How to go about bringing a monopoly into public ownership?

smiles

Originally posted by Mailman
You didn't challenge the accuracy of the articles in either of these links. You challenged the motives of the people who wrote them.

One of these links is a copy of a newspaper article.
The other is an online newspaper article.
As journalists are obligied to research their work and verify their sources I think both articles can be relied upon to be factually correct.

They are very subjective in my opinion, factual doesnt necessarily mean they include *all* the facts.

Originally posted by Mailman
You say one of the links is from a site that is anti tolls. This is not correct - the site in question is on the whole anti-road in general, irrespective of how they are financed.

fair enough, i only read the one page that you had linked to and i would consider the whole set up of the page and the information contained on it to be very negative.

Originally posted by Mailman
They happen to have a bee in their bonnet about tolling because the feel that NTR are cajoling the NRA into building motorways that aren't strictly necessary just so that they can collect tolls on them and I think they may have a point there and considering where you live you might want to give this a bit more consideration.

Well I dont think the motorways aren't necessary. If they were then they wouldnt be used and so the company in question wouldnt make such huge profits.

I know i will be hit by the toll on the road being built beside me, but i still think it is a necessary thing, and has a valid reason.

Originally posted by Mailman
While Ireland is a nation of begrudgers the point of the eveing herald article wasn't that Tom Roche made a fortune - the point was that the government as representatives of you and me were negligent when they negotiated the contract and that is inexcusable irrespective of how bad the nations finances were back in the mid 1980s.

Private finance seeks out projects which produce supernormal ( in the economic sense of the term i.e. profit over and above the opportunity cost) profits. The government could have negotiated a much more favourable contract while still giving NTR a supernormal return.

I think it was necessary to resort to private finance because of the state of the finances. You're right in saying that the contracts should have been negociated better, and i'd love to see the tolls being lower! My argument was about the fact there is a toll road in general, and the validity of these existing.

Originally posted by Mailman
If you think Mr. Roche should be commended for being a great entrepreneur then go ahead but he should also be condemned as much of his fortune was attributable to having politicians in his pocket.

I think thats still being debated! :P But yes, he sounds a little dodgy, but with a sound financial mind.

Originally posted by Mailman
a bitxh fight in the middle of a valid discussion doesn't turn a previously stated fact into a falsehood.

It doesnt turn facts into a falsehoods, it merely throws opinions into disrepute.

<< Fio >>

Mailman

Smiles, if you care to browse CaST's web site you'll see that a report which shows that many motorways aren't needed has been buried.

http://homepage.tinet.ie/~camway/resource_centre/nra/articles/road_needs.html.

You see the problem is if the government don't want to pay then business are more than happy to step in provided it is worth their while.

You have too much faith in our politicians and the NRA.
Politicians decided to ignore the road needs survey. The politicians involved were amongst others Harney, McCreevy and McDowell.
The NRA which is supposedly an independent body has too many vested interests directing it too. It's a QUANGO in the bad old British Conservative party way.
To see what I mean go to http://homepage.tinet.ie/~camway/resource_centre/nra/articles/resignation_20010721.html

I wish to state that I am in no way affiliated to CaST.

smiles

Originally posted by Mailman
Smiles, if you care to browse CaST's web site you'll see that a report which shows that many motorways aren't needed has been buried.

if they aren't needed then they wont be used. then the private companies would make no profit, so they wouldnt invest in the first place.

It has been said for years than no bypass was need beside me, thats why there are up to 2 hour long delays for me getting home every day, and now that some of the relief roads are opened in the last day or two (the first few steps) the traffic has been eased by a huge amount.

You have too much faith in our politicians and the NRA.
Politicians decided to ignore the road needs survey. The politicians involved were amongst others Harney, McCreevy and McDowell.

I dont know where the idea that i have too much faith in politicians comes from. Is it because i think that roads need to be built? If you are going to try and put my opinions down then at least attempt to qualify your reasons why.

