At the heart of economic recovery: Pat Rabbitte

Minister for Communications, Energy and Natural Resources Pat Rabbitte tells Owen McQuade about his energy priorities and plans to get people back to work and “wave goodbye to the ECB.”

Pat Rabbitte was not a reluctant Energy Minister, but was surprised to have been allocated the Department of Communications, Energy and Natural Resources portfolio because that was the only department he hasn’t been involved in throughout his 22 years as a TD.

However, he has been getting to grips with his remit since 9 March and sees his department as being “about the future” and “at the heart of economic recovery.”

In terms of energy, Rabbitte is focusing on the “perennial empirical objectives of security of supply [and] avoiding price volatility.”

One of his main priorities is to “generate greater activity in the exploration and drilling stages” in a bid to tackle Ireland’s 95 per cent reliance on imported fuel.

Security of supply

In response to a Sinn Féin private members’ motion on 20 April, calling for a state exploration company that would hold a 51 per cent share in all oil and gas finds, Rabbitte told the Dáil that only four commercial discoveries of oil have been made since the 1970s. In order to discover more oil, thousands of exploration wells would be required at a cost of approximately €10 billon per 100 wells. He added that any exploration costs should be borne by the industry rather than the Irish tax-payer.

“Hopefully next month there will be new [oil and gas exploration] licences,” Rabbitte tells eolas.

“Quite obviously, one is not looking for a magic wand, but if the industry believes that Corrib is not the only potential out there, then there are reasons to be hopeful, but not at a rate of drilling an average of two holes per annum,” he states.

The Minister is keen to get “more activity at the exploration [and] prospecting stages.” However, he is disappointed that the long-running dispute over the Corrib gas field has not yet been resolved.

“Unfortunately we haven’t moved on from Corrib. My honest, personal reaction is that the imposition by the planning authorities of the requirement to build a super-tunnel under Sruwaddacon Bay is an extraordinary one.”

The ongoing dispute by the ‘Shell to Sea’ campaign “is going to slow the project down [by] slowing the levelling of gas.”

“Is [the tunnel] necessary in terms of safety?” Rabbitte wonders. “I suppose if the authorities say it is, I’m not going to second guess them, but it is an extra ordinary undertaking,” he comments.

Rabbitte believes that “from the early days when the protests were supposed to be about safety, it seems to me that a great deal of protest is not about ‘Shell to Sea’ but ‘Shell out of Ireland’.”

The country’s reputation is suffering as a result, he believes, and “it’s bad for the Government’s objective of sourcing new supply from indigenous resources [at a time when] we simply do not, within the constraints upon us, have the wherewithal to engage in oil or gas exploration ourselves.”

Ireland’s current fiscal constraints mean that it needs to attract international companies involved in the industry “and hope that we can do it on a win-win basis.”

The all-island energy market is “an important dimension” to energy policy the Minister highlights, with the Single Electricity Market “now-well established and the gas side is still to do.”

Job creation

Another priority, detailed in the Government’s jobs initiative, is the national retrofit scheme which will see additional funding of €19 million supplemented by €11 million in savings from DCENR’s Programme for Government allocation to increase funding for home energy efficiency and renewable energy programmes, creating 2,000 jobs.

“It seems to me that retrofit is the one scheme that ticks all the boxes,” Rabbitte says. The revamped scheme, which will see an energy efficiency update in homes around the country, “is not the end of the road”, according to the Minister. He reveals that he is in discussion with the energy companies about a pay-as-you- save scheme which would allow households to repay the energy company over a number of years through their ESB bill. He will discuss with chief executives of the state-owned banks, what contribution the banks can make to such a scheme.

“There are unspent monies in the green fund,” the Minister continues. “There is an obligation on them, in terms of the generosity of the tax-payer towards the banks, to pay them back.”

He has also had discussions with the Construction Industry Federation in terms of “what they can bring to the party.”

The jobs initiative “will be important in the context of putting people immediately back to work but it’s not the end of the road,” Rabbitte reiterates. The retrofit scheme will be important for domestic dwellings as well as public buildings, according to the Minister.

“There is a huge contribution we can make to meeting our targets, bringing down people’s bills and creating employment.”

He believes: “Even the economists who are sceptical about the merits of a jobs programme that requires investment in our present fiscal circumstances acknowledge that retrofit [will generate] a pay-back to the state and the possibility of significant job creation.”

While many companies are attracted to Ireland because of its high level of skilled graduates and the Government is keen to “maintain investment in the knowledge economy”, Rabbitte points out that “a great many of the people now unemployed are not impressed by talk of the smart economy.” They just want to get back to work with the skills they have.

He wants to “make the resources available to produce young people that are skilled in the knowledge economy” but is careful not to “cede the point that you can only be employed in the Ireland of the future if you’re in a white coat or in a laboratory.”

This creates a “huge challenge” for the Government in terms of retraining and upskilling because approximately 30-40 per cent those who are unemployed were made redundant from the construction sector.

He is “actively working” on the Programme for Government commitment to examine if there is “a parallel stream of investment” that could fund the streamlining of the state companies, the supply and creation of new employment and support for research and development.

Constraints

Getting people back to work and focusing on his energy priorities has to be done “against the backdrop of very heavy constraints.” The Government is unable to implement the policies it would like to because it has to “show its homework every quarter to the troika,” Rabbitte states.

“Everything is dominated by the economy,” he stresses.

