Vol. 567 No. 5
215 Mr. R. Bruton asked the Minister for Finance the circumstances in which PPP projects qualify to be regarded as outside the general Government deficit; and if he will provide examples of projects likely to be within and projects falling outside. [14460/03]
EUROSTAT, the statistical office of the European Union, has final responsibility for scrutinising the general government balance, GGB, figures reported by member states and for interpreting the accounting rules. National statistical institutes, including the CSO in Ireland, are responsible for ensuring that these rules are applied in calculating the GGB. The accounting rules are outlined in the publication European System of Accounts – ESA95. Formally, this is Annex A of EU Council Regulation 2223/96. They are further refined in the manual ESA95 on Government Deficit and Debt.
The accounting rules are straightforward for some types of public private partnership contracts. For example, if the private sector provides an asset and, under agreement with Government, recoups its costs by charging third parties for using the asset, these transactions have no impact on the GGB. The West Link toll bridge is an example of this type of public private partnership project. In other PPP contracts a private sector partner builds, finances and operates an asset and the Government makes ongoing payments for the use of the asset. When the fulfilment of the contract involves very little risk for the private sector partner because its costs are almost certain to be recouped, the public private partnership project is considered to represent the purchase of an asset by the Government with a full impact on the GGB. An example of such an arrangement in Ireland was the PPP contract involving the provision of the bundle of five schools at Ballincollig, Clones, Dunmanway, Shannon and Tubbercurry. EUROSTAT determined that in this project the Government retained most of the risks and the transaction was treated as an asset purchase by Government with the full construction costs impacting on the GGB as the schools were built.
The determination and measurement of ownership risks is difficult and the existing accounting rules do not always deal adequately with the many types of public private partnership projects being developed. EUROSTAT is currently examining ways in which the existing accounting guidelines for PPP projects can be made more precise and comprehensive. For this purpose, it has established a task force of national accounting experts from a number of member states. The CSO has a representative on this task force. The task force will complete its work later this year.