<< Fio >>

Mailman

When the motorways are built they are designed in such a way that you are forced to use them i.e. very difficult to divert as with the M50. They're designed to guarantee revenue for the toll operator. This is an intrinsic part of toll road design and is one of the most important parts of the contract negotiation.

Was talking to someone over lunch today who has a friend in Drogheda and his friend was complaining that he will have to pay €5 to use the new toll bridges just to get to his home because he can't divert round them.

Since you bought into the spin about PPP being good for you I figure you listened to our government. Some roads do need to be built, some do not. Most roads that do need to be built don't need private financing.

I don't have to justify my position, you do. The accepted rule has always been that infrastructure is provided from public funds and the burden of proof is on those who propose private financing for a particular route. They're the ones who must justify why public finances aren't used.
The government's consultants questioned the appropriateness of using private investment in infrastructure projects.
The government have disregarded the advice of their consultants and turned this general rule on it's head striving short-sightedly to finance all major infrastructure projects privately to keep government borrowing down irrespective of whether it is appropriate or not.

Even business recognises the necessity of being highly geared sometimes. Our government however do not.

smiles

When the motorways are built they are designed in such a way that you are forced to use them i.e. very difficult to divert as with the M50. They're designed to guarantee revenue for the toll operator. This is an intrinsic part of toll road design and is one of the most important parts of the contract negotiation.

Well, there are always ways and means, although i take your point that they're are designed to be like that, i hadnt actually considered that.

Was talking to someone over lunch today who has a friend in Drogheda and his friend was complaining that he will have to pay €5 to use the new toll bridges just to get to his home because he can't divert round them.

Yes, there is going to be at least 2 tolls on the routes going in and out of the town, and while this is annoying, i still think they are valid in being there. As for €5.... thats a little bit up in the air at the moment and i for one whould have ahuge objection to the toll being so high.

Since you bought into the spin about PPP being good for you I figure you listened to our government. Some roads do need to be built, some do not. Most roads that do need to be built don't need private financing.

Just because i agree with elements of the government does not necessarily mean I agree with all of it. Whats the point in you jumping to conclusions over my beliefs? If you want me to listen to your points then just question mine if you're not sure, dont assume things i dont say.

I already gave my reasons why I think they do need private financing.

I don't have to justify my position, you do. The accepted rule has always been that infrastructure is provided from public funds and the burden of proof is on those who propose private financing for a particular route. They're the ones who must justify why public finances aren't used.

Whats the point in saying anything here if you're not going to justify your position. I read these boards and argue with people simply so I can get other peoples opinions that might have good valid points that might change mine, I honestly think that starting into a discussion like this with a closed mind is foolish.

Basic reasons for privatisation of the routes:
* Reduces government borrowing
* Reduces the burden of taxation on the individual and only taxes those who use the service
* Private enterprise has been proved to be far more efficent
* Private enterprise increases the general level of wealth within the country
* The terrible standards of Irish infrastructure have been holding this country back where foreign investment, and even domestic investment is concerned, so it *has* to be improved.

There were huge cut backs in the 80s that has left a blatent need for upgrading, now the government seems to be trying to rectify this situation and has a choice between:

a] raising taxes and funding it itself (and you can imagine the reaction to that)
b] not building the road (they're already being reprimanded by both Europe and disputes by Irish/international businesses)
c] borrowing and having a larger burden of taxation for future generations,
d] partly privatly financing the project (and having people argue about it like this.)

Its a no win situation as far as I can see, but i'd love to hear other peoples opinions on this.

The government have disregarded the advice of their consultants and turned this general rule on it's head striving short-sightedly to finance all major infrastructure projects privately to keep government borrowing down irrespective of whether it is appropriate or not.

I dont think that they are financial all infrastructural projects privately, there is a huge injection coming from the EU and the government as well as private industry.