The experienced politician who led the Labour Party between 2002 and 2007 and was Junior Minister for Commerce, Science and Technology during the 1994-1997 Rainbow Coalition, says: “It’s difficult to exaggerate the seriousness of the situation we have inherited.”

The challenge of growth is “the single biggest challenge facing go
vernment” because “only through a return to growth, putting people back to work and paying taxes again can we meet the challenge that confronts us.”

Discussions with other European member states on enumerating the terms of the bail-out deal, particularly the 5.8 per cent interest rate, are making progress, Rabbitte believes. He hopes that by the Ecofin conference on 15 and 16 May, a reduction in the rate will be achieved.

State assets

The McCarthy report on the sale of state assets recommends that ESB’s electricity distribution businesses, generation assets, international investment and consulting and engineering business be sold as a single entity. In addition, it suggests that ESB and Bord Gáis Éireann should merge their transmission networks and be kept in state ownership. The transmission grid should be transferred to EirGrid and retained in public ownership as a regulated monopoly, according to the report.

In response, Rabbitte says: “I can see no merit in selling off state assets if we are not free to use the proceeds to stimulate growth and employment in the Irish economy. If it is merely for the purpose of writing down debt, I for one don’t see the merit of that.”

He adds that “it is important to underwrite what McCarthy himself says; that no-one is advocating the sale of state assets in the climate in which we now find ourselves.”

Rabbitte believes that because the report was commissioned by the previous Government, “there may well be forces in [the Department of] Finance that are trying to argue that it is the superior document.” However, he insists, the McCarthy report does not supersede the Programme for Government which commits to generating €2 billion from the sale of non-strategic assets.

He adds: “We also agree with McCarthy that, given the Telecom Éireann experience, we are not going to embark on selling off networks that are strategic and in the national interest.”

Rabbitte is due to meet the Energy Institute following publication of Professor John FitzGerald’s review of Irish energy policy. It recommends that onshore wind be the main focus for investment, rather than offshore renewables, which are currently uneconomic.

He describes the ESRI report as having “a lot of sensible substance” and said he finds it “hard to argue with” the analysis that offshore wind technology needs further development to “bring down cost” and to deal with the problems of maintenance and reliability. However, he doesn’t believe this is an argument against Ireland pursuing its discussions with the British Government about “their very ambitious plans that may in the future hold some possibilities for this island.”

“It’s too early to say” how Fine Gael and Labour are getting on in coalition. “The crisis is so bad and ministers are so aware of it that any kind of jockeying for partisan advantage is not going on,” Rabbitte states.

“I’m around long enough not to say that will survive for five years”, he concedes, but at the moment it is the jobs initiative and negotiating the terms of the bail-out with Europe that are “provoking the single-minded focus of ministers, rather than jockeying for party advantage.”

He adds: “There have been no squabbles, public or private, while ministers struggle with solutions.”

Reform

“As a Government, we have in gestation, the most far reaching programme of reform that’s happened since 1922,” Rabbitte continues.

The Minister for Public Expenditure and Reform will be able to drive through reforms while using “a carrot and stick approach” through his control of expenditure.

In terms of political reform, Rabbitte believes the independence of the Oireachtas needs to be reasserted. “Gradually, over the years there’s been an erosion of the stature and independence of Parliament. More and more powers have been aggregated to itself by the executive.”

The “last real assertion of the independence of Parliament” that Rabbitte can recall was the 1999 DIRT inquiry.

“It had nothing to do with government, nothing to do with the Civil Service. It was undertaken by Parliament, it retrieved over €1 billion for the exchequer and it asserted that Parliament was independent.” It also showed that an inquiry by a parliamentary committee could be carried out “speedily, efficiently and immensely less costly than other inquiries.”

He is determined to see a referendum on the possibility of reversing the Abbeylara judgement that ruled against Oireachtas committees having the power to hold inquiries into events of major public importance.

“People need to be given the opportunity to see people being held to account,” he insists.

In addition, the Government needs to look at the relationship between ministers and the Civil Service, according to Rabbitte.

“Essentially that relationship is still dictated by the 1924 Ministers and Secretaries Act where the Minister is notionally responsible for everything but not really answerable for anything,” he says, adding: “There is a pact between the Minister and civil servant of: ‘You scratch my back and I’ll scratch yours.’”

It is “absolute nonsense” that a Minister is held to account if there is public outcry about a situation, but when the Minister ought to be held responsible, they can avoid accountability with “ruses” such as: ‘I never saw my brief.’

“We need to modernise that relationship and delineate what is the function of the Secretary General and senior officials and what is the supervisory and policy responsibility of the Minister,” Rabbitte suggests.

Profile: Pat Rabbitte

The 62-year-old Minister finds it “impossible” to separate his brief from “the over-riding national objective which is to restore the independence of the country and wave goodbye to the ECB.”

The most “demanding challenge” for the Government is getting back into the bond markets at a reasonable price. “Greece has discovered that, notwithstanding the bailout, market access is not open to them,” he comments.

The Dublin South West TD was President of the Union of Students in Ireland in the 1970s and a TD for the Workers’ Party and the Democratic Left prior to the joining the Labour Party. He hopes that he is still motivated by “the notion of the fair society.”

“You can’t represent a constituency like mine without being motivated by the inequality that is still in Irish society. That is still the over-riding motivation in my politics,” he concludes.