State firms told to hand over more profits

STATE COMPANIES like the ESB and Bord Gáis will be asked to hand over a substantial slice of their profits to the Exchequer next year to provide at least €300 million to help the Government deal with the crisis in the public finances.

However, the Government came under fire from Fine Gael yesterday for allowing departments and State agencies to spend €30 million on advertising this year, despite the problems faced by the exchequer.

Commercial state companies who paid a dividend of just over €84 million to the exchequer last year have been told by Minister for Finance Brian Lenihan that they will have to bring that up to more than €300 million next year.

The Minister is seeking to implement savings across all areas of State activity but is also looking for a much bigger contribution from revenue-earning state companies, according to Government sources.

The ESB currently pays a far bigger dividend to the exchequer than any other State company. Last year it paid just over €63 million from its after-tax profit of €432 million. Under the Minister's proposals it will have to increase that to close to €200 million.

Bord Gáis is the next biggest contributor to the exchequer with a dividend of €8.3 million last year and €9 million the year before. It was closely followed in 2007 by Bord na Móna which paid €8 million, a big increase on the €3.8 million paid the previous year.

The big concern about squeezing a larger dividend out of State companies is whether the charge will be passed on to consumers in the form of higher electricity and gas bills. Householders have faced a big rise in both.

The Government's record in controlling spending was attacked yesterday by Fine Gael's Leo Varadkar, who said that at least €30 million was being spent on advertising. "The Government's commitment to cut back on self-promoting advertising and consultancy is nothing but a hollow promise. Green Party Ministers in particular have excelled themselves in wasting public money, with the two departments under their control accounting for one third of the total advertising spend at €10.5 million," he said.

Mr Varadkar said that while some of the advertising spend on subjects like tax and social welfare entitlements could be justified, millions of tax euros had been wasted on advertising campaigns that were either unnecessary, unsuccessful or ideologically-driven. Among those he singled out were the HSE, which spent €4.7 million on advertising despite the fact that it was cutting services.

Other items he listed included:

• An advertising campaign by the Department of the Environment and councils encouraging people not to water lawns during the wettest summer in decades;

• €2 million for Willie O'Dea's Emergency Planning campaign;

• A €6 million campaign on climate change awareness with a further €2 million spent on the "Power of One" campaign;

• A €2.9 million campaign on Transport 21, largely for projects which haven't even been built;

• €120,000 for a campaign promoting work-life balance;

• €439,000 promoting the work of the National Centre for Partnership and Performance.

© 2008 The Irish Times

This article appears in the print edition of the Irish Times