Thursday, 13 April 2017
Ceisteanna - Questions - Priority Questions
Sale of State Assets
1. To ask the Minister for Public Expenditure and Reform the details of the discussions and correspondence between EUROSTAT and his Department in relation to the use of proceeds from the sale of Bord Gáis; and if he will make a statement on the matter. [19013/17]
This is a follow-up question to a parliamentary question I put to the Minister, Deputy Simon Coveney. The Government had the ability to spend €400 million from the sale of Bord Gáis on housing and it was not able to spend it. I want to know why.
In the context of planning for the use of the proceeds arising from the State assets disposal programme, which included the sale of Bord Gáis Energy, my Department consulted with the Central Statistics Office, via the Department of Finance, in regard to the statistical treatment of the proceeds and their impact on the general Government balance. My Department did not have direct discussions or correspondence with EUROSTAT on the issue as it was a matter for the Department of Finance.
The position in this regard is that, under EUROSTAT rules, the amount of any dividends received from a State company, including proceeds from asset disposals, which can improve the general Government balance is limited by reference to the entrepreneurial income of the relevant company in the previous year. In order to comply with the fiscal rules of the Stability and Growth Pact, the scope for the Government to use such dividends for additional expenditure on a general Government balance-neutral basis is limited to the amount by which the dividends paid actually improves the general Government balance. This has meant that in order to take maximum advantage of the asset disposal proceeds, they cannot all be availed of at once but must be remitted to the Exchequer over a number of years.
It is for this reason that Ervia has, to date, remitted €350 million to the State by way of special dividend since the sale of Bord Gáis Energy was completed, that is, €150 million in 2014, €100 million in 2015 and €100 million in 2016. A further special dividend of €100 million is expected in this year. It is proposed that the remainder of the proceeds will be paid to the Government on a phased basis, as required by Government, and in a manner that is consistent with protecting Ervia's investment grade credit rating while also maximising the general Government balance impact of the payments.
What I am trying to get a sense of is where this money is being spent. In budget 2015 the then Government announced that €400 million of the proceeds of the sale of Bord Gáis Energy was to be made available to establish an off-balance sheet financial vehicle to provide financing to approved housing bodies. In the words of the Minister, Deputy Coveney, "However, despite a high level of engagement with a wide range of potential providers and financiers of social housing, no new model of provision and-or financing of social housing on an off-balance sheet basis could be identified." That included consultation with the Department of Public Expenditure and Reform, as per the Minister, Deputy Coveney's answer.
The Government had €400 million on the table and despite all the best brains of the Department of Public Expenditure and Reform, the Department of Finance and the Department of Housing, Planning, Community and Local Government, and despite all the spin about the Government commitment to housing, the Government could not spend it, although there are people on our streets and children in emergency accommodation. What is this money being spent on? The Minister referred to all the money the Government is getting back from Ervia. What precisely is it being spent on and can people see where the disposal of State assets is going?
The broad answer to that question is that, over the last number of years, €1.5 billion has been received by the State that is the proceeds of State assets and the disposal of State assets. It has been used at different points. For example, in June 2013, €150 million was made available for investment in schools and roads projects. An amount of those disposal gains has been ring-fenced for the national children's hospital. A further €200 million was allocated in May 2014 for investment in a range of capital projects across the country.
In regard to what has happened to the €400 million that has accrued from the sale of Bord Gáis Energy, that funding is available to Government but we have to use it in a way that is consistent with EUROSTAT rules, which we are working to do. More broadly, what we have been able to do is allocate over €5 billion to public housing in a conventional manner from the Exchequer to respond to the exact need the Deputy has identified.
I have just left a budgetary oversight committee meeting with the Minister, Deputy Noonan, who was describing the French housing model that is being used to get over the EUROSTAT rules, yet we have thrown back €400 million. What is actually being spent on housing of the money from Bord Gáis Energy is €10 million per annum. To spend €10 million is very different to spending €400 million and it exposes the spin of this Government in regard to housing. The money was there - the cash was on the table - yet the Government could not work out how to spend it. At the same time, Ministers can go around quoting examples from other EU countries which are spending money on housing in a way that is consistent with the EUROSTAT rules.
What is going to happen in regard to AIB? If AIB is sold, what will happen following the disposal of that asset and where will that money go? What is the Department of Public Expenditure and Reform doing to ensure this Bord Gáis Energy money actually gets spent on housing?
I will deal first with the Deputy's description of spin in regard to the investment in public housing. There is no spin about the fact €5 billion has been made available for public housing investment.
The €5 billion is being invested and I have proof of this. I look at the progress being made in Dominick Street where a public housing project, long heralded and much needed, is now going ahead. I look at O'Devaney Gardens, a project that, when it collapsed over ten years ago, was emblematic of the beginning of the collapse of our economy. Later this year we will see the sod turned for the first phase of that project.
With regard to Deputy Calleary's concluding point on the prospects for AIB, as he will be aware, and I have answered questions on this in the House before and am happy to do so again, under the EU rules what that gain will be is a redefinition of an asset on the balance sheet, so it will go from being a share that the Exchequer holds to being a value that we receive via a payment which we are required to use to reduce the value of our debt.