Impact to argue against plan for forests
Cantillon:Trade union Impact will brief TDs and Senators next week on a report warning that a sale of harvesting rights to State forests will cost the taxpayer money.
The Government is due to discuss the proposed sale of the right to harvest the timber in forests owned by State company Coillte in coming weeks.
However, growing opposition to the proposal from the sawmill industry, staff and other interests has sparked speculation that it may yet backtrack.
Impact, which represents Coillte workers, will brief the politicians on a report it commissioned from economist Peter Bacon, (above) which warns the sale will cost the exchequer money and liquidate the firm.
Mr Bacon’s report claims that selling the harvesting rights will cost the State €1.3 billion. This amounts to a price for the company’s timber of €78 per sq m. However, the average price in recent years has been €43 per sq m. The report argues that this would leave the exchequer with a considerable shortfall. The cost is calculated over 80 years and the biggest elements of that include a €565 million loss from Coillte’s profit flow and a €313 million bill for funding ongoing operations and replanting forests.
The Government is due to consider a report into to the proposal compiled by stockbroking firm, Goodbody, which has not yet been published.
A year ago this week Minister for Public Expenditure and Reform Brendan Howlin said the Coalition intended selling Coillte’s forests, but not its land, when he announced the State assets that had been selected for sale. The Government has since refined the proposal into a sale of the right to harvest the timber.
Opposition to the proposal has been growing since late last year.
Along with Coillte’s workers, the sawmilling industry, which relies on the State company for about 80 per cent of its supplies, has also come out against the plan as have several groups who fear the loss of the amenities provided by State forests.
Labour getting ahead of themselves
We may be the poster boy of Europe but the signals this week indicate that the boisterous celebration of “our” promissory note deal have grated more than a little with our European partners.
Not least among their concerns are suggestions that, having secured savings of up to €1 billion over the next couple of years, we should immediately apply those to reduce the impact of austerity on the beleaguered populace. Reports yesterday pointed particularly to comments by Minister for Social Protection Joan Burton.
The Minister was unrepentant. She reiterated that, in budgetary terms, “we have that bit of extra leeway from the promissory note deal”.
Not to be outdone, her party leader Eamon Gilmore spoke of a tangible benefit for people in the next budget.
Troika sources were quickly letting it be known that the Government was still working under the terms of the bailout and was obliged to use windfall gains to pay down debt.
Both sides miss the point somewhat.
Yes, we are under the bailout and must abide by its terms. But, by Cantillon’s reading of the expected gains, as circulated by the Department of Finance, the “tangible benefits” of this deal, to quote the Tánaiste, only materialise next year when we expect to be beyond its clutches.
Of course, that means Labour members of the Coalition are also getting a little ahead of themselves. No financial windfall arrives until next year, according to the Government’s own figures – because of the cost of meeting the term of the bank guarantee to remaining Anglo bondholders. Furthermore, as this year’s budget will be framed under the terms of the bailout, the troika will not want to see their final impact on policy to be what one European source this week termed the “if I have it, I spend it” dictum of former minister for finance Charlie McCreevy.
Still, with the Government working to further reduce our debt burden, it would do well to pay heed to broader concerns that Ireland’s primary deficit – leaving the bank debt aside – remains too high for comfort.
Even on the current plan, any return to full health is a long way off.
Debt be not proud as Noonan visits UK
The Minister for Finance visits London this week and will do a tour of the media for the first time in over a year.
Among his stops will be the Financial Times and Bloomberg, where he will no doubt be selling the Irish recovery story hard. The kerfuffle over the promissory note deal may take some of the gloss off his spiel but it remains a positive story.
He will also visit chancellor of the exchequer George Osbourne and no doubt there will be more of the same. Given that the UK has lent Ireland some £3.26 billion directly and, as one of the EU 27, is on the hook for the €22.4 billion lent by the European Financial Stabilisation Mechanism (EFSM), Osborne will no doubt listen carefully to what Noonan has to say.
Noonan in turn can be expected to do a bit of lobbying for what is now emerging as the next target in Ireland’s campaign for debt forgiveness – an extension of the maturities of the EFSM loans and maybe the bilateral loans as well.
Maturity extension has quickly become the new debt write-off and if the time scale is long enough, it amounts to the same thing. Were the sorts of maturities that have been secured on the bonds that replace the IBRC promissory notes also obtained on the bailout loans, Ireland’s debt dynamics would be transformed and the bailout exit all but a certainty.
The Government already has a commitment from euro zone finance ministers to extend the maturities on their portion of the bailout – the €17.5 billion lent by the European Financial Stability Fund (EFSF) – and the 40-year promissory note deal has set the benchmark for discussions.
Wringing a similar commitment out of all 27 member states to extend the maturity of EFSM loans may prove a little bit more difficult, not least because in some cases it will have to be approved by national parliaments. It will be interesting to see if the negative comments by Germany’s influential cadre of ex-ECB and Bundesbankers scuppers this move. If so it will be an expensive lesson in hubris for the Coalition. Either way, we have made things harder than they need be but the UK should be a powerful ally.