Sale of State Assets

The Minister for Public Expenditure and Reform has announced the Government’s plans for the sale of state assets. Interestingly, rather than sell a minority stake in the ESB the plan now is to sell non-strategic power generation capacity – in my view a more sensible approach.  

By Edgar Morgenroth

Professor of Economics at Dublin City University Business School

72 replies on “Sale of State Assets”

@ Edgar

“non-strategic power generation capacity” – does this refer to their foreign elements, or to small generation plants/capabilities?

The selling off of assets in the energy sector including sections of the ESB.

The Troika will allow monies raised in excess of ¢2bn to be invested into employment generation. That’s about a ¢1bn
for employment purposes.

Would it be a good suggestion to spend those monies on the creation of a public sector company for the energy sector to make up for any job losses future owners of the ESB may make; also to provide competition against the newly privatised ESB especially if it embarks on some ENRON/California charade using blackouts, cutting off the electricity supply? (Irony there).

They were originally intending a minority share sell off of ESB. I’m guessing they didn’t want trouble from the unions when the new shareholders complain of the massive salaries in ESB; guaranteed FG/LB will make the biggest mess they can.

Looks like being more disastrous than Eircom sell off. Looting of the Irish economy continues.

I thought energy supply by definition was strategic. Now we got non strategic power stations.

It’s going to be interesting to see who ends up buying whatever is sold. Some asset sales in Portugal today went to buyers from China and Oman.


I wonder if asset sales were discussed with the Chinese when they were over here at the weekend? It would be chicken feed to them. Why not go the whole hog and sell Ireland to them as some kind of mega-allotment to provide veg, meat and fresh water supplies to the folks back home? Or perhaps Enda can come up with some kind of sale and leaseback option.

@Colm Brazel Looks like being more disastrous than Eircom sell off. Looting of the Irish economy continues.

I’d keep that hoary old chestnut of Eircom for the gullible.

P&T, Telecom Eireann, were disastrous companies long before Eircom’s privatisation.

Anyone remember having to wait up to 6-12 months for a phone line or as was often the case needing to get a TD to lean on them?
Manual exchanges long after the rest of the world moved on.
A massive scandal related to profiteering from property purchases and sales.
The less well off excluded from phone lines – as a result we’d the lowest phone line penetrations in western Europe through to the 90s.

Anyway it’s amazing that what’s strategic for Ireland is always to have exactly what we have today in state hands – as if we’re in a state of perfection, how about they go out and start up a state fertilizer company, state ferry company, state airline, state agri bank, etc. etc, these were all considered “strategic” at one time.

Things move on.

I can’t imagine Heinkels droning over Hibernia deciding what is a Strategic energy asset and what is not.
Me thinks they will bomb the lot because guess what – they are all strategic.
This debate is pathetic – Ireland is such a small country , why have these multiple chains of command ?
I guess through these multiple folds of pointless complexity you can extract more profit from natural utilities.
Sovereign Goverments can produce their own money – they don’t have to sell anything for money.
We have a demand crisis partially because such Utilities hold the cash , this reduces demand , less investment is pursued because of the lack of demand and so forth.
A market state entropy pit.
Eventually we will have utilties with 100% efficiency as they will not produce product – just rent.

Does anyone know how can we sell assets, without the borrowings which are attached to those assets??

Or is the brainwave that the borrowings will be left with the entities that are now stripped of the assets and the capacity to pay down the borrowings??

If this is the case will the lenders to the entities not have something to say about our cunning plan?

@ Colm Brazel

I would have thought that the last thing we need is another semi state body?

This has all the trappings of a grubby political deal – both big ‘p’ and small ‘p’.

Since it has come into office this Government has done its damnedst to thrash the conditions in the original EU/IMF MoU on structural reforms. For example, it has succeeded in burying the original demand to conduct a detailed, 9-month long assessment of the electricity and gas sectors and has replaced it with some half-arsed exercise being conducted by the International Energy Agency.

When the Troika appeared they were much more focused on structural refroms of the sheltered sectors and went along with privatisation of state assets because the then government had the State Asset Review Group looking at the issue. However, they were keen that any proceeds would be used to pay down debt rather than financing any ‘airy fairy’ schemes.

However, the new government didn’t fancy the structural reforms very much and worked hard to water them down, but FG wanted this NewERA state holding company thinggummy and Labour was prepared to go along with this – and would swallow some very limited privatisations – if they could get funding for this ‘airy fairy’ Strategic Investment Fund’, which is designed to reward the various clientilist networks of both factions in government.

The extent to which they’ve pulled the wool over the eyes of the Troika is an enormous tribute to the cunning, deviouness and slipperiness of Irish politicians and civil servants. And it’s probably the case that the Troika doesn’t have its A-team on the case, so that’s making it even easier for the Government.

Unfotunately, it is the vast majority of citizens, as taxpayers and consumers, who are paying and will continue to pay for the unnecessary burdens imposed by these machinations that are designed to protect the well-embedded, influential, narrow, sectional economic interests.

It is truly ironic that the Government could keep the ESB and BGE fully in the current majority state ownership, restructure and refinance the businesses and extract equity proceeds much greater than the expected proceeds of the half-arsed privatisations they have now decided.

It probably tells you all you need to know about who is really running the country.


Irish semi states are relatively lowly leveraged relative to net asset value, i believe. Paul Hunt, i believe, has suggested they should in fact borrow more, invest in infrastructure and provide an economic stimulus.

@ Eoin Bond

“Irish semi states are relatively lowly leveraged relative to net asset value”

What does that mean in %tage terms? the 2010 financials show

Net debt of €1856m
Tangible Fixed assets of €3,620m
Net debt/capitalisation of 56%

Turnover of €1,509m
PBT of €120m

The financials also show a drop in PBT/Turnover of 10% on the 2009 results-with bad debts of struggling customers likely to feed in to the 2011 results

so how much is such a business worth exactly??
is 56% lowly leveraged??

@ jackh

“I’d keep that hoary old chestnut of Eircom for the gullible.”

Oh yeah, tell that to the thousands conned into buying Eircom shares that later fell to nothing. There was also the promised investment in broadband, turned out the new guys had no money. Eircom was one on the world’s most mismanaged privatisations of state assets, ever.

@ TODevastated

“I would have thought that the last thing we need is another semi state body?”

You do realise the par beginning with “Would it be a good suggestion to spend those monies on the creation of a public sector company for the energy sector to make up for any job losses future owners of the ESB may make..”
was me jokingly being cynical for comical effect and ridicule? You get a Bond 🙂

Who in their right mind would want to buy Highly Unionised Power Plants and Gas Facilities ? Read Colm Mc Carthy’s Second Report to find out how overpaid and pensioned these people are. The Plant operators in some of these facilities are earning more than €120K per annum plus perks like free electricity and subsidised pensions. The ranting Union Bosses are already on the go so Howlin will fold on these disposals.

Investors will run a mile when they do Due Diligence on this lot. They might ask to be paid to takeover these inefficient units !!!


56% doesnt sound highly leveraged for a regulated utility with massive monopoly powers.

I’d still like to see full unbundling and the opening up of a proper competitive market.

However, at least this approach leaves the door open for unbundling in the future. A sale of the asset with the grid attached would have all but ended any hope for a competitive energy market.

It amazes me how effective the ESB is in convincing the Government to leave the grid bundled. That press statement even endorses the model of a vertically integrated utility -hard to explain the benefit of such a position.

I’m also impressed that the IMF resisted their corrupt attempt to purposefully botch the privatisation in order to serve ideological aims. I wrote to them on this topic before Christmas and it seems they were substantially in agreement.

