Thursday, 19 April 2012
Sale of State Assets: Statements, Questions and Answers
Brendan Howlin (Minister, Department of Public Expenditure and Reform; Wexford, Labour)
My party negotiated with Fine Gael on a programme for Government. Part of that programme involved the sale of €2 billion of assets because I believe in a stimulus. We cannot simply have a balanced budget approach, necessary as that may be for us to get out of our economic difficulties.
There are three strands to the problem. The first is that we need to pay our own way by balancing our budget over time. We have set out on a path to doing that by 2015. The second strand is a stimulus package. God knows, the potential for this is limited at present because, as Senator Gilroy noted, nobody except the troika is prepared to give us money at anything approaching an affordable rate. The troika is setting out conditionalities for the money it is giving and it is not allowing its funds to be used for stimulus measures.
We have to think outside the box in this regard. Sometimes we have to hang up ideology to get out of a crisis. My party is a passionate supporter of State enterprise because we believe it was a driver of industry and job creation at a time when the private sector would not get involved. The success of Bord na Móna, the ESB and Aer Lingus are testament to that. However, one cannot be trapped forever in the same groove. We have to think about the next generation of State companies and how to deleverage companies that are successful. Let them be dealt with by the private sector and use the money to build up the next generation of State jobs and enterprises which private capital will not provide. Irish water is one such proposal.
I agree with Senator Byrne regarding the transparency of the process. As far as this Government is concerned, it will be entirely transparent. I have already issued a protocol that my staff and I will not be involved in it in any hand, shape or form. I will not meet anybody who expresses an interest in any State company. Interested parties will have to work through a channel that I have set up at arm's length. I have sent that protocol to everybody who is involved in the process.
I gave a full report on the lobbyist legislation to the Joint Committee on Finance and the Public Service yesterday in the context of discussing the progress being made on several Bills. The draft heads of the whistleblowing Bill have also been circulated. This is complex legislation and I look forward to receiving the committee's feedback on it before June. The lobbyist legislation is being worked on and we will publish it before the end of the year. A freedom of information (amendment) Bill will also be introduced this year. I have circulated my initial thoughts on that Bill to the Government. My objective is to undo the harm done by the Freedom of Information (Amendment) Act 2003. However, I do not want to simply repeal the 2003 Act because approximately 40 of the 65 or 66 provisions contained in it were recommended by the Information Commissioner. I want to wind back certain measures as well as broaden the Act's remit. This work is ongoing.
I agree with Senator Byrne on energy security. This is why we are retaining the energy infrastructure that provides the distribution paths for gas and electricity. Senator Michael D'Arcy's description of the experience in Great Island in Wexford is pertinent. The power station at Great Island was sold to a Spanish company, Endessa, which has since invested hundreds of millions of euro in it. The State got a good return from the sale and the by-product is that we are able to get natural gas in County Wexford. However, the notion that the ESB should not be allowed to sell a power station for ideological reasons is daft. Bord Gáis was established as a gas distributor but it subsequently decided to enter the electricity business. Would a wind farm suddenly become a strategic asset simply because it is purchased by Bord Gáis? I advise Senator Cullinane that not every tree is a strategic asset. We are growing them as a crop and we need some flexibility in this regard.
It is not my direct area of responsibility but during the negotiations for the programme for Government I was taken by the NewERA concept, which would achieve the objectives to which Senator Barrett and others referred. We have not always received great value from our semi-State companies. They have on occasion invested in projects that were not necessarily in the interest of Ireland Inc. Some of them have made proposals to invest offshore for the sake of building corporate empires rather than the best interests of the Irish State. I would prefer State companies to invest their resources in Ireland and we will insist on that through the newERA entity, which will allow proper corporate governance and the leverage of borrowing at scale. These are innovative initiatives.
Senator Gilroy referred to ideology and Keynesian investment. That is a point I made strongly. Several Senators spoke about Irish water. Irish water is an important new State company but a degree of confusion has arisen because of the way things were said on Sunday before a formal decision had been made. Irish water will be a new, entirely State owned company with a capital value of up to €3 billion. We need a proper water infrastructure because water is probably the most valuable of resources. It is certainly as important as electricity, gas, the road network or broadband. We have an indifferent water supply, however. When I was Minister for the Environment, I investigated group water schemes. The EPA produces an annual assessment of water quality and the quality of some of the schemes is far from satisfactory.
Every place in the country should have decent water quality and enjoy consistent water supplies without scarcity. There are real challenges in this regard, as we have seen in the south of England where supplies are at risk. We need to establish an integrated national company with the best skills available and that is what Irish water will offer. Yesterday's decision will have no impact on the sale of Bord Gáis Energy. We are selling off the energy generating component of that company. Irish Water will be a subsidiary of the infrastructure company, Bord Gáis Networks, until the day when it, perhaps, becomes big enough to stand on its own.