Dáil Éireann Debate, Tuesday - 28 February 2012
59Deputy Clare Daly asked the Minister for Public Expenditure and Reform the breadth and timescale of his plans to privatise State assets; if discussions have taken place with the trade unions whose members’ jobs will be affected; and if he or any other Department have estimated the amount of job losses that will arise from the sale of these assets. [11409/12]
View answerMy announcement last week contained the details of the breadth and timescale of the Government's plans to dispose of certain non-strategic State assets. We have agreed with the troika on the sale of assets up to a value of €3 billion based on the guiding principles that there will be no fire sales, integral transmissions and distribution systems will be retained in State ownership and full value will be derived for the State. The assets to be sold will be Bord Gáis Éireann's energy business, but not including its gas transmission and distribution systems or the two gas interconnectors, which will remain in State ownership; and some of ESB's non-strategic power generation capacity. Consideration will also be given to the sale of some assets of Coillte, but not its land holdings, and the sale of the State's remaining shareholding in Aer Lingus when market conditions are favourable and an acceptable price can be achieved.
In the case of the energy State companies, meetings take place between the Minister for Communications Energy and Natural Resources and union representatives from time to time. However, no meeting has been held since the Government decision was announced last Thursday. Job losses are not, as the Deputy's question suggests, an inevitable outcome of this process. Apart from the receipts from the sale of assets that the Government will retain for reinvestment in the economy, the sale of certain business units of State companies offers the prospect of access to significant new capital to grow these businesses, which might not have otherwise have been available to them, given the current position in capital markets.
This question was tabled before the Minister's announcement last week, but I am still none the wiser. It is regrettable that the announcement was made in the media and not in the House, which would have allowed us to debate some of these issues. The Minister says he has not spoken to union representatives but the question of job losses is critical. The Minister has attempted to dress up what is in essence a selling off of valuable State assets in order to pay a debt as something that will somehow create jobs. That does not add up.
How does the Minister intend to achieve what has never been done in the privatisations that have already taken place? Eircom's workforce has increased from 14,000 to 7,000 and is targeted to fall to 5,000. Aer Lingus's workforce has been reduced from 7,500 to 3,500. How will the Minister accomplish the miracle of a privatisation that does not involve job losses? Where is this factored in his decisions?
I made the announcement as soon as I could after the Cabinet made its decisions. I readily agreed to have an early debate in the House. I very much welcome an open debate on all these matters and I believe one is scheduled for next week. I entirely agree with the Deputy on learning from the past. The method of sale of Eircom was not in the public interest because it sold off a strategic asset into the private sector and then it was asset stripped in many ways. That is why we are not selling off the strategic assets. We are holding on to the distribution of gas and electricity, and the interconnectors. That core is important. However, Bord Gáis Éireann may have, for example, bought a particular wind farm. While the Deputy might believe that is a strategic asset, I do not. Some are of the view that everything owned by the State is a strategic asset but that is not how we should operate.
The Minister is dressing this up as a job-creation measure. However, apart from the job losses which inevitably flow from a privatisation - there has never been one that did not involve job losses - how does the Minister answer organisations such as the Woodland League, which would argue that a country such as Switzerland which is half the size of Ireland has twice the area of forest? While we employ 11,000 in forestry, it employs 120,000 people in that area. What does the Minister say to the idea that our State assets could be used on valuable indigenous industry job creation programmes that the Minister is forfeiting by his short-term measures?
I do not agree with the Deputy. She is simply wrong on the forestry side. We have an ambitious forestry programme. We will be growing more trees. We are suggesting that we sell off some of the crop. Trees will grow again and the idea is that one harvests trees and sells them but one keeps the land. The suggestion is like suggesting to a farmer that he should not sell the crop.
Deputy Daly referred to downsizing and losing jobs at Aer Lingus. Every airline has lost jobs during the past decade. I do not imagine the Deputy is suggesting we should hold on to State companies as employment agencies to keep non-commercial numbers. The company must operate in the commercial reality.
They are outsourced to other private companies.
The Deputy has twice mentioned that I am dressing up the pro-jobs issue. This is a pro-jobs issue. After long-term negotiations we have changed the view of the troika to allow one third of the total assets to be used to create new jobs. This is a significant advance in an economy starved of capital for productive purposes.
60Deputy Sean Fleming asked the Minister for Public Expenditure and Reform if he will provide an estimate on a company by company basis of the protocols from the sale of State assets in order that the €3 billion target will be raised; the timetable he envisages for completion of same; and if he will make a statement on the matter. [11456/12]
View answerThe Deputy will understand that I do not propose to indicate to the market how much I expect to raise from the sale of the individual assets in the programme of State asset disposals that I announced. However, I assure the House that the sales will be transacted via an open, transparent and competitive process.