@Mr. Bond, TOD,

The ESB used to maintain a low gearing, but it’s been forced to up it recently because the regulator is struggling to keep gouging consumers at the previous rate to provide some up-fornt financing of investment and because of its acquisition of the Northern Ireland network – and other adventures.

BGE tended to have a higher gearing but that’s being forced up recently, again because the regulator was reaching the limits of his gouging ability and to finance its adventures in Northern Ireland and electricity generation (including overpaying for renewable assets) in Ireland.

They should be forced to dispose of all these assets outside of Ireland becuae their primary responsibility is to provide efficient, reliable and secure energy supplies. The proceeds could be used to convert some higher cost debt into lower cost. The businesses should be separated financially into network and supply units. The single corporate treasury pot meants that excessive network cash flows are subsidising all sorts of doubtful stuff and, since they have a mix of low risk and high risk activities, the credit ratings agencies are setting a limit on overall gearing and a higher cost of capital that they would have as separate units.

There is huge scope to extract equity from the separated network businesses. Once that was done the network assets should be sold to capture the remaining value. I have no strong views on how the proceeds should be used.

But, of course, the government decides to sell the least valuable risky bits, to keep the valuable bits and to continue regulating, financing and operating them as inefficiently as is humanly possible.

You couldn’t make it up.


I feel a good “compromise” would be to “sell” state assets to the NPRF which still has spare funds in the region of 6BN and( believe it or not) rising in addition to itś existing “investment” in our banks.

A compromise involving the NPRF would keep most reasonable stakeholders across the political spectrum realtively happy.

After a few years ,when the economy has recovered and a “farewell bash” for our Troika “friends” has been held,, the value of these state assets can find their true value allowing a future centere right/centre left(or “whatever you are having yourself”)Government decide what to do with those state assets .

IMHO the only people who would not favour this (NPRF purchase of state assets)compromise would be opportunists or “carpet baggers”. 🙂

What does a competitive natural utility mean in a holistic sense ?
Does it mean reducing staff or cutting wages ?
If a newly privatised company transfers this now even greater surplus expressed as profit to lets say a Caribbean island how will that effect demand when goverment must also increase taxes once again to plug the new surplus hole ?
Must we increase exports to that warmer more dynamic Hibernia ?

All of this nonsense is a product of false market state accounting.
No new wealth is created – the remaining wealth is merely run down & transfered more efficiently.
Its a beautifully corrupt system in one sense but a highly unstable extraction device over the longer term.

I guess we must follow this madness to its ultimate conclusion – social & economic breakdown

@Paul Hunt

“BGE tended to have a higher gearing but that’s being forced up recently, again because the regulator was reaching the limits of his gouging ability and to finance its adventures in Northern Ireland and electricity generation (including overpaying for renewable assets) in Ireland.”

Indeed. Recall it was only in 2009 that Bord Gais paid an eye-watering 500million for the SWS wind farm portfolio (the majority of which was in the planning system at the time). Very pricey, especially when you consider that the ‘value’ of SWS was entirely the product of REFIT/priority despatch subsidies for wind. Effectively, the state bought these subsidies (which it had itself mandated) from the private sector at an inflated price.

And now? Now these same wind power subsidies will be sold back to the private sector. Except that of course the price will be more ‘realistic’ this time.

Cronies enriched, semi-state vested interests protected, and taxpayer/comsumer raped.

Looks like they’re going to try to pull another ‘Endesa’ selling a load of clapped out plant for big bucks. Good luck to them!

@ Livonion

Re “carpet baggers”

You nailed it in that phrase. They were originally intending a minority share sell off of ESB. That would have been a better decision than disastrous mess they’ve decided to make. This is the way it works, break a country’s back with debt, price of state assets can be picked up for a song, especially when there is a sell off across EMU at the same time.

But this decision is stupidly bad from a commercial sense also. Consider a break up of the ESB. This will be a guaranteed money spinner for any corporate raider. Its main competition lumbered with unions and costs far in excess of commercial sense will be the main competition 🙂

Cutting costs, manpower, etc with pricing component set high by the competition, should be a gift practice run to any full takeover of the private sector.

This is a licence to print money that will give the corporate raider a footprint to prepare a full takeover of the energy sector in a couple of years.

Its also a threat to state security where energy production is becoming even more strategically important.

Aer Lingus, on the other hand, should be sold tomorrow to Michael O Leary.

@ Paul Hunt 4:42

” It is truly ironic that the Government could keep the ESB and BGE fully in the current majority state ownership, restructure and refinance the businesses and extract equity proceeds much greater than the expected proceeds of the half-arsed privatisations they have now decided. ”

+ 1

@Edgar Morgenroth

“Oman has oil and has presumably built up some sovereign wealth.”

I know – I spent four months there once. But I didn’t know they went looking outside the mid-East to invest.

I wonder if they would be interested in a bridge I ……

I guess financial assets were deliberately excluded from this announcement today? Irish Life is still available for sale I’m sure if it got an offer close to the €1.3bn it almost sold for last year.

The stakes in the banks probably won’t be sold for several years I imagine although they could ultimately sell for €5bn+ in a benign scenario.

Plenty of air time will be devoted to ranting and raving by various politicians and groups , all dedicating themselves to a ‘not an inch’ position, on this matter.

But the fact of the matter is that the country is bust, and my impression when back in Ireland is that by and large people are unaware of just how bust that is.

Instead of selling the national infrastructure of the Irish people (1918 to 2011) – perhaps apply the popular principle of ‘reduce, reuse and recycle’ – one area that might be worth exploring was set out by the Historian Tim Pat Coogan in 2011 to re-use the Irish President’s palace as a new children’s hospital. Many progressive democracies such as France and the USA make do with one head of state.

@The Alchemist,

I don’t think the country (meaning all citizens and residents) is as bust as you suggest, but, even if it were, this programme of privatisation is as cack-handed, half-arsed and counter-productive as it could possibly be.

There is so much restructuring, re-financing and reorganisation (plus reform of regulation) that is required – and that can be done sensibly only within majority state ownership – before any thought should be given to privatisation.

But no. Let’s put the garlanded cart out well in front of the horse – and the narrow sectional economic interests will vent faux rage to conceal their inner delight.

I know that a certain amount of hypocrisy and bullshit is required in all human endeavours, but this really takes the biscuit.

@ Paul Hunt

‘I know that a certain amount of hypocrisy and bullshit is required in all human endeavours, but this really takes the biscuit’

Stay on your feet brother. Things continue until they can’t.

‘You become a champion by fighting one more round. When things are tough, you fight one more round.

— “Gentleman Jim” Corbett

@Paul Quigley,

“Things continue until they can’t”

I agree. But why do the ‘powers-that-be’ keep driving ahead, adding more passengers, until the inevitable car crash happens?

Richard Bruton was loading up passengers yesterday and declaring an intention to put the pedal to the metal on the Action Plan for Jobs:

“It concentrates on implementation, milestones, timelines and accountability. All 15 departments of Government are involved as well as 36 agencies of the State. There is a commitment to publish quarterly monitoring reports from an implementation group chaired from the Department of the Taoiseach.”

He didn’t mention the more than 270 actions, but all 15 departments and 36 state agencies – not to mention the hangers-on that’ll be retained? That is where the jobs will created – or where those who should be encouraged to do something useful will be retained.

He then had the gall, without any sense apparently of the extent to which he was making an ass of himself, to compare this exercise with the policy revolution initated by TK Whitaker, initially authorised by Gerald Sweetman and then picked up Sean Lemass.

Governments seem to have this idea that if you have enough bodies on board, if you keep moving forward without any sense of direction or destination – expect some idea that the ‘sunlit uplands’ are ahead – and keep building momentum (or the impression of momentum using spin) you’ll avoid crashing in to the wall.

