Vol. 837 No. 3
1. Deputy Sean Fleming asked the Minister for Public Expenditure and Reform the proceeds received to date from the sale of State assets; the number of jobs created from the investment of these proceeds; and if he will make a statement on the matter. [16918/14]
2. Deputy Joe Higgins asked the Minister for Public Expenditure and Reform the State assets that have been privatised under the terms of the troika memorandum of understanding; the funds that were realised by the State from these privatisations; where these funds have gone; and if he will make a statement on the matter. [16916/14]
4. Deputy Joe Higgins asked the Minister for Public Expenditure and Reform the assets the Government intends to privatise under the terms of the troika memorandum of understanding; the estimated amounts to be realised; and if he will make a statement on the matter. [16917/14]
I wish to ask the Minister for Public Expenditure and Reform about the proceeds received to date from the sale of State assets, such as those from Bord Gáis, the ESB, the national lottery and Irish Life, in addition to some financial shares that were held by the State, and the number of jobs created from investment of the proceeds.
I propose to take Questions Nos. 1, 2 and 4 together.
The House will be aware from my announcement in February 2012 of the shape and scale of the State asset disposal programme that is being pursued. The asset disposal programme agreed at that time by the Government consists of the sale of Bord Gáis Éireann's energy business, not including its gas transmission and distribution systems or the two gas interconnectors, which will remain in State ownership; the sale of some of the ESB's non-strategic power generation capacity; and the disposal of the State's remaining shareholding in Aer Lingus, when market conditions are favourable in circumstances that accord with Government transport policy and at an acceptable price to the Government. After further consideration, and having ruled out the sale of Coillte's land holdings, the Government determined that a concession for harvesting rights to Coillte forests would be proposed for sale. I am pleased to report that significant progress has been made to date in this area.
On 24 March, Bord Gáis Éireann entered a definitive agreement to sell the Bord Gáis Energy business to a consortium comprising Centrica plc, Brookfield Renewable Energy Partners LP and iCON Infrastructure on the basis of an enterprise value of €1.1 billion. The final sale price and net receipts to the State will be subject to adjustments at completion for certain balance sheet items, such as net debt and working capital, and the level of certain of Bord Gáis Energy's earnings from 1 January 2014 to the completion of the transaction, the value of which will remain with Bord Gáis Energy. The board of BGE will then begin paying special dividends to the Exchequer, commencing immediately following the completion of the transaction, as funds are both available and required. It is currently expected that this transaction will be completed in the second quarter of this year.
The ESB announced in October 2012 that it would sell some of its non-strategic power generation assets on a phased basis, commencing last year. In February 2013, the ESB announced its intention to sell its 50% shareholding in each of its international tolling plants, Marchwood in the UK and Bizkaia Energia in the Basque country, and in October it announced that it is to sell its two peat stations, West Offaly Power and Lough Ree Power. The ESB completed the disposal of its interest in Marchwood last November for a price that was in excess of expectations. Approximately €153 million in dividends accrued to the Exchequer in January 2014 as a result. It is expected that the sale of Bizkaia Energia will be completed very shortly.
With regard to the two peat stations, the ESB is proposing to prospective buyers an arrangement under which it will continue to operate and maintain the stations, with all existing staff.
The ESB has appointed financial and legal advisers to perform due diligence on this transaction. I am informed that this process is likely to conclude this year.
In regard to Coillte, the Government decided last June that it was not the appropriate time to proceed with the proposed sale of harvesting rights and that instead there should be a focus on restructuring of Coillte overseen by NewERA and the relevant stakeholder Departments. Work to give effect to this decision is proceeding. An evaluation of how to give effect to a beneficial merger of Coillte and Bord na Móna in the context of the programme for Government commitment to create a streamlined and refocused commercial State company in the bio-energy and forestry sectors is also being finalised.
Ryanair's 2012 bid for Aer Lingus, the subsequent investigations by the European Commission and the Competition Commission in the United Kingdom and the court cases being taken by Ryanair have complicated the planned disposal of the State's stake in the airline. However, the Government remains open to the sale of this stake when market conditions are favourable, a price acceptable to the Government can be achieved and, importantly, in circumstances that accord with Government transport policy. As I have informed the House on a number of occasions, the funds realised from asset disposals will, in one form or another, go towards supporting job creating initiatives in the economy. Some €110 million of the proceeds has already been factored into the budgetary figures for 2014. This is being used to meet up-front Exchequer costs associated with the new PPP programme. The Exchequer stimulus package which I announced last year will be encompassed in these moneys.
