Dáil Éireann díospóireacht -
Tuesday, 20 Sep 2011

Vol. 740 No. 3

ESB and Disposal of State Assets: Motion

Deputy Pearse Doherty

I move:

That Dáil Éireann:

recognises that the ESB is self-financing, has paid €1.2 billion in dividends over the last nine years and contributed €2.2 billion to the Irish economy through purchases from Irish suppliers, taxes, rates, wages and dividends in 2010;

further recognises that the ESB is of long-term strategic importance to the State's energy supply, in providing skilled employment, training opportunities and a variety of energy and telecommunications services and could play an extended role in the area of telecommunications by using its existing networks to address the State's broadband deficit;

acknowledges that throughout the current economic and financial crisis the ESB's investment in infrastructure has remained high, unlike Eircom, which continues to be dogged by a decade of under-investment following privatisation resulting in the State remaining below the EU15 and OECD average of broadband penetration per capita;

notes that Ireland is lagging at least three to five years behind competitor countries in terms of rolling out infrastructure capable of high speed next generation broadband;

welcomes the Government's decision to accept the recommendations of the Cahill-Frontier report, entitled Transmission Asset Analysis, against unbundling the ESB's transmission and distribution assets;

asserts that the programme for Government commitment to target up to €2 billion in sales of so-called "non-strategic" State assets drawing from the recommendations of the McCarthy Review Group is an unnecessary and damaging fiscal measure driven by a privatisation agenda;

believes that commercial semi-State companies should not be privatised in part or in whole;

asserts that semi-State companies can play a vital role in delivering employment activation measures and training;

affirms that, as a small open economy, State control of strategic State assets and service provision, including but not exclusive to public transport, aviation, ports, forestry, water supply, broadcasting, postal services, energy supply, telecommunications, is central to the future security, prosperity of the economy and society, and environmental protection of the island;

rejects the Government's decision to sell off a minority stake in the ESB;

mandates the Government to inform the EU-IMF-ECB that it will rescind its commitment to a programme of State asset disposals; and

calls for dividends paid to the State by commercial semi-State companies to be reinvested into job creation and retention measures.

Beidh mé ag roinnt mo chuid ama le mo chomhghleacaithe, Deputies Ó Caoláin, Ellis, Ó Snodaigh agus Ferris. Molaim an rún atá os comhair na Dála anocht i dtaobh an Bord Soláthair an Leictreachais atá thíos in ainm Teachtaí Dála Shinn Féin.

Last week the Minister for Communications, Energy and Natural Resources, Deputy Pat Rabbitte, announced the Government's plan to part privatise the ESB. Despite decades of rhetorical support for this valuable State asset and pre-election pledges to keep the company in public ownership, the Minister came forth to announce a key plank in the Fine Gael Party's pre-election proposals. The discomfort among Labour Party backbench Deputies must have been considerable.

There was something deeply dishonest in the way the Government justified the decision to sell off a portion of one of the most successful semi-State companies in the history of the State. We are told that selling a minority stake does not represent a significant loss to the State and that proceeds from the sale of this share will be invested in economic recovery. As all of us know, both claims are untrue. The part privatisation of the ESB will be a disaster in the long term and bad for consumers and ESB workers. There is no rationale for the decision other than that the Government is being pressurised by the International Monetary Fund and the European Union to sell off State assets to service the debt. Clearly, this pressure is too great for the Labour Party to resist. None of this should come as a surprise because Fine Gael made it crystal clear during the election campaign that it wanted to part privatise the ESB. The programme for Government more than hinted that the party had got its way when it promised to "target up to €2 billion in sales of non-strategic state assets drawing from the recommendations of the McCarthy Review Group on State Assets when available." What is surprising, however, is the speed with which the Labour Party capitulated to Fine Gael's demand, backed by pressure from the European Union and the IMF.

We need to remind ourselves of what the Labour Party stated only a few short months ago. Its election manifesto stated the party was committed to the "concept of public enterprise, and is determined to ensure that semi-state companies play a full role in the recovery of the Irish economy". It also stated clearly that "Labour is opposed to short-termist privatisation of key state assets, such as Coillte or the energy networks". Within a matter of months, however, it has made a U-turn of massive proportions and announced what is undoubtedly the thin end of the privatisation wedge. This decision could well result in the eventual break-up of the ESB and loss of control by the State and the taxpayer. Unfortunately, this is just the latest in the growing list of broken promises and U-turns by the Labour Party since taking office in March. On social welfare, protecting the low-paid, local hospital services, natural resources and jobs, the gap between what the party promised the electorate and what it is delivering is growing by the day.

The arguments against the part privatisation of the ESB are compelling. The company is self-financing and has paid €1.2 billion to the State in dividends in the past nine years. In 2010 alone it contributed €2.2 billion to the State through purchases from Irish suppliers, taxes, rates, wages and dividends. The company is not only of long-term strategic importance to the State's energy supply, it is also a driver of substantial economic investment and employment.

Unfortunately, the Government is not being driven by long-term or strategic considerations but by an EU-IMF austerity programme that insists on selling off valuable State assets to service toxic private banking debt. It is also being driven by a right-wing Fine Gael agenda which is anti-public sector and intent on dismantling semi-State companies. The Government will argue that it has no choice and its hands are tied. It will claim that under the terms of the EU-IMF austerity deal, it must raise at least €2 billion through the sale of State assets. As all of us know, in politics there are always choices, if one wishes to explore them. The Government has other options available to it to raise this revenue. For example, it could introduce a wealth tax on individual liquid assets with a value of more than €1 million, raising an additional €1 billion per annum for the Exchequer. Alternatively, it could negotiate a loss-sharing agreement with the ECB on the Anglo Irish Bank promissory note, saving the Exchequer billions of euro, or refuse to pay the €703 million senior, unguaranteed, unsecured bond due to mature in Anglo Irish Bank on 2 November.

What is clear is that if a portion of the ESB is sold, it will be gone for good and, with it, the many benefits that accrue to the taxpayer. If the Government needs confirmation that this is the case, it need only consider the privatisation of Eircom in the mid to late 1990s. The legacy of that sale can be clearly seen in the significant decline of Eircom landline penetration from 82% to 69% and the lack of adequate broadband coverage across the State.

What is most galling and truly remarkable is that a Labour Party Minister is fronting this right-wing rip-off, although given the Minister's history of ideological transformation, this is perhaps not surprising. The question many of us are asking is what Labour Party backbench Deputies will do when faced with a clear choice between their pre-election promises and the right-wing policies of the European Union, the International Monetary Fund and Fine Gael. To the Labour Party Deputies who may be listening to this debate in their offices and members of the party who are genuine social democrats concerned with the interests of taxpayers and public sector workers, I want to make a direct appeal. Do not let the party sell off this vital State asset to pay down the debts foisted on the State by a failed Fianna Fáil Government. Do not let the party undermine decades of hard work and investment by exposing the vital strategic asset we have to the uncertainties of the private market. Do not let the party trade what is meant to be one of its core principles — public ownership — to bail out banks and bondholders. For its part, Sinn Féin is steadfastly opposed to the sale of any part of the ESB because to do so would be bad energy policy and bad economic policy and detrimental to Irish consumers, taxpayers and workers.

Deputy Caoimhghín Ó Caoláin

This is one of the most important motions to be put before the Dáil in recent years. The decision to sell off a stake in the ESB is totally wrong and I warrant that the Minister knows that this is the case. It is the first step towards privatisation of this and other key strategic State assets at the diktat of the International Monetary Fund and the European Central Bank. The disastrous IMF-ECB deal so cravenly accepted by Fianna Fáil and the Green Party is now the equivalent of the old British regime at Dublin Castle, warping the economy and impoverishing the people for the benefit of outside interests.