However, a small wall is looming in the next few months that could do a fair bit of damage – as recounted by Richard Tol in the previous thread – but the ‘powers-that-be’ are determined to hurtle the car towards it.

Is there some aspect in the psyche of those who govern that they only do real governing when they have to deal with the outcome of a car crash – and one that perfectly predicatale and totally avoidable? It’s as if they almost will it, so they can exhibit grace under pressure and garner plaudits.

And there is probably another aspect in a purely politcial context. This privatisation farce is a perfect example. So much time was spent over the last couple of years trying to dampen down any resistance to the concept and to square the political factions and the plethora of powerful vested interests that they lost sight of the mind-numbing and tedious, but vital, details that are required to devise and implement a successful programme.

And so we end up with this total mess. I’m sure an amount of work has been done, and is being done, behind the scenes, but there can’t be anything other than a huge gap between the optical illusion that’s being projected and the substance, to the extent it exists, behind it.

It is measure of the extent to which government is assailed – and allows itslef to be assailed – by various sectional economic interests. Those who prevent a government from governing as it is mandated to govern – and how it desires to govern – are the government.

In most policy areas it’s not difficult to identify the ‘real government’.

Let’s hope the car crashes aren’t too serious and have the appropriate salutary effect.

or maybe transfer the President to Farmleigh,

it might be said that the only difference between now and the period in which Farmleigh (and all the other Farmleighs) sprung up….is the internet

Now that planning permission on the Mater has fallen through, how about selling off the Mater, relocating the Mater to a new greenfield on the periphery and building the new National Children’s Hospital beside it.

? The Mater lands should fetch a good price? Does so much spend/energy/time have to be wasted to find out planning turned down because of height restrictions and development too dense ?

FF suggesting to overturn Bord Pleanala through legislation ? 🙁

Regarding ILPGH: The minister may be having trouble selling Irish Life because of court cases taken by shareholders including Piotr Skoczylas although this has not been admitted. As I mentioned elsewhere Piotr Skoczylas was elected by ILPGH shareholders to its board in July 2011 and his board appointment has still not taken place. He is going to the high court on Monday 27th Feb. to see if can get the court to expedite his appointment as a director.

I’m sure people must have noticed it, because this post has attracted relatively few comments compared to previous posts related to this topic which easily attracted treble the number. And this seems to be reflected in media and blogosphere comment generally.

It strikes me as a clear indication of the Government’s success in extracting most of the political toxicity from this issue – which one would have expected to provoke string reactions both pro and anti.

And that should really, really worry most citizens as taxpayers and consumers of the services of these inrastructure/utility businesses. The bland announcement by Minister Howlin conceals an enormous amount of lobbying, negotiations, deal-making and ‘squaring’ involving the narrow sectional economic interests affected and various political interests that has taken place behind the scenes.

Various interests – mainly on the so-called ‘left’ – will feign outrage (and some will call for a rush to the barricades), but it is all for the optics. That’s what they’re expected to do, even when their place at the public trough has been assured. And so they go through the motions.

The muted reactions of the various narrow sectional interests should be ringing a strident alarm bell for most citizens that they will continue to be gouged to keep those whose snouts are in the public trough in the style to which they have become accustomed.

An external observer might conclude that most Irish people comprise the most unquestioning, docile, trusting and accepting bunch on the face of the planet. But the reality is more subtle and nuanced. Most people are well aware that stitch-ups are done behind the scenes. In most cases they won’t be aware of the details – well they are behind the scenes, but, if they have an interest as a business person, an employee, a professional or, even, a retiree, their main interest is to ensure that the body representing them in these behind-the-scenes negotiations gets the best deal. They won’t worry is the deal they secure imposes additional costs on themselves and on all others. Once they come out ahead of the game all the others can take a hike.

When all the other narrow sectional interests take the same approach, costs increase for everybody and everybody is worse off. But no interest group can stand back and observe the counter-productive impact in aggregate. Nor can they withdraw from the ‘game’. To do so would disadvantage them relative to all others. The common attitude is: “If we don’t grab what’s going so other buch of less-deserving feckers will”.And so the ‘game’ goes on and everyone ends up worse off.

And this game goes on in all the developed economies. Ireland is no worse nor no better than most. Governments, assailed on all side by the various narrow sectional economic interests try to hold the ring – and, inevitably, are forced to give in. But in many other countries, parliaments are a bit more powerful and are able to exercise some restraint, the major competing political blocs are defined by their views on the role of the state, individual members of parliament (or groups of members) are often quite ‘bolshie’ in the general public interest, consumer interests are often represented and advocated more effectively and, even if ‘deals’ are done behind closed doors, there tends to be much more transparency about the nature of these deals.

On all these counts Ireland has major deficiencies. Most people are well aware of them, but while the music is playing everyone feels obliged to keep dancing.

It is difficult to see how this log-jam can be broken. The only effective way is for a handful of TDs (from all factions or none) to have the guts to call the game as it is. They might be pleasantly surprised at the public reaction they would evoke – provided they are prepared to weather the fury of the Government and the various interest groups. There is also a requirement for effective advocacy of the collective interests of consumers. We have a statutory consumers’ body, the NCA, but it is as much use as a eunuch in a harem – mainly because it has been emasculated and under-reseourced by successive governments. And now it’s being folded in to this Competition and Consumers’ Authority which will totally emasculate it.

Ireland can no longer allow this ‘game’ to continue – particularly while continued fiscal adjustment squeezes the domestic economy.

Media, the third estate, has a role to play. Arguably it has failed to measure up to the task. Change is often plus ca change . Splitting off sections of the ESB in an increasingly energy strategic world is a cutting off the nose to spite the face destructive action. No doubt unions and management in the ESB core were bought off with this to prevent prying eyes and risk. Perhaps to make the EZ more efficient sell off of Ireland to be a 51st state or new UK region should also be considered to end the mess getting bigger?

@ Paul Hunt

What is it you are afraid of regarding the possible sale of these assets? Limited investment in the upkeep of the assets? Staff layoffs and/or salary cuts? Something else?

There are privately held infrastructure assets – including power generation – in most countries. If the assets continue to be regulated well and the sale prices achieved are at a fair valuation, I don’t necessarily see the problem.

I know its off topic but The Mater Hospital mess is something else. I hadn’t seen visuals of the plans until I saw it given on the news the other evening. I was stunned by the dimensions, particularly the height; it towered over the surrounding countryside unfortunately occupied by 100’s of other buildings that would be overlooked. The number of personnel, patients, visitors moving into the small space from all parts of the city at rush hour and outside rush hour doesn’t need a triple leap of the imagination to foresee the mess. Will anyone be fired for the extended waste of time, effort and money that has gone into this. Take the plans, build it on the periphery; rebuild alongside it a replacement for the antiquated Mater; make the old Mater a listed building for further development.

@ Carson,

Re “Something else?”

The something else could be the ENRON factor, not to say private ownership of state energy utilities could get as bad as this, but the Enron story does illustrate a cautionary tale:

There are many sources covering the tale of woe, but here’s a snippet 🙂

“Alas, the nation’s largest energy merchant is garnering no such accolades from California’s great deregulation experiment. Soaring power prices have pushed the state’s utilities to the brink of bankruptcy and forced Third World-style blackouts across the world’s sixth-largest economy.”

@ Colm

its a 16 storey building. Liberty Hall is 17 stories, the one down in Cork is 18, and there’s a 10 story one pretty close by to the Mater as is. The planning proposal took in the opinions of international best practice and they all gave it the thumbs up.

On Oireachtas report last night they showed an Oireachtas Committee questioning staff of the OPW on the State’s 100 million + annual rent bill. The OPW staff member replied “thats the market”. What the staff member failed to realise is, the State never needed to sign upward-only rent review lease.
The state by signing these feudal leases wasting hundreds of millions of it’s citizens money and endorsed and copperfastened this ruinous lease law for all commercial tenants.

