Other Questions. - Roads Funding.

Kathleen Lynch

Question:

87 Ms Lynch asked the Minister for Transport the steps he is taking to deal with cost overruns in the road building programme; and if he will make a statement on the matter. [2744/03]

Breeda Moynihan-Cronin

Question:

93 Ms B. Moynihan-Cronin asked the Minister for Transport the implications for the road building programme under the national development plan of the Estimates for his Department for 2003; the road projects likely to be delayed as a result of the Estimates; and if he will make a statement on the matter. [2743/03]

I propose to take Questions Nos. 87 and 93 together.

The 2003 Estimates provision of €1.262 billion for the national roads improvement and maintenance programme – an increase of over 10% on the 2002 outturn – will enable good progress to be maintained in the upgrading of the national roads network. The allocation of the funding available to individual projects is, as I explained earlier, a matter for the National Roads Authority.

Overall, however, the provision, which is approximately three times the 1997 level of investment, will fund the completion of 11 major projects throughout the country; the ongoing work on six other projects; the start of work on up to seven new projects; land acquisition and archaeological and other preparatory work on a number of major schemes, clearing the way for tendering later in the year; further substantial work on projects in planning and design to enable these projects to get to construction as quickly as possible; and a strong restoration programme on national secondary routes and continued progress on road safety improvement schemes throughout the country .

The 2003 Estimates provision will maintain the pace and momentum of the programme built up over the last three years. Financial resources on their own, however, will not be sufficient to guarantee the benefits we want from the major investment now being made in the upgrading of the national roads network. Projects need to be delivered efficiently and cost effectively. Tight cost control and delivery of projects within budget and on time must be the foremost guiding principle of programme implementation.

In this context, a wide range of measures have been taken by the NRA, which is responsible for the management and implementation of the national roads programme, to improve cost estimation and control and to secure greater certainty in the outturn cost of individual projects. These include the appointment of specialist cost estimation staff, the publication of revised specifications, reduction in carriageway width and the greater use of the design and build form of contract, which secures greater certainty of outturn cost.

In addition, a group of senior officials, chaired by my Department, is currently considering additional funding options for the national roads programme. As part of its work the group is considering the scope for further improvements in cost estimation and control procedures, including the greater use of fixed price contracts. These measures, together with the moderation in construction cost inflation that has occurred over the past year, will assist in achieving greater output for our investment programme going forward.

Does the Minister accept that the recent cost overruns in the road building programme are unacceptable and represent bad value for money for the taxpayer? The Minister has been reported as being angry about this fact, but what is he doing to ensure that we get value for money? Has his Department carried out any examination of the current type of contracts that the NRA awards? Has he satisfied himself that those contracts are adequate in terms of containing penalty clauses for cases where contractors fail to meet deadlines?

I also wish to raise the practice of employing engineering consultants on a contract that represents a percentage of the total cost of a road project, thereby leaving no incentive to keep costs down. This form of contract has been heavily criticised by the Comptroller and Auditor General in other arenas. Does the Minister accept the need to move away from that type of percentage contract because it does not lead to cost effective projects? What steps is he taking to review those types of contracts?

Like everybody else, I share the Deputy's worry, even anger, at the fact that we spent billions over the years on our national roads network but produced 20% less road for that money than was originally intended. The reasons given to me for that are increases in land costs, changes in designs, compulsory purchase order difficulties and construction inflation. For five or six years we were throwing money at the NRA and construction firms and telling them to get on with building the roads. An enormous amount of funds was poured into chasing a capacity that was not there to deliver the programme, and that caused construction inflation.

We must learn from that lesson. I attended a board meeting of the NRA recently and laid out the Government's attitude. We want certainty in delivery of roads, as many fixed price contracts as possible and penalty clauses like those to which Deputy Shorthall referred. An assistant secretary of my Department is now on the board of the National Roads Authority, thus ensuring a strong link between the Department and the NRA. I have requested that the percentage method of paying consultants be examined, but above all, I have asked the NRA to provide certainty and more design and build-type contracts. Overall, I have delivered the message this House would want me to deliver – that money is tighter now, even though we are giving them more of it. I have agreed with the Minister for Finance a rolling programme on road investment over a three-year period, which will help a lot.

