“Really, this is about restructuring a state-dominated sector rather than privatizing the RTE organization.”

I think you have hit the nail on the head - and this applies to all the sectors that are dominated by the various semi-states listed for possible privatisation.

I’m not sure how well resourced the review body is - or to what extent the ToR will allow it - to investigate and make recommendations on the extent of the restructuring required. This is where the big gains may be made for the benefit of consumers and the economy. Ownership and financing are very important, but they are secondary.

RTE outsources a fair bit of program-making as it is. This is the publisher-broadcaster model pioneered by the neoliberal ideologue Michael D. Higgins. There is scope for going further with this model, for sure. RTE’s production facilities could be more of a service for program makers generally rather than tied closely to the station.

How do you actually turn the whole thing into cashflow? Difficult because of the change in the whole broadcasting arena.

How do you deal with the vast, valuable (I am talking in the cultural sense) archives? Big questions. Really, this is about restructuring a state-dominated sector rather than privatizing the RTE organization.

Yes you are strictly true but the European fiscal money that went to subsidise farmers had a disproportionate effect on 1970s Ireland given its agricultural nature.
This welfare was saved rather then consumed and filled the greasy tills of our banks which subsequently fractionally multiplied these deposits.
Remember unsustainable rural housing has been a hallmark of that time and not just a hallmark of the crazy naughties.
Looking back at the history of this Irish state the only real wealth created since its foundation was within the ESB - remember Ardnacrusha is still producing revenue 80 years after construction.
The rest of the wealth was imported via tourism , EU subsidies and IDA gaming strategies.

In historical, economic, social and cultural terms, Ireland is better categorised as a European region than a European nation. And a peripheral region at that.

The ‘national interests’ involved in a divvy up of state assets will probably be defined by our usual nexus of public and private sector stakeholders. In other words, more of the same. No reasonable persons could have confidence in our leading classes after the banking and telecoms shambles.

It is possible to recognise the unsustainability of credit-bubble economic development without joining the ranks those who want to take the world back beyond the era of fiat currency. Credit markets are an essential part of complex economies, and Framing Finance by Alex Prada is a good read.

Personally I don’t recall a credit bubble in the 70s in Ireland - unless you factor in the escalation of land prices post-EEC - or the 80s. I make this point solely with reference to the interest rates on property loans. These ranged from 12% to 14% and could be worse depending on security. More to the point the average home owner (aspiring) or investor had to stomp up a serious amount of cash, between 10% minimum and 20%, of the property value to be eligible for a 20 year mortgage. Any one buying land on seven and ten year term rates got a real ride but rate dropped substantially as the 90s wore one. I don’t doubt, following what we know about Ansbacher etc., that some people benefited from a credit bubble but it was not open to all.

That was @ Keith

Your point is indubitably correct, in the sense that the tendency to hollow out prudential considerations needs to be snuffed out early doors if the state is to be credible.

After crippling crises in telecoms and banking, we are shaping up for a D minus in utility regulation. Our weak democracy, and the hubris of our native elites, leaves us wide open to speculative attack. We’re easy meat.

The corporate governance problems of Eircom had not even been recognised let alone addressed, prior to privatisation. The process was misunderstood, and mishandled by the unions, and the resulting entities were looted. It is typical of an emerging nation that elites grab resources and wreck development.

We ‘trusted’ ‘our’ bankers, in the same way we trust our senior civil servants and public sector management more broadly. The history of Soviet privatisations shows that, without democratic oversight and transparency, senior management, and their private sector ‘associates’, will take the lion’s share of any gain.

Ireland’s experience with the privatisation of its telecoms industry is a salient example of this loss of control. The decision to relinquish complete control of Ireland’s telecoms network eliminated the scope for the government to prevent any undesirable changes in ownership. The subsequent takeovers by private equity groups in two separate LBOs resulted in a deterioration of the financial structure of the company, with debts soaring to unsustainable levels. This severely reduced the resources available for capital investment and contributed to the slow rollout of broadband infrastructure in Ireland. The government was then forced to re-enter the telecoms market and begin investing directly in broadband infrastructure itself through the MANs programme and the NBS.

While one might argue that the problems above can be addressed by effective regulation, this poses challenges in itself (again, as we saw in the case of Eircom). It is imperative that the government learn the lessons from Eircom’s privatisation in relation to its remaining network SOEs. Substantial restructuring of each company and sector would be required before the question of privatisation is ever considered. The retention of public ownership over the network elements of each SOE would also be advisable.

He recounted “an illuminating conversation with a senior executive of a recently privatised water company. I was puzzled that so many companies seemed to be able to issue peremptory edicts to their managers to reduce costs, or headcount, and see these edicts fulfilled. Could it really be that there was so much inefficiency and, to get rid of it, little more was necessary than to tell people to sort it out?

