Pat Rabbitte (Dublin South West, Labour)

I move amendment No. 1:

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

"commends the Government for:

— its 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, EriGrid'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 whilst 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 show 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.

See this speech in context