It cannot be said often enough that the most recent general election saw one of the greatest frauds ever perpetrated against the people who rejected the Fianna Fáil-Green Party wreckers of the economy and gave a strong mandate to Fine Gael and the Labour Party, both of which had been highly critical of the IMF-ECB deal. That deal was clearly rejected by the people and armed with that mandate the new Fine Gael-Labour Party Government should have gone back to the IMF and the ECB and told them we could not and would not pay, the austerity regime was not working and we had to invest in job creation and growth instead of paying off bank bondholders. Instead, Fine Gael and the Party Labour bowed the knee to the IMF and the ECB, took up the axe left down by Fianna Fáil and the Green Party, and continued with those savage cuts. Tá na pairtithe sa Rialtas seo tar éis dallamullóg a chur ar an bpobal. Vótáil siad ar son pholasaí amháin ach tá polasaí eile ar fad á chur i bhfeidhm anois.

The Minister for Arts, Heritage and Gaeltacht Affairs, Deputy Deenihan, has proposed to take over the Bank of Ireland building in College Green, which was the old Irish Parliament building. This is ironic, given the fact that the members of that Ascendancy Parliament sold it out in return for bribes from the British Government, just as the political establishment in this State sold what was left of our economic sovereignty to the IMF and the ECB, surely the greatest sell-out since the Act of Union itself. Now State companies are up for grabs, with large chunks to be sold off. It is the worst kind of short-sighted policy and will come back to haunt our society and our economy in the years ahead.

I wonder what joker came up with the name "NewERA" for the body to be set up to act as an agent for the sale of State assets. It started as a Fine Gael policy document in November 2009 which promised that 105,000 new jobs would be created. What has happened to that promise? At least Fine Gael stated clearly in that plan its intention to sell off State assets. It was otherwise with the Labour Party, which before the general election said it was committed to State enterprises and pledged that it would use commercial State companies as a key part of economic recovery. It said, and has said continually over the years, that it was opposed to privatisation. Now this Fine Gael and Labour Party Government is to set up NewERA as a non-statutory body within the NTMA which will take responsibility for the management and disposal of commercial semi-State companies from Departments. NewERA will also decide on dividends paid out to the State, pay levels and pension fund policies. The Government claims any moneys raised will be used for investment and job creation, but we know very well that the EU and IMF want the moneys to be used to pay down the debt.

As our motion states, the ESB is self-financing, has paid €1.2 billion in dividends in the past nine years and, in 2010 alone, contributed €2.2 billion to the economy through purchases from Irish suppliers, taxes, rates, wages and dividends. The company is of long-term strategic importance in providing the State's energy supply, skilled employment, training opportunities and a variety of energy and telecommunications services. In addition, it could play an extended role in the area of telecommunications by using its existing networks to address the State's broadband deficit.

We reject the Government's decision to sell off a stake in the company to private interests. Let it not be forgotten that the ESB, like other strategic State companies, was built up when wealthy private interests were unwilling to invest in the building and development of infrastructure in the State. They preferred to invest their money abroad, just as the Government is now sending billions of euro out of the country to pay the gambling debts of bank bondholders.

After the achievement of self-government for 26 of the 32 counties, successive Governments built up strong State-owned companies. That must be acknowledged, and the parties responsible merit praise for their initiative. The ESB, Aer Lingus, our telecommunications infrastructure, Bord na Móna and others were strategic pillars of the economy. Of course, these companies must be equipped to adapt to change, but what is not acceptable is the ideology which dictates that the people of this State, through the Government, cannot retain any of these in public ownership and cannot even assist them out of public funds.

The sound investment made when the ESB was established and developed has paid off handsomely over the decades. Throughout the current economic and financial crisis the ESB's investment in infrastructure has remained high, unlike that of Eircom, which continues to be dogged by under-investment following its privatisation. We know who benefited from the fiasco that was the Eircom privatisation: the likes of Tony O'Reilly and other privateers who creamed off profits and dividends. We are still paying that cost. The State, which should be a world leader in communications infrastructure, now lags behind other EU and OECD states in terms of broadband availability per capita.

The Fine Gael-Labour Party programme for Government is committed to obtaining up to €2 billion from sales of so-called non-strategic State assets, drawing from the recommendations of the McCarthy review group. This is not based on any sound economic strategy. On the contrary, it represents another step in the downgrading of the economy and a further limiting of the potential of the State to help create jobs and bring about economic growth and recovery. These semi-State companies should not be privatised in part or in whole because they can play a vital role in delivering employment activation measures and training.

In the past ten years the ESB and Bord Gáis alone have paid out nearly €2 billion in dividends. It is economic madness to start selling off these vital national assets in whole or in part. The Government defends this by asserting that it is only a partial sale of a stake in the ESB, but once the rot begins where will it end? We have ample evidence of what happens.

Molaim an rún seo, a cuireadh síos ag Pairtí Shinn Féin, do na Teachtaí uile sa Dáil. Iarraimid ar an Rialtas gan dul ar aghaidh leis an díol seo agus an Bord Soláthair Leictreachais a choinneáil go hiomlán i seilbh mhuintir na hÉireann.

Deputy Dessie Ellis

No one is under any illusion. Regardless of our political perspective, we all accept that at this moment the numbers do not add up. The State is not taking in enough to pay its way, much less pay the debt it has completely and illogically taken on at the behest of the European banking system. We are now borrowing at high rates and most of that money is doing little or nothing to change the situation. Government policy is simply deflating the economy and taking money out of the pockets of struggling people who spend every penny of their income in the local economy.

With this in mind, we accept that revenue must be generated and new sources of funding tapped. What we completely and utterly reject is the short-sighted, ideologically driven strategy of selling off the family silver, represented by bodies such as the ESB, CIE and Aer Lingus. A move such as this flies in the face of a strategy to encourage growth and job creation. These are bodies and companies that offer essential services to the people, the State and their mutual interests. They are not inherently wasteful, inefficient or poor quality service providers.

It is certain that savings could be made by many of these bodies, which are almost wholly under State control. One possible step, which I ask Ministers to consider as an option for themselves also, is to cut the wages of the top earners in these bodies and establish measures to ensure the obscene pensions that have been awarded to such people are consigned to history. This might not yield the billions required, but it would certainly be a gesture to indicate the Government is serious about getting value for money. There are choices. Blind belief in the market or the orders of the troika is not good enough.

Until recently, the Labour Party was opposed to the current Government direction of privatising State enterprises for short-term superficial gain. It was right to take this position. It was right in believing that it was the responsibility of the State to provide many of these services to citizens and that breaking up these companies would not be beneficial to anyone other than narrow private interests. Unfortunately, the Labour Party seems to have, in deed if not in word, become completely subservient to the senior Government party. I ask Labour Party backbenchers to think about their core constituency, the ordinary working families who depend on these services. They should consider how these families will be affected by privatisation and how little this policy will really do to ease their weekly struggle to make ends meet. It is all the more worrying that these plans, cooked up by Fine Gael in its NewERA programme and accepted by the Labour Party in the programme for Government, are following almost to the letter the recommendations of Mr. Colm McCarthy. This is the man who drew up the plan to destroy the entire State, devastate communities and treat tens of thousands of people as if they were simply numbers in an accountancy exercise. He did all this for a rather tidy sum, given the useless product of his questionable effort.

One of the companies in which the State is considering selling its stake is Aer Lingus. This company saw large State investment of time, work and money in order to ensure its commercial viability into this century. It has been allowed to slip partly into the hands of Ryanair which is set on creating a monopoly situation in Irish air travel. If the remaining shares in State control are sold, Aer Lingus is as good as finished and a brand which has always been looked on positively throughout the world as our national carrier will become another low fare airline. Merging of services will cause job losses and, most likely, protracted industrial action. One would think Aer Lingus was failing. The Government would have us believe that Aer Lingus is costing us great amounts of money but this is simply not true. According to the airline's spokespeople, last month was a continuation of the "positive trend" in the company's figures and August saw profits before tax rise 124% on the previous year's figures. Short-sightedness must be becoming contagious because it is rampant across this Chamber.

