Varadkar predicts battle over State assets sell-off

A BITTER fight between the Government on one hand and the European Union and International Monetary Fund on the other over the sale of State assets has been predicted by Minister for Transport Leo Varadkar.

The Government was united in its opposition to the sale of State assets simply to reduce its borrowing requirements, he said.

Ministers, while differing in their approach to privatisation, were not keen on a sell-off unless this made sound economic sense.

Mr Varadkar said the sale of a port or airport could make sense if the buyer was prepared to invest in the asset when the Government could not afford to do so.

He also expressed opposition to the sale of profitable parts of State-owned bodies such as CIÉ’s tour operations or Bus Éireann’s Expressway coaches.

Such operations cross-subsidised the loss-making parts of their parent companies and their sale would raise relatively small amounts of money, reduce the borrowing requirement by “not very much” and deprive the company of revenue.

“It’s not for me to rule this out but I don’t see the benefit of it,” the Minister said yesterday.

Mr Varadkar is, along with other Ministers, consulting State-owned enterprises targeted for privatisation in the McCarthy report.

He said the boards of some State enterprises were still holding out for the payment of bonuses to senior staff, even where they were loss-making. But Mr Varadkar said no bonuses would be paid.

He promised a decision on whether big transport projects such as the Metro North and Dart Underground will proceed once the capital spending review is completed by mid-summer.

However, he admitted it was very unlikely Ireland could return to the markets and raise capital to build the projects on a public-private partnership (PPP) basis in the short term.

“If PPPs are not a runner, then loads of these big projects are gone,” he said.

While it was still his ambition to see one of the three or four biggest projects completed, Mr Varadkar hinted they could be long-fingered until the markets were prepared to lend to Ireland again. One possibility was that the projects would be cancelled but then re-activated by a future government after 2015.

In cases where preparatory work was under way, he said it was worthwhile bringing the project to the point where a route was selected or full permission granted, even although this meant added expenditure.

Mr Varadkar said he expected tourism businesses to pass on the benefit of the 4.5 per cent cut in Vat to their customers but added that the main purpose of the initiative was to create jobs rather than cut prices.