I first declare an interest, in that the proposed new motorway to the west will run through my own family farm. My first question relates to the decision taken by the Minister for Finance in the budget about changes to capital gains tax, and the impact this will have on compulsory purchase orders and land acquisition. Has this been factored into the overall cost for the construction of road projects? Given the difficulties the Government had in negotiating with the IFA on this, it will cause friction on the ground when compulsory purchase orders are served.

I understand there is a proposal from the National Roads Authority to the Department of Transport to toll roads such as the Jack Lynch tunnel, the Portlaoise bypass and sections of the M50. This would equate to a stealth tax on employment and industry in the regions. The alternative routes on all of these sections of road are already congested and would become even more congested if tolls were introduced. I ask the Minister to reject these proposals because the roads have already been funded and paid for by the State.

The roll-over relief is a budgetary matter, and I expect it will add to the costs of the National Roads Authority. We will, to an extent, take a hit on that. The previous Government and, so far, the present Government, have taken the view that tolling existing roads would not be the right way to go. It is something we must keep under constant review, however, in light of the level of income we have to fund future roads. The Monasterevin road is not built yet, and tolling could be considered in that context, whereas the Jack Lynch tunnel has been open for many years. Whatever case there is for applying tolls to roads that are not yet built, even those built by public funds, there is not much of a case for revisiting roads already in use. This has to be kept under constant review because policies may change.

The public will be increasingly angry when they realise the hundreds of millions of euro that have been wasted in this area. Would the Minister agree that one of the main causes of this is that the NRA has been unaccountable to this House and to the general public in recent years? The inability of politicians and the media to raise questions of public interest to the NRA has allowed it to get away with contracts such as the percentage contracts where the engineers involved would be penalised by their companies if they did not increase the price by as much as possible. Does the Minister agree we need the NRA to be more openly accountable? Perhaps we need the Freedom of Information Act to be applied to it. We need a review of the rules where Deputies cannot ask questions of the NRA.

If PPPs are to be used in road construction will the Minister agree that new contract arrangements be open to debate in the House prior to signing? I do not want commercially sensitive information on a specific contract – I want the House to be able to determine whether we are getting value of money in any PPP. I am told this is not possible; if this is the case we will continue to waste money as we have done for the past five years.

I have some sympathy for the Deputy's point. I do not intend to hide behind the NRA in my dealings with this House. I will bring all non-commercially sensitive information to the House and welcome the views of the House on what our road building priorities should be. A professional body established by statute, like the NRA, is the most appropriate body to do a job. Broad policy frameworks are still given by Government. I will keep a close watch on the NRA's accountability to the House. This House should be better informed on the strategies and financing without dipping our fingers into contractual items. Committees of the House can question the NRA and I encourage them to do that.

What are the Minister's views on the new tendering process under which a number of road contracts may be awarded this year? Under it, the contractor may not get paid for 12 months after starting the job. How many projects does the Minister envisage will be carried out in this way this year?

The Deputy is referring to the offer from some roads developers to construct roads and not seek funding until the road is handed over. Arising from my discussions with the NRA I recall a number of developers making those offers, but I am not aware that any have been taken up.

I understand this system may have been proposed for the Cashel bypass.

I do not know if that is the case. I will check it for the Deputy.

Will the Minister report on the road projects that are likely to be delayed this year due to budgetary constraints?

Am I to take it that there is a question mark over whether tolling will go ahead on new road sections that are substantially publicly funded? Is the Minister indicating whether the Government is reviewing what tolling arrangements will be applied, or not applied, on these roads?

There is a large motorway programme to be completed. Enormous investment must be made and we must keep an open mind on how we source funding. Tolling is one method, but it is not a panacea for solving the problem as it causes traffic jams and sometimes the private sector receives an undue slice of the cake. This has already happened on a few occasions and I would not like to see it repeated. It may be worth examining if it is possible for the State to collect tolls and invest them in other roads.

It could be part of the mid-term review of the national development plan on transport.

I will take a closer look at this.

Deputy Shortall asked about delayed projects. The NRA has 22 projects at advanced planning stage. Some of these will go to construction this year and others will be proceeded with as quickly as possible. I can get a list of the projects for the Deputy.

Written Answers follow Adjournment Debate.