BUSINESS OPINION: The opening days of the election campaign have seen much posturing about the ownership of the semi-State firms. Be it the Progressive Democrats' desire for a national sell-off or Labour's stout defence of the State system, such principles will be hard-fought in any negotiation on a programme for government.
No doubt there will be much puffing about what constitutes the national interest. But it is the performance of the largest semi-States - not their ownership - that will be the most critical factor. Such firms are no longer seen as employment vehicles. They have an important bearing in their own right on the growth capacity of the economy.
There is no surprise that Fianna Fáil and the PDs are making much of the boom. But the sturdy economic performance since 1997 was not helped by the tardy response of certain semi-States. To cite just two examples, CIÉ and the ESB failed to respond adequately to rapid economic expansion during the last Government. In these lapses, they constrained the overall competitiveness of the economy.
Starved of cash for decades, the CIÉ companies almost split their seams when hundreds of thousands of jobs were created. At the very time when public transport should have come into its own, the services were so under developed the average motorist wouldn't be caught dead on a bus. Thus the roads have become even more cluttered, making public transport even less effective. In addition, hearings of an Oireachtas committee last year suggested that rampant politicking seemed as much a priority as transport at the highest levels in CIÉ in the mid-1990s.
The ESB has never been short of money. Indeed, it had plans last year to spend €1.8 billion on an acquisition in Poland before the Government spiked the proposal. It was highly embarrassing for the company, which likes to think of itself as among the State's brightest. On its very own domestic patch, however, the ESB failed to project rising demand for electricity and develop the national grid accordingly. It meant that no firm could contemplate building a large plant in large areas of the west and north-west. Emergency generation was required to prevent black-outs during winter.
Yes, a massive investment programme was proposed to beef up the network. But it was delayed for months by the company's failure to reach agreeement with its unions on the use of outside contractors. That is the reality. It diminishes attempts to secure balanced regional development. It clouds the State's allure to investors.
These are matters of performance. The question is this: Would other owners have fared better? By its very nature, the public sector is vulnerable to the whims of those in control of the Exchequer. It is also where trade unions excercise the most power.
Yet if privately-owned or publicly-quoted companies are better at delivery, they do so only in the commerical interest. That is why "national control" is crucial for Labour. Efficiency appears to be more important to the Progressive Democrats, who want to use the money generated from flotations or trade-sales to part-fund the National Development Plan. There are arguments for both options. But neither is clear cut.
When Aer Lingus was on its knees last autumn, the EU prevented a cash-injection from its owner, the State. Remember Bord Gáis too. Owned by the State, and in huge profit, it demands a subsidy to build a gas pipeline to the north-west because the commercial returns are apparently inadequate. This suggests that the proximity of the north-west to the Corrib field is irrelevant and that those living in the region have no right per se to supplies from it. Meanwhile, the company plans to invest €50 million in a programme to supply the Isle of Man.
So State ownership is no guarantee that what appears to be the most sensible or equitable "national interest" option will always be followed. This merits reflection on Labour's part.
The private sector has flaws too. The easy but egregious example is Eircom. Floated as an exercise in the democratic share ownership by the public, half that company is now controlled by Sir Anthony O'Reilly and a group of US venture capitalists. The other half - formerly Eircell - is owned by Vodafone, a company that appears to have a bottomless marketing and advertising budget. What this means for the long-term development of the State's telecommunications infrastructure remains to be seen. It is fair to assume, however, that the buyers will concentrate more on profits than investment in infrastructure.
These questions go beyond ideology and the potential release of billions of euro into the Exchequer through sell-offs. They also ignore the EU's deregulation of State monopolies, which leaves many of them facing competition for the first time.
But given that neither Labour nor the PDs are going to form a government on their own, their semi-State policies will form part of their opening gambit in any negotiation. As for their potential partners, Fianna Fáil has no "ideological preconceptions". In addition to Eircom, three State banks were sold during the last Government - and Aer Lingus was prepared for sale. All that suggests that further sales are likely if Bertie Ahern is returned to power.
Alone among the main parties, Fine Gael made no broad proposals about the semi-State firms in its election manifesto. It wants to appoint a Minister for Transport and have certain bus routes privatised, but elaboration on its broader ownership policy awaits publication of further election documents. It seems a surprising omission from a manifesto. Yet at the end of the day, politics not policy will dictate the fate of the semi-State firms when the new government is formed on June 6th.
For example, consider the case of the Great Southern hotels. In the modern economy, few would argue that the State should own hotels. The scale and nature of the business do not require public investment. And yet, when the Government made initial moves three years ago to sell the Great Southern group, the Independent TD Jackie Healy Rae cried foul. That's politics. Not policy.
