fund employment projects and the other half to write down debt. How does he defend selling the family silver and using half of the proceeds to write down the debt, which any citizen on the street will remind him is not the people's debt? Experience in other European jurisdictions, for example, Greece has shown that the sale of state assets has not returned the expected proceeds and projections have continuously been revised down considerably. My fear is that this sale, about which the Government boasts, will have a similar result in this jurisdiction.

I have put a series of questions that are of concern to company employees regarding the pension fund and questions about the extent to which the Government has measured impacts, particularly on the dividend to the State from the newly cannibalised company. I hope the Minister of State has answers to them because in selling off part of a successful commercial semi-State company, the Government parties are taking a step into the largely unknown. I hope they have properly considered and measured the consequences of their action.

The purpose of this legislation is to allow for the sale of Bord Gáis Energy, a division of Bord Gáis Éireann. Sinn Féin is totally opposed to this. We also oppose splitting Bord Gáis into two companies, one of which will be the network company in control of pipes, maintenance, etc., which will be retained in State ownership while the second is the energy company which is to be sold. We do not believe that this makes economic sense and it is clear that is only being done because the sale of Bord Gáis Energy is part of the troika programme of sale of State assets, which is clearly ideologically driven. While many in Fine Gael may support such an ideology, I remind the Minister for Communications, Energy and Natural Resources that his own party voted at its annual conference to oppose any such sale.

Bord Gáis Energy comprises the following businesses - an energy supply business in Ireland, servicing more than 825,000 customers in the gas and electricity markets, North and South; a 445 MV combined cycle gas turbine plan at Whitegate, County Cork; a large scale portfolio of onshore wind assets; and Firmus Energy, an energy company operating in the Six Counties. It is clearly, therefore, not only a valuable asset but one with significant prospects for the future and could, if retained as a single entity, play a significant part in economic recovery. Bord Gáis Energy is a profitable company. In 2012 it reported an EBITDA, gross operating profit, of €79.4 million, compared to €44.3 million in 2011. These are substantial profits. Bord Gáis is by far the biggest player in the domestic gas market at present with a 60.97% market share in June 2013.

We should also learn from the history of privatisation in other countries, much of it also driven by right wing ideology. Over the past two decades, close to $1 trillion worth of state-owned enterprises have been privatised in more than 100 countries. Restructuring, privatisation and deregulation of the energy market began as a political ideology in Chile, New Zealand and Britain, but has spread to the EU, the US, and the rest of the world. The troika's promotion of privatisation is a clearly ideological approach in support of an evermore discredited neoliberal economy and benefiting only a small group of transnational corporations. Their insistence on entrenching neoliberalism is also profoundly anti-democratic. When given the opportunity, European citizens have voted against privatisation, demonstrated in their resounding rejection of water privatisation in the 2011 referendum in Italy. Other citizens across Europe are building powerful anti-privatisation campaigns to stop public services being sold off.

In the short term at least, restructuring and privatisation result in job losses, even in cases where the sector is expanding and the economy is creating new employment opportunities, according to an OECD report on privatising state-owned enterprises.

Reports indicate that the sale of Bord Gáis Energy could generate proceeds amounting to between €1 billion and €1.5 billion, although some more recent estimates have been towards the lower end of the scale. Half of the proceeds could be available to fund employment enhancing projects of a commercial nature with the other half destined to pay down debt. Experience from Greece has shown that the sale of state assets has not returned the profits which were expected and projections have been revised down considerably.

I remind the Minister and all of his Labour Party colleagues that the Labour Party conference in 2012 voted to reject totally the sale of State assets. In going ahead to do that not alone is he doing a terrible disservice to the citizens of this country but he is also turning democracy on its face within his own party.

I call Deputy Kevin Humphreys. He is sharing time with Deputy Buttimer. Deputy Humphreys has five minutes and Deputy Buttimer has 15 minutes. Is that correct?

That is correct.

Is that agreed? Agreed.

None of us wants to see the sale of State assets, but that is the legacy of the agreement Fianna Fáil reached with the troika when we were bailed out on its watch in November 2010. I listened carefully last night to the comments of Sinn Féin Deputies, especially those that concerned my party. I commend them on the conformity of their speeches. The scriptwriters were excellent. The approach has continued in today's contributions. However, they neglected some key facts and I wish to focus on two particular points in my contribution, namely, the sale of State assets, and investment of the money raised in jobs, and the importance of keeping the network in public ownership.

As Deputy Finian McGrath said last night – the dominant debate in the country is about jobs, jobs, jobs. This sale will provide a windfall that will enable us to invest in jobs. As has already been stated by the Minister, Deputy Rabbitte, it is important to put on record that while the troika expects us to raise €5 billion from the sale of State assets to pay down debt, that figure was reduced to €3 billion by the Government. It was pointed out on many occasions by Fianna Fáil that the sum could not be reduced through negotiation. Through further negotiations with the troika it was then agreed that half of the money raised would go towards investment in the economy, which would create jobs and build the infrastructure we need to encourage future growth. That was a significant political achievement by the Labour Party and Fine Gael in government, as the assets were originally to be privatised to pay down debt as the price of the bailout. It was then agreed early last year that half of the money raised would in the long term go towards retiring debt but in the short term the potential €1.5 billion would be put into a fund to support lending in the economy to assist SMEs and job creation. Projects that will benefit from such funding include a new campus for DIT at Grangegorman in Deputy McDonald’s constituency. I repeat again, none of us want to see the sale of State assets, but that has been the cost of the bailout that has paid for vital public services and supports. The fact that the proceeds can be ploughed into job creation in the economy is important.

One of the reasons I can agree to this sale is that the State will retain the most important part of Bord Gáis Energy, namely, its gas pipeline transmission network. The book value of property, plant and equipment at the end of 2009 in Bord Gáis was €3.5 billion. A total of €2.5 billion of that was attributable to the gas pipeline according to Colm McCarthy’s report on State assets. That means more than 70% of the State assets in Bord Gáis would remain in State ownership and we would have €1 billion to invest in jobs. When the Minister responds to the debate, could he confirm the up-to-date position on the value of assets in Bord Gáis that will remain in public ownership?

If we learned anything from the disastrous privatisation of Telecom Éireann where both the customer side and the network were sold, it is that the transmission networks – a natural monopoly - should remain in public ownership. That would guarantee that the Government would have the power to maintain and invest in supply networks to improve competitiveness and contribute to growth. That is critical for long-term economic growth. The failure of the privatisation of Eircom to develop a national broadband network is a lesson we have learnt the hard way.

As recommended in the report on State assets, core transmission networks in gas and electricity should not be sold. That is exactly what we will have achieved along with an investment of billions in the economy. It is important to remember that the ESB and its power plants, the dominant player in the energy supply market, will remain in public ownership as a vertically integrated company.

I concur with Deputy Humphreys that State assets are important. I am sorry Deputy McDonald is leaving the Chamber because I would like to hear how we should create employment and sustain a modern economy. I have never heard that from Sinn Féin and other speakers opposite.

I will explain it to Deputy Buttimer in a while.

Sometimes I wonder if I am in a recurring nightmare. The politics of protest and condemnation is very easy.

l stayed because I thought Deputy Buttimer was going to say something interesting but now I am leaving.

The political focus that is required is to find a solution and to get people back to work. At times I wonder whether certain Members opposite want to see the country fail completely so that they can go out with their flags and drums and organise protests and state they were right. I hope that is not the case. This is about getting people back to work, ending the scourge of emigration and generating a stimulus to create jobs.

This is about selling gas.

I know Deputy Murphy believes I am right, because that is what we are trying to do. The Minister, in reply to a parliamentary question, underlines what I said by stating that it is important that a significant proportion of the proceeds would be ring-fenced for reinvestment in the economy to underpin jobs, investment and growth. That is very important. That is why we are here today and that is what we are trying to do. That is what the Minister of State, Deputy O’Dowd, and the Minister, Deputy Rabbitte, are trying to do, namely, get the country back working again.

