Ictu calls for State holding firm

The Irish Congress of Trade Unions (Ictu) yesterday published new proposals to increase investment and improve management in State enterprises as an alternative to privatisation.

Ictu proposes the creation of a State holding company, accountable to a joint Oireachtas committee, that would raise funds for State companies.

The proposal would effectively transfer ultimate financial control of State companies from the Department of Finance to a structure comprising representatives from the Department of Finance, the National Treasury Management Agency, social partners and representatives of the private pensions industry. Ictu claim that this broader ownership structure will reduce the potential for politicised management in the semi-State sector.

It would also permit the National Pensions Reserve Fund, private pension funds and joint venture companies to be tapped into for investment in State enterprises, Ictu argues. Ictu says that the strategic importance of such utilities to Ireland as well as the small size of Ireland's market make privatisation inappropriate. However, they acknowledge the dilemma between retaining State control and improving investment levels in State companies.

Citing a 1998 OECD report on State-owned enterprises, the proposal document also accepts that the management of State enterprises can be undertaken in pursuit of "regional, social and industrial" policy objectives which are not necessarily in the interests of the customer.

The most recent State privatisation was the 1999 sale of Telecom Éireann, which became Eircom.

But last May, the Government approved in principle the sale of a majority shareholding in Aer Lingus to enable the expansion of the airline's fleet of aircraft.

Ictu general secretary David Begg said that the history of Eircom showed that private ownership of natural monopolies was not necessary to improve performance in the semi-State sector.

"Significant improvements in both efficiency and technology were achieved in Eircom before its privatisation in 1999," Mr Begg said. "There needs to be some clarity on the role of the State in the economy. Our purpose is to bring that condition of clarity about."

Privatisation has been pursued across Europe in response to EU competition laws requiring greater competition in the context of achieving a single market, particularly in telecommunications. More generally, privatisation has been advocated as a way of reducing taxpayer exposure to the cost of running and investing in utilities, as well as of de-politicising and improving their management.

Advocates of privatisation argue that political control and unionisation cause public utilities to be managed inefficiently.