Dáil debates

Wednesday, 5 October 2011

1:00 pm

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Question 5: To ask the Minister for Finance his negotiating position with the EU-IMF Troika in relation to the sale of State assets; and if he will make a statement on the matter. [27641/11]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The fourth quarterly review of the EU-IMF Programme of Financial Support for Ireland takes place from 11 to 21 October 2011. The review will comprise a series of meetings to evaluate all the elements of the programme covering fiscal developments, including the comprehensive spending review and potential asset disposal, the macroeconomic outlook, progress on commitments in restructuring the financial sector and structural reform.

Under the EU-IMF programme, the Government is committed to considering options for an ambitious programme of asset disposals, based on the programme for Government and the report of the review group on State assets and liabilities, and to preparing a draft programme of asset disposals in this context to be discussed with the troika in advance of taking final decisions on the programme to be pursued. This draft programme is to include the identification of the potential assets to be disposed of, any necessary regulatory changes and a timetable for implementation. As a signal of its intent in this area, the Government has announced that it is prepared to dispose of a minority stake in the Electricity Supply Board.

The use of the proceeds of any such asset disposals will be a key issue for discussion with the troika. The Government has already signalled its wish to retain some of the proceeds for reinvestment in job creation initiatives in the economy as part of the NewERA programme. Beyond this, it would not be appropriate to discuss any further details of our negotiating position in advance of our discussions with the troika on the matter.

3:00 pm

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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It is very hard to get straight answers about the outrageous plan to dispose of State companies and State assets, in part or in whole. As I understand it, and the Minister can correct me if I am wrong, there is no specific requirement in the EU-IMF memorandum of understanding that we sell State assets. It says that the Government will consider options for an ambitious programme of asset disposals based on the programme for Government. Will the Minister clarify that it is his Government that wishes to privatise these assets? It is not a specific demand of the EU-IMF. The Government wants to do it, but it wishes to put the blame on the EU-IMF for carrying through this deranged proposal to get rid of this country's family silver. These are precisely the assets we need to invest in to maintain and create jobs and to fuel economic growth.

Will the Minister clarify that issue for Members? Will he also clarify whether we are talking about €2 billion or €5 billion of State assets? The report suggests it wants €5 billion of State assets. Is the Minister now saying €2 billion will be used to pay the bankers' gambling debts and that some or all of the rest of the €5 billion, which he may or may not be considering, will be used to invest in jobs programmes as he has suggested?

What justification can the Minister or the troika, if he is saying it is it which is making this demand, give for privatising successful State companies, such as the ESB, or other State assets? It is a drop in the ocean in terms of the debt. It will make very little difference to the debt. What is the rationale for selling off the family silver other than for corporate vultures to use the economic crisis, facilitated by the Minister, to asset strip this country of vital State companies?

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The European authorities and the IMF require the sale of State assets as part of the programme. I am sure the Deputy is au fait with the debate in Greece and Portugal. One could see the difficulty in Greece when the troika visited Athens and insisted on a very large privatisation programme. There was no similar outcry in Portugal but there was a requirement for a very significant sale of state assets there also.

The Government, which supports the sale of non-strategic State assets, has put the only figure on the table and that is in the programme for Government. We said we would sell non-strategic State assets to the value of €2 billion. We know from informal suggestions from the troika that it regards that as a modest initiative but it has not nominated a higher figure. These issues will be thrashed out in the discussions starting next week.

In terms of the proceeds of the sale of assets, it would be our preference to use the proceeds for a stimulus package to create jobs in the economy through the provision of modern infrastructure.

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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The Minister is not answering the question. What is the rationale which the troika or he is putting forward for the sale of State assets? How is it of benefit to this country and its prospects for economic recovery or growth? I cannot see any other logic behind the demand of the EU-IMF, or the Minister's support for the sale of State assets in the programme for Government, other than asset stripping. The Minister is not saying how it will benefit us.

Is the Minister aware that when state companies in Europe are privatised, in particular energy companies, investment in them falls because the private shareholders in them demand dividends on their shares? It does not lead to increased investment in the economy or jobs growth. It often goes in the opposite direction. Is that not the real danger if we go down this road?

Will the Minister please define what the hell a non-strategic State asset is? How can the ESB be in any way described as a non-strategic State asset?

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The movement towards the private sector holding infrastructural assets, such as those about which we are talking, rather than the public sector has been a part of economic management in all modern economies for the past 30 years, of which I am sure the Deputy is well aware. The European authorities are of the view - it is supported by any economic theory one would like to read - that assets in private hands will be used more efficiently for the public good than assets in public hands in general terms.

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Did it work with the banking sector?

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The line is drawn between what is strategic and non-strategic. A minority shareholding in any State company is not strategic.