We must learn from the Eircom debacle. Those of us who were not involved in politics then as public representatives who saw what happened with Eircom are wary, have questions and want to see this process done in a different way to that sale. I am amazed that the former Minister, whom I will not name in the House, is now seen as a genius by all commentators. When one turns on local radio stations across the country the former Minister is to be heard. Yet, let us look at the legacy the Minister left behind in terms of Eircom. We must learn from the sale of Eircom. That is why this sale is different to what transpired then.

The Bill is to provide for the restructuring of Bord Gáis to allow for the sale of the retail arm of the business and Bord Gáis Energy and to establish a gas network subsidiary company that will remain in State ownership. That is very different from what happened previously and what has been said by others. It is important that the Government has secured the agreement of the troika to allow half of the money obtained from the sale of Bord Gáis Energy to be invested in job creation. The biggest task that faces all of us in public life today, irrespective of ideology or how we achieve the outcome, is to get people back to work. We must create stimulus in the local economy and get rid of the stigma of the troika. In addition, we must get banks to work with small and medium enterprises, families and mortgage holders in distress. I accept we had a Private Members’ motion earlier on the latter issue. It is time the banks in particular listened to those of us in public life who deal with constituents every day of the week. I hope the Central Bank will take on the banks.

The sale will secure between €500 million and €750 million for investment in jobs. That is something we should all support. I encourage the Members opposite to support the creation of jobs and investment in infrastructural development and stimulus that will get people back to work. That is what we are about.

In America yesterday, everything Mr. Ben Bernanke of the Federal Reserve said was underpinned by a belief in job creation and sustaining the economy. That is what this Government is about.

Selling the retail arm of Bord Gáis and ensuring the network and physical infrastructure will remain in State ownership were recommended by the Review Group on State Assets and Liabilities. It is important to keep the network and physical infrastructure in State ownership. That demonstrates that we have learned from the failure of the Eircom privatisation. When every asset of Eircom was sold, no provision was made for the future development of the telecommunications network. Deputy Humphreys is correct in respect of Wi-Fi and deficits across the country. The Government has learned from the Eircom debacle.

We have seen a lot of scaremongering by political opportunists regarding Irish Water and its privatisation. This Bill demonstrates again that it is not the Government's intention to privatise Irish Water. The only arm of the Bord Gáis group that will be sold is the retail arm, Bord Gáis Energy. All the other sections will be kept in State ownership. It is a question of ensuring that strategic infrastructure remains in State ownership so it can be used and retained for the public good. I hope the Members opposite will acknowledge this point. It is a question of securing funding for investment and growth in the economy.

A recent survey carried out by the Commission for Energy Regulation showed that gas prices for the average householder have increased by 12.1% in the past 12 months or more. In 2012, the average household spent almost €990 - almost €1,000 - on gas. This year, the figure will be €1,100. Almost two weeks ago, the regulator gave Bord Gáis permission to further increase residential gas prices from 1 October. This will amount to a price increase of 2.04% over the figure for October 2012. Bord Gáis Energy requested a 7.2% increase but I am very happy it did not get its way. I am disappointed that the regulator acceded to the request to increase the price of gas for the home owner. An increase of 2% might seem modest to the regulator and some social and economic commentators, but it is difficult to imagine it at a time when an increasing number of people are struggling to pay bills. Householders are now deciding not to put the heat on.

I question not the motivation of the regulator but the rationale for the decision to increase energy prices. I am not criticising the regulator personally or the office, which is independent. I accept its independence. In this case, it is a matter of the householder being asked again to pay more for gas when we see the profits Bord Gáis Energy has made. It really forces one to question such price increases. The energy price increase at this time contrasts with the decision of the regulator to reduce prices on two occasions during 2009. The unit rate for the standard domestic tariff fell to €4.27 in October 2009 but since then we have seen a 24% increase. From 1 October next, it will cost €5.29. If we are talking about money to stimulate the local economy and jobs, which are necessary to sustain and grow the economy, and money to invest in infrastructure, the householder or home owner needs to be included in the equation. I am disappointed by the increase. Operating profits increased by approximately 19%. This is a huge figure by any standards. For the Bord Gáis Energy section of the business, the increase in profits has been even greater. Between 2011 and 2012, operating profits increased by almost 80%, from €44.3 million to €79.4 million. At a time when the profitability of the retail arm of the business is growing, it is very difficult to understand how the regulator can decide to increase costs.

Will the Minister of State tell us whether there has been a change in policy since 2009, when the regulator acted in the interest of consumers and reduced prices? Why are we seeing an increase now? The Minister of State may argue that the increase is because of extenuating circumstances in certain parts of the world, strife, the transportability of certain fuels, etc., but we need to give the home owner a break. According to the regulator's survey this year, the average household will spend €92.50 per month. We need to encourage householders to consider not just switching providers in order to save money but also to give them a meaningful break.

I renewed my car insurance in recent weeks. Let me give an example of how the whole system is skewed against the consumer. I received a quote of €590 in the post. I spent half a day ringing various brokers and agents and then got a quote of €400. If I had accepted the initial quotation from my broker, I would not have saved €190. Where is the action on behalf of the consumer, the citizen, the ordinary person who deserves a break? We need to return to considering how we can look after the ordinary person. In supporting this legislation, I am mindful that we need to consider looking after the citizen while saving money as a State. The regulator has approved two websites, and, which allow one to compare the prices of various providers to determine whether it is possible to save money. The system should be transparent and open so one will not have to take a whole week making endless telephone calls to renew a policy. For the average person paying the standard Bord Gáis tariff by direct debit, it is possible to switch and save up to €145 per year. For the average householder on standard rates receiving gas from Bord Gáis Energy and electricity from Electric Ireland, up to €254 can be saved over the course of one year by switching providers. It is important that these issues be highlighted.

Most importantly, we should focus on the consumer. That is why I was very pleased with the remarks of the Minister for Communications, Energy and Natural Resources, Deputy Rabbitte, on the issue of Bord Gáis staff. Bord Gáis has been a very strong employer in the Cork region since it first came to the county. The employees are key to the continuing growth of the company. That is why it is important that, in the transfer, any issues regarding pensions, entitlements or staff conditions should be addressed in the affirmative for the staff and others who have given great service to our State.

This is very important legislation. Its aim is to demonstrate that the Government has the ability to renegotiate with the troika. If one had listened to "Six One News" some nights ago and heard the former Minister whose various Ministries included education, foreign affairs and health, and another that I cannot remember, one would have sworn he had never been in government, because he maintained that the current Government could never renegotiate successfully with the troika. It has done so.

It is important that the aim of the sale of the energy business, Bord Gáis Energy, will be to ensure we invest in job creation and getting people back to work. Every single week in my office I meet people who are seeking to go back to work. They do not want to be dependent on social welfare. They were self-employed or worked in many parts of the private sector. They want to see the Government creating more jobs. They acknowledge that we have made progress in the two and a half years during which we have been in government. They see that the foundation is being rebuilt properly, but they believe it must be underpinned by a stimulus to create sustainable jobs that will not be built on just one arm of the economy, as happened before.

That is why this Bill is important. That is why today we are saying to the Irish people and the rest of the world that this Government is serious about job creation and about Irish citizens. Having said that, there is an onus on the Government to recognise that it is not good enough for the cost of energy to the householder to be increased as it has been. I am worried about that issue.

I have to say that Deputy Buttimer deserves ten out of ten for brass neck and loyalty to the party line when it comes to trying to put a positive spin on what is, frankly, a scandal and part of the looting of public resources. There is no other word for it. The Deputy said that most of Bord Gáis is going to stay in public ownership, but this Bill is about putting public resources into private hands and starting a process of picking apart Bord Gáis. The Government is trying to claim that it has saved part of Bord Gáis but this Bill is about selling a very profitable part of that company and beginning the process of the inevitable full-scale privatisation of Bord Gáis. An elementary point will bear that out. If we sell off the profitable parts of Bord Gáis, the pressure will become all the greater ultimately to privatise the less-profitable parts. That is basic arithmetic.

