Brendan Howlin (Wexford, Labour)

Since I announced the Government's plans for a programme of State assets disposal, there has been a great deal of misinformation circulating about the Government's intentions in this regard and of the impact of any such disposals.

From the outset, claims have been made that the Government would be selling off key strategic infrastructural assets in a fire sale and that what it proposed to do was not in the national interest. I have again heard the traditional criticism that the Government's proposed disposal of State assets is akin to it selling off the family silver. In reality, what family, if faced with real financial difficulties and a substantial amount of debt, would not consider drawing on whatever assets and investments it had to reduce its vulnerability. As a nation, we are in such a situation. Our outgoings continue to exceed greatly our income in the form of taxes and other revenues and, as every Member of the House is aware, we are dependent on funding from the EU-IMF to meet our day-to-day funding needs. In return, we are required to implement over a specified period a programme of fiscal reform that will bring our budget back into balance, which we will do. As part of this programme, and as already agreed by the Labour Party and Fine Gael in its negotiated programme for Government, we are also committed to reviewing our portfolio of State assets and to releasing value from some of these assets at this time of national need, but only on the basis that the State achieves fair value from any assets that are to be sold and that doing so does not damage our prospects for recovery and for future economic growth.

I have heard Deputies opposite state that the semi-State companies involved have contributed hugely to our economic development in the past. I agree that they have been significant contributors to our economic development over past decades. However, that is not a justification for refusing to review the contribution they can make now and into the future nor does it necessarily mean their continuation in State ownership represents the best way forward for them or the State. Time does not stand still and we cannot be prisoners of the past. Let us take the example of Bord Gáis. It has built up a successful electricity generation and supply business and is now a valuable asset within the State's portfolio of assets. However, from a strategic point of view, the question that must be posed is whether it is necessary or in the best interests of the State to have two significant electricity generation and supply businesses which are in competition with each other in public ownership.

Opposition Deputies have also drawn comparisons with the sale of our telecommunications network through the privatisation of Eircom. The Government is conscious of the fall-out from the Eircom experience and the programme of disposals which I announced have been carefully crafted to ensure that such dangers are avoided this time and that the mistakes made in regard to previous privatisations, which are evident to every Member of this House, are not repeated. In this regard, I have already made it crystal clear that the Government has no intention of selling off strategic infrastructural assets. We have agreed to sell BGE's energy business. Its gas transmission and distribution systems, including the two gas interconnectors, are not for sale. We have agreed to sell some of ESB's non-strategic power generation capacity in order to reduce ESB's market dominance. This is part of the strategy of keeping the ESB as a vertically integrated company in State ownership, otherwise it would be under threat. This also provides ESB with alternative generating capacity at a time of critical mass and provides for greater competition in the electricity market into the future. We have agreed to consider the sale of some of Coillte's assets. As I pointed out when I made the announcement on the sale of State assets, the decision in respect the sale of Coillte assets is different. Evaluation of decisions in this regard is ongoing. The evaluation is likely to focus primarily on the harvesting rights of Coillte forests, in other words, on the trees themselves, but the land on which the forests are grown will remain in State ownership, which is very important. Moreover, the Government is only agreeable to dispose of the State's remaining stake in Aer Lingus because the remaining 25% shareholding is no longer a strategic asset. This is because, as Deputies would admit were they being honest, it does not enable the Government to determine Aer Lingus policy on commercial decisions such as the use of the company's Heathrow slots.

Some Deputies have suggested that rather than sell off these semi-State assets, the Government should actually invest further in these assets in areas such as wind and wave energy, in which there is potential to create significant numbers of new jobs in what are described as the emerging technological areas. Other Deputies have suggested the Government should go ahead with the sales but simply should keep all of the money raised for reinvestment, rather than using any of it to reduce the overall level of debt. However, as the Deputies opposite are aware, these suggestions are not realistic. Where would the Government get the funds to invest further in these assets when it does not have access to the financial markets but is wholly reliant on the EU-IMF programme for even its current funding requirements? Moreover, I note the Government's capital plan has laid out €17 billion in capital investments. As regards the use of funds generated from the disposals, agreement has been reached after protracted negotiations with the troika that one third of the proceeds can be retained and will be available for reinvestment in the economy to help stimulate jobs and growth. This represents a significant shift in the position of the troika, the original position of which made crystal clear to the Government, from its first meetings with the former on assuming office, that all of the proceeds were to be used for debt reduction. This is what the troika requires in other programme countries such as Portugal and Greece. I am satisfied this represents a real breakthrough in the Government's negotiations with the troika and is a very satisfactory outcome for Ireland. It offers the potential for the Government to have access to €1 billion for much-needed reinvestment in the very areas pointed out by Members opposite.