The Government also seeks to sell off part of the ESB. Given the experience of struggling families in recent years in regard to disconnections and inability to keep up with bills, how can the Government fail to see this is a recipe for disaster? The private industry has no potential for tolerating the difficulties faced by people in this economic basketcase. People and representatives had to fight to end the practice of shutting electricity off from those people who fell behind on their bills. If the ESB is lost to private hands, disconnections will be a massive problem and we will once again face the real possibility of people being without power and heat in their homes. Neither the electorate nor any person who is honest with himself or herself would say that in this day and age electricity should be a luxury. This move has the potential to create that situation, which is very worrying. The policy also disregards the fact that the ESB is self-financing and has been a good thing for the people both socially and economically since its foundation.

The ESB, Aer Lingus and other bodies are not millstones around the necks of the people but are very real assets. If they were not, who would be willing to buy them? The Government must abandon this grubby plan of privatisation. Its conviction that the market should rule all failed us in the past 15 years. The people learned that but obviously the political class has not. If Fine Gael succeeds in this plan, it will bring more hardship, worse service and job losses to this State as well as decreases its year-on-year revenue intake. It is blatantly wrong and I ask all Members to support this opposing motion.

Acting Chairman (Deputy Michael McCarthy)

Deputy Ó Snodaigh has five minutes.

Deputy Aengus Ó Snodaigh

Beidh mé ag glacadh beagánín níos mó ama. I will take more time.

Ar dtús báire ba mhaith liom an rún seo a mholadh. Rún simplí é agus ní chóir go mbeimís gafa ins an stad go bhfuilimid ag cur a leithéid de rún chun cinn. Is é ról na Dála cosaint a dhéanamh ar an bpobal, agus ar an infrastruchtúr straitéiseach atá bunaithe againn thar na blianta ach go háirithe, chun iarracht a dhéanamh cosaint a thabhairt dár bhflaitheas eacnamaíochta agus do thodhchaí eacnamaíochta na tíre agus chun poist a chur ar fáil do Éireannaigh in Éirinn seachas thar lear mar atá ag tarlú faoi láthair.

Public control of strategic assets is about much more than our economic recovery in the short term. It is about the very survival of an island nation into the future. As the European financial crisis deepens, the European Union is becoming an increasingly hostile and merciless place for small outlying member states. The larger members obviously seek to protect their own interests first and foremost and we will suffer the consequence. Already we are witnessing unilateral moves by the likes of France and Germany at our expense. These continental players are acting to protect their own banks which recklessly lent to Irish ones during boom times. That is not to say Irish banks were not also guilty. Likewise, Finland's insistence that Greece honour its debt to Finland over and above its debt to Ireland or to other member states is another example of larger states making unilateral moves at the expense of the small outlying nations or nations like us that are struggling.

As an island nation, Ireland is different from other European nations. We have no international land borders and therefore have no choice but to be more self-reliant than others. We must now protect and bolster our capacity to be self-reliant in case the need arises.

Ag tús an 20ú chéad dob é polasaí Shinn Féin — cé nach raibh an páirtí féin bunaithe ag an am — pobal na hÉireann a chur chun tosaigh. Bhíomar ag féachaint i ndiaidh phobal na hÉireann i dtús báire agus ina dhiaidh sin ag féachaint go mbeimís ag trádáil agus ag déanamh conarthaí le tíortha eile. Sa chéad dul síos bhíomar ag déanamh cinnte de go mbeadh flaitheas éigin againn agus go mbeimís in ann táirgthe a dhéanamh ar son mhuintir na hÉireann.

We are losing foreign direct investment not only to India and other countries, but to our European neighbours. We have seen a haemorrhage of jobs in recent years. During such times of crisis, economic or otherwise, our sea, air, rail and road transport and our communications and energy infrastructure are the last line of defence for the economy. Their privatisation, whether in part or in whole, would expose us to attack in an increasingly competitive and cut-throat global environment and undermine our ability to protect our industries, infrastructure and jobs. We need only think of State jobs in State companies that have been partly or wholly privatised.

Acting Chairman (Deputy Michael McCarthy)

The Deputy has one minute remaining. However, as some of his colleagues did not use all of their time, if he wants more time, I will allow it.

Deputy Aengus Ó Snodaigh

I will speak until 8.05 pm, if that is all right with the Acting Chairman.

We need only look at SR Technics, previously Team Aer Lingus. Where is it now? The same applies to B & I, Eircom, Siúcra Éireann and Irish Steel, which was sold for £1. We should have these companies in State ownership now and with them we would have been able to resurrect the economy, protect jobs and help plan for the future of Ireland. They are not there, however, and we have no control over them. Some of them have gone in total — it is not only that the jobs are gone but the actual companies have disappeared, in some cases because of the property bubble.

Free market competitors can be savage and merciless in their actions. We must defend and hold what we have in terms of strategic assets. Anybody who recklessly disposes of our strategic infrastructure is acting treacherously and against the interests of the Irish people, North and South.

In terms of energy, Bord na Móna, Bord Gáis and the ESB are profitable and are also of undeniable strategic importance. Even a partial sale would be the first step towards full privatisation — that is the way it has happened in the past. In many instances, the privatisation of critical infrastructure, in Ireland and abroad, has been an unmitigated disaster for the public. In Britain, for example, the Royal Mail had to be bought back by the state such was the scale of the disaster and the experience of that privatisation. The privatisation of British Rail also came at enormous cost and because it was done so poorly, in some cases, it literally cost lives. There was no proper consequent maintenance of the railway lines. Companies came in to asset strip, not to invest. The same is true of what happened in Eircom. There was no investment, only continuous asset stripping.

These were assets which were formerly Irish-owned and for which we never obtained full value. We will not obtain full value for anything sold in the current climate.

Critical infrastructure, when in public hands, can be deployed strategically in order to grow the economy. Owing to the fact that under a public owner, profit is not necessarily the bottom line, it can also be used to serve a diversity of public interests. As Sinn Féin's spokesperson on social protection, I actively opposed the Government's recent decision to cut pensioners' fuel and energy allowances. It made a decision to achieve savings by cutting fuel allowances under the household benefits package rather than by securing a bulk purchaser discount from energy providers. In many cases, the latter are State energy providers, which makes what is happening even more ridiculous. We must start insisting that our public services serve the public. We need to cut waste and the outrageous pay and conditions at the top in both public and private companies. We must also extract the very best for the public. The assets to which I refer are only non-strategic if, as is the case with the Government, there is a failure to use them strategically. It is not good enough to sit back and do nothing.

Caithfimid smacht a fháil arís ar na modhanna táirgthe. B'fhéidir go dtuigeann Pairtí an Lucht Oibre é sin mar sin a dúirt Marx agus Engels. Muna bhfuil smacht againn ar na modhanna táirgthe tá sé an-deacair smacht a bheith againn ar an eacnamaíocht. Ceacht é sin a tugadh dúinn tamall de bhlianta ó shin ach ceacht atá fíor sa lá atá inniu ann. Muna bhfuil an smacht sin againn beidh cumhacht ag fórsaí seachtracha ar an náisiún seo, agus ar an eacnamaíocht ach go háirithe. Cheana féin, tá cumhacht agus smacht ag na fórsaí sin ar chúrsaí airgeadais agus ar a lán eile. Caithfimid a bheith cinnte de nach mbeidh smacht acu ar a leithéidí Bhord Soláthair an Leictreachais nó ar aon cheann des na comhlachtaí móra Stáit atá ag teastáil uainn chun déanamh cinnte de go bhfuilimid in ann ath-thógáil a dhéanamh ar eacnamaíochta na tíre.

Caithfimid díriú isteach ar rudaí atá tábhachtach seachas ar na pinginí beaga a bheadh á fháil againn. Caithfimid cuimhneamh gur minic nach bhfuil pinginí chomh tábhachtach is atá poist nó an féin mheas a fhaigheann daoine as sin, gan trácht ar an mbuntáiste a fhaigheann an Stát go leanúnach as a leithéidí Bhord Soláthair an Leictreachais. Ní díbhinn airgeadais amháin a shaothraíonn sé ach díbhinn ó thaobh poist agus cúrsaí sóisialta.

Molaim an rún agus tá súil agam go dtiocfaidh athrú poirt ar Phairtí an Lucht Oibre sa chás seo.