Bord Gáis Energy produced €79 million in profits last year, as has been said and has, year on year, given tens of millions in dividends directly to the State. How anyone could possibly construe that it is good for us to give away a profitable asset when the country is beggared and when that asset is actually putting money, year on year, into the Government's coffers, is beyond belief. Not only that, if the profitable part is gone, the subsidy that those profits would provide to the other parts of the company to maintain the infrastructure that will be retained in State ownership will also be gone. It will be more costly for the State to maintain the network infrastructure and eventually the pressure will come to privatise that as well. That is always the way it works. One begins by privatising the profitable part and then one ends up having to privatise the rest. That has been the experience everywhere in the world. There is no counter example. Once privatisation starts, it is a slippery slope and the process continues.

Of course, there are other parts of Bord Gáis that are being privatised by stealth in what is an unbelievable sleight of hand and, frankly, a heist being facilitated by this Government. The recent awarding of the contract to install water meters to Sierra, owned by Mr. Denis O'Brien, is a scandal. That company had €110 million of debt written down by Anglo Irish Bank, that is, by us. People who are in mortgage distress cannot get a write-down on their debt but one of the richest men in the country can get €110 million written off by Anglo Irish Bank which was headed up at the time by Mr. Alan Dukes, former leader of Fine Gael. Now, lo and behold, he gets the contract for installing water meters, out of which he will make a pretty penny. It is a startling repeat of what happened with the selling off of the second mobile phone licence. It is just a scandal. We are being robbed and the Government is facilitating this robbery.

Who will suffer? Consumers will definitely suffer. As the company has been geared up for privatisation, we have had year-on-year price increases and the latest one will add €20 a year to the average household bill. How is that going to be a stimulus for the economy, when householders who already cannot pay their bills have another €20 added to their annual gas bill? Will that not be depressing for the economy? Of course it will. What damage will be done to small and medium enterprises which are clinging on for dear life, as prices are jacked up by private companies which have a captive market handed to them, courtesy of this Government? It is an absolute scandal.

I wish to illustrate how this connects with the so-called "good news" figures from the CSO suggesting that Ireland is coming out of recession. What a load of nonsense. I have just attended a briefing by the CSO and if one looks carefully at what is happening one sees that the domestic economy is continuing to flatline, investment is down and GNP is down. The one area that is growing is the multinational sector. At the same time that this sector is growing there is a massive increase in the outflow of profits from multinationals, which are hardly being taxed at all. We are being sucked dry by these multinationals as the domestic economy goes down the toilet. Not happy just to facilitate the multinationals in the areas of financial services, pharmaceuticals and IT, the Government is now proposing, with this Bill, to give them our natural resources which could be used for the benefit of the people and to generate desperately needed employment. The Government is going to hand over those resources to the same multinationals to suck out the profits from them. One could not make it up. It is a scandal.

What will happen to the workers? The same thing that has happened in all of those places which have been privatised - they will lose their jobs and their pay and conditions will be attacked. How will that help the domestic economy? It will not; it will do the same damage it has done in every other case where there has been privatisation. It is an absolute, unmitigated scandal.

It is a pity that there is not the same public sense of urgency and attachment to our gas resources as there was to our forests, which we did stop the Government from selling because we were able to mobilise widespread public opposition to it. Sadly, this is going under the radar for most of the public and they do not understand what is at stake. I certainly hope that the workers in Bord Gáis will fight this with every fibre of their being because their jobs and livelihoods are at stake, not to mention a vital natural resource.

It is not just gas that is being sold off, it is even worse than that. Bord Gáis Energy has massive wind portfolio assets. Years ago I used to joke at public meetings that if the corporate vultures had their way, eventually they would make us pay for fresh air but that is what will happen. Wind, or air, is a massive resource in this country which could be used to develop energy and to create thousands of jobs. The Bord Gáis wind assets are now going to be handed over to private interests so that they can profit from our resources rather than us. Again, it is an absolute scandal. It is a heist and a robbery which should be opposed and resisted.

The Government asks what the alternative is but the alternative is very simple, namely, to keep a profitable asset in State hands and invest in the development and expansion of that asset. We must invest in wind energy, in our gas resources and so forth. We should used the profits generated to invest in the real economy to create jobs. How the Government Deputies cannot see that is beyond me or maybe they do see it and they know what they are doing, namely, facilitating their mates in the private sector. In that context, I must say a final word about the Labour Party. I sort of expect this from Fine Gael because of its ideological commitment to privatisation but for Labour Deputies to stand up here and defend the privatisation of State resources is absolutely shocking. It is particularly shocking that the senior Minister in the Department that is doing this is someone who wrote pamphlets in the 1970s, as part of a resources protection campaign, warning against the privatisation of our resources. He actually led popular campaigns and protests against the sell-off of our natural resources and now that same Minister is facilitating the asset stripping of a vital resource when we need it most. How the worm turns. It is revolting.

This Bill is about the privatisation of an important State asset which should be retained as an asset for the benefit of the people. Much has been said by the Government that this is not a fire sale of the family silver but the sale of non-core assets needed to generate revenue for the State. This legislation, however, must be in place by the end of the year to make this sale go through. The European Commission has given the Government a deadline of 2014 to have this sale completed on foot of the EU gas directive which provides for the breaking up of gas suppliers across the EU.

Having a deadline has a serious impact on the potential price that can be achieved for this asset, however. The Government expects between €1 billion and €1.5 billion from the sale of Bord Gáis Energy but it has been reported that it could be less. I expect that to be the case because anyone looking to buy this company knows the troika and the European Commission have a gun to the Government’s head. Accordingly, any potential buyer can sit tight and run down the clock with the Government ending up having to accept a deal which might not be the best. Even if the €1.5 billion price tag is achieved, €750 million of that will go against writing off our debt. That equates to six weeks interest payments on the national debt. We are selling off this vital public asset for the benefit of six weeks interest. This does not make any difference to our debt. It will simply reduce it from €200.7 billion to €200 billion, a reduction of 0.4%. The sale of this asset will not make any impact or improve our debt position.

Why then is the sale of this asset happening? It is because the overall agenda in the European Union and the Government, although the Labour Party is part of it, is to use this crisis for the benefit of multinational energy companies to avail of a fire sale of state assets in Ireland, Greece and other programme countries. Angela Merkel was not joking when she said some years ago that we should not waste the opportunity of this crisis. This is not about making life better for European citizens but making opportunities for big business.

The Government also claims half of the sale price will go on job creation and a stimulus package. If we keep BGE in semi-State ownership, could it not have been used to train workers for the energy sector and be part of a recovery stimulus? No private sector company will be interested in pursuing such a programme when it takes over the company. Members have pointed out the example of the ESB which took on 400 apprentices. Bord Gáis could be doing that on behalf of the people. There are significant deficits in maintenance personnel for the renewable sector across Europe. In Ireland alone it is estimated there is a requirement for 10,000 jobs just to maintain existing renewable energy sites. Keeping Bord Gáis in semi-State ownership could give us the potential to train workers for this area. However, this will be all lost when this Bill is passed and the sale of BGE is completed.

If the company is left with the management of the transmission network and reliant on the subsidy of energy retail companies, what will happen to the extension of the transmission network? Extending the transmission network into the north west would have been a significant stimulus for Donegal, Letterkenny and Sligo. This will not happen after this sale goes through. For all these reasons, I believe this sale should be rejected as well as this legislation.

I was intrigued by Deputy Kevin Humphreys’s contribution earlier in which he started off by claiming the Government was forced into selling off Bord Gáis by the previous Government and that the Labour Party would not have sought to privatise vital services. He then went on to talk up the benefits of this privatisation. That is somewhat paradoxical.

Along with health and education, energy infrastructure is one of the critical areas of strategic interest. One cannot create economic wealth or build an industrial sector without a good energy infrastructure.

Although I generally do not agree with wholesale privatisation, I am not opposed to the sale of some State assets. However, I need to be convinced that problems will not be created down the line through a sale. It is not good enough to suggest there will be no consequences of the sale of BGE. If the company is left with just a network of pipeline but it has no income coming in, how will it maintain it? If we have a significant gas find, what is there to say it will not be exported for the higher price? There are many issues which could be potential strategic risks down the line. For example, there was the great sell-off of the railways in the UK under Margaret Thatcher. Essentially, the short-term financial gain from this sale has been more than wiped out by the long-term failure of the privatised rail network. In the case of Eircom, we lost a serious opportunity to be ahead in broadband provision, an infrastructure equally important as a decent road or rail system.

