And his response......

I think we'll leave it at that....

(published on 14 September 2006 in the Irish Times)

Madam, - Congratulations to Diarmaid Mac Aonghusa (September 8th) for his robust and articulate response to my earlier criticisms of his support for government involvement in semi-state companies such as Aer Lingus.

Mr Mac Aonghusa is entirely correct in pointing out that pension deficits are not exclusive to the public sector. Unfortunately, he fails to understand the difference between pension deficits in the public and private sectors.

Pension shortfalls in the private sector are an internal matter for the staff and management of such companies. However, public sector pension deficits are a problem for the taxpayer. Once again I reiterate my original question which Mr Mac Aonghusa failed to answer: Why should the average man on the street be asked to fund the financial mismanagement of semi-State dinosaurs?

Due to rising fuel costs and the cyclical nature of the airline industry it is inevitable that Aer Lingus will in the future face difficult times. Does Mr Mac Aonghusa suggest that the Government should have waited until Aer Lingus was at a low ebb before offloading it? Or does he suggest diverting taxpayers' money away from essential services to prop up an ailing Aer Lingus if that is what is required at some future point?

Mr Mac Aonghusa's support for government investment in semi-State bodies came on the very same day that another one of these dinosaurs, the ESB, announced a 19.7 per cent price increase to consumers. This is the same ESB which last year paid its chief executive, Pádraig McManus, a salary package of €478,000. This is the same ESB where employees have benefited enormously from concessions made in the partnership process. Again, every one of these concessions and wage increases has been made possible by the private sector.
Why do companies such as Ryanair absorb rising fuel costs whereas the first instinct of the semi-state sector is to raise prices?

Mr Mac Aonghusa accuses me of being "wedded to an ideology". In this instance he is entirely correct. I unashamedly believe that one sector of the workforce should not be asked to subsidise another sector. This is sadly the circumstances that the private sector taxpayer currently has to endure.

Privatisation of semi-state dinosaurs is the only remedy for this social injustice.

Yours, etc,
BRIAN GEOGHEGAN,
Temple Manor Grove,
Walkinstown,
Dublin 12.

The response.... (well I had to!)

(letter published in the Irish Times on 8 September 2006)

Madam, - Brian Geoghegan (September 6th) criticises my letter of August 30th for "economic stupidity" and refers to my "outdated mindset" (whatever that might be). But his letter is factually wrong on almost all points.

His suggestion that the pension deficit facing Aer Lingus is a result of the "incompetent financial management of this semi-state dinosaur" may sound convincing, but it ignores the fact that pension deficits are an international problem faced by very many large companies (including British Airways, which was privatised 20 years ago).

His claim that any business leader in the private sector who presided over such irresponsibility would be jettisoned by shareholders is also wide of the mark, since the reaction of most of these companies has been to simply, cancel or curtail the pension benefits owed to their workers. I know of no company that has sacked its senior management as a result of its pension deficit. The idea that Aer Lingus has been financially mismanaged is very odd, particularly in view of its success in recent years when it generated large profits and expanded its route network while many other airlines were suffering massive losses.

The truth is that pension deficits are a result of poor stock market performance since that is where pensions are invested. Whether they have been invested there by a private or a state-owned company is irrelevant.

Mr Geoghegan calls for my "mindset" to be challenged as the "reality is that privatisation works" and "delivers value and efficiency for the average man on the street". Does it really? What example of the privatisation of a large national asset by our Government has done that? Need we be reminded of the disaster of Eircom? Surely nobody could consider that a success for Ireland. Its lack of investment in infrastructure - a direct result of putting shareholder value ahead of the country's strategic interest - has resulted in us having one the lowest broadband uptake levels in the EU along with some of the highest charges for basic phone service.

It is not I who am "wedded to an ideology" but Mr Geoghegan, who believes that everything except the services that he decides are essential should be privatised. I believe that the possible merits of any privatisation need to be examined individually for each semi-state organisation so that each decision can be made on a sound economic and strategic basis, not an ideological one.
Mr Geoghegan's claim that "the only other countries involved in the state ownership of airlines are Cuba and China" is simply untrue. State ownership of airlines is still widespread, ranging from 100 per cent ownership of companies such as Dermot Mannion's previous employer Emirates Airlines to smaller holdings in companies such as Air France-KLM.
Selling Aer Lingus for a few hundred million euro would be a foolish move and one which I believe, like the sale of Eircom, would be deeply regretted in coming years.

- Yours, etc,
DIARMAID MAC AONGHUSA, Shankill, Co Dublin.

I suffer from Economic Stupidity.

I am not sure if there is a cure or even a treatment. The diagnosis was given to me in a letter to the Irish Times in reply to my letter on the sale of Aer lingus. The letter was written by a Mr Brian Geoghegan. Now surely it couldn't have been the Brian Geoghegan, could it?

In any case, the letter he sent is below complete with misspelling of my name..... (he's not the first one to do that!)

Madam, - Diarmuid Mac Aonghusa's letter of August 30th is a classic example of the economic stupidity that surrounds the issue of privatising semi-state companies such as Aer Lingus. Without realising it, Mr Mac Aonghusa clearly illustrates the argument in favour of privatisation.

He says the sale of Aer Lingus is "sad and pointless" because the revenue raised by a share flotation will be absorbed by the "costs of funding the pension deficit". If Aer Lingus is not privatised then this significant pension deficit must be paid for by the taxpayer. Does Mr Mac Aonghusa expect the taxpayer to foot the bill for the incompetent financial management of this semi-state dinosaur?

The fact that such a large pension deficit was allowed to develop is in itself strong enough argument for privatisation. Any business leader in the private sector who presided over such financial irresponsibility would be jettisoned by shareholders, and rightly so.

The outdated mindset of Mr Mac Aonghusa needs to be challenged. The reality is that privatisation works. It delivers value and efficiency for the average man on the street. The private sector is the dynamo which is driving our economy; it should not be expected to carry economic dinosaurs such as Aer Lingus. And it should not be held to ransom by the vested interests of unions who represent public sector workers at the expense of the private sector.

Mr Mac Aonghusa's letter shows the folly of those who are wedded to the ideology of state ownership. The government is required to provide essential public services such as health, education, policing, etc. However the supply of a tradable commodity such as air travel is best left to the efficient private sector where the need for profit ensures that there is no room for the inefficiency and waste that are now the defining feature of our over indulged public sector.

It is worth mentioning that the only other countries involved in the state ownership of airlines are Cuba and China. Not exactly shining examples of progressive nations.

Yours, etc, BRIAN GEOGHEGAN, Temple Manor Grove, Dublin 12.