Irish

Thursday 10 July 2014

A chill wind blows but Rabbitte can take the heat

The austerity drive rankles, but the ex-Labour leader has no difficulty in applying his political principles to overseeing the industry sectors covered by his brief, writes John Mulligan

Published 21/03/2013|04:00

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SNOW is whirling around outside, but it's roasting in Pat Rabbitte's office. The two extremes could be a perfect allegory for the veteran politician.

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The heat is on the Government, but the public has gone cool on Labour. The most recent opinion poll showed support for the party – which he once led – dropped two percentage points to just 11pc.

The Government remains under intense pressure over a range of issues from banks to property tax and mortgages, with the soft glow of the debt deal made just weeks ago having all but faded already.

But Rabbitte, who's been Minister for Communications, Energy and Natural Resources for the past two years, has been long enough in this game to take it in his stride, and doesn't accept that the outcome of an election in three years' time is a foregone conclusion.

"One would be very foolish to make any predictions about what the political environment will be in three years' time," he says. "Harold Wilson's adage is still correct: a week is a long time in politics. Three years in the context of where we are now is a generation in political terms.

"So I don't make any automatic assumptions about what will happen at the next election. I don't believe that, when it comes to a national electoral contest to elect a government, people are so gullible as to have forgotten what happened to them under the Fianna Fail-led governments that preceded 2011."

And it's true that trying to predict the outcome of an election so far away is pointless. But for Labour, in particular, being part of an austerity and tax drive that is enraging the public seems a world away from its socialist roots.

"I think I'm a social democrat in the sense of what that means in mainstream European politics," Rabbitte says, when asked if he's still a socialist.

But aligning that with what Labour must do as a part of Government must surely be like trying to put a square peg in a round hole? "It's extremely difficult. You'd give a lot to be in Government at a time when there's money around, to implement reform and correct inequalities so far as you can," he says.

"To be landed in government at the depth of the worst crisis that has ever beset this State since its foundation is not something that you would have aspirations to.

"But the nature of politics is that things happen and you have to confront the issues that arise at any given time, and we happen to find ourselves in government after the economy had been plunged into its worst crisis.

"There was even an existential question about the viability of Irish independence."

But while people accept things needs to be done, they're furious at the nature and scale of the cuts and tax hikes they're enduring.

"You can't make social progress and you can't protect social welfare and social services if you haven't a functioning economy. I don't think we have been especially good at explaining that to people.

"Talking macro-economics to the average citizen is not a very winning formula. They're concerned about how it affects their families. The sheer longevity of the recession is what's making it worse."

It could be argued that what is also making it worse is that many of the bankers perceived to have been at the centre of the financial vortex remain largely unfettered and with their pockets lined. "It takes an unconscionably long time in this country to arraign persons in the general white-collar area for suspected offences," says Rabbitte.

"But we have a separate prosecutorial system in this country, we have an office for corporate enforcement, we have spent a lot of resources in supporting the investigative arm.

"It would suit the purposes of Government if it could proceed with more haste, but one suspects that the enquiries under way have been very difficult."

That's putting it mildly. The glacial pace of the probe into Anglo has drawn the ire of even the judiciary, not to mention the public.

In January, investigators, including the Director of Corporate Enforcement and the gardai, asked the court for three more years to be allowed conclude their probe, citing the "mammoth" task they faced. Justice Peter Kelly gave them an extra year.

And besides the day-to-day political machinations of government, Rabbitte's own brief is extensive.

Semi-state companies, including the ESB, Bord Gais and Bord na Mona, fall under his wing, as does the telecoms sector and natural resources ranging from oil and gas exploration to inland fisheries and wind energy.

The department will also eventually be responsible for examining all media mergers.

Rabbitte has been fortunate that two of those sectors so far have delivered good news for the Government.

In November, a new communications spectrum designed to allow mobile firms to deliver new high-speed services was auctioned off, yielding a total of almost €1bn for the State.

The ESB is paying a €78m dividend to the State this year, and the Exchequer's coffers will be further swelled by the electricity firm's sale of assets in the UK and Spain.

The retail arm of Bord Gais will also be sold off this year – a transaction that's also likely to generate in the region of €1bn for the State.

The ESB is one of the state-owned assets that fell under the gaze of the IMF and EU for a possible sell-off when Ireland received its bailout.

But while it had been originally mooted that the Government would sell a minority stake in the electricity firm, it later pulled back from that action and instead instructed the ESB to sell €400m of non-strategic generating assets by 2014.

Needless to say, unions didn't like the idea of a stake sale.

"We are fundamentally opposed to the fire-sale of state assets in order to mistakenly right the wrongs of the banking disaster," said the UNITE union last year.

But Rabbitte denies that fear of damaging union strike action prompted the Government to do a U-turn.

"I did and do interface with unions at ESB, and quite a bit at the time the Government made a decision to sell off some power generation," he says. "But the group of unions never threatened industrial action," he insists.

So what's next for the ESB?

"The ESB board understands that the Government is looking for a contribution of up to €400m apart from the normal dividend," he says, adding that the ESB is "best-placed" to decide the timing of further asset disposals.

"I'm also content enough to see some power generation disposed of by the ESB, but I do not want to see the ESB broken up. It's an exceptionally pivotal company."

But in an open market economy, why should the State retain ownership of assets such as the ESB?

"I've lived through the experience of Telecom Eireann [Eircom]. I can't say, with all due respect to your still part-owners [The O'Reilly family, which owns a stake in Independent News & Media], that that has been a very happy experience for Ireland incorporated." Just last year, Eircom emerged from the largest examinership ever in Ireland as it cut its €4bn debt pile.

But just because the Telecom Eireann floatation proved a mess, it doesn't necessarily follow that a sale of the ESB would lead to a similar outcome, or a lack of investment in infrastructure.

"I don't think that people who don't follow this debate closely appreciate the significance and importance to Ireland of building out the networks and having control of that," he says. "People take energy security for granted."

He says that the focus for now is primarily on the sale of the Bord Gais retail arm.

"It's going to the market this year and I expect it will be concluded this year."

He says he doesn't have a "big difficulty" about the disposal of Bord Gais Energy. "I don't have great difficulty in that disposal and freeing up the company to focus on the creation of a water utility company under state ownership."

Rabbitte has already strongly defended the Government's stance on tax and royalties on successful oil and gas discoveries, and he's also in favour of two massive and controversial windfarm developments proposed for the midlands that would see electricity exported to the UK.

When asked if it's true that, despite the extensive and varied amount of interests in his portfolio, that he's bored by the department, Rabbitte is emphatic.

"That's all bollix. It's not true. This is a tremendously exciting department. I wouldn't like to transfer out of here in mid-stream. Broadband, energy security – these are critical questions in terms of economic recovery."

And outside, winter still doesn't want to let go.

Irish Independent

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