I have already indicated that additional capital investment has been authorised to deal with the flooding crisis and the determination of the amount of money available for further stimulus investment will be considered in this context. In addition, a review of the public capital programme, led by my Department, has recently commenced. This review will culminate in the setting of the Government's capital investment framework for the next five years. It is my intention that the use of further proceeds arising from the sale of assets over the course of the next few years will be considered as part of the review. The jobs impact of this investment is dependent on how the proceeds are reinvested. A 2009 survey, carried out by the Department of Finance, found that the labour intensity of capital projects generally fell within the range of eight to 12 jobs for every €1 million invested. While this estimate for labour intensity is used as a general rule of thumb, the exact employment impact varies from project to project, as different types of public construction project have different levels of labour intensity. For example, smaller scale projects tend to be more labour intensive than major national infrastructural projects. To get the maximum jobs impact from the reinvestment of proceeds, the main focus will be on such small scale and labour intensive works.
The essence of my question is the number of jobs created, but the Minister has not responded to it. While he provided a good summary in terms of the planned disposals and expected receipts, he did not provide information on the number of jobs created. He speculated about how many jobs could be created if €1 million was spent here or there. It should be possible for him to provide the information sought on a project by project basis. The task of doing so is not as difficult as his officials might pretend. The new PPP projects are specific and few in number. We will be lucky to have a few additional ones during the course of the year. I am sure that, as part of the tendering process, labour, materials and so on are factored in. It should be easy to also factor in job creation figures.
I agree with the Deputy that the main dividend of the sale of State assets is having the capacity to reinvest in the economy. He has been critical of the reduction in the general capital programme, but we need investment. I have worked hard to find alternative sources of money to invest. I cannot provide a jobs tot because I will not have the money until this year. I announced and authorised the spending of money in last year's budget in the expectation that money would come on stream this year. I did so because I did not want to delay the advance preparation of PPPs. For example, to allow PPPs to hit the ground running, €25 million is being spent on advance works at Grangegorman. The same is happening in respect of road projects. I hope the second largest road project, the Tuam project, will be signed off on shortly. It will not be until I have sight of the total volume of money available and its phasing that I can given more information. As I have explained to the House previously, there are Government accounting issues in the phasing of the payment of money.
I draw the Minister's attention to a specific issue within the OPW which also comes within his remit. On 27 March the Department of Public Expenditure and Reform, through the Office of Public Works, sold approximately six or seven former Garda stations, from which the yield was €673,000. In response to a parliamentary question to the Minister recently on what the proceeds would be used for, he said half of the proceeds would go to the Department of Public Expenditure and Reform and that the other half would form part of the OPW's budget for next year. Moneys accruing from the sale of Garda stations should be reinvested in Garda resources such as vehicles and manpower. It is important that this money be reinvested in front-line services and the recruitment of more gardaí.
The Deputy will be aware that only a small amount of money is accruing from the sale of Garda stations because, in many instances, closed Garda stations are being subsumed for community use which I am encouraging, rather than trying to extract commercial value from every Garda station. That is a good and proper approach to take in that regard. Separate from any money that will accrue from the sale of properties, Garda recruitment has recommenced this year for the first time in many years and I look forward to a significant intake of gardaí into the college in Templemore during 2014. Also, given the concern about the aging profile of some Garda vehicles, more than €9 million has been allocated for this purpose.
I would first like to put a general proposition to the Minister. Does he agree that the sale of publicly owned assets was and is an extremely short-sighted policy, one which was driven by the ruthless neoliberal outlook? Does he also agree that the troika's forcing of the people to sell their assets in order to pay bankers and bondholders debts, for which they had no responsibility, was a criminal abuse economically of the people?
I asked the Minister in my second question what funds had been realised by the State from these privatisations and where the funds had gone, but he did not answer that question comprehensively. Perhaps he might do so now.
With regard to the privatisation of Bord Gáis Energy, will the Minister set out the rationale for what has been agreed to in this regard? Will he also comment on an article in last Sunday's Sunday Business Post which stated the enterprise value of Bord Gáis Energy had been sold for €210 million, of which €60 million would have been available in the normal course of the sale of that section of the company, and that the book of 680,000 customers was valued at €110 million, leaving €40 million for the Whitegate power plant which was built a few years ago for €400 million. Will the Minister explain the incredible divergence?
The Deputy has asked a number of questions. On his first question, I am not, as I have stated previously, an enthusiastic seller of State assets.