Not one politican asked the right question. The politicans included Shane Ross, Mary Lou McDonald etc –not one of them asked the right question.


You’re probably coming late to the party, but I’ve being banging on for what seems like years – Oh god, it is years – about these issues – much to the annoyance of many here.

In general, the semi-state sector in Ireland is a dysfunctional mess. In many respects it is not much better or much worse than state or municipal owned infrastructure and utility activites in other advanced economies. But in some respects it is a lot worse and these impose significant excessive and unnecessary costs on consumers and the economy. And these are more serious in the electricity and gas sectors – which, coincidently, present the lion’s share of net asset value when privatisation is considered.

I have no objection in principle to privatisation – once the objective is to increase economic efficiency. If the objective is, as was the case in the UK, to get the state out of the way to create a playground for capitalists so they could gouge consumers, to maximise current government revenues to compensate for the effect of hollowing out of industry as a means of battering trades unions, or to create a docile, share and property owning electorate, then I would be opposed.

My principal argument in the Irish context – and specifically related to the electricity and gas sectors – is that the businesses should be restructured, reorganised and re-financed while in public ownership (with a through reform of regulation) before any consideration is given to privatisation. The lion’s share of the efficiency gains will be achieved by doing this and consumers will benefit.

Privatisation only arises then in the context of the currently high – and likley to stay high for some time – cost of funds for the government. Forgoing dividends or injecting additional equity to part-finance investment will have a high opportunity cost given the huge demands on the public purse. Only then would it make sense to contemplate privatisation under very strict policy and regulatory constraints.

But, of course, what we’ve got in Ireland now is some half-arsed ‘privatisation’ without going through the process of restructuring, re-organisation, refinancing and the reform of economic regulation. Yes, some limited proceeds will be generated, some debt will be paid down and the Government will have some funds for its Strategic Investment Fund to reward various clientilist networks, but businesses and consumers will continue to be gouged unnecessarily and unjustifiably.

But what matter? All the various narrow sectional interest groups have been ‘squared’ and will continue to be maintained in the style to which they have become accustomed.

@ Bond

Re “its a 16 storey building. Liberty Hall is 17 stories”

Wow, in the surroundings of Phibsboro, Lower Dorset St, Berkeley Rd, and the surrounding residential areas, traffic

Can’t believe they agreed to it even on heritage grounds following the previous knocking of Georgian Dublin.

Hopefully it’ll go out to the periphery on a large plot of land surrounded by a landscaped park, with a swan and two ducks and good view of the Dublin Mountains and be both a combined Childrens/Adult hospital with plenty of parking spaces and opportunity for further development….due to vested interests and other mess looks like it will take a long time to get to the planning stage again.

Trust FF to come up with an idea to overturn the best advice of the professional Planners

@ Colm

“Hopefully it’ll go out to the periphery”

Cos Dublin public transport does cross-city travelling really well, right?

@ Paul Hunt

I think you make a good point that it would be better for the state to reform the semi-state bodies before selling them on, thereby participating in the increase in value brought on by such reforms. However, I think politically this is very difficult.

The necessary reforms and cost cutting needed to make the ESB and Bord Gais operationally efficient are much more likely to happen under private ownership I think. In any case, there is pressure on the government from the Troika to sell assets relatively quickly to raise funds so I don’t think they are likely to try to implement major reforms over the next two or three years which could result in a lot of resistance from the unions.

I think a good outcome here might be a deal that see a trade buyer like Centrica put together a joint venture with a firm such as AMP Capital (which is already working with the NPRF). So you get a combination of industry and financial expertise. With the correct structures and regulatory environment in place, I think this could result in a good long term outcome for Ireland.


You seem to be subscribing to the ‘labour theory of cost’ that is prevalent in these parts. Labour isn’t the only input to the production of goods and delivery of services. Labour can not, and should not, be expected to respond as rapidly (in terms of pay and jobs) as capital to changed economic circumstances. You’re dealing with people not ‘things’.

And, while I think there is little dispute that there is some over-manning and overpayment in the ESB, management and unions have agreed to a significant cost reduction programme over the nest few years. In addition, even significant reductions in pay and manning levels would have a negligible impact on final prices. And I would argue that BGE operates its businesses as efficiently as, if not more efficiently than, its peers – whether public or private.

While the focus is on cutting labour costs, the political resistance you mention will always arise. But the core problems are in terms of structure, financing and regulation. That’s where the focus should be and the negotiations on pay and conditions should be kept out of it as much as possible.

Irrespective of the opposition that might be encountered the structural, re-financing and regulatory reforms should be pursued – or else this will turn into a costly mess for taxpayers and consumers. Then, and only then, should consideration be given to eyeing up potential suitors.


If the assets continue to be regulated well and the sale prices achieved are at a fair valuation, I don’t necessarily see the problem.

There may be an issue with the possibility of regulation that is both cost effective and effective at protecting the public interest in a jurisdiction as small as ours.

Think of it as a problem associated with efficiencies of scale. In a large country with many competing enterprises you can afford a large regulatory framework with substantial resources allocated to enforcement, in a very small one like Ireland you will likely end up with a regulatory body that is so expensive it increases end costs versus an integrated state monopoly or so small that it is not in a position to offer much public benefit. The dominant players may also find it more comfortable to collaborate in frustrating the regulator than compete with each other (like the Irish mobile telecommunications market).

This rotten partial privatization plan meets the requirements of the Troika (sell everything to save the financial sector) but the plan is intentionally flawed to try and ensure that we will not end up with EDF dictating surrender terms to Irish consumers.

It will still quite possibly end in blackout producing Enron like antics.

@ Bond

” Cos Dublin public transport does cross-city travelling really well, right? ”

No, it doesn’t, (cries).

But its possible to get this right. The extension to James’ Hospital was a success and the Luas travels rightly through it.

Think Luas to the periphery, think MS0 access, think Weston, they are looking to sell it for ¢3 ml. Noise could be the wild card, but there is another site they earmarked for it on Naas Road ? Maybe James Connolly, Blanchardstown, which is a teaching hospital.

Dept NoClue: ‘We need consultants, advisors and an expert group on this. It wont be easy, it wont happen in a day, it’ll cost a lot of money. Bertie wants it on the Nth Circular.

Noo problem. One year later, NoClue Consultancy Corp drop by and the BobaJob team set to work.

Task 1, identify the stakeholders and clarify what Dept NoClue wants out of this.

Two years later BobaJob produces a report, champagne all round. ‘Its exactly what we wanted’; BobaJob get a bonus and a little confetti of further contracts.

Beware outside consultants, especially those employed by IBRC.


My, what an interesting take on privatisation, regulation, competition, the public interest, the Troika et al. You even had room for a swipe at Enron, EdF and, indirectly, the privatisation of Eircom.

If you have a large number of competing enterprise you don’t need regulation per se; you need effective competition law and policy. That Ireland doesn’t have and it doesn’t look like it will have it in the foreseeable future.

Economic regulation is required when an activity has natural monopoly characteristics. Often these are based on ‘granted’ rights and they can be re-defined and a measure of competition introduced. The main problem with economic regulation is Ireland is that, in most instances, it is ‘regulating’ state-owned monopolies and pretending they are privately owned. And so, for example, we end up with the CER auithorising the ESB and BGE to impose implicit financing taxes on final consumers to part-finance investment not only in the networks and supply, but also in all sorts of whizzo schemes, so that the state doesn’t have to.

There is a scale problem in Ireland, but vertically integrated monopolies aren’t the answer – and there is a big market next door and beyond if only politicians, policy-makers and regulators would cease messing up access to it.

