# Fine Gael policy to sell off state assets to pay for job creation - good/bad idea ?



## redstar (15 May 2009)

I was watching Vincent Brownes program on TV3 recently where George Lee said that Fine Gael, if in Govt, intend to invest millions to create 100,000 jobs. This would be funded by selling off Bord Gais, ESB and other state assets.

In light of the Eircom experience, is selling those state assets a good idea ?


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## Protocol (15 May 2009)

*Re: Fine Gael policy to sell off state assets to pay for job creation - good/bad idea*

It would be if we could get a good price for them.


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## jhegarty (15 May 2009)

*Re: Fine Gael policy to sell off state assets to pay for job creation - good/bad idea*

Sell ESB generation is a great idea. 

The power grid should never be sold , that would be eircom mark 2.


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## jquinn (15 May 2009)

*Re: Fine Gael policy to sell off state assets to pay for job creation - good/bad idea*

Of course it is. What does a auctioneer/publican from Offaly know about generating electricity, transporting gas or anything else for that matter?

BUT - its how you sell them off thats important - the big problem with Eircom was turning a state monopoly into a private monopoly - a little bit more efficient (maybe) but completely gouging us with prices.
For ESB - power stations should be sold off pretty much separately, and you'd need a legal limit on the amount of generating capacity that any particular company could control - i.e. you only get benefits if you have lots of producers competing against each other, and as we can see with supermarkets, lots is more than 5. You'd also need interconnectors to UK / France to keep our boys honest, and, if the grid was being privatised - you'd need price caps set by similar prices in the rest of Europe. One of the favourite models for regulated monopolies (e.g. eircom) is to set a "return on capital" limit - so the companies immediately over-value their assets as much as possible, while never depreciating them; they also route all construction etc at highly inflated prices through sister companies - increasing even more the "asset base" - that they can then use to justify price increases.
Basically, monopolies, whether state or private, do nobody any favours and none of these companies should be privatised until there is a plan in place to ensure competition in each industry (pretty difficult with gas-pipes, I think).

Successive Irish governments have a pretty dreadful record in "creating jobs". Shannon Dev cost us millions every year and, even at the height of the boom barely created a handful of jobs. Jobs get created by companies trying to make money - not by governments taking it away and handing it out to their pet projects (Port Tunnel?, Lansdowne Road, Adamstown, .....).


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## csirl (15 May 2009)

*Re: Fine Gael policy to sell off state assets to pay for job creation - good/bad idea*

Agree with jhegarty - the generation could be privatised. Madness to sell the power grid - you'd end up with a "Railtrack" scenario. Better to have the grid under state control with its maintenance paid for through access charges to the generating companies. 

I dont think selling Eircom was a disaster. On the contrary, the Government did a brilliant job of it. They sold it for way way more than it was worth so the taxpayer got the maximum return - great marketing job. While in the short term, it may look like selling the Eircom infrastructure was a bad idea, it actually doesnt matter. In fact, the Government may have got rid of a future liability. Phone lines will be out of date in c.5 years - everything will be mobile. Eircom is now left with the waste disposal task of getting rid of all those ugly wires in a few years time. 

There are many other state companies that could also be sold. Opening up these sectors to competition should make them more efficient thus giving the taxpayer the double benefit of both the cash and better service.


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## redstar (15 May 2009)

*Re: Fine Gael policy to sell off state assets to pay for job creation - good/bad idea*

Normally I would agree with offloading enterprises that have nothing to do with governing a country, but the way 'privatisation' works here makes me doubt that it would work.

Of the top of my head, I think selling the assets are a bad idea because;
o Lack of, or powerless, regulation in the relevant market.
o Protection against asset strippers, ala Eircom, who are only interested in short-term gain at the expense of necessary investment in our infrastructure, whether Broadband, Gas, Electricity.
o Handing control of vital infrastructure to private monopolies BEFORE adequate competition exists in the market.

Eircom effectively stopped rolling-out broadband to the remaining areas, which are now turning to mobile broadband, which is a barely adequate alternative to 'proper' wired DSL.
Eircom should have upgraded their lines to fibre-optic. This would allow those who are too far from BB enabled exchanges (hence degraded signal on phone wires) to get BB.

Just seeing Bord Gais and ESB as a supply of funds for job creation initiatives is not enuogh reason for selling them. Fine Gael needs to examine the impact of such a sale on the customers of the sold-off enterprises.
They also need to ensure proper competition and regulation exists in the market BEFORE selling them.

Anyway, chances are that the next Govt will be a FG/Lab coalition so any chance of these sell-offs happening is probably very remote


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