When the Minister for Communications, Energy and Natural Resources was leader of the Labour Party in opposition, he was a vocal opponent of privatisation, particularly in the case of Bord Gáis and its potential to lead to rising energy prices. Every Member is concerned about the impact of high energy prices not just on households but on the industrial sector.

Bord Gáis is one of the most profitable semi-State companies. It is in a position to borrow itself on foot of that profitability.

That, in itself, can stimulate the economy. It is unfair to say that selling this asset is the only way additional resources can be leveraged. The key issue is that it is of strategic importance that we have a secure energy source that we can use to our benefit and guarantee that we will have in terms of creating wealth through building an industrial sector. While I am not ideologically opposed to the sale of some State assets, to sell one as strategic as our energy supply has serious potential downsides which I am not sure are being considered properly.

I call Deputy Anthony Lawlor who has ten minutes.

I only have five. Deputy Tom Barry who is sharing time with me has 15. He comes from the energy sector in Cork. I am from a little county called Kildare. We only have water and a bit of turf.

It has wind turbines.

Is the Deputy putting in a turbine?

No, the Deputy is.

This is probably the first opportunity many of us here have to discuss the sale of a major State asset. The fascinating aspect of previous arguments is that people said we were selling a strategic asset. A strategic asset is an asset such as railways, gas or electricity lines. Unfortunately, we sold a strategic asset, our telecommunication lines, when Eircom was privatised several years ago. I have no problem with the sale of this asset. From a business perspective, from where I come, when one is in financial difficulty and the wolf is at the door, one must always examine actions one can take to keep the business going.

The money from the sale of this asset is crucial, but the most important question is how we will use the money to be generated from this sale. I welcome the negotiations that happened a couple of years ago when the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, in negotiations with the troika secured agreement that 50% of the proceeds from the sale of assets would be used for job creation in the country. That is the key point. Ireland's major asset is its people and the most important thing we can have for the people is work. That is why I hope the Minister will argue further that we allocate more of the funding for strategic job creation.

I always look at the small end of job creation. While it is lovely to see the capital projects going on such as the provision of road infrastructure at Newland's Cross, I am a firm believer in the small construction company that may have three or four people working for it and which needs to be helped in some way. If we can use the money to provide a stimulus for house improvements, extensions or improving the energy efficiency of houses through a tax rebate or by increasing grants, it will stimulate the construction industry, taking people who are long-term unemployed off the dole queues. It will also target the black economy. By giving sufficient tax relief or grants to people to invest in their own properties there is a real chance of doing this.

I have heard Sinn Féin speak before about not wanting to sell any national asset. Viridian, which may be one of the main bidders for this company, is a Northern Ireland-based company operating in the free market. It was part of Northern Ireland Electricity which was privatised a number of years ago, yet I have never heard anyone from Sinn Féin from the North of Ireland jumping up and down about re-nationalising Viridian. I find it extraordinarily strange that its Members can come in here and be highly critical of what the Minister is doing on the sale of this asset and not jump up and down in Northern Ireland where a former state asset was privatised. They are not talking about re-nationalising it again.

When was that done?

It was done in 2007, not long ago. Who was in power in Northern Ireland at the time? I do not have to elaborate any further on that matter. Whatever negotiations take place on the use of funds from the sale of this asset, the Minister should return to the troika to try to generate as much as possible that we could use on our major asset, namely, the people, to generate as many jobs as possible.

I welcome the opportunity to speak to this Bill. It is the first time we have had to sit down and discuss the sale of State assets. For many people this brings trepidation, but that is only natural. Any person in business will say selling an asset for long-term strategic gain is something that always happens. Our gain will be creating jobs which we must keep doing. We are doing it now.

I will bring Members back in time to when the Government came into office. Our first initiative was the jobs initiative, of which one of the larger points was the 9% VAT rate to stimulate tourism. It has worked very well. I am a great believer in planning and this initiative was brought forward early. People criticise this, but they always criticise things. Some would criticise the sun rising in the morning. The Gathering has happened. Our tourism numbers should not have dropped in the first place, but they are up again. All of this was planned; it was not accidental, and these initiatives cost money. JobBridge has been a very good success, although people criticise it and there have been issues with some employers. I have availed of it in my business and the quality of people coming through is excellent. With JobsPlus which came through last July a person who has been unemployed for three months can move to JobBridge and receive training. This is a great time for small businesses such as my own to build a loyal workforce that will see us through many tough and good times. A person who has been unemployed for three months can move to JobBridge with a sincere and decent company. He or she can move from that position to JobsPlus. A person participating in JobBridge receives an extra €50 per week with his or her unemployment assistance payment. As an employer, I would have no problem adding another €50 per week because the programme is of huge value to us. JobsPlus offers financial assistance to companies of up to €7,500 for a person who has been unemployed for a year. That means that a person can be unemployed for three months, join JobBridge and then JobsPlus. One can see a pattern of people returning to work, which is very important.

These programmes all need to be funded; nothing comes for free. That is why I am spending some time on it because these programmes are forgotten. For small businesses like my own, it gives one an extra person who goes out to look for more work and jobs are being created. I have done it. There is quiet confidence. I am not ignoring the issues, but there is no point in living with one's glass half empty. The figures show that there is job creation. Anyone can see this, although there are difficult sectors. I am in the agriculture sector which was described only a few years ago as a sunset industry - God help us. How times have changed.

Retention of a strategic distribution network is incredibly important, but selling the energy business is not critical.

We are already paying the highest prices for energy in Europe. There is no such thing as cheap fuel and I doubt that people will be queuing up for our dear energy. We need to get our targets on renewables in line. The future of energy generation will not be based on fossil fuels. We are junkies for fossil fuels because they are easy to use but we need to reduce our reliance on them. Several years ago, when I was promoting the development of our sugar industry into the production of both sugar and ethanol, a certain Deputy announced at a meeting that there was plenty of oil and that all we needed to do was to drill another hole in the ground. It was like throwing a cluster bomb into the middle of the meeting. How can we argue with someone who thinks in that way? The price of diesel fuel has increased continuously since then and, unfortunately, it is catching all of us. We have plenty of biomass in this country and using biomass and other renewable resources is a way of creating employment. It is a busy industry because it involves bulky materials. There is no one-size-fits-all solution to renewable resources because every area has to be considered separately. I acknowledge the productive work that members of the Joint Committee on Agriculture, Food and the Marine have done in this regard.

We must be strategic in investing in job creation because we cannot afford to lose the money. I use more fossil fuels than any other Member of this House and most other people in my county because I dry a large volume of grain. That is not a boast, because it pains me that I send 300,000 litres of diesel heating oil up to the sky every year. It is a dreadful way to use diesel fuel that can never be created again. Diesel gives us what we need for our industry but it also gives us high costs. The direct fire-drying of grain creates dioxin risks, about which we must be vigilant. I would like that risk to be removed altogether. Every summer I also face the risk that, for some reason, Egypt or one of those countries will go bananas - which is a funny word to use - and I will be unable to get any fuel. That would leave us in a dreadful situation. Someone has to pay for it. Some in this House take the attitude that we should renege on all our debts, but we would only get away with that once. It is not a solution, because businesses live on their reputation.

It is easy to be lazy on this matter because conventional fuels have been tried and tested. I ask the Minister to consider the renewable incentive scheme offered in the UK, which offers a financial rebate on a kilowatt-hour basis for industries and households replacing fossil fuels with renewable energies. It is, for example, possible to get a financial rebate for switching from oil to wood. I recognise the significant burden on our finances, but this scheme would be acceptable if it offered returns in the form of tax rebates. The people who install these expensive renewable systems will have money to spend because they will hopefully be earning extra money and they would appreciate a tax return as much as cash in hand. This scheme could generate significant employment. I have done a lot of work in this area and I think it will work over time if we put our heads together.