Deputy Martin Ferris

I wish to share time with Deputy Healy-Rae.

Acting Chairman (Deputy Michael McCarthy)

That is fine.

Deputy Martin Ferris

When the Minister for Communications, Energy and Natural Resources, Deputy Rabbitte, announced in a reply to me last week that the Government had been obliged to make a decision to sell an as yet unknown stake in the ESB, I had no doubt he was genuine in stating that this was not something he would have chosen to do. I am certain that is the case. I am also certain that there are many of his colleagues for whom this is an extremely painful and embarrassing departure from the principles on which the Labour Party claims to stand. The Minister has said — it will be repeated many times during this debate — that the Government has no choice in the matter. We will be told that this sale and the sale of other State assets is necessary in order to pay off some of the massive debt taken up as a consequence of the bank bailout and the virtual surrender of economic sovereignty to the European Union and the IMF. It is correct to say there is no choice in that context. That is why my party and others are opposed to what is happening and why we are arguing that the State should pull out of the EU-IMF programme before we are forced further down the road of debt slavery, austerity and the destruction of vast areas of public and social provision.

Deputy Brendan Howlin

Then what?

Deputy Martin Ferris

Not only does the programme to which I refer narrow the options available, it also means that, in effect, the IMF and the European Union can call the shots on key areas of Government policy — which they are doing — including the vital issue of the sale of State assets. The Government has already abandoned its promise not to sell off strategic assets. However, the scale of the sale is in question. The programme for Government states €2 billion worth of State assets will be sold off. Is that still the case? What is proposed would be bad enough, but I wonder whether the Government has succumbed to pressure to sell off even more assets. The IMF has publicly demanded that €5 billion worth of State assets be sold. The proceeds from such a sale would be spent not, as promised in the programme for Government, on job creation but on servicing the debt.

Similar pressure has been exerted on the Greek Government. Is the Minister or any of his colleagues willing to state publicly in this House that they will not bow to such pressure? Will he or any of his colleagues state that whatever proceeds accrue — as stated, we are opposed to any such sale — they will be invested in job creation programmes? I suspect they are not in a position to provide such a guarantee. We await with interest to discover the actual scale of the sell-off. It will also be interesting to see how the Government deals with the pressure from the European Union and the IMF.

Sinn Féin does not accept that there is any logic in selling parts of or shares in State companies and then reinvesting the proceeds through new public programmes or a new State company, as has been proposed in the context of the NewERA project. We believe, as the motion states, that the existing public companies and their dividends must be used more proactively in order to stimulate growth and employment. That would be a far more sensible and productive use of the State sector, rather than a once-off sale which would lead to diminishing services, job losses and higher costs. I appeal to Labour Party Deputies, in particular, to consider what we are proposing as an alternative to what the Government is planning to do.

In recent years we witnessed the sale of Irish Sugar by Greencore and the consequences this had for the agricultural community and beet producers in the south east and Munster. We were informed at the time — the Acting Chairman will be able to verify this — that the golden share would protect the interests of both the workers and the producers. What actually happened was that an industry that had been in State ownership for a long period was given away to Greencore which gained massively as a result. I encourage everyone present in the Chamber to vote with his or her conscience in order to protect the State assets that have served us well in the past.

Deputy Michael Healy-Rae

I thank my colleagues in Sinn Féin for sharing time. I acknowledge what the Minister stated last week and fully appreciate the difficulties he faces and the difficult position in which he finds himself.

It is vitally important that we maintain the security of the supply of energy on this island. The ESB is a net contributor to the Exchequer. It is a world renowned company which could be the catalyst for further development in this country. State assets and the potential earnings which might accrue to them must remain in the hands of the people. I ask the Minister to compare the ESB, as it is now, to Eircom and the position it occupied in the past. It is only 11 short years since our telecommunications network was in an excellent condition. Massive improvements had been made to it, particularly the part of it located in rural areas. People were provided with a great service. After 11 years of profiteering, asset stripping and plundering, however, Eircom is now €3.7 billion in debt and the network is crumbling. If one travels through rural areas, one will see telephone poles leaning over. The service is almost non-existent, which is ridiculous. All of this occurred as a result of privatisation. It is good to make a comparison between the ESB and Eircom.

I am extremely uncomfortable with regard to what has been termed a "fire sale". I am becoming very nervous. Should we not just inform the European Union and the IMF that we cannot pay back the money we have been loaned? If we do not retain our indigenous assets, we will no longer be the masters of our own country. Ireland will become a country ripped up and stripped apart by the European Union. We will be left with nothing.

State companies were established because private companies would not venture outside towns and cities where business was highly lucrative. We all know how private companies dealt with the roll-out of broadband. The country's communications and energy infrastructure — namely, roads, the rail network, fibre-optic and copper networks, electricity and gas networks, etc. — should remain in State ownership. The current suggestion that 25% of the ESB be sold is all wrong. It would open the door to a future sale of the whole company, including its networks. I remind the Minister of what would have happened if a company like the ESB had been in private ownership in the past. Does he really think a proper electricity supply would have been provided to places like Lambs Head, Valentia Island and the Black Valley? It would have been completely cost-prohibitive for families to set up an electricity supply when building their homes and keeping rural Ireland alive and vibrant. They would not have had any electricity because they could not have afforded to connect their houses to the network. We have seen the good the ESB and its workers have done in the past. I compliment the ESB's excellent workers and acknowledge the great work they have done in bad weather and the worst of conditions.

We have to learn from the mistakes of the past. We know what the closure of our sugar beet factories, which has already been mentioned, meant to the people. We closed vital parts of our rail network over the years. If such infrastructure were still in place, it would be invaluable. We have to realise that there is a time to sell and there is a time not to sell. Now is not the time to strip down the ESB or any of our other State companies. We should hold on to what we have and what took so much hard work to build. If privatisation takes place, customers and consumers who rely on a quality service at an affordable price will lose out. I ask the Minister to take all of this into account. I appreciate and readily acknowledge the terribly difficult position the Minister and all his Cabinet colleagues are in. I want to work with the Government to ensure the right decisions are taken. I ask the Minister not to throw the baby out with the bath water. That is all I am asking.

Minister for Communications, Energy and Natural Resources (Deputy Pat Rabbitte)

I would like to share time with the Minister for Public Expenditure and Reform, Deputy Howlin.

Acting Chairman (Deputy Michael McCarthy)

Is that agreed? Agreed.

Deputy Pat Rabbitte

I move amendment No. 1:

To delete all words after "Dáil Éireann" and substitute the following:

"commends the Government for:

ts commitment to delivering on energy policy priorities, including ongoing investment in energy infrastructure, ambitious targets for renewable energy, a substantive increase in energy efficiency, and the continued opening up of gas and electricity markets to competition, with resultant benefits to business and domestic consumers;

its commitment to the major investments in critical transmission and distribution infrastructure being undertaken or planned by the ESB in electricity networks, in both this jurisdiction and Northern Ireland, by EirGrid in electricity interconnection and the roll-out of vital transmission infrastructure through Grid 25, and by Bord Gáis Energy (BGE) in gas transportation networks, all of which are designed to ensure security of energy supply, enhance the delivery of renewable energy and underpin economic growth; and

its decision to retain the ESB as a strong, integrated utility in order to underpin and expedite the least-cost delivery of this critical energy infrastructure, while ensuring the ring-fencing of ESB businesses as necessary to continue to contribute towards increasing competition and efficiency in the all-island electricity market and in line with EU law and requirements;

notes the improved broadband landscape where commercial operators have been investing over €400 million per annum in rolling out critical communications infrastructure in Ireland over the last number of years and that the State continues to intervene where market failure has been identified;

acknowledges that as a result of these investments Ireland will meet the EU target of a basic broadband service available everywhere by 2013, and that speeds of 100 mbps are already available to approximately 500,000 homes, and that private sector investment in high speed broadband services is continuing across a range of platforms;

looks forward to the outcome of the Next Generation Broadband Taskforce, which is chaired by the Minister for Communications, Energy and Natural Resources and which seeks to accelerate the roll-out of high speed broadband across Ireland, through industry and public sector collaboration, in line with the objectives of the NewERA proposals in the Programme for Government;

further notes that:

under the EU/IMF Agreement with Ireland substantial funding is being provided to Ireland to meet the provision of public services and restore the banking system;

this Agreement places binding obligations on Ireland to reduce its deficit to sustainable levels and that this requires implementation of necessary measures on both expenditure and revenue; and

the sale of State assets, as provided for in the Programme for Government, provides a potential source of funding for both debt reduction and for sustainable investment notably in the areas referred to under the NewERA heading of the Programme for Government;

and, in this context, supports the Government decision to sell a minority stake in the ESB on the basis that:

the ESB will remain an integrated commercial energy company with strong majority State shareholding;

a group has been established to report to Government by end of November next on the best way to approach this transaction, including size of stake for sale, timing of sale and implications for wider energy policy; and

the group will be co-chaired by the Department of Communications, Energy and Natural Resources and the Department of Public Expenditure and Reform."