But you're right, I think the policy should be examined more closely and alternatives considered.

Even business recognises the necessity of being highly geared sometimes. Our government however do not.

Troll.

<< Fio >>

Victor

Originally posted by Mailman
Even business recognises the necessity of being highly geared sometimes. Our government however do not.

Which example should I use?
Commercial: Enron, Global Crossing, British Airways, ntl, Sabena, Swiss Air? or
National: Argentina, Germany (c. 1930), Mozambique, Ireland (c. 1987)?

Originally posted by Mailman
Was talking to someone over lunch today who has a friend in Drogheda and his friend was complaining that he will have to pay €5 to use the new toll bridges just to get to his home because he can't divert round them.

Can't? How did he get home up to now? And who is suggesting a toll of €5?

Originally posted by smiles
It has been said for years than no bypass was need beside me, thats why there are up to 2 hour long delays for me getting home every day, and now that some of the relief roads are opened in the last day or two (the first few steps) the traffic has been eased by a huge amount.

What sections are open?

Mailman

Highly geared companies. Hmmm, lets see......
NTR was highly geared to begin with and they're thriving. Maybe they're just special.

Highly geared countries. Don't have to look too far.
As a proportion of GDP Ireland has one of the lowest levels of debt in the entire EU so other countries in Europe are more highly geared than we are but I don't see them being dragged off to the knackers yard just yet.

I can't confirm the €5 or elaborate on alternative routes. As I took care to state in my last post I said it was a friend of a friend. The only things I did clarify with my friend before I included that discussion in my post were that he was certain that his friend was from Drogheda, the figure mentioned was €5 and that there was no alternative viable route available to him. Take it with a pinch of salt if you want.

Smiles, when I was talking about justifying Tolling I mean on a case by case basis not in general. It has to be done on a case by case basis. The benefits you listed are the benefits you hope would accrue from involving business in a public project and the benefits provided from involving private individuals must outweigh the disadvantages on a case by case basis.

When NTR and the NRA use the same contractors(and they do) to build their motorways the level of efficency is identical. When NTR borrow they borrow at a less preferential interest rate to a government. When NTR operate a toll bridge there are extra operation costs incurred that aren't present on an untolled road. Look at their financial reports - the administration costs are substantial.
On a macro-economic level the un-tolled bridge is paid for through increased economic activitity. Do you think Irish business is going to be better off or more competitive internationally having to pay a toll on the M50 after being diverted on to it by the Dublin port tunnel.

The idea that government can't be as efficient as private enterprise is wrong. Look at the national lottery - it is just as efficient as the british lottery but the people of Ireland benefit from the Irish Lottery. Cadbury-Schweppes benefit from the lottery in Britian. Yes, there is private involvement in the Irish Lottery(G-Tech) but the majority of the benefits accrue to the public. In the electricity industry private companies demanded that the price per KWh hour be increased by 10% before they enter the market. Dennis O'Brien is waiting in the wings to cherry pick the most efficient public owned Power Stations at a knock down price when the industry is privatised. Perhaps electricity generation will be more efficient once privatised but you and I won't see the benefits. Victor, am I right or am I right on this one?

I'm especially annoyed about Tolling today. Before setting out on my journey across the toll bridge today I left out €1.30. I approach the barrier, roll down the window and throw the money into the funnel. The machine registers only 10 cents of the €1.30 I threw in. I roll the window further down to retrieve the €1.20 that has been rejected. I find only 20 cents. The machine has swallowed the euro. Impatient drivers behind me getting more impatient. So now I have to undo seatbelt and contort myself to extract more money from my pocket. Only have €2 coin. With irate drivers behind me I have no option but to throw €2 into funnel. Machine likes €2 coin very much. Green light. Go.
So to get through the toll bridge I had to pay €3.30- highway robbery.
On return trip I choose Chapelizod, speed bumps and all in preference to M50.