We must ensure any assets sold off are properly separated in order to avoid creating an unfair burden. The lifetime of the network also needs to be established to ensure charges levied on new users are fair to the new tender company and the taxpayer. In my game, maintenance is everything. Maintenance and replacement costs of existing networks need to be thoroughly examined and the extension of the network should be considered because we will have gas for some time to come and we need to factor it into the transfer planning. We are only too aware of the mess created by a previous Administration with the sale of Eircom. Flags were flown and shares were sold on the basis that we could get wealth by not earning it. Perhaps the assumption that one could get wealth without earning it was the start of the mess. One has to earn wealth, because it does not appear out of thin air. I was going to say wealth does not grow on trees but wealth can grow from trees if they are managed properly. Our broadband infrastructure has been curtailed since then. The concept is correct and simple but the detail needs to be worked out carefully.

The sale of State assets was initially prompted by the financial mismanagement of the State, but we have restored our reputation and moved on from that unfortunate point to discuss job creation. We would have to consider this issue even if the State was not dealing with a financial mess, because we would have to balance our books through job creation. There is an onus on all of us to work in this direction. All businesses sell assets when they consider them non-core.

I share a personal interest in renewable energy with the Minister for Health. Both of us espouse the virtues of wood gasification boilers. For the past five years I have heated my home with renewable energy. While the initial costs were significant, the system has already paid for itself. I get great satisfaction in being able to heat my home without forwarding money to the Arab states or elsewhere. It is a mentality. It requires more effort and sometimes it can be a hassle but it works very well. Sometimes one even finds that the heat levels are higher than one would expect because people turn up the dial too much. I challenge people to engage with renewable energy. It is easy to preach about the sale of State assets but people should live as they preach. Those who criticise our plans vociferously should ask themselves what they are doing in their small way to increase their use of renewable energies. Grant schemes are available for insulating houses and reducing waste. Every business has to reduce waste.

This Bill provides for the sale of State assets but, more important, it deals with job creation and a change in mentality. We need people to start thinking about energy use over the long term. In the early part of the last century my grandfather and his friends entered a ploughing match in County Carlow. They had a good day admiring others' ploughing skills and as they were leaving they noticed several of the new gadgets known as tractors in a corner of the field. As it was a considerable distance for some of the elderly men, they decided to head home instead of walking over to see them in action because they did not believe they would ever come into use. I assure Members that time stands still for nobody and renewable energy will come into use. We need to forge ahead by putting renewables at the forefront of what we do. We must also follow through with our educated young people in order to sell the new concepts in renewables worldwide.

I have no doubt about our ability to do this and I look forward to this discussion.

I thank the Ceann Comhairle for the opportunity to contribute to the debate. I also thank the Minister of State with responsibility for this area, Deputy O'Dowd, for being in the House. I know he works extremely hard. The Bill provides for the restructuring of Bord Gáis Éireann and allows the generation and retail part of the business to be separated from the network, which is not being sold and will remain in State ownership. The Bill will allow Bord Gáis to be split into two companies. One will take control of the physical gas network and another will take control of the energy business. Bord Gáis Energy employs a sizeable number of people and serves more than 825,000 gas and electricity customers. The programme for Government commits to a sale of State assets as a means of funding jobs and growth, which is to be welcomed. The sale of Bord Gáis Energy is also a commitment in the EU-IMF programme. The Government has initiated the sale process, which was formally launched in May 2013 and will be concluded by the end of the year.

The gas networks and the two gas interconnectors will be retained in State ownership as national strategic infrastructure. This is vital for the continued delivery of the nation's energy supplies. It is the lesser of two evils to sell the energy business rather than the network itself. Half of the proceeds from the sale of Bord Gáis will be allocated to fund employment-enhancing projects of a commercial nature. The other half will help to pay down the national debt. However, the Minister has confirmed the money will serve to underpin additional lending into Ireland by the European Investment Bank - for example, to support continued investment in job creation initiatives. More information on this would be appreciated. The sale of Bord Gáis is expected to generate €1.5 billion but some commentators estimate it will be closer to €1 billion. Concerns have been raised about the timing and that we may undersell a State asset. Other speakers referred to the debacle with Eircom, which was flipped and sold on for huge profits to the detriment of the taxpayer.

In advance of the sale it is important that the potential loss of jobs be fully assessed, and employees need to know and have a right to know where they stand and whether they have a future at the company after the sales process is completed. Many concerns have been raised by various parties. Sinn Féin states that the Government should invest to a greater extent in the energy market rather than offloading it onto the private sector, but the economic situation is not ideal. The Government does not want to sell State assets, but we must deal with the real world. Concerns have also been raised about significant job losses, and I ask the Minister of State to refer to this. There are also concerns that control of the water system could be affected by the change. What regulations will be put in place to monitor the new owner and ensure water charges are not increased year on year and hospitals and schools are not charged for their water usage? The Government has been accused of lacking the courage to hold onto the assets, but the national accounts are in a difficult situation.

From a consumer's perspective, what effect will the sale have on gas prices? It will be preceded by the deregulation of gas prices charged by Bord Gáis, which means the new owners will be able to charge whatever they want for gas. We have seen increases from the ESB and Eircom.

It is a regulated sector.

It will not be an issue.

In general, there is an issue with increases, particularly the standing charges included in bills. Deputies receive many queries about the fixed charges included in bills over which customers have no control, particularly from hard-pressed people.

Media reports have stated that Bord Gáis staff could receive a potential windfall of between €40,000 and €60,000 depending on the sale price, which is to be welcomed from the point of view of long-standing employees. It has also been reported that this is not finalised, as negotiations are continuing between the unions and the Government over how the employees' stake will be treated once the company is split in two. I ask the Minister of State to comment on this. The Bill only deals with the technicalities of selling Bord Gáis Energy and does not address wider policy issues, including consumer protection.

A portion of the proceeds of the sale will be used to fund employment-enhancing projects. What projects does the Government have in mind? Has any decision been made on where the money will be allocated? Has any estimate been made of the number of people for whom these projects will be available to help them get back to work? For what other areas will the money be earmarked?

A positive aspect of the sale is that the money will be ring-fenced and will be invested in Irish jobs and the economy. It has been suggested that some of the money could be used to fund the national broadband plan. Broadband is a major reason Ireland has lost competitiveness as compared with other countries, particularly because broadband can be haphazard in rural areas. Will the Minister of State comment on this? The Government published a plan in August which stated that significant investment would be made in broadband and that a review was under way to determine the level of Government involvement needed and the areas that may need to be targeted with State-led investment. Is broadband an area which could benefit from this asset sale?

I welcome the opportunity to speak on the Bill. I congratulate Deputy Flanagan on his maiden speech in the new allocated slot for Others. We hope to use it frequently.

The issue of broadband is close to my heart and I am surprised no mention of Aurora Telecom, which is owned by Bord Gáis, is made in the legislation. It owns a huge fibre-optic cable network throughout the country and is a major strategic asset. I hope we can revisit it before the legislation is passed. It is my firm belief that we need to knock heads together quickly with regard to the fact that we have five State-owned public fibre networks but they are not connected to one another. If they were connected we would have a half-decent broadband network.

The onus and responsibility lies on the Minister of State's Department to get all of those people around the table and ensure there is one semi-State company that can wholesale the fibre network. I would hope that fibre network remains in public ownership, along with Aurora Telecom. It is an issue we will be debating later this year with another piece of promised legislation, and I hope this can be incorporated into that forthcoming legislation.

I welcome the opportunity to speak on this Bill and I do not have a difficulty in principle with where the Government is going in this regard. I have a number of concerns, some of which I will raise today and some of which I hope to raise at committee. However, I do not disagree with the principle because the objective behind it is to generate money that we can invest back into jobs.