And as for the Troika, it never insisted on privatisation, but since it was on the table when it arrived, it has kept it there. It was much more interested in structural reforms in the sheltered sectors that would generate efficiencies and growth in the domestic economy, but the Government has done everything in its power to frustrate its intent.

This cack-handed, half-arsed, silly – and potentially costly – privatisation programme is all the Government’s own doing having ‘squared’ all the various narrow sectional economic interests. Their snouts are so deep in the trough that they could only vent the most perfunctory faux outrage at what the Government is proposing. That should tell us all we need to know. I don’t know what about Enron-like blackouts but one thing thing we can be sure of is that businesses and consumers will be gouged just as, if not more than, they are being gouged now.

And why would the hundred thousand plus well-rewarded, unionised employees of the 85% state-owned EdF consent to dictating surrender terms to Irish consumers? 🙂

@ Paul Hunt

“You seem to be subscribing to the ‘labour theory of cost’ that is prevalent in these parts. Labour isn’t the only input to the production of goods and delivery of services.”

That may be so, but in the case of the ESB, labour represented €792m out of €2.56bn operating costs in 2010 or 33% (, both figures add back the €159m of ‘capitalized employee expenses’). This equates to its employees receiving 29c in every euro that the ESB generates – which practically makes it a commune as compared to the equivalent figures of: 6c for Eon; 17c for EDF; 2c for SSE; and 9c for RWE.

“And, while I think there is little dispute that there is some over-manning and overpayment in the ESB…”

This is an egregious understatement. To put the €792m in context, the ESB employed 7,201 people in 2010, so the total cost to the company was €113,000 per employee (before an ‘exceptional’ pension charge of €330m), or more than 3x the average wage in Ireland.

“In addition, even significant reductions in pay and manning levels would have a negligible impact on final prices.”

There is nothing negligible about the impact that this €792m has on final prices – a 10% reduction in employee costs could leave consumers with a 3% fall in their electricity bill or alternatively leave the taxpayer with an extra €79m that could be spent on something else like paying for a year’s worth of jobseekers allowance for a ‘negligible’ 78,000 people.

@Edward v2.0,

Why do capitalists have to be given carrots and workers have to be hit with sticks. I’m not for one moment arguing that the staff (and management) rewards in the ESB do not appear excessive – particularly at a time when so many people are enduring so much hardship. This is a matter of public interest, but it is not a matter for direct public action.

This a matter for negotiation between the managements and the unions in the ESB – and, indeed, a programme for labour cost reduction is in place. And I would argue that the Army should be trained to operate the electricity system lest the workers abuse thier power to bring the country to an effective standstill.

But the fundamental problem is that the Government is implicitly authorising the CER to sanction the imposition by the ESB of an implicit financing tax to ensure the ESB receives whatever level of revenue it requires. While this ‘gravy’ is flowing the ESB management finds it difficult – and has no incentive – to exercise appropriate restraint on labour costs.

Removing this ‘financing tax’ has to be the priority. But, to the extent that it is used to part-finance necessary investment, an appropriate restructuring and re-financing of the business has to be effected. Curtailing the revenues awarded by the regulator is the most effective means of enforcing efficiencies in both capital and labour inputs.

But, once an appropriate restructuring and re-financing was effected, that would require Government, as the majority shareholder, to step up to the plate to part-finance necessary investment as required – and that’s where privatsation comes in.

During the mid to late 1990s governments sought to restrain ESB labour costs by authorising price freezes which cut profits and cash-flow. It had some effect in that respect, but the low prices boosted electricity demand and the demand for investment and, with government refusing to part-finance investment, the business had insufficient cash-flow and a huge back-log of investment built up. When the regulator took over from 1999 it had no option but to throw whatever money the ESB demanded at it – or the lights mightn’t have stayed on.

So let’s focus on the real problem – an absymally regulated, badly structured and inefficiently financed ESB – rather than the one that provides frenzied copy for the Indo.

@Paul Hunt

If you have a large number of competing enterprise you don’t need regulation per se; you need effective competition law and policy.

I know that this is a key area of interest for you but surely it is far from settled whether the comparative costs and dangers of a necessarily complex “properly” regulated market in strategically important parts of an economy outweigh the advantages of competition?

Ireland does not have the “heft of state” of Germany or France when it comes to dealing with multinationals and capital flows, the downside risks for a small and geographically peripheral country like ourselves of getting the balance between stability, comprehensibility and efficiency in the structure of the economy seem very high.

You would have to agree that recent history suggests that we underestimate the risks of market failure very badly.

It would appear that our President Higgins has been giving out about privatisation and the Labour ranks are trying to keep him quiet. He’s also been publicly questioning any avoidance of a referendum on the fiscal compact. He has a bit more about him than I thought perhaps?


I’ve known for some time you’re probably ‘unpersuadable’, but you appear to be typical of a relatively large constituency. Probably the main point I’m trying to get across on this thread is that if economic efficiency isn’t the primary objective of any programme of privatisation then it is almost certain to end up creating a costly mess. So, yes, I am well aware of the downside risks you mention.

The fundamental problem with this programme outlined by the Government is that economic efficiency doesn’t seem to enter in to the process at all. So the primary focus conveyed by Government is that, hey, we’ve persuaded the Troika to allow us to have one third of the proceeds to fund this ‘airy fairy’ Strategic Investment Fund that we can use to reward our clientelist networks and. look, we’ll be able to pay down a bit of the national debt as well so the bond vigilantes will smile on us.

I just find it interesting that, given the need to promote economic efficiency above all in these exercises, the economists here are so silent when they are confronted with this programme which goes entirely in the opposite direction.

And I also find it interesting that all those who are instinctively, reflexively, unthinkingly, ideologically, whateverly opposed to any hint of privatisation any time, any place, any how have to mouth are ‘Eircom’ and ‘strategic’. I know it does on many occasions, but I just can’t understand why ‘strategic’ has to trump considerations of economic efficiency always and everywhere. What does it really mean in the context of the infrastructure and utility sectors? It strikes me as a means to preserve the current gloriously inefficient and consumer and economy-damaging status quo.

Ireland has a long history of small groups holding it up for ransom. During the half century + of stagnation every Tom, Taigh and Paddy was protected behind tariff and non tariff barriers. The EU partially rescued us from ourselves. With EU assistance we actually became prosperous. But that is not enough for us because the well connected in return for “contributing to the cause” have to be rewarded by the Gov’t they bought and paid for. Fair is fair after all. The natural governing party stimulated the property R G right over the cliff. Has the Gov’t or the people learned anything from recent failures? It does not look like it to me. Could the Irish Gov’t with its long history of buying votes by conferring advantage for a price ever be capable of efficiently managing anything. Will the Irish voters ever come to the realisation that the normal way of governing in Ireland is dysfunctional in the extreme.

From the comments here where statements made by the Gov’t are quoted it is clear that ourselves and our Gov’t are deeply mired in the bog. Statements like “the Gov’t will use Euro one billion of the proceeds to create jobs” which appear natural in Ireland would raise alarm bells in many countries. We got where we are because the Gov’t created the jobs which begat the joblessness. It is not the job of Gov’t to create our jobs, sell our goods, wrap us in cotton wool or smooth us with baby oil. It is the job of Gov’t to devote its energies to providing a level playing field and structures within which we ourselves can create our own jobs, sell our own goods and procure our own creature comforts. When everybody is buying advantage nobody has advantage and the funds spent are wasted along with distortions in output adding immensely to the wasteful behaviour. I am not saying that the oligarchy are not getting disproportionate benefits.

