In most respects, Fianna Fáil's claims to have taken a turn to the left are both preposterous and pathetic. There is, however, one area in which something of substance may actually be happening. Some of the noises emanating from the Taoiseach and his closest allies these days are the startled mumbles of people discovering that something they believed all along might actually be true, writes Fintan O'Toole
Until it went into government in 1997, the party, in as much as it believed in anything, had a lingering faith in the role of State enterprises. It remembered that it was supposed to take pride in these companies as evidence of Fianna Fáil's positive achievements. This memory was lost in the coalition's first term. Now, some lingering pragmatism seems to be encouraging a rethink. Over the next few weeks it should become clear whether or not a dose of common sense has cured the delusions of free-market ideology.
As they try to decide whether to revert to a pre-McCreevy view of State enterprise, the Fianna Fáil Ministers could do worse than read Paul Sweeney's short, lucid and persuasive book Selling Out? Privatisation in Ireland. (To declare an interest: Selling Out? is published by the think-tank tasc, whose advisory council I chair. I have, however, had no involvement with the book itself.) In an atmosphere where most commentary and analysis assumes that privatisation is automatically a good thing, Sweeney takes a properly sceptical view, puncturing a few myths and providing the broader social and political context that is so often lacking from such debates.
I imagine that most Irish people, if they were given a word-association test would respond to "State company" with "loss-making" and "inefficient". Sweeney points out that the State companies as a whole made more than €500 million in profits after charges, tax and interest payments last year. The only ones that made losses - An Post and CIÉ - are not, and should not be, fully commercial companies. They provide important social services that no purely profit-driven company would even contemplate. CIÉ's loss of €4 million and An Post's of €32 million are not insignificant but there is no evidence that private companies would provide the same services more cheaply in the same circumstances.
The point, though, is not just that the State companies as a whole make money, but that private companies often make losses. As a State company in 1997, Eircom recorded profits of £197 million. As a private company owned by Wall Street venture capitalists, it reported losses of €233 million in 2002, €40 million in 2003 and €103 million in the year to last March. If it were still a State company and these kinds of figures were being published, the chorus of demands for the privatisation of Eircom would be deafening. We would be told that private-sector initiative, efficiency and vigour were the solution. Since it is already private, however, there is a curious silence. The hush is not unconnected to the fact that the whole process of making it so has been a delight for some people.
Mary O'Rourke infamously promised at the time of Eircom's privatisation that there would be no fat cats. Sweeney quantifies the total gains made by the members of the Valentia Consortium who took it over three years ago, at around €950 million.
The Soros Fund, headed by the colourful investor George Soros, made €177 million. Tony O'Reilly made €35 million. Providence Equity made a whopping €443 million. In just two years, these people made a return of 141 per cent on their investments. Over the same period, the company's top four executives were paid a mind-blowing €29 million between them. Goodbody Solicitors got €8.5 million for their advice to the consortium. The directors nominated by the Employee Share Ownership Trust (ESOT), which holds shares on behalf of the company's 14,000 present and former workers, also shared in the bonanza. Con Scanlon, former head of the Communications Workers Union, got €1.8 million. Much of it was in pension payments, but the sum included €580,000 worth of shares for his "contribution to the company". The sale of Eircom did, of course, produce a major short-term gain for the State. Over €6 billion of the €8 billion that half a million of us paid for shares in Eircom went to the Exchequer and was invested in the National Pension Reserve Fund. But that represented a return on heavy State investment in the company in the 1970s and 1980s. It has to be balanced against the loss of any national control over a key infrastructural asset. What we're left with is not just half a million citizens nursing serious losses but a telecoms sector dominated by a debt-ridden company that can't afford the capital investment that is crucial to Ireland's survival as a high-tech hub.
Contrast this with the ESB, which has remained in State hands. It has never received State investment yet pays a dividend to the Exchequer. It made a profit of €250 million last year. Crucially, it is in the middle of a five-year programme of upgrading its networks through an investment of €4 billion. Its consistent ability to win international business in open competition suggests that it is very good at what it does. It might even generate enough power, channelled through Sweeney's calmly rational argument, to switch on a light in Bertie's head.