One issue that came to light in recent days, which I hope the Minister of State, Deputy O'Dowd, can take up, is an initiative which is in place across the Border in Northern Ireland and in Britain. The initiative provides interest-free business loans where a company is investing in new equipment which has low carbon emissions. This gives a huge incentive to businesses to reduce their carbon footprint and increase their efficiency. I have been talking recently to one energy user in my constituency, a business which employs 60 people. It could increase its job numbers by ten tomorrow morning if it could have access to a similar loan scheme on this side of the Border. That is just one business. There would be a huge knock-on impact, not just in regard to job creation but also in regard to carbon emissions. As we know, carbon taxes are increasing incrementally, which is a further cost on doing business in this country. Pretty much every country in Europe except this jurisdiction has a similar mechanism. Many businesses, when they go abroad or are dealing with companies that sell such equipment, cannot understand why we have not got an incentive scheme like this here. I urge the Minister of State to look at the 0% business loans scheme for carbon reduction that is in place in the UK, to go across the Border to see what is happening and to take that initiative on board.

The main reason I want to speak on the Bill is that I believe we need to see a clear plan for the investment that is to be generated from the disposal of this asset. Much, or at least some, of that investment needs to be ring-fenced to invest back into infrastructure, in particular gas infrastructure. I hope the Government will ensure, before the passage of this legislation, that a portion of the dividend from the sale of Bord Gáis Éireann is ring-fenced specifically for the expansion of the gas network. I mention this on behalf of some of my colleagues, including Deputies Joe O'Reilly and Michael Colreavy, who come from a part of the country which does not have access to gas - the north west.

If one looks at the Bord Gáis Éireann network, one will see a big vacant area in the north west where there is no access to gas. In my own constituency, when an assessment was carried out, the town of Carrick-on-Shannon was marginally outside the requirements for getting gas. It would save businesses in Carrick-on-Shannon €7 million every year if gas was available in that town. Consider the boost that would give employment in the town of Carrick-on-Shannon alone. It would have a similar impact in Sligo and, again in my own constituency, it would save €2.5 million each year for businesses in Ballaghaderreen, €200,000 for businesses in Boyle, €1 million for businesses in Roscommon town and some €125,000 for businesses in Strokestown. That is a direct incentive to maintain employment in those regions and also to create new employment.

At the moment, thankfully, some 625 jobs a week are being created, and the Government is to be commended on that - well done to it. The difficulty, however, is that they are being created on the east coast, particularly around Dublin. All one has to do is go outside of this building any day of the week we are here, such as a Tuesday or Wednesday night, and one will see that this city is hopping with young people who are in employment. That is great to see but, sadly, when one goes outside of the Dublin catchment area, one sees that every other town in the country is literally being decimated. This roll-out of the gas network would help to equalise that and would help to maintain existing jobs in the provincial towns across the north west, and it would be an added incentive with regard to bringing new investment to those regions.

It is of the utmost importance that part of the funding from the disposal of this company is specifically ring-fenced for that purpose. If we could get gas into the north west, it would save industrial and commercial users there about €17 million every single year, it would save domestic users about €5 million every year and, based on a carbon tax of €20 a tonne, it would save a further €1.2 million every year.

The difficulty at present is that the criteria laid out by Bord Gáis Éireann through the Commission for Energy Regulation, CER, do not take issues such as those I have articulated into account. I believe these issues are very important, in particular the impact this has on regional development and on the viability of businesses. It is about ensuring equality of treatment across the country and about the impact of emissions on those businesses and those regions. These issues are not taken into account. CER has to try to balance the issue of, on the one hand, the competitiveness of the gas market and, on the other, the maintenance and rollout of the grid. Sadly, issues in regard to regional development are not a concern of CER, which is a fundamental flaw. This should form part of the weighting and part of the consideration of any assessment. Even a small change would, literally overnight, make Carrick-on-Shannon viable for a gas connection and, of course, a number of other towns would benefit from that.

I urge the Minister of State to look at the legislation and draft an amendment that makes provision for the issues I raise. It is wrong this is happening to our part of the country, which is actually supplying the energy to the country as a whole. For example, we have what is happening off the coast of Mayo, which we all welcome, and we have a huge debate in my region at present on the issue of fracking. While I do not know what will happen in that regard, we want to have natural gas in our region now to sustain existing jobs. I have raised this issue on numerous occasions in the House with the Minister, Deputy Bruton, in regard to the MBNA jobs in Carrick-on-Shannon. Straight away, it would make that businesses viable in the long term if we could get a concession in this regard.

The final point I want to make is not just in regard to Bord Gáis Éireann but to all of the utility providers and is based on my own experience of electricity providers. The electricity providers, by law, have to take a meter reading twice a year, as I understand it. However, the electricity bill comes out every second month and, between meter readings, the bill is calculated on an estimate. I personally had a meter reading at the start of the winter and one after the winter, but it was an estimated bill over the winter period and I received an astronomical bill. While that is grand for me as I am a Member of Dáil Éireann, there are many families who are struggling to make ends meet. Something needs to be done to ensure they are not receiving massive, prohibitive bills that are putting them in arrears and forcing them into a situation where they cannot pay those bills.

It merits brief repetition that the Bill facilitates the splitting of Bord Gáis Energy and Bord Gáis Networks and allows for the sale of Bord Gáis Energy. The sale arises from what is called the troika deal, or the deal between this country and the EU-IMF, and it is a condition of that deal that we have a sale of State assets.

We will certainly seek to get the best deal possible for the country, in the context of the concession we obtained that a portion of the moneys can be retained, but the sale is not an optional extra. It is a condition of the deal we agreed with the troika.

To the Members who spoke against these proposals from an ideological or any other perspective, I challenge them to produce a menu of alternative fund-raising options for providing the moneys that must be repaid as part of the bailout agreement. The reality is that we made a commitment under that agreement, which was sadly necessary to keep our public services running, that part of the moneys to be paid back will be raised through the sale of State assets. The onus, therefore, is on Members on the Opposition benches - notably the Independent benches - to come up with alternative money-raising measures. If the assets are not sold, we must offer the troika an alternative means of raising the funds, most likely through taxation. I challenge Deputies opposite to present their proposals in this regard.

The Government won an enormous concession in securing the agreement of the troika that a portion of the proceeds of the sale of the State assets will be retained by the State for the purposes of job creation. It would be churlish of anybody on the other side of the House to refuse to acknowledge the magnitude of that achievement. It is a major concession that was won on the back of competent Government performances, concentrated diplomacy and an upping of Ireland's game internationally. It is a great tribute to the relevant Ministers and we must use it wisely. As I said, the sale of State assets is compulsory under the bailout deal which followed years of wanton wastage of public moneys. Within that deal, however, we have won the right to use a substantial portion of the moneys for job creation.

In the case of Bord Gáis, it is important to note that the network will remain in State ownership. We have learned something, after all, from the sale of Eircom. There was some perspicacity in the reference by a Member opposite to the importance of the maintenance of the network. It is a fair point. The Minister of State, Deputy Fergus O'Dowd, is a person of tremendous ability and I know he will do his best in this regard. I urge him to work with the Minister, Deputy Pat Rabbitte, to secure a commitment from the eventual purchaser of Bord Gáis Energy in regard to the maintenance of the network while it remains in State ownership. There should be some type of contribution or undertaking sought in the context of the sale. It is not an unreasonable proposition that there be such a linkage.

Part 3 of the Bill offers legislative protection to the 1,000 employees of Bord Gáis Energy as part of any sale. That is an important provision of which we should be proud.

The profitability of Bord Gáis Energy has increased from €44.3 million in 2011 to €79.4 million in 2012. That makes it an attractive prospect and offers the likelihood that it will make in the region of €1 billion to €1.5 billion. Despite the degree of pessimism expressed by my good friend and erudite colleague, Deputy Terence Flanagan, I am confident we will achieve close to the higher figure on the basis of the company's profitability. I agree with Deputy Jerry Buttimer's well articulated point that there should be no increase in the retail price of gas in the context of those profit levels. While acknowledging the primacy of our system of independent regulation, I echo his point that this issue does merit closer scrutiny by the Oireachtas.