Certain elements of the Private Members' motion before the House have some resonance with my own thinking, and I will come back to them later in these remarks. My fundamental position, however, is that the motion is misguided and based on a completely false premise. It indicates an unwillingness to face reality. When I listened to Deputy Doherty, in particular, it became clear that making mischief was a large part of the impulse behind this motion. In effect, the motion asks the House to reject any sale of State assets, which is totally unrealistic given where we find ourselves, and in particular to reject last week's Government decision to sell a minority stake in the ESB. I cannot accept this motion, clearly, and, accordingly, I propose the amendment before the House.

I will leave the ESB issue aside for the moment because it is important that the parameters of this debate be set out. The simple fact of the matter is that, at present, Ireland depends totally on the funding arrangements that were put in place under the EU-IMF deal to pay for public services and to restore the banking system. This year, we will borrow billions of euro to help to fund social welfare payments, the health and education sectors, and public service pay and pensions. All of these borrowed funds are being provided by the European Union and the IMF. Ireland has no other borrowing avenues available to it. The central point is that Ireland is wholly dependent on the EU-IMF deal to fund the services to which I referred and to which I assume the Deputies opposite attach some importance.

The paymasters are not making these funds available unconditionally. They rightly want to ensure Ireland has a credible programme in place to ensure financial sustainability. The conditionality is set out in a memorandum of understanding between Ireland, as a sovereign state, and the European Union, the IMF and ECB troika. The revised memorandum commits the State, at the insistence of the troika, to an ambitious programme of asset disposal. We cannot unilaterally discard this as the motion would have us do. Sinn Féin pretends to believe the Government can walk away from the memorandum without devastating consequences. In terms of value, the obligation imposed on us by the memorandum has inevitably led to a particular focus on the State energy companies, especially the ESB. My colleague, the Minister for Public Expenditure and Reform, will address the broader issues concerning the memorandum of understanding with the troika, the fiscal backdrop and the Government's tempered and graduated approach to the consideration of any sale of State assets.

I would like to focus my contribution on energy matters, with particular reference to the importance of the State energy companies in the context of contributions made by Deputies on the other side of the House. I accept the tenor of the motion with regard to the major contribution the ESB, as a State-owned energy company, has made to economic and social development. It is equally correct to record that the ESB has been a commercial success over the years, particularly in the increasingly competitive generation and supply environment of recent years, which I welcome.

It is important to place the achievements and contributions of the ESB on record. It has contributed close to €400 million in dividends to the Exchequer in the past four years. This included a special dividend of €176 million on foot of its profit on divestment of some of its generation assets. A customer rebate of €300 million was provided by the ESB to keep costs down for all customers. The ESB pays a substantial element of the carbon windfall levy. This levy was put in place by statute of this House in 2010 to last until the end of 2012. The special dividend and levy proceeds have been used to mitigate the electricity costs of large energy users that are crucial to employment and exports.

The ESB has provided for capital investment of approximately €10 billion in the past decade or so. The vast bulk of this has been in the transmission and distribution network, particularly the latter. This follows earlier years of neglect of capital investment. This investment, which was funded by the company in partnership with EirGrid as transmission system operator, has delivered a hugely improved network infrastructure. It has been pivotal to the excellent security of electricity supply Ireland has enjoyed in recent years, which has already been mentioned by Deputies on all sides.

The ESB recently commissioned a modern gas-fired generation plant in Aghada in Cork. I note that Bord Gáis has commissioned a similar plant in nearby Whitegate. The cumulative impact is that almost 1,000 MW of additional modern generating plant has been put in place by profitable State companies at no cost to the taxpayer. The ESB has been to the fore in investing in renewable energy and smart technologies. It holds a strong portfolio of wind generating assets and is involved in research in wave and tidal energy. The company is in the process of putting in place an extensive network to underpin the use of electric vehicles. This continues the hallmark of the ESB, which has been evident since the initial Ardnacrusha investment of the 1920s, as being to the forefront of innovation and effective delivery.

It is important to record the distinctive contribution the ESB has made to our telecommunications infrastructure. Through its subsidiary, ESB Telecoms, the company has put in place an extensive fibre-based backhaul broadband investment. This has provided important competition to Eircom and has facilitated the roll-out of faster broadband to more places. The ESB is investigating the feasibility of using its extensive distribution network to facilitate a deeper penetration of fibre-based broadband throughout the country. The delivery of key energy infrastructure — gas and electricity — is critical to enable us to tackle our reliance on a single source of gas supply and limited electricity interconnection. Energy projects of national importance are absolutely vital to ensure secure supplies of energy.

The importance of the electricity and gas infrastructure and supply chain to economic and social development cannot be emphasised strongly enough. It is encapsulated in the oft quoted expression, "keeping the lights on". Electricity and gas are the lifeblood of economic production, whether in the high-tech ICT sector, the employment intensive services sector or indigenous sectors such as farming. They are also fundamental to key social services.

Because Ireland has such a reliable and modern electricity and gas infrastructure, we almost take it for granted. However, we must always remember that the creation of modern and reliable energy network systems did not happen by accident. It arose from extensive and well executed investment by State-owned companies, notably the ESB and Bord Gáis, and now, more recently, by EirGrid.

The Government fully endorses the strategic national importance of investing in Ireland's electricity transmission infrastructure. EirGrid's national grid development strategy, GRID 25, is of key importance. Development of the high-voltage electricity grid is critical to economic recovery, security of supply, competitiveness and the realisation of our renewable electricity targets, as well as regional balance in our recovery.

No doubt EirGrid's strong professional independent management and operation of the transmission network, as well as good regulation, has further contributed to our excellent networks infrastructure and its reliability. It has also assisted in the introduction of strong competition in the generation and supply business. In turn, strong competition in generation, underpinned by the single electricity market, SEM, exerts downward pressure on wholesale prices, which is good for competitiveness.

Another key project, EirGrid's east-west electricity interconnector between Ireland and the UK will be completed by the end of next year.

It has been argued elsewhere that the severe step down in economic activity ought to result in the reining in of investment in this area. It is true that the contraction of the economy has been dramatic but energy investment is for the long term. Therefore, the current economic downturn does not in any way diminish the need to complete the Grid 25 strategy and other necessary investments while extracting best value in the new environment.

I reject the assertion in the motion that Ireland is three to five years behind competitor countries in terms of rolling out high speed broadband. International comparisons of retail broadband services are conducted periodically. The ComReg statistical report for end 2010 noted the latest OECD broadband data ranked Ireland 13th of 19 EU states surveyed for fixed-line broadband penetration per 100 inhabitants. Indeed, Ireland ranked third of 18 EU states surveyed for wireless broadband penetration per 100 inhabitants. Our leadership position on wireless and mobile broadband is an example of how the market has responded to demand for broadband from people in sparsely populated rural areas.

A wider report on broadband services in 72 countries, published in 2010 by the University of Oxford and the University of Oviedo, Spain, concluded that the broadband services currently available in Ireland are capable of meeting the requirements of today's broadband applications and overall, in terms of broadband quality and penetration, ranks Ireland 13th of the 72 countries studied.