One long standing problem that the Gov’t seems to be incapable of handling is where a group of employees providing and essential service can insist on being paid three or four times the going rate or they will “shut down’ the country. Has no one in the country heard of binding arbitration for employees providing essential services. Is the Gov’t so gutless that it could not jail people who break the law. The professional silos, virtually untouched since 1922 except to tighten the stranglehold. The architects of failed policies still getting paid. Without close supervision by the EC, ECB, IMF we are doomed to another half century of stagnation.

@Mickey Hickey

Statements like “the Gov’t will use Euro one billion of the proceeds to create jobs” which appear natural in Ireland would raise alarm bells in many countries.

Like the US, where they spent approximately twice that per capita in the 2009 stimulus package alone. Those crazy statist yanks. Was it 80 billion they then spent just on the car industry? Look what a disaster that has not been. Alarm bells ringing all round.

The really stark difference between the European neoliberal consensus and the approach elsewhere is that the EU’s does not work, though supposedly its stops the pollution of our vital competitive fluids by outdated social democratic ideas of wealth redistribution – the PIIGs may face social ruin but their capitalists souls are saved.

Without close supervision by the EC, ECB, IMF we are doomed to another half century of stagnation.

Only the chief local proponents of neoliberalism can help Ireland recover from the global financial crisis enabled by neoliberalism. Only more market reforms can possibly save us from market failure.

It has occurred to you that everyone not taking the Mittel-European kool-aid thinks that the EU and ECB are the principal reasons that Europe is still stuck in this crisis and that the political compass is so out of whack in the EU that the IMF are now seen as dangerous lefties? Yet you expect these evidence proof ideologues to save us?

Seriously, this is the craziest thing I have read on the Internet in eight hours.

The US auto industry had been in decline since the 1970s’. The Japanese, Koreans and Germans were (and continue to) eating their lunch. The aid (low interest loans) from the US and Canadian Gov’ts was contingent on severe wage cuts which the unions and companies acceded to. The largest of the two companies GM is still in trouble and Chrysler which was rescued by Fiat is now profitable but the holding company overall is taking losses. Can you imagine an Irish Gov’t insisting on wage cuts of 33.33% before providing a bridging loan to a company that was doomed to failure without the cost cuts. It does not fit the vote buying model of governance. I attended an Auto Show in Toronto yesterday with a friend of mine who is the auto advertising business. He pointed out to me the size and opulence of the Mercedes, BMW and VW exhibits and how it is related to their increasing market share. He specifically pointed out a Euro 120,00 MB and told me that the advertising model was scarcity, as in, this is the only one we have and that is what it costs, negotiation would be too crass in the circumstances. Hyundai and Mazda were two other companies selling cars at a profit as opposed to stuffing the supply chain and hoping for the best.

As for the PIIGS, the Greeks are toast and it is not possible to unmake toast. Portugal was hit over the head by the Irish sledge hammer when Cowen/Lenihan back stopped the bankrupt banks using taxpayer provided funds. I hear lots of self serving, self righteous statements coming out of Ireland about the Portuguese foreign minister insulting one of our MEPs, I hear nothing about the explanation and it is that the man is disgusted at the way the Irish taxpayers were sold down the river and to put salt in the wound set the precedent that will bankrupt Ireland and Portugal.

I am not into isms’ nor am I a cynic. Our Gov’t walked into this with their eyes open. The ECB and to a lesser extent the IMF propped up the Gov’t with low interest loans (purportedly to the CB and banks) which the Gov’t is on the hook for. Unfortunately the Gov’t continues on its merry, foot dragging, sure it will all be right in the end, ways.

I am surprised that a man seemingly as intelligent as yourself would not be down on your knees thanking God for the EU, EC, ECB.

Colm McCarthy’s latest Sindo piece is probably relevant here:

It’s a masterly piece of writing which purports to say a lot, but actually says very little. When an economist of Colm’s acknowledged calibre and forthrightness appears to be so constrained, it should make most citizens, as taxpayers and consumers, very, very concerned about the deals that have been cut behind the scenes to secure the apparent resigned acceptance of, if not full support for, this cack-handed, half-arsed, silly and potentially costly programme of privatisation – without provoking open revolt from the usual suspects.

@Paul Hunt

“this cack-handed, half-arsed, silly and potentially costly programme of privatisation”

Has there ever been a privatisation that didn’t benefit a small handful of people at the expense of the masses who previously owned it?

I can’t say I’ve ever spotted one. And it’s usually a reasonable bet that the quality of whatever the thing provides will go down as the prices go up… all in the good name of efficiency and growth of course.

They are, indeed, rare, because there is always some other agenda that conflicts with the necessary focus on economic efficiency. But this proposed programme of privatisation is probably the worst I’ve ever seen because it will embed even further – and copper-fasten – the existing inefficiencies, implicit financing taxes and deadweight costs that are gouging businesses and consumers.

That was the only way the Government could secure the grudging acceptance, if not the support, of the various narrow sectional interests affected. The Government simply had to ‘stuff their mouths with gold’ – as Nye Bevan had to bribe the doctors to secure their consent to the UK NHS in 1948 – to prevent any possible open conflict or revolt. Any conflict or revolt in this area would seriously damage the international image the Government is seeking to project of Ireland as the ‘poster-boy’ of fiscal adjustment and reform under a Troika programme. But those who prevent government from governing as it should in the public interest are the government. This is a measure of the extent to which democratic governance has been usurped in Ireland.

And none of the gilded horde of professional economists, who know damn well what is going on, is prepared to speak out against this consumer and economy damaging nonsense. But I can understand why. It could be extremely career-limiting – even livelihood-threatening – if one were to speak out. Only those with secure tenure at the top of the academic tree might feel sufficiently protected from the retribution that would be exacted, but even they are reliant on public funding in most instances if they wished to expand their research activities – and, in addition, the Government has numerous prestigious baubles and sinecures its gift that might be withheld if criticism were too sharp and pointed.

To make the point more specifically, I labour as an economist in the energy consulting game. I can get work anywhere in the world where an opportunity arises and my experience and capability match the requirements – except Ireland. No consulting firm seeking to secure work from the Department, the CER, the ESB or BGE – for obvious reasons – will associate with me. Even if they are seeking to secure work from businesses ostensibly competing with the ESB or BGE, the same thing applies, because these businesses, in most instances, are not competing; they are seeking to secure a share of the rent being captured by the ESB and BGE. So they don’t want any conflict with with the ‘power-that-be’.

So I fully understand why people keep their heads down. But all the while businesses and consumers are being gouged and the economy is being damaged.

My only hope is that some few might try to break cover and secure some safety in numbers.

ESRI Spring report 2012

“Once again growth will be driven by external demand as domestic demand will remain weak. All categories of final domestic demand, excluding stocks, are expected to experience declines. The unemployment rate will more or less stabilise, at 14.0 per cent, both because of migration and because of a reduced participation rate.”

The Road: Part 1
Colm McCarthy

The man looked at the tinned Denny’s pie, laid flat in his lap with the can opener on it. He had got the opener from a Euro shop. He did not want to remember what it had been like in the Euro shop. What he had done there.

The boy was asleep. He had not told the boy about the pie. He hadn’t told him, as he was afraid that it would fill the boy’s mind. That the boy would be overcome by it as they walked on the road, and that he, the man, would have given in to the boy and they both would have eaten it.

But now, it occured to the man that he could eat his part of the pie in the dark and save the rest for the boy in the morning. And this would not be irrational either, as both of them needed to keep going. The man sighed. This is what want did to you.

“What’s that?”, asked the boy.

The man shuddered. He had been so distracted he had not noticed the boy had waken up – or the fire between the trees either.

The fire was a warm orange in the ash-grey night of the ruined landscape beyond the road.

