Half of cash from asset sale may be retained in State, says Kenny

IRELAND COULD hold back up to 50 per cent of the proceeds from the sale of State assets for domestic investment following agreement with the EU-IMF, Taoiseach Enda Kenny has said.

The original agreement allowed the State to keep just a third of total sales to spend on infrastructure and jobs.

“The change now is that that will be significantly higher. It could be – I stress could be – as high as 50 per cent,” said Mr Kenny.

Minister for Finance Michael Noonan and Minister for Public Expenditure and Reform Brendan Howlin would not be drawn on a figure during a press conference on the bailout programme review.

However, speaking in Dún Laoghaire, Co Dublin, Mr Kenny said another significant concession was that the Government could now start investing from the immediate sale of the proceeds “rather than having to wait until the end”.

The Taoiseach said the development was evidence of the trust being established between Mr Noonan, Mr Howlin and the European Commission, ECB and IMF troika.

Mr Kenny called for a Yes vote in the upcoming fiscal treaty referendum at a number of engagements as campaigning intensified.

The Yes side received a boost when the executive of the country’s largest public sector union, Impact, became the first to recommend a Yes vote to its members.

Impact’s general secretary, Shay Cody, warned that a No vote would result in a significant increase in the cost of Government borrowing and could even cut off the country’s ability to borrow.

This would have “dramatic consequences for social welfare benefits, pensions, public services including pay and employment, and domestic demand in the wider economy”, he said.

The country’s largest union, Siptu, will recommend a Yes vote, despite reservations, if a stimulus plan is put in place. Siptu general president Jack O’Connor will appear before an Oireachtas committee this morning to outline the union’s proposal to use half the National Pension Reserve Fund and money from private pension funds to create a €10 billion fund for infrastructural investment.

The Government has published draft legislation to give effect to the fiscal treaty if there is a Yes vote in the referendum on May 31st.

The General Scheme of the Fiscal Responsibility Bill 2012 is designed to underpin the rules in the fiscal treaty, according to Mr Noonan. “These rules are sensible and prudent and represent a responsible approach to budgeting,” he said.

The increase in funds available for job creation was confirmed by Mr Noonan and Mr Howlin at a press conference, marking the conclusion of the sixth review of the bailout programme.

Both Ministers described the development as a “significant political breakthrough”.

However, Mr Howlin would not disclose the extent of the increase, other than to say it would be significantly higher than the 33 per cent agreed with EU and IMF officials three months ago.

“We are ambitious. We have not settled on a number and we could not [during negotiations] over the past couple of days. I will be travelling to Brussels to finalise that in the coming weeks,” he said.

However, Fianna Fáil finance spokesman Michael McGrath said the Government was not focusing enough on stimulating activity in the economy domestically and would now have to rely on rising inflation to meet its targets.

Among No campaigners, Sinn Féin TD Pádraig Mac Lochlainn said the Government’s referendum strategy was based on trying to “scare the bejasus out of the Irish people”.

Separately, former taoiseach John Bruton has made a strong plea for a Yes vote.

The former Fine Gael leader said No campaigners were asking householders to “take our custom away from the credit union and to place our fate in the hands of the moneylenders and loan sharks”. He said: “A No vote would be a vote for more austerity, not less.”