THE GOVERNMENT’s review of State companies should not focus solely on the revenue it could raise by privatising them, according to Forfás, the policy advisory board for enterprise and science.
Forfás chief executive Martin Shanahan said many State-owned enterprises played an important role in the provision of essential infrastructure, such as transport, energy and telecommunications.
“The forthcoming review of State assets and liabilities presents an excellent opportunity to clearly define the role of State-owned enterprise . . . It is critical that their roles are reviewed in terms of supporting wider economic growth through the provision of high-quality and cost-competitive infrastructure,” Mr Shanahan said.
Minister for Communications Eamon Ryan this week firmly opposed the privatisation of State organisations he said were “delivering”, including the ESB, Bord Gáis and An Post. This followed the appointment by Minister for Finance Brian Lenihan of the Review Group on State Assets, to be chaired by economist Colm McCarthy. It will consider selling public-sector assets, including commercial State companies.
Forfás published a report yesterday, entitled The Role of State-owned Enterprises: Providing Infrastructure and Supporting Economic Recovery, which said clear criteria should be developed to guide the potential sale of State-owned assets.
The report said “natural monopoly assets”, such as electricity transmission lines and gas pipelines, should not be sold to “dominant competitors”.
If State companies are to be sold, costs to the taxpayer should be kept to a minimum and the sale should take place when markets conditions are favourable.
The report recommends the development of policy on the role of State-owned enterprises. It highlights the risk that State companies could “drift from their founding goals” or “not reflect current national economic development needs” if they were not reviewed regularly.
Clearer governance structures must be implemented, the report said. “State-owned enterprises are often required to pursue multiple and sometimes conflicting objectives, eg to provide loss-making public services while operating commercially.”
Forfás recommended a single, well-resourced unit dedicated to supervising such enterprises could improve the State’s ability to monitor the companies under its ownership. Stronger corporate governance frameworks must also be implemented, the report said.
Mr Shanahan said more than 41,000 people were employed by State companies, which represented 5.8 per cent of gross domestic product. He said the report identified the requirements necessary to ensure State-owned enterprises were providing competitively priced infrastructure to Irish enterprise and were maximising their potential to support recovery and opportunities for enterprise and innovation.