We must create sustainable jobs from the portion of money to be retained by the State from the sale of Bord Gáis Energy. There should be an emphasis on shovel-ready projects that are not merely follies, to use an ancient historical term, but which actually create enduring employment. I am sure the Minister and his civil servants will devise a range of options in this regard, but I take this opportunity to recommend suggestions of my own. There is great scope in the area of energy conservation, with potential, for example, for a national insulation programme. Retrofitting grants for owners of older houses are an option that is line with the desired focus on green energy. It is also worth examining options such as micro-generators and community and private wind farms. Community wind farms are a particularly interesting concept, and I understand the Minister opened one the other day in the midlands. Blanket provision of high-speed broadband throughout the country is a vital requirement which certainly merits consideration in the context of these moneys. Gas exploration is another area for consideration. I also agree with Deputy Denis Naughten's point that extending the gas network would offer the advantage of being labour intensive while also having a positive impact for domestic industry and in terms of attracting inward investment.

The Irish Presidency won a significant success in securing in the region of €6 billion to €8 billion from the multi-annual financial framework for the youth guarantee fund. Under the scheme, young people aged between 18 and 25 who are unemployed for more than four months will now receive critical intervention and support in the form of training and so on. The experience in Finland and elsewhere shows that such schemes can have a significant impact in terms of youth unemployment. I other speakers in applauding the creation of 625 jobs per week in this country. Of course it is not enough, but it is nevertheless an enormous achievement in the context of the loss of more than 275,000 jobs in the three years before we came into government. The country was effectively in a position that was beyond bankruptcy. This and other signs of a revitalised economy are indeed to be applauded.

A major difficulty that must be addressed is that because so many construction companies have collapsed, there is no opportunity for young people to do apprenticeships, as I have found through my constituency work, in carpentry, plumbing, electrics and so on. There are simply no local contractors to take them on. In the context of the moneys to be retained by the State from the sale of State assets, the youth guarantee funding and the Government's broader job creation initiatives, might consideration be given to creating simulated environments in third level settings which would allow young people to complete their apprenticeships? In so far as is possible, such training should include work that activities that are constructive and have a long-term sustainability, such as constructing new schools, for instance. That would be all the better. However, even if that is not possible and the things they build must be destroyed, there would nevertheless be merit in such a scheme. We cannot have young people denied apprenticeships because of the dearth of contracting employers. It is a real issue in my constituency and, I am sure, throughout the country.

Another problem is that the vocational sector in this country has became excessively academic over the years. We went over the top in trying to push training into the third level sector instead of focusing on what could be done in secondary or community schools in local parishes. The result is that we have lost much of the vocational ethos and dimension of second level education, an aspect in which we contrast greatly with Germany, for example. It never does one good to ignore what is being done in that country, given its economic success. The vocational dimension has been retained there; likewise it retained its manufacturing industry at a time when that industry was being destroyed in Britain. There is much to consider in that.

In the context of spending these moneys, the Minister should look at opportunities for young people to develop traditional apprenticeships. I commend the job creation considerations to the Minister and I applaud the achievement of the Government in securing discretion for us in that respect. I applaud the wisdom of maintaining the networks in public ownership and I commend the sale once we are using it strategically. Whether I commend it or not, there is no escaping the reality that we owe the truth to the public - the taxpayers who fund this operation and who own this House, the people's assembly. The truth is that a sovereign agreement was entered into by this country in the bailout. The nonsense talk that we can avoid it is not sustainable.

I join in the welcome for the commitment to unbundle Bord Gáis, remove the energy generation aspect of the business and sell it in the public interest, as eloquently described by Deputy Joe O'Reilly, for job creation and badly-needed investment in strategic infrastructure, such as water, broadband and energy. Not too long ago, Deputy Colreavy's party tabled a motion suggesting that money should be obtained from the European Investment Bank and the National Pensions Reserve Fund to create a stimulus package for jobs. Everyone in these Houses would like to see such a package and this is a real way to do so. We are on course to do it and, from that point of view, it should be welcomed. The budget of the Department of Communications, Energy and Natural Resources is paltry compared to its potential to build our way out of this economic turmoil. The jobs of the future are in that Department but the budget does not match it. We know why that is and the role of the troika and other elements has already been explained.

I understand why there can be much emotive language about privatisation. Considering the situation of energy generation and supply, whether gas or electricity, having semi-state companies in competition with one another in this realm is not good for the Government as a stakeholder. This means that ESB, Bord Gáis, Coillte and Bord na Móna are at the same job of energy generation and, in particular, electricity generation. We witness this on the supply side when they are competing for customers. These companies spend millions on marketing campaigns and paying people to knock on doors, with Electric Ireland asking consumers to move from Bord Gáis and Bord Gáis asking people to move from Electric Ireland. A number of years ago, Bord Gáis paid €2.4 million for the naming rights to the Bord Gáis Energy Theatre. All of this is reducing dividends to the taxpayer and the shareholder, the Government, and the consumers' interest on the generation side is not best served by the State competing. We should not confuse the sale of Bord Gáis with the sale of a natural resource. Some 98% of our gas, on average, is imported. Bord Gáis takes in a commodity and converts it into energy. Private companies in the market are doing the same thing so it is not a Holy Grail as far as I am concerned.

To get the best value, the State should not be competing with itself. That position is borne out in the McCarthy report, which points to another State company, ESB, which is in control of more than 60% of generation. This introduces complications to the energy market, with energy rules requiring adjustments and equalisation exercises to reduce its generation share to 40%. This all comes at a cost. There is a problem with competition on the energy generation side. The best interests of taxpayers, consumers and the State mean that this must be addressed. It is well documented but it does not grab the headlines like privatisation does.

Eircom has been mentioned many times in the House. I understand why, because it was a disaster. Adding Government involvement means it is like oil on a bad fire. We must be more discerning in respect of what happened at Eircom. A private company purchased Eircom, stripped assets and loaded the balance sheet with debt. When the generation side of Bord Gáis is being sold, we must get a company that is prepared to grow and invest in the business and compete in the Irish market in the interests of the consumer. If we learn nothing else from what happened at Eircom, we must learn that that is a prerequisite. It can be done right.

I am perplexed about the following matter and perhaps the Minister of State, Deputy O'Dowd, can provide an answer. It is generally agreed that there are benefits to competition. The wisdom is that the consumer is best served when no one has a dominant position and where no company has a market share in excess of 40%. ESB has in excess of 60% of generation and Bord Gáis has 50% of the gas market. My bewilderment arises from the decision of the regulator to deregulate ESB at 60% and to deregulate Bord Gáis at 55%. Once the market share of each company drops below these levels, the companies can control their own prices. In excess of it, the energy regulator controls the prices. That does not fit with common sense. There is a lot of talk about the burden on consumers in respect of energy prices, but the decision of the regulator does not help consumers. I would like to know why the regulator made such a decision.

I understand that matters will be brought to a conclusion in six minutes. However, I will do my best to address a major subject such as this in six minutes. As already indicated by speakers, and most recently by Deputy Michelle Mulherin, the importance and cost of energy is a serious issue in the context of our economic recovery and performance. The points the Deputy made are relevant in the present context. For example, the emphasis now is on privatisation. I am not a great supporter of privatisation if the same service can be delivered by the public sector. Unfortunately, in times past, there were flaws in both systems and we must now start again.

Eircom is a classic example. There is a lot of emphasis now on not-for-profit companies. Public companies were only required to deliver a service, to break even and to provide sufficiently for future infrastructural requirements. That did not always happen and we had problems. We now face a situation that requires careful monitoring. With a multiplicity of companies, all in the same business of providing energy at one level or another and at some cost or another, the tendency is for the regulator to intervene and to regulate the price in such a way as to create difficulties for the consumer. This may be an issue we will have to revisit. From past experience, in my lifetime in this House we saw a change in the banking system to bigger banking institutions, the removal of smaller institutions and the amalgamation of others.

Now there is a change in emphasis again. The large corporations are no longer regarded as fit for purpose and we are going to change back to the old system, having regard to the experiences we have had. That is interesting because we have the old system already in the energy sector, but the question then arises of whether we can achieve the level of efficiency required to deliver the service by a multiplicity of companies with individual administrative costs right across the board which the consumer must meet at the end of the day. That is the issue that needs to be examined in the future.

I have often commented on regulation in the past. It is harsh for the consumers to be told with regret that the regulator has decided that their gas or electricity bills are going up. It is a serious issue. There were many occasions in the past when we in this House had to comment on the regulatory system and how it affects the consumer. Let us not forget for one moment that these issues never go away.