Victor

Originally posted by Mailman
.... In the electricity industry private companies demanded that the price per KWh hour be increased by 10% before they enter the market. Dennis O'Brien is waiting in the wings to cherry pick the most efficient public owned Power Stations at a knock down price when the industry is privatised. Perhaps electricity generation will be more efficient once privatised but you and I won't see the benefits. Victor, am I right or am I right on this one?

Electricity has been underpriced in Ireland (underpriced relative to neighbouring markets, environmental concerns and price sustainability). While the ESB has been making profits, it has not been making enough to replace generation capacity or to expand the distribution network at an appropriate level. This puts new entrants at a disadvantage as they need to build the generation capacity and network connections. On a secondary level, some technologies are genuinely more expensive. But most importantly the difference between wholesale and retail prices were insufficient to attract new entrants.

Denis O'Brien I understand has withdrawn from the electricity industry. SeeO'Brien's ePower to close after losses of €6m , although I am sure he is entitled to re-enter. And I would support the selling off of various generating units (or groups of units) to avoid an eircom type situation with a privatised monopoly. The sale of Ngrid and the ESBs retail market is another matter.

The efficiency of energy generation is not down to public or private ownership, but strategic location of generating and distribution capacity, technical issues regarding energy loss, usage patterns and models.

The ESB is currently over-staffed by an estimated 2,000. The advent of competition is one of the reasons that the ESB is becoming more efficient.

Finally, I don't see prices coming down, primarily on energy policy, environmental and price sustainability grounds. But we will see the benefit of greener electricity

---

Ban the ESB, its a double tax!!!!!

smiles

Originally posted by Victor

quote:

---

Originally posted by Mailman
It has been said for years than no bypass was need beside me, thats why there are up to 2 hour long delays for me getting home every day, and now that some of the relief roads are opened in the last day or two (the first few steps) the traffic has been eased by a huge amount.

---

What sections are open?

That was actually posted by me!

The side roads that they built are, the big roundabout section down the road from me and one of the roads that links one of the incoming roads to that roundabout. it also means the road that was closed to heavy traffic (and at times all traffic) is now reopen.

<< Fio >>

smiles

Originally posted by Mailman
Highly geared countries. Don't have to look too far.
As a proportion of GDP Ireland has one of the lowest levels of debt in the entire EU so other countries in Europe are more highly geared than we are but I don't see them being dragged off to the knackers yard just yet.

What??? You use the national debt to GDP ratio as a sign of a country being highly geared?!?! How on earth does that work (besides saying that means other governments spend more, because that doesnt even need to be argued with as wrong)

Originally posted by Mailman
the figure mentioned was €5 and that there was no alternative viable route available to him. Take it with a pinch of salt if you want.

a very large pinch of salt i think!

Smiles, when I was talking about justifying Tolling I mean on a case by case basis not in general. It has to be done on a case by case basis. The benefits you listed are the benefits you hope would accrue from involving business in a public project and the benefits provided from involving private individuals must outweigh the disadvantages on a case by case basis.

of course case by case assesment is need Those were the reasons why a private industry is *in general* more efficient and better at handling projects than a public one.

When NTR and the NRA use the same contractors(and they do) to build their motorways the level of efficency is identical. When NTR borrow they borrow at a less preferential interest rate to a government.

I've already given my arguments as to why i think it was better for there to be private industry involved with the M50 at the time it was built (and i wont discuss that any further, i think we have to agree to disagree!) but as you said, it must be a case by case assesment of both the current economic situation and what the predicted situation will be.

On a macro-economic level the un-tolled bridge is paid for through increased economic activitity. Do you think Irish business is going to be better off or more competitive internationally having to pay a toll on the M50 after being diverted on to it by the Dublin port tunnel.

name more than 3 european countries that have no toll roads/bridges!