The fact is that Ireland has made significant progress on broadband penetration, speeds and competition. Commercial operators have been investing steadily in rolling out critical communications infrastructure in Ireland over the last number of years. That investment has been of the order of €400 million to €500 million per annum.

In terms of next generation broadband, speeds of up to 100 mbps are already available to 500,000 households and industry investment is set to continue in the upgrading of services available. The Government is fully committed to supporting and driving the accelerated roll-out of high speed broadband. Under the NewERA proposals in the programme for Government, there is a commitment to co-invest with the private sector and commercial semi-State sector to accelerate the roll-out of high speed broadband. This means higher speeds, to more places, quicker. Last week, I convened the latest meeting of the next generation broadband, NGB, task force. Its purpose is to report on the optimal policy framework and to identify a roadmap for the speedy delivery of high speed broadband availability throughout Ireland. The NGB taskforce, which I chair, will report by year end and it is my intention to quickly proceed to implementation.

The State has also invested, where the commercial sector has not delivered. Initiatives such as the metropolitan area networks, the national broadband scheme and major international interconnectivity projects are delivering important infrastructure and services to areas of Ireland which could not be served commercially. As a result of the combined efforts of Government and the private sector, a basic broadband service will be available to all citizens across Ireland well ahead of the EU target date of 2013.

Reverting to energy issues, one of the fundamental objectives of energy policy is competitiveness of energy supply for the economy and society.

Irish electricity prices were for many years above the EU average. This was primarily due to our high dependence on imported fossil fuels, particularly gas.

The Government remains firmly committed to increasing competition as the best means of exerting ongoing downward pressure on gas and electricity prices. Moving to greater use of renewables will also reduce the impact of sudden surges in international gas prices on Irish prices. While other measures to mitigate the cost of energy have been put in place in recent years, the drive for more, and better, competition in electricity and gas markets has had significant effects. Customers are availing of the benefits of value and choice by shopping around for alternative suppliers.

Analysis by the SEAI of official EUROSTAT electricity and gas prices shows continued convergence in Irish electricity and gas prices towards the EU average in the two years to end 2010. This is a welcome development.

However, in recent months, global wholesale gas prices have been trending significantly upwards. This has implications for both our electricity and gas prices in view of our high dependence on gas for power generation. This reinforces the arguments for continued investment in the electricity transmission infrastructure to achieve greater security and energy diversity, in particular, through renewables.

I must emphasise that the days of an ESB monopoly in the power generation and electricity supply sectors are long gone. There is strong competition in the power generation, due to the all-island single electricity market, underpinned by effective regulation and the independent transmission system operators, North and South. There is ever more vigorous competition in the electricity supply sector. This is to be welcomed. Greater competition is good for the consumer.

Of course, I accept that the ESB must be constantly vigilant in the promotion of cost efficiency in everything it does. I acknowledge the fact that the ESB has achieved what it has in the past decade while implementing a significant reduction in numbers employed. I also very much welcome the recent and groundbreaking deal agreed between the company and the unions on pensions. This will have major long-term benefits for the company. However, the focus on cost containment must continue. Therefore, I welcome the current negotiations between the company and the unions which are aimed at securing the delivery of the performance improvement programme of €280 million per annum by 2015.

The networks remain in ESB ownership and this was recently confirmed by a Government decision taken in the context of the transposition of the EU third directive on energy liberalisation. Under this arrangement, EirGrid continues to be the transmission system operator as an independent State company. In this sense, the ESB remains a vertically integrated energy utility, but with a strong and independent transmission system operator, and it is in this format that a minority stake in the company will be offered. The inclusion of these regulated network assets, North and South, in the minority offering should increase the attractiveness of the stake.

The importance of the electricity and gas sectors to economic and social development places the sectors in a unique position in the context of public policy and the national interest. It is my view, given the importance of the sector to the very economic and social functioning of the State, that we must continue to have a strong and direct presence in generation, networks and supply. This must be done in a way that protects overall economic competitiveness and does not deter private sector involvement in generation and supply. However, I have no wish to see a scenario in which Ireland would be unduly dependent on foreign-owned energy companies in a situation where it would be a small component of a larger European market. This approach does not preclude extracting value from the strong and profitable State companies we have built. The process of extracting such value and the implementation of any other structural change within the State energy sector must meet, however, the simple test that they are in the public interest in the widest sense.

I am strongly of the view that the sale of a minority stake in the ESB can be structured in a way that passes this test. As Deputies are aware, a group co-chaired by my Department and the Department of Public Expenditure and Reform has been mandated by the Government to report back by the end of November on the best approach to the proposed sale of a minority stake. Subject to a positive decision by the Government after consideration of the report of this group, I envisage the specific transaction being progressed throughout 2012.

It is incorrect to assert that the decision to sell a minority stake will inevitably lead to the State losing its majority ownership. I have already stated and the amendment emphasises that the State will continue to have a strong majority shareholding in the ESB. This will ensure the company, while continuing to have a strong commercial focus and remaining profit-making, will retain the key role that it has in the electricity market. It will be the task of the group to which I referred to assess the level of stake that might be offered, taking account of energy policy parameters, including regulation, and the objective of maximising yield. The overall objective is a transaction that produces a compatible minority partner for the ESB.

I have no wish to be in the position where outside forces are dictating macro fiscal policy. I would much prefer to have been in government when the country was awash with money. However, Ireland is on the way back. Sinn Féin economic policy would send Ireland the way of Greece. We have a strong underlying economy worth protecting. We are keen to grow that economy within the constraints on us. We can find a compatible investor that will not diminish the role played by the ESB. We are not dependent on a golden share, as has been stated. We are retaining majority control. This is not a first step towards privatisation. We must raise funds under the terms of the memorandum of understanding, at least some of which can be used for re-investment purposes. The Government did not drive the economy onto the rocks, but we are determined to refloat it and regain sovereignty over our own affairs. I, therefore, commend the amendment to the House.

Minister for Public Expenditure and Reform (Deputy Brendan Howlin)

My colleague, the Minister for Communications, Energy and Natural Resources, has addressed energy policy and related issues associated with the Government's decision to sell a minority stake in the ESB. I will explain the broader policy context in which it has taken that decision.

Like my ministerial colleague, Deputy Rabbitte, I acknowledge the important role State agencies and the ESB, in particular, have played in the economic development of the country through the provision of key infrastructure such as energy and transport infrastructure and the commercialisation of resource-based industries, including agriculture. However, as we are aware, the country is in a desperate fiscal position, notwithstanding the fact that the public finances have stabilised. We are dependent on the financial assistance provided under the EU-IMF programme for the continued day-to-day operation of the State. That is an inescapable fact; one cannot wish it away. The overwhelming public need is to bring sustainability to the public finances and foster economic growth. That is what we are about.

The point has been made by Deputies opposite that the sale of State assets is not a traditional policy of the Labour Party and it is one I accept. In normal times we would probably not be proposing the sale of State assets, but these are not normal times. The Labour Party remains a key advocate of State involvement in the economy. For example, the programme for Government contains a commitment to the establishment of a public water company. The case for State involvement in areas of market failure remains as strong as ever. We could have had a more speedy and successful broadband roll-out in the initial stages had it been State driven, but the whole purpose of State supported economic activity is to support national development and it is entirely appropriate that the fate of any State company is subservient to this overall national goal. To suggest anything else amounts to ideological blindness.

To put the matter in context, this year the gap between the revenues and spending of the Exchequer will be of the order of €15 billion, excluding the costs associated with repairing the banking system.

Deputy Thomas P. Broughan

Does that include interest payments?

Deputy Brendan Howlin

It does.

Deputy Éamon Ó Cuív

It also includes the figure of €4 billion for recapitalisation.

Deputy Brendan Howlin

It is a fact completely denied by the Deputies opposite who maintain that we can walk away from the EU-IMF deal and somehow restore the lost resource by magic. The truth is that if we walk away from the deal and instruct the only funder available to the State to take a hike, as some of the Deputies opposite suggest, we would have to find that €15 billion immediately or shut down services. We would not be discussing minor cuts then, rather we would be discussing wholesale closures and sackings. It is not a sustainable position and it is clear that the gap between the revenues and expenditure of the State must be closed.

