Congress Warns Against Semi State 'Fire Sale'

2 Aug 2010

Congress has warned against a 'fire sale' of semi-state companies in order to raise cash to bail out failed private banks.

Congress Economic Advisor Paul Sweeney said this would "prove disastrous in the longer-term and choke off our capacity to restart growth.

"For a start, asset prices are on the floor at the moment, so it is a very, very bad time to sell. Secondly, these companies generate an income stream for Government which would be lost in favour of a once off payment. That makes no sense and smacks of desperation from a Government that knows its policies are not working. It would amount to a fire sale with the proceeds simply funnelled into the banks.

"Have we learned nothing from the Eircom debacle? We have some of the worst communications and broadband systems in the EU and a once healthy company that is now weighed down with debt. The definition of stupidity is to keep doing the same thing and expect a different outcome."

Mr Sweeney said Government should instead use the opportunity to look at how the semi-states can help us restart growth and create jobs.

Mr Sweeney pointed out that Congress had proposed the establishment of a State Holding Company in 2005, which would change how the semi states were run and "free up capital for re-investment in these companies and give them a developmental role at home and abroad.

"In addition, the State Holding Company could be used to leverage the considerable assets of the semi states for borrowing, outside the strictures of the EU's Growth and Stability Pact. The proceeds could be used for a major investment programme for jobs," Mr Sweeney concluded.

 

Originally published 5 July 2010

Revised response below published August 2010

For further information

revised-congress-response-to-government-review-aug-10

http://www.ictu.ie/publications/fulllist/governance-for-state-companies/

 

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