In this regard, I should also mention the Government has reformed the manner in which the State, as shareholder, engages with its key semi-State companies. Last year the Government established NewERA, which is now taking a proactive role in overseeing corporate governance from a shareholder perspective of all the commercial semi-State companies in the energy area, including the ESB, EirGrid, Bord Gáis, Bord na Móna and Coillte. NewERA now advises Ministers on proposals for new capital investment by these companies, approval of borrowings, dividend policy and so on. NewERA also is working closely with the strategic investment fund and the National Pensions Reserve Fund to ensure that potential commercial investment opportunities are identified and exploited fully. Consequently, in addition to the disposal of some of the non-strategic State assets, the Government also seeks to make the best use of the remainder of the State's portfolio of assets that will remain in State ownership and this includes identifying the best opportunities for investment in these sectors.

As I stated at the outset, there has been much misinformation about the Government's asset disposal plans over recent weeks. Some of it has been ill-informed and some has been downright mischievous. In fairness, however, I must also acknowledge that I have heard some legitimate concerns being raised by Deputies opposite in respect of some of the wider implications of the proposed asset disposals and in particular, a number of Deputies have raised concerns in the context of Coillte and its forests. Fears have been raised about a potential lack of public access to the forests for walkers and for recreational purposes. Queries have been raised about whether the forests, if sold, would be replanted after the current crop is harvested. Questions have been raised about the impact of any disposal of Coillte forests in terms of the climate change agenda and the position regarding carbon credits in particular. More generally, questions have been asked about whether the Government has engaged with thestaff interests in the companies involved with regard to its plans.

I acknowledge and accept these are all genuine and real issues that must be addressed. However, I assure Members that these issues already were identified in the preliminary analysis undertaken by the Government in the form of the interdepartmental working group, which reported to Ministers in December 2011. That group considered a range of State assets identified by the Government as potential candidates for disposal, which included Coillte. I can confirm the Government is conscious of all the issues I have outlined and that they all will be taken into account before final decisions are arrived at by the Government with regard to what assets of Coillte are to be sold and the manner of the sale.

In this regard, I already have explained that the Government decision with regard to Coillte and its assets is different from that in respect of Bord Gáis and the ESB. Whereas specific decisions have been taken and announced regarding the assets that are to be disposed of in the case of the energy companies, no definitive decisions have yet been taken with regard to Coillte. The Government has agreed that Coillte is to be included in the asset disposal programme but my announcement of last month indicated the need for further consideration on how this was to be done. I already have indicated that any disposal in the case of Coillte is likely to focus primarily on the harvesting rights but that primarily is because I wanted to make it clear there would be no question of any disposal of Coillte land holding. The Government is determined this should be maintained in State ownership. As for the final decision on how best to release value from Coillte, since the Government made its announcements, a number of ideas have been presented to it, all of which are being considered. I will revert to this House with any decisions arrived at and Members can debate them again.

A working group, comprising my Department, the Department of Agriculture, Food and the Marine and NewERA, currently is considering this matter in detail. NewERA is preparing a valuation of the company and its assets and the working group will report back to Ministers by the end of March with the outcome of this assessment. Its report also will set out any policy, regulatory, legislative, corporate governance or financial issue that must be addressed to facilitate a disposal of Coillte or its assets. On completion of this report, together with similar reports also being prepared on Bord Gáis Energy and the ESB's non-strategic power generation capacity, the Government will be able to take further decisions on how best to proceed with the implementation phase of the asset disposal programme announced. I assure Members the Government will ensure that all the implications of each asset disposal will be individually and carefully considered with a view to mitigating any potential negative impacts associated with such disposals. This will include ensuring the continuity of access to the forests as a public amenity that is highly valued by the Government.

International investors are again beginning to look favourably on Ireland's long-term growth and prospects. The indications are, therefore, that there should be significant interest in investment opportunities in this State. The Government hopes and fully expects to benefit from this renewed international interest as the State assets are prepared to be brought onto the market. I am confident the Government will be able to secure good value for the assets it puts on the market.

I will conclude by noting that as I indicated previously, there will be no fire sales. If the Government is not convinced that any particular asset is achieving fair and good value for the Irish taxpayer, that asset will not be sold.

See this speech in context