My informant predicted that his company, in common with its rivals, would engage in successive rounds of efficiency savings, and be congratulated by analysts and regulators. Eventually, he predicted, there would be a big problem – or several. Then politicians would compete in the vigour of their denunciations. Money would be thrown at the problems. He hoped he would have retired before this.”

Peter Sutherland had retired after 12 years as BP chairman, months before the Mocondo blowout but the same concerns that were raised about safety issues after the 2005 Texas City oil refinery explosion when 15 worker were killed are now being raised again.

We have classic cases where two Irish chairmen of large companies, Sutherland and Laurence Crowley, took decisive action by sacking their CEOs over sex issues but risk and safety management issues brought both Bank of Ireland and BP to the brink of ruin.

Would a public utility where the ethos is to put staff interests first, be any better than a private run company?

Maybe the best course is to privatise Bord Gáis which can provide significant competition for the ESB, without having the same stranglehold the unions have in the latter, on public energy policy.

As for CIÉ and its offshoots, maybe it doesn’t deserve its reputation as a Soviet style bureaucracy and public transport cannot be totally left as a private sector service but how can an organisation like it, attract bright motivated people?

There’s a story told that Parliamentary Sec. Brendan Corish was heading back after lunch to the Custom House one day when he went to help a person who was lying face down on the steps. A plastered Myles Na Gopaleen looked up and said: “Corish Iompair Éireann!”

“I would like someone with more expertise than myself to explain in simple terms what benefits a privatisation programme will bring to the people that live here”.

I won’t claim to be more expert than the contributors to this site - and certainly not more than the gentlemen the Minister has appointed to examine this issue - but I have worked as an economist in this territory for almost a quarter of a century and even a plank of timber would have absorbed something.

What we are looking at here is a subset of the principal infrastructure and utility (I&U) sectors that remain predominantly in state ownership. Telecoms has been excluded (by virtue of the Eircom privatisation), as have water, waste water and waste management (LA ownership and not semi-state) and roads and air travel (mixed ownership and financing), so we are left, primarily with energy, bus and rail and ports and airports - and RTE (which should generate its own excitements). Among these, in the context of this state asset review, energy is probably the most significant by virtue of scale and asset value.

Successive governments have added layer upon layer of complexity to the energy sector over the last decade to such an extent that I suspect most consumers have no idea who is actually doing what in this sector anymore. This complexity has been driven by three objectives/constraints. First, successive EU Directives have required increased separation of network and supply businesses, “independent” regulation and the introduction of competition in supply to all consumers. Secondly, major efforts have been made to create a single all-island market in electricity and gas. And, finally, and, in a number of respects, running counter to these efforts, is the underlying policy objective of maintaining the ESB and BGE as ‘vibrant’, financially integrated businesses - even if they have been required to de-integrate operationally and to shed share in some markets (to create the optical illusion of compliance with EU Directives).

Consumers have been hosed to achieve these objectives with final prices are much higher than they should be. I have estimated that the over-charging of electricity and gas probably amounts to €5 billion in the last decade.

I am sure you will agree that anything that might reduce this over-charging (running close to €500 million a year) would benefit all citizens and residents. Inefficient financing of investment is a major cause of this over-charging. Selling the networks (at a price perhaps a little over their current book value) would lead to a major reduction in this over-charging.

There are many other changes which could be made (without touching staff pay - popularly, but wrongly, considered as the main cause of excessively high prices) that would benefit consumers. I’m confident that the newly appointed review body will get to the bottom of all of these problems.

Instead, these are public sector workers, who have no such commitment to public service, know they have a crucial function and who are already gearing up for a showdown.

If the schools, civil service, etc close down for a day, then not much will happen. Indeed, the public servants most urgently necessary, could not strike effetively -Gards, nurses.

But if the electricty goes out, or the gas is cut off, then the economic effects will be severe, and the government is not in a position to take this on. Even the bus network cannot go down without major disruption. I doubt if anything serious will ever be done with them.

Prove me wrong Mr. Cowen.

The Jesuits should change their motto.
Show me the man and I will turn him into a boy.

I am no expert on economics but am educated to post graduate level and yet every decision this govt takes baffles me. I would like someone with more expertise than myself to explain in simple terms what benefits a privatisation programme will bring to the people that live here

We have lived in a credit fueled bubble since the 70s and possibly before.
Capital has been run down to express either a temporary profit or increased wages.
Let me use the ESB as a example.

