‘There is a phrase in Government Buildings at the moment: this is a year-one issue, not a year-five issue.” So a Coalition source told this newspaper, as reported on Thursday.
The quote was in relation to fears about selling Aer Lingus, but it was about a lot more, too. It looks like we are destined to have safety-first politics right the way through to the next election. “Year five” will see just about everything kicked into touch.
Political debate now seems to consist of Government and Opposition sniffing the wind and trying to work out how not to upset anyone. If this continues, a decision on just about anything will become impossible, unless political focus groups say that nobody will be too upset by it.
The debate on whether to sell the State stake in Aer Lingus is the clearest example. No sooner had it been announced that Willie Walsh’s IAG was making a fresh bid, which the board would recommend to shareholders, than the prevarication started. Labour sources began to mumble about severe difficulties if the party’s TDs were seen to have to make a decision by voting a sale through in the Dáil. Fianna Fáil came right out and said the stake should not be sold. Tourism and regional interests piled in, calling on the famed Heathrow slots to be defended like a part of the national territory.
National interests
Of course there are important national interests here. But don’t we need to hear exactly what IAG plans before making up our minds? Say, for example, that IAG can give the Government an enforceable veto over any future sale of the Heathrow slots and significant comfort about their use for flights to and from Ireland. Say it commits for a period to maintain employment levels at Aer Lingus. Say it promises to enhance connectivity from Ireland and drive new traffic from its network through Dublin and Shannon to the US. These are precisely the issues at play as IAG meets Government officials.
Now I don’t know precisely what IAG is putting on the table, but I would expect IAG to go on the offensive very soon. Rejecting the bid out of hand, before hearing the plan – and considering the alternatives – is crazy.
The IAG bid could, depending on what is on offer, be the best way forward for Aer Lingus. There are two reasons to give it serious consideration. One is that the Government, as a 25 per cent shareholder, has limited power anyway. Under the company’s articles of association, it would need the support of at least 5 per cent of the other shareholders to block a sale of any Heathrow slots .
The other issue is the more vital one: what will happen to Aer Lingus if the IAG bid does not go through? You could put a case for its survival as an independent airline, though there is a general consolidation trend going on in the industry and funding fleet replacement would be an issue. Also, the biggest shareholder, Ryanair, with almost 30 per cent, is likely to be forced to sell by competition rules and the Government has already said it will sell “when the time is right”. So the decision needs to be between what IAG is offering and a realistic assessment of what the future might hold if the Government turns down the offer.
IAG could even change tack and mount an unconditional offer, putting the Government in a tricky position if most other shareholders accept, though so far IAG has said it would not do this. But this is the kind of complexity lost in the Punch and Judy of public discourse.
Pay cap
The same is on show in the debate – or rather the lack of it – over whether the pay cap of €500,000 should be broken for the recruitment of a new chief executive at AIB. Salaries – or what they call “remuneration packages” – are ludicrous in the financial industry. In fact, they are obscene. But to attract a top-class candidate will probably require the cap to be busted. And such a candidate is needed, because the plan to start getting our €20 billion back from AIB will involve selling it off on the stock market in chunks. To achieve this, AIB needs a plausible frontman – or frontwoman – who
is trusted by investors.
When the time comes, we won’t bat an eyelid as tens of millions are paid out to investment bankers and advisers to manage the float. Don’t expect the “pro bono” advice on AIB from Goldman Sachs to the Government to remain free when the real action starts. Yet we won’t pay an extra few hundred thousand to attract a top-class chief executive, who can have a vital role in developing plans and fronting a float, because it bothers people a bit.
The trend of not upsetting anyone has been evident for a while, of course. You could probably trace it back to the water charges. After that, plans for a broadcasting charge to replace the TV licence were scrapped. People dodging the current licence fee, or without a TV, might have been upset after all. The debate on tax and spending has long since turned into a game of seeing which political party can promise the most. Talk of “tackling vested interests” is long forgotten.
Of course politics is going to intervene in all key decisions, particularly as an election comes into view. But we seem to be in a particularly risk-free political environment right now. Perhaps someone might get a bit of credit for telling us what they really think. Otherwise we are in for 12 months of year-five government.