On foot of my announcement, work is progressing on plans for the disposals I have outlined. All of the relevant Departments will participate, overseen by my Department and with the assistance of NewERA entity created by this Government. The objective is to identify by the end of next month any remaining policy, regulatory, legislative or financial issues that may need to be addressed prior to individual disposals. Great care will be taken at all times to ensure any decisions are in the national interest and represent good value for the taxpayer. It is intended that any issues arising will be addressed by the end of this year to facilitate the commencement of sales next year.
I realise the Minister has stated in his reply that he cannot give details of the projected sales on a company by company basis. The Minister claims he cannot put this information in the public arena for commercial sensitivity purposes. Does the Minister know? Does he have an estimate on a company by company basis? Has the Government discussed the estimate on a company by company basis? Has the Department in conjunction primarily with the Department of Communications, Energy and Natural Resources agreed on the basis for it? Who came up with the estimates on a company by company basis? The Government cannot have put out a magic figure of €3 billion without knowing approximately where it would come from.
What professional advisers have worked with the Departments on this matter? What tendering process took place and when was it advertised? How much were they paid? Will these people have an interest in advising potential purchasers later on when they make bids for some of these assets in terms of the methods of sale? The Minister has given no indication of whether it will be a sale of shares, as happened in other companies, whether it will be a trade sale or whether the Department will invite submissions from interested parties and perhaps invite a limited tender. Will the Minister explain the process? Presuming the Minister has professional advisers, has he locked into this process that they must not be in a position to advise any potential purchasers in due course?
I thank the Deputy for his questions. The Deputy does not expect me to quantify the value I expect from each item or company we put up for sale. However, I wish to give as much detail as I can to the Deputy. Subsequent to the decision made by the Government last September we set up two parallel processes. The first was to establish what regulatory and other difficulties were presented by the decision made originally on a minority shareholding sale in a vertically integrated ESB. That process was carried out by my Department and the Department of Communications, Energy and Natural Resources. The parallel process involved the valuation of other State companies. This was carried out by the NewERA entity, drawing on the expertise of the NewERA entity along with the National Treasury Management Agency. They have put a tentative value on them. It cannot be all that completely precise until we test the markets.
The Deputy referred to a tendering process. We have not held a tendering process. Therefore, we do not know the true value. However, I would expect to get a very good price for the State for the energy component of Bord Gáis Éireann, BGE. The idea, and this is what attracted the troika and helped us in our negotiations, is that this will contribute in two ways to our economic growth. Not only will we get one third of the proceeds to invest in the productive sector of the economy, but it will also create competition within the energy market, because BGE is the nucleus of an alternative player that will be a competitor for a vertically integrated ESB which will remain a State company.
I thank the Minister for that information. He has confirmed that he has received no external professional advice with regard to how he came up with the figure of €3 billion, but said it was proposed by the NTMA in NewERA.
Yes, in NewERA and they would have had expertise with them.
Perhaps if the Minister is not in a position to provide the information today, he will send the information on to us regarding the level of expertise the particular staff in NewERA have on estimating value of companies where privatisation the selling off of strategic State assets is planned. The Minister says the sale of Aer Lingus is not the sale of a strategic asset nor is the sale of forestry, but some people would disagree. Who in the NTMA who was involved in the decision process had experience - perhaps from another country - of making these decisions or was it that it was just a group of public servants, which those in the NTMA are, coming up with a figure and presenting that figure to the Minister? There appears to be no independent verification of any of the figures by anybody outside of officials employed by the Government. That is not a sufficient basis on which to proceed and I would like to see some verification or benchmark as to whether this is a realistic figure.
The Deputy is quite disparaging of the qualities available to the NTMA. Based on the amount of money we are paying those working in the NTMA, I sincerely hope they are not run of the mill civil servants. They are individuals who are highly qualified for treasury management, to run our national debt process and to involve themselves in a range of the strategic funding issues that affect the State and they are well placed to look at these matters and get expert advice on them. I am confident of that.
The Deputy also asked how we determined what was strategic. The NTMA did not do that, the Government did and that is laid out in the plans we have made. The Deputy asked who decided Aer Lingus was not a strategic asset. The problem is the Deputy's party sold off 75% of Aer Lingus. The remaining 25% is not a strategic holding. We do not have any leverage on the slots in Heathrow or anything else. Fianna Fáil sold that, unfortunately.
We did not sell the slots.
We are moving on to the next question as there is a limited time for questions.