Deputy Martin Ferris

It is not sustainable to throw money at Anglo Irish Bank.

Deputy Brendan Howlin

No. We had no wish to throw money at Anglo Irish Bank.

Deputy Martin Ferris

The Government has done it.

Deputy Brendan Howlin

It was done by the previous Government. Money was committed solemnly by the State. Sometimes the Deputies opposite pay regard to the institutions of the State, but a solemn agreement was entered into by an elected Government and voted on by the Parliament. That is not something from which one can walk away without consequences.

Deputy Richard Boyd Barrett

Is that the case, even if it is economic treason?

An Leas-Cheann Comhairle

I am sorry. We are talking about the disposal of State assets.

Deputy Brendan Howlin

No. It would collapse the economy. I realise there is an anarchic trend in some of the Deputies opposite which would welcome this, but let us tell the people the truth. The programme for Government includes a commitment to release value from the State's portfolio of assets, with the intention of using the proceeds to fund investment in the productive capacity of the economy. The programme specifies a target of up to €2 billion in asset sales, drawing from the recommendations of the review group on State assets and liabilities, the so-called McCarthy group. As the House is aware, the review group reported in April and I have been consulting my ministerial colleagues on its findings and other related matters since. The report stresses how economic recovery must be the central concern of economic policy, including, in particular, the generation of sufficient economic growth to expand employment as a key driver of economic sustainability. It points out that the realisation of proceeds from State assets can assist in the fiscal adjustment and the generation of capacity to invest in future job creation. However, the group cautions against a rushed sale process because this would inhibit the attainment of proper and fair value and, in many cases, it would not be prudent or even possible, given the requirement for revised regulatory procedures and complex legislation.

None of this will be done speedily. In this regard, I have stated an informed view must be taken of what is strategic and essential to the national interest. It can be argued that the ownership and control of electricity, gas and other utility transmission networks such as water are strategic. However, it cannot be argued that outright 100% State ownership must be retained in all cases. The policy choice is to determine which assets to sell and in what circumstances. Any decision on State assets must also have regard to the agreement we have made with our funding partners. The latest EU-IMF memorandum of understanding includes a commitment to asset disposal as an essential contribution to the adjustment process in which we are engaged.

The Government believes releasing value from State assets can provide funds for reinvestment in the economy, as well as reducing the State's debt burden. Funds released for reinvestment in this way also have the potential to help leverage further private sector investment to grow what the original State companies did and create the next generation of State jobs since there is no private money to leverage them now. In this way, the proceeds from the sale of State assets offer the potential to create new employment and to generate additional economic activity. This is the policy objective we are setting about. To this end, the Government has mandated the Minister for Finance and me to engage with our counterparts in the European Union, the European Commission, the ECB and the IMF during the forthcoming October mission to discuss a potential programme of asset disposals and, in particular, how those disposals should be applied as between retiring debt and funding productive investment in the economy to help stimulate jobs and growth.

We have already broken new ground in the last two tranches of negotiations with the EU-IMF-ECB troika to indicate that we want to break away from the commitment given by the previous Government that any sale of assets would be used to retire debt. We want to use it for job creation and growth. In order to progress these objectives, a group co-chaired by my Department and the Department of Communications, Energy and Natural Resources has been established to consider the best approach in achieving such a sale, including, as the Minister, Deputy Rabbitte, said, energy policy and regulatory, legal, financial and economic considerations. All of those will be carefully balanced before we come to a final conclusion.

The policy of releasing value from State assets for productive investment in the economy and for debt reduction is an appropriate response to the horrendous fiscal and economic challenges faced by the economy, the people and the Government which we inherited from our predecessors. It will contribute to bringing sustainability to the public finances and, most of all, to fostering economic growth and job creation. This is the task we have set about. Objectively, in the first six months of office we have come a long distance from teetering on the abyss of economic disaster to giving ourselves some space as we move away and give hope to people that there is an economic future for investment in this country.

On that basis, I cannot accept or support the motion tabled by the Deputies opposite. I strongly recommend the Government amendment to the House.

Deputy Éamon Ó Cuív

Ba mhaith liom moladh a thabhairt do Shinn Féin as ucht an rún seo a chur síos. Tacaím go mór leis an rún. B'fhéidir nach ndéanaim sin ar son na cúiseanna a bhfuil Sinn Féin á chur ar aghaidh, ach tacaím go mór leis go bunúsach.

I commend the Government for having the courage to do a total about-turn and to implement the policies the previous Government was implementing to ensure the fiscal stability of the State and to ensure services to our people continue.

I have already expressed my opposition to the proposal that has been put before us in regard to the ESB. Our position is based on both experience and an analysis of the issues that are at stake. I do not have a principled objection to the State selling assets. I have always believed, as the Minister, Deputy Rabbitte, knows, that where Údarás na Gaeltachta owned factories and achieved value for those in order to build another factory, which would tie the factory owner to the location as he had then made a big investment and it was not easy to move, it was a gain-gain situation. Each case has to be examined on its merits. However, I believe the approach in this case is utterly flawed and wrong.

We must analyse the issue carefully. We had made a decision in government that we would not sell either the high voltage lines, which are the transmission lines, or the low voltage lines, which are the network of lines connecting to all houses, because they were a fundamental strategic national asset. To sell them to private interests would shift something that had been fundamental to the development of the State right back to at least the time when Fianna Fáil came into power in the 1930s. It is very interesting that one of the constant aims of Fianna Fáil was to promote the dispersal of energy so that industries could be developed throughout the country.

The Government owns a company in which the State interest is the only interest because 95.5% of the shares are owned by the State and the other shares are owned by the workers, who are working for the State. If there is a sale of a minority stake of anything up to 49%, the board immediately changes, and in that boardroom for the first time ever there will be people whose only interest is financial return. The long-term strategic interest of the State will be to them secondary and, as they are obliged under law, return for the shareholder will be the primary interest. What happens in that boardroom when there is a conflict between the return to the State in the national interest and the return to the shareholder in terms of a quick buck and dividend for the investor? It will create a chaotic incompatibility and will also lead to the danger of under-investment in the grid.

There is a tremendous investment programme taking place at present, and the EirGrid electricity investment project, Grid 25, is of vital importance. Let us spell out what we are talking about. The first thing we need this for is to reach our target of 40% of renewables by 2020. Unless we keep investing in the grid to bring it to where the wind is, it will not be possible to reach that target.

I am not suggesting that investment will give a direct repayment back to the ESB, which might make more short-term profit by not making that investment. However, on many strategic fronts, the State would lose because we would not reach our Kyoto targets and the more ambitious targets we have set. It would lose because we would be over-dependent on oil and what might happen in the event of any oil or gas shortage or crisis, or simply rising prices due to peak oil. It would lose because we would be exporting money from the country to buy oil when we could keep that money in the country for other purposes by having our own, indigenous energy sources. In other words, wind energy would become to Ireland what the bogs and turf energy were in previous decades in terms of our not having to export money to buy the raw materials for energy generation.

The second issue that will arise at board level is the reversal of a policy adopted immediately after the war by Fianna Fáil, namely, that of ensuring everybody living in the State would have access to electricity at a fair price. I do not know how much the Government knows about how the ESB prices lines into a domestic dwelling. The reality is that we have had a social and economic development policy which stated that electricity is the right of every citizen and focused, for example, on keeping the small schools of Ireland open. What will the shareholder whose only interest is the return on his capital want except the charging of the full economic price? They are a bit sore in Kerry this week, which was a hard week for them, but I will use the county as an example. If an electricity line to the back end of a Kerry has to be upgraded, the person concerned with economic return will say: "If there are new industries in west Kerry, let them pay for the upgrade of the line because I want a return on my shares".

