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Fine Gael’s Crown Jewel Policy.
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From the Irish Independent
FINE Gael has formulated a radical €11bn stimulus plan for the economy which would see some of the State’s ‘crown jewels’ sold off to create green and hi-tech jobs.
Now I thought they meant the actual Irish Crown Jewels which were robbed in 1907. But no they mean the ESB international and Bord Gais. And used the money from the sale and other borrowings to invest in.
- Telecoms, civil and structural engineering.
- Plant maintenance and operation.
- Scientific research.
- Insulation and home energy.
- Plumbing, electrical work and other construction crafts.
- Software.
- Forestry and timber.
- Digital content for health, education and state services.
It is an interesting idea and one that is going to annoy the Labour Party (selling the heavily unionised Semi-States) and also in a way please them. (Suggesting the state can pick economic winners)
Now this tactic merits further discussion but the question that jumped out at me is. Who would buy these assists in the current economic climate?
Also Ciaran Cannon has joined the Party. Surprisingly.
It’s a valid question to ask who will buy but even more valid to ask if you’re going to get a good deal. The value of everything is tanking at the moment so the return for selling state assets will be far less than it might be in the future.
yeah, same point that Adam makes. Equivalent of firesale prices?
Yeah but you could agree a staged sale with the price linked to future revenues. There are ways and means for doing this sort of thing.
In a lot of ways this idea harks back to the National Development Agency (or a similar name) I think it was called which John Bruton and Dick Spring fell out over. The idea was (I think it was in 1983 or around that time) that the state would assist companies in strategic areas to get up and running but the difference in opinion came in that Dick Spring reckoned that the state should retain ownership forever, while John Bruton reckoned we should sell the successful ones off after a time and plough the money back into the scheme and cull the ones that never work out.
one word ‘enron’
Asdas, one word, ‘Wah?’
Simon,
Who would buy these assets in the current climate is an excellent question; given that the experience of shareholders in the current climate is that they are the first to get dumped on, particularly when the only acceptable state policy is to “protect the taxpayer”.
From what I can understand of it, and please, anyone, correct me if this interpretation is way off the mark, the Geithner ‘legacy assets’ buy out plan in the US has a large element of support for bank shareholders built into it – probably for the first time in any scheme in this Great Recession – which is most likely why it has been so warmly welcomed in the markets. By inference, therefore, Geithner’s plan involves a massive loss risk to the taxpayer who, through the US Government, is stumping up the funds. But at this point you have to ask what’s wrong with indirectly supporting shareholders, since the shareholders of banks – many ordinary people and even more many ordinary people’s pension funds – have been the first casualties of the financial meltdown? The principle of ‘protecting the taxpayer’ above and beyond all other considerations is overused and appears increasingly myopic. The interests of the taxpayer are hardly protected by a global ecoomic catastrophe.
So right now, FG’s plan to sell off ESBi and Bord Gais might result in getting less value for these companies than may be realised in better times, thereby infringing the hallowed principle of ‘protecting the taxpayer’. Or else the assets might prove very difficult to sell in the current climate. Or worse, simply take too long to set up for sale (by which time the Great Recession may have, ahem, receded). But leaving aside all the ideological, never mind economic arguments, why a fire sale of State assets might not be such a great idea, it’s what you do with the cash from the sale that matters most in the long run.
Since the FG document is not yet published, it’s unfair to judge their proposed investment plan on the basis of a flimsy newspaper report. But the list of proposed investment areas is worrying and suggests the likelihood of funds being frittered away – like pouring water into a colander – on job creation ideas that may never amount to anything much, even if they look very appealing in an election manifesto.
First of all any such investments would have to be export driven and thus capable of holding their own in the international competitive marketplace; secondly it might take many years and a lot of money down the drain to separate the wheat from the chaff in this respect, so any job creation effect might be temporary and come at a very high cost per job and thirdly, well you need a lot of luck and luck is also a manufactured thing that takes a lot of time to mature.
Irrespective of the old Spring/Bruton ideological battles about the 1980s NDA, in the end the Agency was subsumed into the IDA. If reviving that concept is what FG has in mind, then it’s a bit stale as an idea and wouldn’t work this time either for the same reasons it was a flop in the 1980s. Also, it would possibly be duplicating the work of a range of existing agencies.
But we should look forward to the FG paper when it somes to light and can be properly scrutinised. Good on them too, at least they’re churning out detailed policy ideas rather than just mouthing empty crowd pleasing platitudes about protecting the taxpayer and pointing bony fingers of blame in all directions.