The other pressing issue is economic recovery. We must utilise our energy system in every way possible to assist economic recovery. That means, in the case of exploration, generation and transmission, that we must ensure we arrive at a juncture at which we achieve the maximum efficiency so that in the course of our thrust towards economic recovery we are competitive with all others throughout Europe, because that is where our market is. We must be competitive on production and administrative costs with our colleagues throughout Europe who, in turn, are selling their product to their consumers. In fact, in the past we have not fared all that well in that area and it is an issue with which we must deal in some shape or form in the future.

Energy is most important to economic development and performance. The cost of energy is equally important, as it is a major input. There is a tendency nowadays for us to become concerned about the environmental impact of many of our energy providers, whether it be ESB generation, wind farms, gas exploration or whatever. There is a need to do more in terms of bringing information to the public that is reassuring and of a sufficient level to enable people to make an objective decision about its attitude to what we are trying to do. There is nothing to be gained from sticking our heads in the sand and pretending that we object forever to the promotion of our energy sector. We must develop our energy sector quickly. We must get our energy into the grid and to the consumer and we must avail of the economic benefits accruing therefrom.

I thank all of the Members who spoke and who raised important and constructive points. I noted the presence of Sinn Féin Member throughout the debate and I want to acknowledge that. I acknowledge the important points raised by that party and others. The Department officials who are here with me have taken note of all the significant points that were made and any questions that I cannot or will not have time to answer today will be responded to by the Minister, Deputy Rabbitte, on Committee Stage.

There are a couples of points I want to clarify. The first is the question of why the company is being sold. In November 2010 the memorandum of understanding agreed between the then Government and the EU-IMF - that is, the bailout programme - committed to setting appropriate targets for the possible privatisation of State-owned assets. The details were to be informed by the recommendations of an bord snip nua, a review which was then ongoing. The troika initially mentioned a figure of €5 billion at its first meeting with the new Government, and all of that money was to pay down debt. The figure committed to in the programme for Government was €2 billion and, following further discussion, a figure of €3 billion was agreed after the troika agreed that a proportion of the proceeds would go towards reinvestment for job creation. Subsequently, the current programme of asset disposal was agreed with the troika.

I agree with all the Members who said that Bord Gáis Éireann is a valuable State company. It is a dynamic, successful company which has delivered real benefits for Irish consumers and it has invested and grown in the competitive electricity generation and supply business. A number of Members also underscored the importance of avoiding a fire sale. There will be no fire sale. I can confirm that this accords with our intention. The position we held in negotiations with the troika is that there will be no fire sale, that assets will be sold on acceptable terms and at a price that achieves fair value, and that key strategic assets, such as our electricity and gas transmission and distribution systems, are not for sale and will be retained in State ownership. There is no question of key transmission assets being sold. Neither is there any question, as raised by a number of Members, that Irish Water will ever be privatised. I want to assure all of the Members in the House that such will be the situation. Clearly, some of that arises from the lessons learned by the sale of Telecom Éireann, when the network itself was sold, which was a disastrous decision made by a previous Government.

In his opening remarks, the Minister, Deputy Rabbitte stated the Government's "overriding objectives of Irish energy policy remain security of supply, competitiveness and sustainability." These objectives resonate well with the proposal within this Bill. The current reality is that we are heavily dependent on gas for electricity generation. This Bill will support Bord Gáis Éireann's strategic gas network business and will ensure absolutely that it remains in State ownership. The Bill specifically provides that Bord Gáis Éireann may not sell the gas network subsidiary and it is vitally important to remember that this is the intention of the Bill.

Finally, I want to state that energy is a vital issue for the country and the community. There are many controversies about energy infrastructure. There is controversy about hydraulic fracturing. There are controversies about oil and gas. Everybody agrees it is critical that there be competition in energy. When John Murphy turns on his cooker or light switch, it does not matter to him who is making the profit on the gas. What he wants is to have it as cheap as possible for him. If we have an open competitive market, the regulator will decide the price. It is the regulator who decides the price of the energy. It is not the case that a company, whether private or public, can do whatever it wants. It cannot and it will not, and that is why the regulator is there.

I affirm that Aurora Telecom will remain with Bord Gáis Networks in State ownership. That company is not being sold. A question about industrial relations issues was raised by Sinn Féin. The party made a balanced contribution in that regard. I affirm that negotiations on industrial relations issues are ongoing between the Bord Gáis Éireann management team and the group of unions and no final decisions have been taken, but I want to assure Members that the Bord Gáis Éireann pension scheme remains fully funded.

I ask Members to submit their amendments, if this Bill is passed today, as quickly as possible for Committee Stage and I thank Members for their contributions.

Question put:
The Dáil divided: Tá, 60; Níl, 37.

  • Bannon, James.
  • Barry, Tom.
  • Burton, Joan.
  • Buttimer, Jerry.
  • Byrne, Catherine.
  • Byrne, Eric.
  • Collins, Áine.
  • Conway, Ciara.
  • Coonan, Noel.
  • Costello, Joe.
  • Daly, Jim.
  • Doherty, Regina.
  • Donohoe, Paschal.
  • Dowds, Robert.
  • Durkan, Bernard J.
  • English, Damien.
  • Farrell, Alan.
  • Feighan, Frank.
  • Ferris, Anne.
  • Fitzgerald, Frances.
  • Fitzpatrick, Peter.
  • Flanagan, Charles.
  • Flanagan, Terence.
  • Griffin, Brendan.
  • Hannigan, Dominic.
  • Harrington, Noel.
  • Harris, Simon.
  • Heydon, Martin.
  • Hogan, Phil.
  • Humphreys, Kevin.
  • Keating, Derek.
  • Kehoe, Paul.
  • Kenny, Seán.
  • Kyne, Seán.
  • Lawlor, Anthony.
  • Lyons, John.
  • McLoughlin, Tony.
  • Maloney, Eamonn.
  • Mitchell O'Connor, Mary.
  • Mulherin, Michelle.
  • Murphy, Dara.
  • Murphy, Eoghan.
  • Neville, Dan.
  • Nolan, Derek.
  • Ó Ríordáin, Aodhán.
  • O'Donnell, Kieran.
  • O'Donovan, Patrick.
  • O'Dowd, Fergus.
  • O'Reilly, Joe.
  • Phelan, Ann.
  • Reilly, James.
  • Ring, Michael.
  • Ryan, Brendan.
  • Spring, Arthur.
  • Stagg, Emmet.
  • Stanton, David.
  • Tuffy, Joanna.
  • Varadkar, Leo.
  • Wall, Jack.
  • White, Alex.


  • Adams, Gerry.
  • Boyd Barrett, Richard.
  • Broughan, Thomas P.
  • Calleary, Dara.
  • Collins, Joan.
  • Colreavy, Michael.
  • Cowen, Barry.
  • Crowe, Seán.
  • Daly, Clare.
  • Doherty, Pearse.
  • Donnelly, Stephen S.
  • Dooley, Timmy.
  • Fleming, Tom.
  • Healy, Seamus.
  • Healy-Rae, Michael.
  • Kelleher, Billy.
  • Kitt, Michael P.
  • Mac Lochlainn, Pádraig.
  • McDonald, Mary Lou.
  • McGrath, Finian.
  • McLellan, Sandra.
  • Moynihan, Michael.
  • Murphy, Catherine.
  • Nulty, Patrick.
  • Ó Caoláin, Caoimhghín.
  • Ó Cuív, Éamon.
  • Ó Fearghaíl, Seán.
  • Ó Snodaigh, Aengus.
  • O'Sullivan, Maureen.
  • Pringle, Thomas.
  • Ross, Shane.
  • Shortall, Róisín.
  • Smith, Brendan.
  • Stanley, Brian.
  • Tóibín, Peadar.
  • Troy, Robert.
  • Wallace, Mick.
Tellers: Tá, Deputies Emmet Stagg and Paul Kehoe; Níl, Deputies Aengus Ó Snodaigh and Seán Ó Fearghaíl.
Question declared carried.