“Shall we go and see?”, asked the boy.

“Quietly.”, said the man.

The two lay on they stomachs not breathing. From all directions, wheelbarrows, quads with trailers, JCBs were bringing paper and throwing it on the fire to burn. The paper was green and brown and blue and orange and it all went woosh into the night sky, leaving trails of sparks.

“How much is that?”, whispered the boy.

The man tried to do the maths. If they were burning 100,000 pieces of paper an hour for twenty fours hours aday, that would be…. if the total was 3.1… he lost the thread.

“Why don’t we ask them to stop?”

The man looked at the suited drivers of the mobiles bringing in the money to be burned. He was sorry they had looked.

He could try to explain that perhaps the men might stop if they didn’t ask. But if they did ask then they probably would not: and other men elsewhere might be cross and there was nothing they could do here.

He thought of saying all that, but he just said, quietly, gruffly, “let’s go”.

By day helicopters flew over the road. The boy wondered if they were the guards looking for them. The man had explained that they were not the guards. The guards had no helicopters any more. These were the helicopters of the rich. He could not say if they were the helicopters of the Irish rich or the other rich. But that did not matter really. The rich had helicopters and could fly. He and the boy did not and had to walk.

The man had cracked a joke about the helicopters dropping cash, and regretted it as the boy kept looking up round-eyed.

The man did not know how long the younger man with the goattee had been walking with them. At first he had been a welcome distraction for he was cheerful and kept the boy talking.

Now the man was growing impatient with him.

The young man kept talking about the things they were passing. How this estate could be easily co-opted for housing. How these empty, concrete offices could be community centres. How this road could be converted to a tramway at very little cost.

Worse, he had explained to the boy if they could only borrow a little money, the boy could buy a bicyle and the boy could make himself useful as a courier and could earn some money back and pay off for the bicycle and keep the bike and make some money for his Dad.

There was no money. There was no money to borrow. The man closed his eyes and saw the bonfire again.

“So, will you do it?”, asked the goatee.

“What?”, said the man.

“Stay here of course. We can co-operate and stimulate.”

The man looked around at the dead, empty land. At the dead empty land that still had to give.

“Get lost.”

“But…” said the boy. The man could almost see the bicycle in the boy’s eyes.

“Get lost.”

The goatteed man looked hurt; broken. He did not want to understand there was no stimulus coming. There was only the road.

The man wondered if he was hallucinating. He and the boy wavered slightly in front of three golden figures. He could not remember how they had got here. Behind the figures was a beautiful landscape garden and a grand house with twenty seven flag poles with twenty six flag waving from them.

The figures were so beautiful and strong he could not look at them.

The smell of roasting, what, pig? was in the air. It made him faint. He thought of the pie and hoped the boy would hold.

“You’re doing great.” said one of the figures. It seemed they spoke together. Sort of.

“Keep going. And, maybe if you pass by again, you can have these.”

A cheque book was help out. It had a quite simply enormous number written on it.

The boy had seen it. He was calculating.

“It’s not a gift. It’s a loan”, said the man in a dry cracked voice. “We don’t want it. If we take it, things will be worse, not better.”

Pig, pig, little pig, let me in. Long pig. That was it wasn’t it.

The man saw where the missing blue and white flag was laid out on the grass for all the beautiful people to receive the carvery.

No, they did not want to stay here.

End of Part 1.

Ran out of time there: will post Part 2 later if I have a chance.

Re: “Now that planning permission on the Mater has fallen through, how about selling off the Mater, relocating the Mater to a new greenfield on the periphery and building the new National Children’s Hospital beside it.”

“We don’t want a hospital built in the middle of the countryside like an IKEA”…….just heard that remark by a foolish pro Mater person on Marion, Nora Casey, an RTE dragon.

Swedish Ikea people are smart, their site is a car parking and location site success.

Can’t understand why the people are not not up in arms supporting the MAter site? Oh really, perhaps because they see the foolishness of building a starship on top of the MAter.

Those visiting Ikea look at the reg plates from every corner of Ireland with ample parking facilities. They know efficiency and attention to people’s needs are addressed and satisfied security and space wise?

Mater Planning is another spike into Dublin. Could we please learn from the Swedes. Instead we got a steady state trail of Scott’s Antarctic expedition decision making whether its on state asset stripping, privatisation, ESB, NAMA de riguer on the Irish titanic 🙁

ESRI Spring report 2012

“Once again growth will be driven by external demand as domestic demand will remain weak. All categories of final domestic demand, excluding stocks, are expected to experience declines. The unemployment rate will more or less stabilise, at 14.0 per cent, both because of migration and because of a reduced participation rate.”

The Road: Part 2
Colm McCarthy

The man saw where the missing blue and white flag was laid out on the grass for all the beautiful people to receive the carvery.

No, they did not want to stay here.

“You are doing well”, said the golden three-part voice, “the road will get a little harder and more sacrifices are required. You understand?”

Of course he understood. Like he understood the bonfire. The figures turned away.

The golden figure on the left looked back. It was the biggest: or perhaps the smallest. It was impossible to tell. It spoke in a French-American accent, or possibly an American French one.

“You shouldn’t have to go through this.”

He thought he saw a slight shifting in the other two figures. They didn’t like this. For them the conversation was over.

The American voice continued. “Don’t bring your boy back here.”

The beautiful guests had gathered round the meat and crackling laid out on the flag.

The boy was still going but he would not stop talking. He was over-tired now and angry. Tired of being angry.

Why could they not just take a house? Why could they not run a business? Why could they not eat at the feast with the other nice people.? Why could they not stop one lot of men burning the money and why not take more money from the golden three.

“Stop”, said the man. “Look at your shoes.”

A lace was broken. Efficiently the man knelt to the boy, unthreaded the lace, rethreaded it through half the eye-lets, and retied it.

“Is that better?”

“Yes, but…”

“That’s the best I can do.” He willed the boy to understand. There was nothing else.

They smelled the sea before they saw it. It smelled of salt and an endless, brooding gloom.

The road ended at the harbour. The light was not day and not fully dark and a variety of lights of all kinds made it hard to see.

The man staggered with relief. He was lopsided with carrying the rucksack that had only one strap.

Boats were coming and going. The boats let no one off, but were filled with clamouring passengers from the quays. How had these people got here? The road seemed empty. It did not matter.

The boy took in the scene. The end of the road. The ruined land behind them. The sea. The boats leaving. He looked at the man.

“You want me to leave.”

Did the boy not understand? He did not want any of this. There was no choice. There never had been a choice.

“You want me to leave.”

The sea itself looked slick-black, oily and poisoned.

“It’s not so bad.”

“How do you know?”

“There’s nothing here.”

“Will you come with me?”

“I have to go down the road myself.”

The boy seemed older now. Like a young man.

“You brought me here to get rid of me.”

The man sighed. He reached into the rucksack for the tinned pie. He had nearly kept it for himself. He knew it.


“Keep it.” said the boy. “If that’s all you have to offer – keep it. You’re right. There’s nothing for me here. It’s just the place I grew up in, is all. And if all that you have left for me is that. Well, keep it.”

And the boy slipped away.

The man looked at the tin, ashamed. He hurt because the boys words were true. It was all that was left. He rembered the good times. No, the good times came into his head and would not go away. A voice in there told him he was part of the story of this ruin too.

But he was hungry and would not throw the pie away.

The man looked to see if the boy had embarked safely but he was lost in the dazzling lights and the darkness of the crowd.

Something lightened in the man. He had done what he had set out to do. His life was fully his own again. He put his part of this story into proportion – accepted his place so he could see where the others were placed too.

Now he was free, he felt inside himself for what he wanted. He was surprised at the sheer anger there.

He wanted a reckoning. There would be a reckoning.

