Joe Higgins
Ceist:11. Deputy Joe Higgins asked the Minister for Public Expenditure and Reform when he expects the possible sale of State assets to be discussed at a meeting of the Government. [29692/13]
Amharc ar fhreagraThursday, 20 June 2013
Ceisteanna (11)
Freagraí ó Béal (6 píosaí cainte)
As the House will be aware, the Government has initiated a programme of State asset disposals as part of commitments made in the programme for Government and under the EU-ECB-IMF financial assistance programme, with a view to generating resources for additional investment in job creation initiatives in the economy.
Various aspects of this disposal programme have been discussed at Cabinet on a number of occasions since the Government came to office in February 2011 and Ministers had a further opportunity to discuss the Coillte harvesting rights aspects of the programme during the Government meeting yesterday. On foot of yesterday's meeting, I can inform the House that the Government has agreed with the joint recommendation of myself and the Minister for Agriculture, Food and the Marine that now is not the appropriate time to proceed with the sale of harvesting rights in Coillte. Instead, the focus needs to be on the restructuring of Coillte as a company to address the issues that were identified in the reviews undertaken. To that end, I wish to further inform the House that Coillte is to undergo a fundamental restructuring, to be overseen by NewERA and the relevant stakeholder Departments, which will include operational streamlining, financial de-leveraging and a critical examination of the disposal options for its non-core activities such as telecoms and wind. A robust analysis will also be carried out to evaluate how to give effect to a beneficial merger of Coillte with Bord na Móna to create a streamlined and refocused commercial semi-State company operating in the bio-energy and forestry sectors, as committed to in the programme for Government. A priority in this regard will be the annual delivery of a material financial dividend to the State by Coillte. Finally, we intend to fill the significant number of vacancies that will arise on the Coillte board this year by persons with relevant experience and commercial expertise to drive the restructuring process and the merger with Bord na Móna if this is approved by Government.
We learned of the decision not to proceed with the privatisation of Coillte and its harvesting operations at the meeting of the Oireachtas Joint Committee on Finance yesterday. I really welcome the fact that the Government was forced to recognise the massive opposition that existed around this country to any moves in the direction of the privatisation of our woodlands. That message came through loud and clear to the Minister and the Government. I ask that the reform of Coillte referred to by the Minister be done in a different way from what reform and restructuring usually means for this Government, namely, downsizing, crude restructuring, job cuts, worsening of conditions and so forth. I ask that the Government reforms Coillte in a way that brings the workers in Coillte and Bord na Móna to the heart of the management of the process in these vital areas of national life and economic activity, to give them real democratic ownership of the valuable work they do. I ask that the Government also bring in the woodland devotees, those people who are genuinely devoted to the woodlands and all they represent for our people, into the process. In that way, we will get an entirely different approach.
I had to leave the committee meeting yesterday for duties in this Chamber and therefore I missed some of the Minister's further elaborations. The troika said that the Government had to raise €3 billion, 50% of which was to be used to pay off bondholders. What is the arrangement with regard to that particular demand by this dictatorship, in view of the Government's decision on Coillte?
During the negotiations on the programme for Government, one of the issues that arose from the Fine Gael side was that party's plan to promulgate a share-holding entity, NewERA, which mirrored what happened in a number of progressive countries, including all of the Scandinavian countries and Britain, to get better value from State assets. I must say it has been a very worthwhile exercise. One of the things we discovered, in the drilling down of the work done by NewERA, is the situation within Coillte, namely, that even with all of the commercial forests which the Deputy has lauded, Coillte has struggled to generate cash from its trading operations to date. A large portion of Coillte's profits and cash flow has come from the sale of land and from exceptional gains on the sale of immature forests. In other words, what Coillte has been involved in is selling not only harvesting rights, but also land, on a piecemeal basis. That has been generating such cash flow and profits as the company has. We must fundamentally restructure that company and must make our decisions rationally and on a commercial basis.
I do not know for certain but I believe that the synergies between Coillte, with its very significant land holdings across the State, and Bord na Móna, which has a great track record but whose core business - the production of turf - is running out, could be harnessed to develop a very important, new State bio-energy company. Our objective between now and the end of the year is to test that thesis commercially to ascertain the benefits, assets, liabilities and requirements to make that a reality. When we have that due diligence or analysis completed, I will return to the House and present the findings to Deputies.
People who I respect and who had many dealings with Coillte were massively critical of the leadership and management of the organisation. This was the fault of successive Governments which allowed them to do this. Bringing the Coillte workers, woodland devotees and people who appreciate our woodlands to the heart of the management of a reformed entity is the critical issue. The Minister did not answer my question on the €3 billion and the 50:50 divide demanded by the troika dictatorship to pay off the bondholders. What is the arrangement in this regard?
I should have mentioned it. Deputy Higgins is aware the original requirement for the troika was to use all of the proceeds from the sale of State assets to retire debt. I have spent considerable weeks and months trying to change this view with some success. After much negotiation the agreement was that 50% of the take could be used directly for job creation and would be rolled into the stimulus package. It will be part of the variety of elements we will use, including the new Irish strategic investment fund which will be created when we transfer the €6.4 billion from the National Pensions Reserve Fund into the new investment vehicle for Ireland. While it was originally agreed the balance of the money would be used to retire debt, after further interaction with me the troika has agreed for it to be used as a backstop in the first instance. It will eventually be used to pay down debt, but in the first instance it can be used as a backdrop to leverage funding including for public-private partnerships, because one of the problems we have had in getting these off the ground is no triple A rated bank in Ireland to partner banks such as the European Investment Bank. Other countries have used funds, either asset sale funds or structural funds, as a backstop. This is the type of model we are using. In the short term, all of the money from the sale of State assets in one form or another will be used in job creation.
The Minister should pull back from all privatisation.
Written Answers follow Adjournment.