It would not be the first place I would look, but we inherited a programme. It was explained to us by representatives of the troika that they expected State asset sales of €5 billion. Clearly, we are not going to go into that territory. More importantly, when the Government came into being, any sale of State assets was carefully parsed and focused to ensure it would fit into general economic policy. We are three years in government and, as the Deputy can see, the sale of State assets has been rather limited.
I will come back to the funds achieved and spent. The Deputy asked about the rationale for the sale of Bord Gáis Energy. As he is aware, the Government, in particular, the Minister for Communications, Energy and Natural Resources, Deputy Pat Rabbitte, resisted the break-up of the ESB, although it was one of the drivers from the Commission. We are preserving it as a vertically integrated company. Most importantly, we are keen to ensure we do not make the mistakes of a previous Administration by selling off vital national infrastructure. In the past when eircom was sold, the State had to move back into that area. The gas and electricity distribution systems are being held in public ownership. We are selling the energy generating capacity of BGE because we need to create more competition within the market. As the Deputy can see, in recent times there has been an opening of competition with a suite of new offers to domestic and commercial energy users because of more players coming into the market. This was occurring before the sale was completed. There is a logic in this and a good reason for it.
I have set out the position on the funds achieved to date. However, until all of the processes are complete, I will be unable to give the Deputy a definitive account of how much in total we are to get or its phasing. However, I can give him some detail of how it is to be determined. As he is aware, under EUROSTAT, we cannot bring in the book value in one fell swoop. I will give him exact details of how we are to expend it: it is to be spent, largely, in the creation and maintenance of jobs in the construction sector.
Does the Minister agree with me that it is a fallacy to sell crucial State assets to create competition when, in fact, the State, especially if it restructured the boards of assets such as electricity generation and gas companies in a democratic way, could determine the price and a fair price for ordinary people could be achieved? He did not answer my question on Bord Gáis and I call on him to be specific in this regard. How on earth would he sign off on the sale of a facility-----
I will come to that.
-----the Whitegate power plant which only came into commercial production four years ago, at a cost of €400 million? The calculation is that the Government realised €40 million for it in the sale.
That is wrong and I will explain why.
I appeal to the Minister to explain it in some detail.
Yes, I will.
The rationale for putting Uisce Éireann under the umbrella of Bord Gáis was so-called synergies and that Bord Gáis had a database of consumers and customers, etc. Where does the Government's sale leave that rationale?
I omitted to answer the first question and will do so now. We decided to sell the BGE business in its entirety, rather than break it up and sell it in modules to maximise Exchequer receipts. EU rules for the separation of competitive energy businesses from strategic gas networks apply. Centrica, Brookfield and iCON as a consortium bid the highest price for the entire business and we have agreed to sell on that basis. We must sell to the highest bidder and that is our objective. It is not a matter of how they apportion the individual unit costs within the sale. How the individual members of the consortium, whether it be Centrica, Brookfield or iCON, distribute the assets between them and determine this contributes to the overall selling price is a matter exclusively for them. We are only interested in the net overall price.
Will the Minister give me a breakdown of the components?
The bottom line is that it is not for us to break down the components. That is the point I am making. We are selling it as a unit and looking at the highest price. By any analysis, €1.1 billion, the total price paid, is a fair price. How it is apportioned among the bidders is nothing to do with the State.
That is incredible.
Does the Deputy not understand the net point? The total price the State is paid is what is of interest to us. We sold it as an entity. It was the block or bag of assets that was up for sale. Due process suggested a fair value would be in excess of €1 billion. We got €1.1 billion. Demonstrably, that is fair.
In the final part of his question the Deputy asked me about crucial State assets. Even for someone with his view of the State, how he can determine that Marchwood Power in the United Kingdom and half ownership of an energy plant in the Basque country are crucial State assets is beyond me.
If a farmer brings his or her herd of cattle to the mart, he or she knows the price of each one.
3. Deputy Sean Fleming asked the Minister for Public Expenditure and Reform if he will issue guidelines to public sector bodies to prohibit the rehiring of former public servants on an employment contract or agency basis; and if he will make a statement on the matter. [16919/14]
Will the Minister issue guidelines to public sector bodies to deal with what is a serious issue for many, especially younger people looking for jobs? Will he issue guidelines to prohibit the rehiring of former public servants on employment contracts or an agency basis? There is a lacuna whereby people who have worked in the public service and retired on full gratuities, with lump sums and pensions can walk back in the following week through an agency or on a contract basis. This must stop.
