(Limerick East) asked the Minister for Finance the arrangements which have been made between his Department and private individuals and/or companies to provide office accommodation for public servants deployed to locations outside the Dublin area in accordance with the Government's decentralisation programme; if in each case he will name the company or individual involved; if he will specify the terms of the agreement entered into; and if he will make a statement on the matter.
Ceisteanna—Questions. Oral Answers. - Office Accommodation.
68.
Three firms have been nominated by the Commissioners of Public Works to obtain planning permission in respect of the provision of the accommodation required for the decentralisation of sections of the Departments of the Environment, Agriculture and Food, Defence and Social Welfare to Ballina, County Mayo, Cavan, Galway City and Sligo respectively. No agreement has yet been entered into with any of the firms involved but the nature of the agreement will be such that the accommodation so provided will be purchased by the commissioners over a 20 year period from completion. The developers nominated are Casellara Ltd. in association with John Sisk and Son Ltd. for Cavan and Sligo, Rohan Construction Ltd. for Galway and Hillview Securities Ltd. for Ballina, County Mayo.
Subject to the designated firms obtaining planning permission and the agreeing and signing of the formal contract documents it is expected that works on site for these four centres will start early in the new year.
The Government have recently decided to proceed with a second phase decentralisation involving a further eight centres. These are Athlone, Dundalk, Ennis, Killarney, Letterkenny, Limerick city, Nenagh and Waterford city. The accommodation in the second phase, as in the first, will be provided on sites which will be made available by the State and discussions have taken place with the relevant local authorities on the availability of suitable sites. Applications will shortly be sought from interested developers who wish to be included in the firms to be selected to submit tenders for this second phase of decentralisation.
(Limerick East): Would the Minister confirm that the 20 year purchase of these properties which are being built by the private sector involves a real interest rate of 13 per cent——
I am sorry I cannot hear the Deputy.
(Limerick East): Would the Minister agree that the tentative repurchase agreements which are now about to be put in place involve real interest of 13 per cent per annum which is twice what is available if the borrowing is done abroad and at least four and a half to five points higher than money available to the Government on the domestic market?
I do not accept that. Final discussions and negotiations are taking place in that regard. It will be a variable interest and if we were borrowing abroad there would be exchange risks and so on and the real interest rates might be 15 per cent or 16 per cent.
(Limerick East): That is flimflam and nonsense. It is another example of off balance sheet financing and the real cost of this will be 13 per cent per annum over 20 years.
That is what the Deputy said.
(Limerick East): I asked the Minister to deny it and he did not; he said it was variable.
We want to deal with three remaining questions, two of which are in the name of Deputy Noonan. Will he please assist me to do so within the prescribed time?
(Limerick East): I will, but the Government have entered into negotiations with companies in the private sector which will involve very costly borrowings, five points ahead of the money available to the Minister in the gilt market. It is an extraordinary situation and, on top of what we heard about the Central Bank funding already, it is something to which I will certainly return. An interest rate of 13 per cent over 20 years is an extraordinary handout to the private sector to carry out a decentralisation policy and it does not fit in very easily with the Minister's commitment to controlling public expenditure.
I categorically state that the Government are not borrowing money for this programme, they are renting office space on a rental-purchase basis. At the end of the day the State will own these assets rather than be paying another landlord high rent — as has been done in our capital city and elsewhere — for State property to accommodate public service Departments. We are relocating people at a very favourable rent per square foot on a purchase basis and it is a very wise investment.
(Limerick East): The domestic market rate is three points lower——
The domestic market rate has come down further today——
Hire purchase is always dearer than cash prices.
We are dealing in rent per square foot.