Vol. 564 No. 5
9 Mr. R. Bruton asked the Minister for Finance if he has carried out an analysis of the overruns in the national development plan; and if he is satisfied that in cases of overruns the guidelines from his Department are being faithfully observed. [10104/03]
As I indicated in my reply to Question No. 170 of 25 February last, the current estimated cost of implementing the economic and social infrastructure operational programme of the NDP is €40 billion in 2002 prices as compared to an original estimate of €26 billion. The reasons for the increased cost are: construction industry inflation over the first three years of the plan was considerably in excess of that assumed; land costs, which impact heavily in the roads programme in particular, have also increased significantly; delays due to factors such as foot and mouth disease, environmental and archaeological factors and general planning considerations; and initial cost underestimation and subsequent re-specification of some projects.
I am concerned that cost increases have reduced the quantum of output in the first three years of the plan. My Department commissioned evaluations of both the NDP roads and public transport programmes last year which analysed the reasons for increases in the cost of these programmes and put forward a series of recommendations in regard to project and programme management. These recommendations are now being addressed by the Department of Transport and the implementing agencies.
In addition, Departments and implementing agencies are required to observe my Department's capital appraisal guidelines, the details of which I have set out in a separate reply to Question No. 31 on today's list. It is intended that revised capital appraisal guidelines will be issued by my Department later this year which will take account of experience in regard to NDP project management and appraisal, and compliance with which will be a condition of the agreement of a five year multi-annual framework for capital investment, which I also hope to conclude with my ministerial colleagues this year.
Notwithstanding cost increases, very good progress has been made in the roll-out of the infrastructure programme of the NDP. In the first three years of the plan the Exchequer investment in infrastructure has amounted to €9 billion or about €1 billion more than the original commitment and the plan is delivering on projects of unprecedented size and scope. I have no doubt that by the end of 2006 the NDP will have brought about a real enhancement in the quality of our economic and social infrastructure.
Does the Minister agree that an increase of 54% in the plan in only 24 months cannot be explained away by inflation in the sector, which was less than 10% in that period? Will he explain his reported comments that some of his ministerial colleagues are sponsoring proposals that are totally unrealistic? Will he give examples of these foolish proposals that are coming before Government and appear to be getting funding? Why is the taxpayer always the fall guy for all these overruns, whether they are explained by inflation, land costs or underestimates? Why is no one held accountable for the underestimation or mis-planning of these projects? When the cost of a project increases, will the Minister confirm that there is a genuine reappraisal to ascertain whether it should be dropped due to its higher cost? Does that happen in Departments overseen by the Minister?
With regard to the Deputy's first question concerning inflation, inflation in the construction industry in the period 2000 to 2002 was 30%.
That is not the period to which I referred.
I am pointing out what happened in these particular areas. As I set out in my reply there are increased costs in a wide variety of areas. I can give an example of what happened in regard to land costs in this period. With regard to land costs concerning the roads programme, while the average price of agricultural land was €6,000 to €8,000 per acre, there are incidents of the State having paid €600,000 per acre in urban areas and €30,000 per acre in rural areas.
With regard to the Deputy's second question, I would not regard proposals put forward by Ministers as foolish, but not every proposal can be given number one priority. The Deputy and others have heard me say that on many occasions. This can be compared to what happens during an election. When a candidate calls to the door of a constituent, the constituent may promise the candidate his or her number one vote, but when the constituent votes he or she can only give his or her number one vote to one candidate and he or she can give his or her second, third and four preference to the other candidates. Ministers put a wide variety of proposals to Government, but given the economic and budgetary circumstances they must prioritise. One proposal must be number one, another number two, another number three, etc. Politicians the world over are loath to make those decisions. As I pointed out regarding this programme, the Exchequer contributed well over €1 billion more than it was considered would be contributed at this stage.
In my reply to Question No. 31, I provide guidelines as to the delegation of various Departments and the framework management regarding capital investment which involves matters to which the Deputy referred at various stages, including when the project is initiated and during the lead-up stages. Various delegatory functions are given to Departments to reassess projects at various stages, not only at the end.
The cost of the roads programme is up 71%, the port tunnel project is up 300% and the Luas project is up 48%. It cannot be that these increased costs are simply overruns which could not be anticipated. Is part of the lack of realism to which the Minister referred the fact that the Government promised that, for example, hospital waiting lists would be eliminated in two years, that 200,000 people would be given a medical card and that an extra 2,000 gardaí would be on the beat? Is it not the case that Ministers and the Government, to which this Minister was appointed, have created these expectations which they cannot now manage?
As the Deputy is well aware, all those commitments are predicated on sound and sustainable public finances and economic growth levels to sustain them. Some of the proposals being put forward could not all be achieved in the same period even if we were to again experience average growth rates of 9% per annum for next ten years.