It is interesting that we still face huge challenges in regard to investment. I am advised that Dublin is the only place in the country with a sufficiently robust electricity supply to host major data centres. While this may not be important to the financial investor in the ESB, it is incredibly important for balanced regional development in which we continue to invest in order that the location of such major industries must not necessarily be centralised in a single place. In other words, my point is that the minute one brings in a private shareholder, the decisions of the board, which heretofore had been determined ultimately by the national interest, will henceforth be determined by a significant part of that board, who will have an absolute obligation to their shareholders to try to maximise the return in respect of pure profit. I became a great believer in the semi-State sector when I saw what it could do. I acknowledge semi-State companies do things which perhaps they should not be doing but in respect of things the private sector would not do, where it would not invest sufficiently or where there is a strategic national interest, one should not allow in the private sector.

The motion before Members refers to broadband and I note the Minister has a limited vision with regard to broadband. He thinks people like me who believe fibre should be available throughout this tiny island are living in a dream world. However, for as long as the Government owns the ESB, it is terribly easy technically to wrap fibre around the ESB lines. As there is an ESB line into every house in the country, by owning those lines outright the State can take a decision to use the ESB to be both the electricity and fibre carrier. Moreover, the associated technology is becoming increasingly cheap and increasingly easy to implement. As one literally uses existing lines, one is not obliged to erect poles or anything else but simply wraps the fibre along the lines. Ultimately, by selling off a part-share in the lines that extend to each house in the country, the Government potentially is both doing huge damage to investment policy in this basic infrastructure and is closing down a new avenue that has opened up to resolve the issue of broadband in Ireland.

There has been talk of the agreement with the EU-IMF and I have heard many contradictions from the Ministers opposite. As the latter are so careful to point out to Members, the European Union and the IMF really are only concerned about the bottom line. They have made this clear both to the Government and to my party as long as the targets are achieved. Moreover, these targets are absolutely necessary anyway and even in the absence of the EU-IMF deal, we would be obliged to reduce the deficit as one cannot continue borrowing money for the current account forever. Even if there was no EU-IMF agreement and even if the money was available, it would be imprudent for this country to continue with the type of deficit we have. However, within that, there is room for manoeuvre. I was fascinated to hear the Minister, Deputy Howlin, state a few minutes ago that there is no problem with the EU-IMF because while they wanted the proceeds to be put into debt retirement, the Government intends to put it into new investment. Consequently, the idea that the spectre of the EU-IMF is driving the Government to this crazy proposal is absolutely belied by the Government's own words. If it intends to put this money into new infrastructure, and I concur new infrastructure should be built, it should not do so by this particular route. The really crucial infrastructure required here is physical infrastructure such as roads, broadband, electricity and gas. The aim should be to hold on to the basic networks for all these things. Although the electricity network could be the network for both broadband and electricity, the Government intends to sell a stake in order to be able to do what it could do much more easily by holding onto that stake. Therefore, it is a complete contradiction in terms.

I am aware the Fine Gael Party contains those who have never been believers in State companies. They could never recognise the fantastic achievements of Bord na Móna and never realised the State companies have created profitable industries where no one in the private sector ever would. Such people have an illogical hang-up about the disposal of State assets, which poses a huge challenge for the Labour Party. On the other hand, I am disappointed by the reaction of some unions. The threat of strike only feeds the paranoia of those right-wing people who believe the solution to all problems is to privatise everything and in the god of competition. I ask the unions to fight this bizarre decision by the Government and have no difficulty with them so doing in the national interest, although they should do so in a mature and reasonable manner.

I believe that holding the country to ransom in the manner proposed would only add steel and some validity to the argument that somehow there is a problem with State monopolies. I have never believed that those who work in State monopolies should be allowed to use muscle for their own personal gain. I believed those assets truly exist for the good of the nation and that people in such entities were entitled to good terms of employment. However, they were not entitled to either bad work practices or terms of employment that were far in excess of anything in comparative industries. I believe they should be efficient and should be models of good practice. I hope the vast majority of workers in the State companies, who share my view of what a State company should be, will not follow a leadership who will be completely destructive of the national interest in this case by making the case for the privateers who wish to begin disposing of these assets.

If the Government sells a 30% or 40% stake, it will set up a board on which two wings exist from the outset. There will be a wing that considers the national interest in investment decisions and another that considers the shareholder interest and the profit interest while making decisions.

An Leas-Cheann Comhairle

The Deputy must conclude his remarks.

Deputy Éamon Ó Cuív

These interests are incompatible and I believe in such circumstances, slowly but surely, step by step, the argument then would be put forward to privatise the entire entity. Consequently, one will wake up some day to find that when electricity is needed or wires to connect to important natural resources in wind and wave energy are needed, or wires to facilitate industrial policies or wires to bring basic services to households throughout the State are needed, we will be told their provision does not stack up on a profit and loss basis and the national interest cannot be served as it is now purely a private company.

An Leas-Cheann Comhairle

I call Deputy Catherine Murphy, who I understand is sharing time with Deputy Boyd Barrett. They have five minutes between them.

Deputy Catherine Murphy

One has been told constantly that Governments cannot create jobs. However, past Governments did create jobs in companies such as Bord na Móna, the ESB, Aer Lingus, Bord Gáis and Eircom, all of which contributed handsomely to the State. Moreover, such employment was of a high quality. If one compares the fate of Eircom with the ESB in the past ten to 15 years after the former was sold off, it is evident how Eircom was stripped of its assets and the only dominant concern was how much the shareholders would make. At the same time, the lack of investment meant the country went backwards because it did not have this key infrastructure. It demonstrates how important a strategic asset really is. Members have been told a decision has been made to sell a minority share but they have no idea what that means as it could be 5% or 49%.

We are going to have a dual interest in the boardroom of the ESB in the future which will comprise public and private interests. Private interest is about protecting shareholders. There could be all kinds of conflicts in that regard.

The ESB is being eyed up as it is a very valuable asset which has enormous potential into the future because energy will be a huge issue. Wind and wave energy will become more important when no more holes can be bored to get oil and gas. It is the asset in which we need to invest, rather than sell off. I have no doubt that people will be queueing up for it because of its potential. It could deliver a dividend in the future which would help to pay our way out of some of our current problems. I have serious concerns about interfering with the ESB in this way.

Deputy Richard Boyd Barrett

It is shameful that any Government, particularly one which includes the Labour Party, would consider selling any part of a vital strategic public asset like the ESB, Bord na Móna or Coillte. It is even more shameful that it is being done under the diktat of the European Union and the IMF to pay off the private debts of bondholders, speculators and vultures of the financial market.

It is extraordinary that because of the greed of people in the private banking system who crashed the European economy, the response demanded by the European Union and the IMF, and implemented by the Government, is to take another vital area of the economy and hand it over to the same privateers and profit and greed driven people who crashed the financial system. It beggars belief.

It is the definition of betrayal, sell-out and economic treason that any Government would consider giving away even a part of something as important as the ESB. It is a slippery slope to begin privatising the ESB. The State was transformed from being a Third World country to a modern state primarily as a result of a public enterprise, the ESB, assisted by other publicly owned enterprises such as Bord na Móna.

Now, when the vultures of the private market have failed us, is the time we need such enterprises most. We need to invest in them to put people back to work and put our economy on a rational and sound footing. We need to invest in the things our society needs. We should aim for energy security, infrastructure and the provision of jobs for the people. I challenge the Government to tell me if it or the European Union and the IMF can put forward any justification why in a so-called rescue package it is a good idea for us to sell our vital State assets. How does that help economic recovery?

An Leas-Cheann Comhairle

I ask the Deputy to move the adjournment of the debate.

Deputy Richard Boyd Barrett

How can one define that as anything other than asset stripping?

I totally disagree with the advice of Deputy Ó Cuív to the unions. I hope Sinn Féin Deputies agree that we need a massive mobilisation of working people in this country on the streets on 8 October when the European Union and the IMF come here to show them that we are not allowing the Government to sell our vital strategic assets. We need to maintain that mobilisation to stop vultures asset stripping the country and the people who are sitting opposite from selling the country out and doing away with any of the assets we need if we are to have any chance of economic recovery.

Debate adjourned.