I thank the Deputy for his question. As Minister with responsibility for the public service and public expenditure, I have overall responsibility for employment and human resource policy for the public service as a whole. The Deputy will appreciate that the specific decisions made by public bodies on the re-engagement of former public servants reflect the particular circumstances applying in each case and are, in the first instance, for the employing bodies within the general policy framework set out. The overall policy approach is that all appropriate alternatives should be fully examined prior to the engagement of any retired public servant. Any re-engagement should only take place, in so far as is possible, on a limited and restricted basis and be related to a particular set of circumstances such as, for example, where a particular skill or experience is required on a short-term basis. In practice, in the light of the nature, complexity and specialist knowledge required in some particular instances, situations can arise - they have arisen - where the most appropriate and cost-effective way of meeting a specific skills need, for example, in a project environment, would be to appoint a person who has previously worked in that area and has a detailed understanding of the requirements of the role and how they can be met successfully.
The issue raised in the Deputy's question is relevant, in particular, to public service personnel who have, since 2010, been able to avail of several incentivised retirement schemes. These include the Civil Service incentivised early retirement, ISER, scheme, the Health Service Executive targeted voluntary early retirement and voluntary redundancy schemes and the Department of the Environment, Community and Local Government voluntary redundancy scheme. In June 2012 a collective agreement was reached between the Department of Public Expenditure and Reform and the public services committee of ICTU on ex gratia redundancy payments to public servants. Staff applying for any of these schemes face significant restrictions on taking up any such position. These restrictions effectively debar them from re-employment in the public service, other than in exceptional circumstances governed by the conditions of each scheme.
The Minister might clarify what he said specifically and try to relate it to my question which essentially is about rehiring former public servants either on a contract or an agency basis.
I accept the generality that people who retire do not come back into normal employment barring particular exceptions. We have had that in the OPW. We are now seeing the scandal of people who have retired from local authorities being taken on by Irish Water with their gratuities, pensions and lump sums moved into Irish Water to get a bonus on top of that. I know the Minister will tell me he cannot do anything about that, but somewhere along the line the Government needs to govern the country.
I have previously asked the Minister about agency staff. He will say that when an agency is involved he cannot control whom they bring in. The Minister should take legal advice about introducing regulations to oblige the agencies to give the PPS numbers to the HSE - or wherever they are working. That would allow us to establish the number of former employees back working in the same employment along with their former colleagues, but now employed through an agency. The Minister needs to deal with that issue, which he has so far avoided.
I have not avoided it because we have dealt with this previously. I agree with the thrust of what the Deputy has said which is that people who have decent pensions should not come back and displace people who are looking for public service contracts of employment. By and large that should be and is the situation. However, there will be exceptional cases, either through an agency or a direct employment on a short-term basis, where a particular skillset is required which is not available except by rehiring somebody. That can arise, as the Deputy knows.
A unique set of circumstances pertains to Irish Water where a new public utility is being created and people were asked to migrate from the local government sector into it. Certain benefits to them arose to ensure the smooth transition and the smooth creation of what will be one of the most important public companies to be created in the State.
I understand the agency point the Deputy makes. However, all citizens have natural rights and it is not possible simply to debar people from employment, even on a temporary basis because they have worked previously in the public sector. It is possible to do that by way of writing a voluntary deal into the agreement and that is what we have done. As a general rule we need to be careful not to trample on people's constitutional and natural rights.
I understand what the Minister is saying. As a first step I would like to see some progress on this matter, notwithstanding that there might be a constitutional issue. However, we can do a considerable amount within the current Constitution. When agencies are providing staff for a public body, they should provide the details of the staff they are sending in to work in that public body because the public bodies are entitled to know who is coming in to work for them. They should be supplied with a short CV and a PPS number. At least let us establish the extent of the issue.
The Minister keeps telling me that they should not be rehired except in exceptional circumstances. I believe that employment through agencies is far more widespread than simply based on exceptional circumstances. Let us at least gather the information so that we can have an informed debate. The refusal to make an attempt to quantify the extent of the issue indicates that the Minister does not want to do anything on the matter at all. We need to start by gathering the information. It might prove there is none out there but there could be tens of thousands of people and we are entitled to know that.
I understand the point the Deputy is making, but I do not want to set up a new bureaucracy involving a new trawl of every agency or company that applies cleaning or catering facilities even on a short-term basis. We have reduced the number of people working in the public service and do not want to put new burdens on them unless there is an identifiable problem, which I do not believe is very widespread.
This happened in specific sectors. For example, in the education sector, many retired teachers were brought back. While one can understand them doing a day's substitution, recently retired teachers returning to cover for maternity leave when qualified young teachers were available is a different kettle of fish and I believe the Minister for Education and Skills has addressed those. In general terms I do not believe there is a widespread problem, but I will reflect on what the Deputy has said.
