THE REPORT of the McCarthy review group on the disposal of State assets will be discussed by Cabinet for the first time today.
The Government has given a commitment in the programme for government to identify for sale up to €2 billion of non-strategic assets drawn from the recommendations by the group, chaired by economist Colm McCarthy.
At today’s discussion, the Cabinet will discuss its findings and begin the process of identifying suitable assets. But it will make no decision on implementing the recommendations.
The Cabinet will also discuss the report of the inquiry conducted by senior Finnish finance official Peter Nyberg into the causes of the banking crisis, the systemic weakness that failed to prevent it, and recommendations to remedy such failures. The report is understood to be highly critical of the banks, the regulators and the Department of Finance, but spares political leaders the same degree of criticism on the basis of a dearth of knowledge transferred.
The report is believed to have concluded there was a “herd” mentality at the highest levels, and is scathing about corporate governance failures. It found it was very difficult to challenge the consensus. Taoiseach Enda Kenny is expected to make a statement on the report to the Dáil today.
In relation to the McCarthy report, a number of sources in Government said yesterday there were two substantial impediments to any immediate or short-term adoption of its recommendations.
The first was that there is a clear recommendation there should be no immediate sale of any assets, as that might amount to a fire sale. “McCarthy makes it plain the sale of assets is contingent on timing and should not be done immediately,” said one source. The second obstacle was the very clear language of the memorandum of understanding agreed with the EU and International Monetary Fund last November. It stated that any sale of such assets should be used to reduce the national debt and not to fund stimulus programmes.
Yesterday, Minister for Transport Leo Varadkar dismissed suggestions that the sale of State airports or ports had been considered. He also said that notwithstanding the condition in the EU-IMF programme, any money raised from State assets should be used to invest in the economy.
“To date, there have been no discussions at Government about selling any of the three State airports,” said Mr Varadkar.
“The latest McCarthy report will only be presented to Cabinet today. I believe the proceeds of the sale of any non-strategic State assets should be re-invested in the economy, as set out in the programme for government, and as part of discussions with the external authorities.”
Government negotiators discussed this issue with the EU-IMF missions over the past fortnight. The revised memorandum has referred to the McCarthy report being considered by Government and leaves open the possibility the funds raised by selling assets might not have to be ring-fenced for debt reduction.
“The Government will discuss its plans with the EU Commission, the ECB and the IMF when it has finalised its response to the review,” it stated.
One source yesterday said that while the McCarthy report would influence the Government’s approach, it was the creation of the previous government and could not supersede the programme for government.