If anything we are going towards the same standards that the rest of Europe already has (both in better infrastructure and increasing privatisation)

The idea that government can't be as efficient as private enterprise is wrong. Look at the national lottery - it is just as efficient as the british lottery but the people of Ireland benefit from the Irish Lottery. Cadbury-Schweppes benefit from the lottery in Britian. Yes, there is private involvement in the Irish Lottery(G-Tech) but the majority of the benefits accrue to the public.

Lets see... Telecom Eireann? Irish Fertilisers? (and ther was another company whos name escapes me at the moment sold for about 1p i think -- the buyer had to accept all the debt as well)

and to put two of your quotes together:

The idea that government can't be as efficient as private enterprise is wrong

Perhaps electricity generation will be more efficient once privatised

so, yes, the ESB as another example of an inefficent government run company.

Of course there will be efficient companies that are run by the state, but inefficiency of public enterprise is an accepted fact, open *any* economics book and you will see that. It was also one of the reasons that the USSR centrally planned enterprise failed.

In the electricity industry private companies demanded that the price per KWh hour be increased by 10% before they enter the market. Dennis O'Brien is waiting in the wings to cherry pick the most efficient public owned Power Stations at a knock down price when the industry is privatised. Perhaps electricity generation will be more efficient once privatised but you and I won't see the benefits.

Electricity is a very tricky issue, if it was privatised then there is a huge amount of capital needed to be directly invested, more than anyone seems to want to put up on their own, without the government knocking down prices on the generators that they have already built.

If it wasnt for the governments initially investment in the ESB then we would have been years without widespread electricity.

If it is totally privatised then they will simply cut off all the inefficient areas, lets see:

CEO: "Oh look on the Clare Island it costs us more to give them electricity than the rest of the country, and our profits are down by 0.02%, lets up the prices by.. say... 500% on that island ? and then well cut them off completely." :P

[and yes that word was *totally* privatised, a little/lot of competition would do them no harm]

<< Fio >>

Victor

Originally posted by smiles
What??? You use the national debt to GDP ratio as a sign of a country being highly geared?!?! How on earth does that work (besides saying that means other governments spend more, because that doesnt even need to be argued with as wrong)

It's one indicator, together with private and corporate debt, relative to realisable assets and affordibility.

smiles

Originally posted by Victor


It's one indicator, together with private and corporate debt, relative to realisable assets and affordibility.

By that logic Russia was highly geared at the time when their economy was going unto complete and utter chaos.

A government being highly geared is best measured by growth, not the debt of the country!

<< Fio >>

Mailman

that is, Private industry was unwilling to enter the market until the price per KWh was increased.

The price in the UK is significantly lower.
Go to Norwebs or powergens web sites and you see the cost per KWh is significantly lower than here

The British benefitted from privatisation of electricity, Ireland will not.

I said the ESBs stations will be cherry picked because that is exactly what a representative of ESB said when being interviewed on TV on the matter of electricity de-regulation. He said it in a matter of fact way, not as scaremongering.

According to BWEA's figures on their web site the cost to generate electricity using Gas was something like 2.2pence per KWh and efficent wind generation plants were around 4 pence per KWh. At retail price of 8.8p per KWh allowing for sterling exchange the markup still seems outrageous and private industry still weren't happy with this and demanded an extra 10% on top.

Debt as a proportion of GDP - A fair measure for estimation of a country's ability to repay it's debts and a reasonably accurate means of comparing the extent of debt between countries(even when considering Ireland has a low corporation tax rate).

Pinch of Salt - we'll see in the fullness of time.

Name more than one European country that is financing 20% of it's road network through Public Private Partnerships.

I mention the National Lottery because I believe this is the ideal for the future. It is nothing more than a management company.
Apart from a board of directors there are practically no employees so it isn't a glorified social welfare system.
The ownership is held by the public but everything is contracted out to specialist companies with expertise in whatever area they have been contracted for which gives it efficiency.
It's like Ryanair, or my company - no deadweight lying round.

smiles

Originally posted by Mailman
Debt as a proportion of GDP - A fair measure for estimation of a country's ability to repay it's debts and a reasonably accurate means of comparing the extent of debt between countries(even when considering Ireland has a low corporation tax rate).