The man turned his back from the boy, the harbour and the great world beyond it, and set face towards the road.

By Christ there would be a reckoning for this.

He started to walk.


@ Paul Hunt,

“Under EU rules, the grid, which is the pitch on which the competition game is played, must be operated independently and should not be controlled by the dominant power generator.”

President Higgins said: “This is the road back to autocracy, in which a hollowed-out State is bereft of anything meaningful to attract the support of the citizen — especially the marginalised, excluded from the mainstream of society.”

McCarthy’s rather myopic and blinkered view is:

“Budget cutbacks around Europe are raising inevitable questions about the role of the social-democratic state, but selling some power stations and energy retailing units is hardly going to marginalise anybody.”

McCarthy clearly is unaware of the consequences of the privatisation of energy policy as shown in examples such as Enron and similar bad outcomes in other parts of the world; he has not shown any strategic advantage in such state sell-off’s nor does his opinion piece rest on any full attributed research on his views:

McCarthy is clearly out of step with his international peers in the matter as in above. His piece is an opinion piece with little visible research foundation.

Paul Hunt’s views would encapsulate the following conclusions of research showing the mistaken privatisation road in above:

“1. Frame reforms around the goals to be achieved in the sector. A narrow focus on institutional restructuring driven by financial concerns is too restrictive to accommodate a
public benefits agenda. . . .

2. Structure finance around reform goals, rather than reform goals around finance. . . .

3. Support reform processes with a system of sound governance. An open-ended framing of reforms will reflect public concerns only if it is supported by a robust process of debate and discussion.

4. Build political strategies to support attention to a public benefits agenda. (Dubash 2002:168 –171)”

Clearly there may be another agenda here with greater political control and absorption of EMU member states into an agenda to curb the rights of citizens to social democracy; in favour of the rights of finance, the banking anxiety re the growing of power literally and metaphorically by member states. You can make your own mind up upon that one.

Some relevant points perhaps McCarthy should consider are from above:

“”In developing countries in particular, opposition is also based on a strong sense that these sectors should be subject to local decision making, taking account of all public interests, and not left to global, commercial operators and market forces. Deloitte’s analysis of opposition to energy privatisation (Buresch 2003) notes all these issues, including the rejection of excessive and unjustifiable profits. The campaigns also articulate a view that the organisation of sectors like water, and to a lesser extent energy, should be determined as a matter of public policy within the country concerned, not by the operations of the market.”

“Resistance to large price hikes usually entails the rejection of privatisation. In Senegal, for example, the government has refused to meet the demands for price rises of three successive multinationals—Hydro-Que´bec, Vivendi, and AES—as a result of which even the WB abandoned the plan to privatise the electricity utility (though it is now proposing the development of private generation through independent power producers (IPPs)). Other issues include reliability, efficiency, the local impact of IPPs, environmental policy, public accountability, national control, and corruption. Other campaigns have revolved around a broader set of interests, such as the campaign against Enron’s private power plant at Dabhol, in the Indian state of Maharashtra, which was based on a long-term power purchase agreement. The campaign was supported by energy NGOs opposed to the project on social, economic, and environmental grounds, and by the local communities whose livelihoods were seriously damaged by the plant. Demonstrations by these communities were brutally suppressed—leading to the unusual case of an Amnesty International report on Enron (Amnesty International 1997). The campaign nevertheless achieved some success with Enron’s departure from India.”

“At the World Bank’s energy week in February 2003, a speaker from the global consulting firm Deloitte noted a ‘growing political opposition to privatization in emerging markets due to widespread perception that it does not serve the interests of the population at large’, which it attributed to a number of features of privatisation: ‘Pressures to increase tariffs and cut off non-payers; loss of jobs of vocal union members that will be hard to retrain for the Development in Practice, Volume 15, Numbers 3 & 4, June 2005 287 Public resistance to privatisation in water and energynew economy; [and] the perception that only special interests are served—privatisation is seen as serving oligarchic domestic and foreign interests that profit at the expense of the country . . .’. These are not offset by any benefits from privatisation because gains such as expanded coverage, improved quality, and competitive tariffs are small, dispersed, and slow, whereas the impact of price hikes and job losses ‘is concentrated, immediate, and falls on visible and vocal groups (e.g., labor unions)’ (Buresch 2003:9, 11, 12).”

Perhaps it might be wise for Irish supporters of these state sell-offs to ruminate upon the idiom, ‘ Fools rush in where angels fear to thread ‘

We need reform of the energy sector but we shouldn’t throw the baby out with the bath water.

That’s not reform.

I suppose I should be resigned to having views and positions attributed to me that I neither express nor hold. It’s one of the many perils of the blogosphere. But the issues that arise here are too important to let it go.

Full or partial privatisation of the electricity and gas sectors may be considered as an entirely separate dimension of a programme of reform of these sectors, but they are inevitably intertwined and if either or both are to be successful – and to generate sustainable benefits – they must be governed by the objective of securing economic efficiency.

The programme of electricity and gas market ‘liberalisation’ being pursued by the EU is fundamentally flawed in two ways. Both relate to the legislated, mandated roll-out of full retail competition. The benefits of liberalisation are primarily generated at the wholesale level, but the insistence on full retail competition without establishing efficient wholesale markets has resulted in increased consolidation and vertical integration in the industries that has increased the market power of the principal participants.

Retail competition has also atomised, disenfranchised and individualised final consumers and deprived them of the means of exercising effective collective action to advance and protect their interests. And it has destroyed the ability to convert their long-term commitments to consume and pay for electricity and gas as the basis for the long-term contracts these industries, characterised by investment in long-lived, specific assets, require.

In the gas sector, the EU has added another fundamental flaw by insisting on Entry-Exit pricing of gas transmission services which separates contractual arrangements from the underlying physical and economic reality of the transmission systems.

A naive person might assume that national governments, ostensibly seeking to govern in the public interest, would seek to ameliorate the detrrimental inpacts of these flaws in their own jurisdictions. And, indeed, some do. But in Ireland, successive governments – and this one is no different – have succeeded in exploiting and bending the primary EU legislation to establish a policy and regulatory regime that embeds in efficiency and dysfunction and gouges businesses and consumers.

The current energy sector privatisation proposals will entrench these inefficiencies and dysfunction even more. That’s why I’m totally opposed to it. And that’s why there is barely a whimper from the various sectional interests whom one would expect to be threatening to die in the last ditch to prevent any from of privatisation. And it’s why the vast majority of practising economists are doing their best to pretend it isn’t happening.

@Mickey Hickey,

The EU energy market ‘liberalisation’ process has some major flaws – as I’ve pointed out above – but huge efforts are being made to overcme them – or, in some cases, to paper over them. Succesive Irish governments and the CER have layered their own Irish variety of dysfunction on top of these. Up to now they’ve been successful in projecting and sustaining this optical illusion of ‘more competition and better regulation’ that conceals the reality of no real competition and absymal regulation that is gouging consumers.

The energy components of this proposed privatisation programme represent the outcome of a gargantuan effort to square the various narrow sectional economic interests behind the scenes and to reinforce and sustain this optical illusion.

But the proposed regulatory treatment of the gas interconnectors – discussed in the previous thread – has the potential to shatter this illusion. It looks more and more likely that the issue will be resolved in the courts. The Irish courts may be kind to the optical illusion peddlers, if the case is tested and decided on very narrow grounds. But DG COMP and the ECJ may take a very different view.

I’m looking forward to the mayhem when the optical illusion is finally shattered.

As for the Canadians, I really do like any of those I have met. But any country that has “peace, order and good governance’ as its motto has to be a bit boring. And the country is 3,000 miles wide, a few miles thick and it gets very cold in the winter 🙂

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