THERE is something very seductive about the argument that a disposal of state assets can be used to offset the already large, and growing, national debt.

In theory, tens of billions could be raised from selling state companies while the companies themselves would be freed from the shackles of political interference.

But the reality of the situation is a lot more complex. That is not to say that the government is wrong to appoint the review group to look at state assets – far from it. It makes sense to consider the potential for asset disposals; to see how best state companies can be developed in the national interest and to scrutinise their investment and financing plans and business practices. The blunt, no-nonsense Colm McCarthy is the perfect chair for this body.

The knee-jerk reactions from some quarters that this approach amounts to selling off the family silver is as ridiculous as the argument on the other extreme that all the semi-state companies should be privatised in a bid to improve efficiency and raise money.

Ideology – of the left or right – shouldn't come into the equation and each state asset should be looked at on a case-by-case basis.

There is, at times, a strong case for privatising a state company. Anyone who knew the first thing about the aviation sector understood that, appealing and all as the concept of a national airline undoubtedly was, Aer Lingus simply could not have survived medium term as a state-owned company. All across Europe, national flag carriers have disappeared, unable to compete, because of political interference, with private-sector airlines such as Ryanairs and EasyJet.

Equally, there was no valid reason for having a state owned chain of hotels and the decision to sell off Great Southern Hotels was the correct one.

However, against that, the Telecom Éireann/Eircom example stands as a warning to the dangers of privatising crucial state assets. It seemed logical at the time to privatise the company. With the market being liberalised at the insistence of the EU, and plenty of private-sector competition, the argument was that the state should move from owning the dominant player to regulating the market.

But hindsight has shown that a state-owned company could have been a lot more forceful in developing absolutely crucial broadband services, which have been so badly lacking in Ireland.

The Eircom experience provides a strong example that where possible – in the Aer Lingus case it simply wasn't viable – key infrastructure, fundamental to the national interest, should remain in state hands. Britain learned that lesson when it had to buy back the privatised rail track.

The sale of the ESB, for example, could bring in up to €3.5bn-€4bn. But that includes the national grid, which remains, for the time being, under the ownership of ESB. There might be a case for selling individual power stations. But electricity is so crucial to people's living, and the success of the economy, that selling the national grid would be an extremely risky move and one no government is likely to contemplate.

The same presumably holds for Bord Gáis, which could be worth €2bn. While it probably isn't as fundamental to the economy as the national grid, it is still very important. As is Dublin Airport and the other main airports. There is an old adage that the one thing worse than a state monopoly is a private-sector monopoly. With Dublin Airport so dominant – and so crucial to our island economy – there is a very strong case for keeping it in state control. Ditto for the main ports.

Coillte is another semi-state that could bring in north of €1bn if sold off but there are issues surrounding the privatisation of a company that owns 7% of the state's land. Ireland for sale?

Once those companies are ruled out, then the level of money that can be brought in is relatively small. That doesn't mean that it is not worth doing – on a case-by-case basis – but it won't transform our debt picture. Nor will it, as some have been suggesting, offset the need for cutbacks in spending. Any windfall from the sale of state assets is once-off and won't be available the following year, so it can't be used to shore up current spending, which arises yearly.

Questions also have to be raised about whether this is the best time to be selling assets. And it shouldn't be forgotten that Bertie Ahern's crazy decision to agree to workers in state companies getting a 15% stake further dilutes the amount that can be brought in to the state coffers. Workers in former state companies such as Telecom Éireann and ICC Bank made small fortunes from this decision at the direct expense of the taxpayer. Unfortunately, this has set a precedent for future privatisations.

The final factor that needs to be considered is the not-insubstantial annual dividend that state companies pay to the exchequer. ESB stumped up €123m in 2008, while Bord Gáis gave close to €30m.

Adding up all the factors, it's pretty clear that, while the Review Group on State Assets and Liabilities has an important and worthwhile job to do, the issues it will examine are extremely complex and we shouldn't get our hopes up. Privatisation shouldn't be a taboo subject but it certainly isn't a panacea for the current huge problems facing the state.

scoleman@tribune.ie