Right the first bit makes relative sense, but I dont see what point you're trying to make as regards corporation tax levels meaning you cant compare the debt... thats the whole point of the debt ratio. (please correct me if i'm wrong)

What you said was:

As a proportion of GDP Ireland has one of the lowest levels of debt in the entire EU so other countries in Europe are more highly geared than we are...

you were talking about "highly geared" economies.... so could you explain that please?

Originally posted by Mailman
Name more than one European country that is financing 20% of it's road network through Public Private Partnerships.

why? *shrug* i'm not trying to advocate that Ireland not unique, i'm merely trying to introduce other ideas into the argument, and other possible reasonings behind the privatisation.

Originally posted by Mailman
I mention the National Lottery because I believe this is the ideal for the future. It is nothing more than a management company. Apart from a board of directors there are practically no employees so it isn't a glorified social welfare system.

I think the people who work for semistate companies would reject you calling it a "glorified social welfare system". A lot of the technicians who work for the ESB are highly trained... we dont let monkeys at our generators.

Surprisingly enough most companies need employees....

Mailman

transfer pricing operated by multi-nationals causes Irelands GDP to be slightly overstated.

Other EU countries are more highly geared in that they have more national debt than us (as a proportion of GDP). That's not to say their debt\equity ratio is over 1:1 just that they are more highly geared than us. They could have a lower debt ratio by clearing their national debt through implementing austerity measures but that is counter productive having a negative effect on the economy in the long term.

The ESB has been used by politicians to prop up BnM for too long just to hide an unemployment black-spot in the midlands. If public companies are given some autonomy they can be efficient.
A monopoly doesn't have to maximise profit. It can be used to provide a service as efficiently as possible if that is the mandate that is given to it. Where there is no scope for introduction of competition in an industry this is probably the best policy to adopt.

I haven't mentioned the M50 once yet in this post so I think this thread is past it's best.

smiles

Originally posted by Mailman
transfer pricing operated by multi-nationals causes Irelands GDP to be slightly overstated.

Thats why we tend to use the GNP for comparisons, it's the GDP +/- net factor income from the rest of the world (and then you an adjust for subsidies/taxes)

[net factor income is basically companies sending profits home]

Other EU countries are more highly geared in that they have more national debt than us (as a proportion of GDP). That's not to say their debt\equity ratio is over 1:1 just that they are more highly geared than us. They could have a lower debt ratio by clearing their national debt through implementing austerity measures but that is counter productive having a negative effect on the economy in the long term.

erg! How does the debt ratio mean they are more highly geared? (again)

<< Fio >>

Nice But Dim

I'm astonished that we've managed to get to page 3 of this thread without a single person making reference to consumption externalities and the role of tolls and taxes in regulating economic activity as opposed to acting solely as a revenue raising device.

Victor

Originally posted by smiles
How does the debt ratio mean they are more highly geared? (again)

If I remember right 'gearing' is the ratio of equity to debt. Is there soem other meaning? GDP v General Government Debt would be a part of the equation, but only a part.

Originally posted by Nice But Dim
I'm astonished that we've managed to get to page 3 of this thread without a single person making reference to consumption externalities and the role of tolls and taxes in regulating economic activity as opposed to acting solely as a revenue raising device.

:D:D:D I'd smile more and make intelligent comments if I knew what that meant.

Victor

Originally posted by Mailman
The ESB has been used by politicians to prop up BnM for too long just to hide an unemployment black-spot in the midlands.

Quite possibly. However, there are other valid reasons -security of power supplies, general economic development, creation of an engineering society. If engineers / electicians / metal workers didn't exist in the midlands from BnM / ESB / CIE training would there be any industry in the midlands at all?