Before the Neo - liberal con job utilities were expected to run a minimal or zero profit as they were thought of quite rightly as the economies ecosystem and not its flora and fauna which profit or die from success or failure.
The state invested a surplus in strategic assets which almost always had a high capital cost and low running cost such as hydroelectric and coal fired power stations which insured a diverse and redundant energy supply.
It is no accident that since the adventure into deregulation of our electrical system that Gas fired power stations were the all the vogue.
These typically have the lowest capital cost but a high running cost.
This was a form of insurance for the investors since as more gas was used for electrical consumption they could use the excuse that the higher gas prices justified a higher charge for their service.
This was a win win situation as long as credit grew in the economy at the expense of base money.
But now thank God the credit system of patronage is now proving to be unsustainable.
But yet the vested interests still want more of a smaller and smaller pie and hope their good friends in the central banks help them out again via a super duper version of the 1980s wealth transfer scheme that did not involve any wealth or capital creation.
My bets is that it ain’t going to work this time as all those efficient / capital expensive power stations and other utilities are coming to a end to their lives and badly need to be replaced.
It is no accident that we have both a banking and energy crisis as both these utilities have had their capital run down to express false profits.
We need to kill this corrupt credit system to increase or even sustain our energy consumption.
This will free goverments to engage in the construction of the most capital intensive of all electrical production , nuclear fission and possibly fusion in the future as it is again no accident that the only country that built a almost 100% nuclear industry is the only western country that had at least resisted the siren song of bankers - France , although since the days of Mitterand it has also become addicted to false accounting and has started producing these strange creatures called financial engineers

* Rabbit ears don’t count since the quality is awful.

The result was that working class could no longer afford to consume at a rate to keep corporate profits rising. Therefore, the elities looked for alternative investments. The banks responded, to this need for return, by creating complex securities which disguised risk and increased returns. They also increased credit to enable the working classes to consume more (credit cards are an early example and in later years equity release schemes served a similar purpose). The other option to pay workers more was ignored (salarys have increased but I think this represent a share of a growing pie rather than a growing share of the pie?).

The excess liquidity in the International market meets the Irish market in 2003, the result is a housing bubble.

This crashes and brings down the economy.

Now the responce to a neoliberal problem is more neoliberalism (i.e. cut spending and privatisation) what next less regulation!

The US FED seems to be well aware of the problem - there efforts at encouaging China to Inflate their economy is (i assume) aimed at increasing Chinese domestic consumption. Why don’t they and the EU practice what they perscribe and encourage a fairer distribution of wealth (increasing wages etc) in the developed world and then perhaps we wouldn’t have to rely on credit to drive consumption. This seems to be the big issue with everybody cutting: who is buying?

Any comments would be very welcome

“Let me get this straight - the government for want of a better term wish to dispose of national assets and treasures…”

So shares in so-called treasures such as ESB and Bord Gáis, were given by the State to the workers, who already for each category are the highest earners in their grade, never mind having a guaranteed pension scheme

Meanwhile the typical private sector worker who has no pension and has to pay for the high cost of services of the semi-monopolies if not outright monopolies.

So who benefits from these ‘treasures’?

Aer Lingus charging £200 return to London in the 1980s was a favour to the public!!

As for RTÉ, how much of what they do is in the commercial arena and and has nothing to do with its public service remit?

A 2005 study of RTÉ peak-time programming found that only around 30% of its output could be reasonably classified as public service broadcasting news, current affairs, documentaries, Irish language programmes as opposed to soaps, overseas drama and sport. DKM said the issue was given greater emphasis by the fact that RTÉ’s share of all-day adult viewing had dropped from 53.1% in 1997 to 39.2% in 2005, while non-RTÉ channels had increased their aggregate share from 46.9% to 60.8%.

“In terms of funding, RTÉ is still being treated as a monopoly, which it simply isn’t anymore,” Colm McCarthy, then managing director of DKM Economic Consultants said.

McCarthy suggested that if the Irish newspaper industry was organised as the broadcasting sector, The Irish Independent and the Evening Herald would be Government-owned; The Irish Times would be a licensed private commercial newspaper and The Irish Examiner wouldn’t exist as it wouldn’t have a licence.

http://www.finfacts.ie/irishfinancenews/article_1016914.shtml

Thank you for your response. We may have to agree to disagree on the economics of security of supply and I think you’re being generous and diplomatic in your take on the ‘national interest’. In any event the CER has bent over backwards to gouge consumers to help the ESB finance any amount of network investment - even though it may be balking at extending this largesse to finance the acquisition of the NI networks. And with three gas interconnectors to the island, a North-South interconnector and with Corrib, new storage and possibly an LNG import facility coming on stream (as well as ample supplies and delivery capacity into Britain for the foreseeable future) I don’t envisage a gas security of supply problem. In fact, it’s probably the opposite; Ireland is seriously over-kitted - ultimately at consumers’ expense.

Given the sequence of imbecilic policy and regulatory decisions over the last decade or more made in the sectors where these semi-states operate, the progress and outcome of this review will be interesting.

No, stop raining on his parade. The banks ARE going to get the free ECB money and use it to buy national treasures such as the ESB, CIE, Book of Kells, sack all the public spirited hard working public servants and run for cash.

Would that not mean we would have no state broadcaster?