Agency cautions against selling-off key assets

The expert agency that advises the Government on economic development and strategy has cautioned against any sell-off of Shannon or the other State airport.

Forfás, in its recently published report The Role of State-Owned Enterprises, highlighted the fact that such commercial companies are key investors in infrastructure provision and are responsible for delivering a significant part of Ireland’s National Development Plan. The report also noted that the National Development Plan envisaged investment of €1.8 billion in the three State airports operating under the aegis of the Dublin Airport Authority (DAA).
The DAA, successor to the former Aer Rianta, has been heavily tipped by commentators and in media leaks as one of the front-runners for privatisation as the Government heads into the pre-budget decisions on Colm McCarthy’s ‘Bord Snip’ recommendations.
However, a contrary stance has been taken by Forfás in the report which reviews Government options and how they should be approached.
“The sale of State-owned assets cannot solely be guided by how much revenue they will raise,” the report states. Instead, Forfás contends, State operations should be safeguarded if they provide infrastructure that can support or stimulate future economic growth or where they foster and promote enterprise, innovation and regional development.
The Forfás review pinpoints energy, communications and broadband networks as key infrastructure and brackets with them vital airports. Forfás does not make any distinction between the three State airports as to whether all or any one is seen as vital.
Shannon Airport goes furthest in meeting the criteria as a generator of economic growth. While Dublin and Cork airports provide essential infrastructure within the national economy, the record of Shannon as an innovator of world impact in the 1940s, as a hotbed of enterprise and as a catalyst and pioneer force in regional development, matches up to what the Forfás review sets out.
To help the Government pick out the appropriate State enterprises to be sold off or held in State ownership, “it is important to develop clear criteria” the Forfás review states. Before making any decision on disposal of State assets, checks to be carried out should examine “the factors needed to ensure that the State-owned enterprises maximise a broader contribution to supporting economic recovery and opportunities for enterprise and innovation”.
Stating that the interests of users of infrastructure must be protected “by not selling monopoly assets” the guide also states “it is also vital that investment in advanced infrastructure and that regional development is promoted”.
The review points out that the quality of air transport in Ireland is ranked in the bottom five of OECD countries as evaluated in World Competitive Ratings. Ireland is in 23rd place in a table of 27 countries.
Capacity to expand on an international scale in opening up new areas of enterprise and growth should also be a factor to be considered when the Government weighs up whether State assets should be cashed in. A global reach has been achieved by the Shannon originated Aer Rianta International (ARI), which has contributed profits of more than €100m to the Dublin Airport Authority since the 1994 break-up of Aer Rianta.
With the promised autonomy for Shannon Airport as well as Cork held up because of Government failure to honour promises that they would be given a debt-free start, the review records that the debts of the parent Dublin Airport Authority amounted to €188m at the end of 2008. Since then, Shannon has been loss making while the building of Terminal 2 and the steep fall in traffic has pushed Dublin Airport into deeper losses.