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Dáil Éireann debate -
Wednesday, 7 Jul 2004

Vol. 588 No. 6

Priority Questions.

Road Network.

Denis Naughten


34 Mr. Naughten asked the Minister for Transport the action he intends to take to ensure that the NDP roads programme is delivered on time and within budget. [20800/04]

Róisín Shortall


35 Ms Shortall asked the Minister for Transport the steps he will take to ensure better value for money in view of the findings of the Comptroller and Auditor General of the serious cost overruns in the national roads programme; and if he will make a statement on the matter. [20787/04]

I propose to take Questions Nos. 34 and 35 together.

Investment in the roads programme at €1.28 billion in 2004 is at its highest level ever and the beneficial impact of this investment is increasingly evident throughout the country. Virtually all projects under construction, particularly those being constructed under design and build contracts, are on budget and ahead of schedule, including the Monasterevin bypass and the Cashel bypass, both of which address key bottlenecks in the road network. Recent examples of major roads projects completed on time and within budget include the M1 at Cloghran, Lissenhall and Balbriggan and the Drogheda bypass, the Kildare bypass, Hurlers Cross and Shannon on the N18-N19 and the Youghal bypass on the N25.

In considering the national roads programme and its development and management in recent years it is important to bear in mind the major expansion in the scale of the programme over the period since 2000. Initial preliminary costing of the programme of work proved difficult due to the limited information available from the smaller preceding programme and the preliminary scheme outlines available as a basis for costing. In general, a comparison of outturn with tender costs, as opposed to initial unrefined scheme estimates, provides the most reliable guide to project and programme management performance.

To provide greater certainty about resources, which facilitates more cost effective implementation of the programme, I have secured the agreement of the Minister for Finance to the introduction of a multi-annual funding framework for national road investment. It provides for total national road development investment of more than €8 billion, of which €6.9 billion is Exchequer funding and €1.1 billion will be invested by the private sector in PPPs over the period from 2004 to 2008. I have asked the NRA to submit a five-year plan to ensure that the resources being made available under the capital envelope are utilised to best effect. The envelope will be underpinned by an agreement between my Department and the Department of Finance, which will incorporate provisions relating, inter alia, to the annual funding levels, contractual commitments and reporting and monitoring arrangements.

I have consistently highlighted to the National Roads Authority the importance of strengthening cost estimation, control systems and procedures on the management and implementation of the national roads programme. In recent years, the NRA has implemented a range of measures to improve cost estimation and control. These include the greater use of design and build lump sum fixed price contracts offering cost efficiencies, greater certainty of outturn costs and reduced scope for claims; standardisation of economic designs for high cost items such as bridges and other structures; securing greater involvement by foreign contractors; buy-out of price variation clause and risk where this gives good value; further attention to improving quality of site investigations and acceptance of such investigations by contractors as the agreed basis for pricing; and greater use of PPPs which leverage private sector investment in the programme, incentivise private sector innovation and limit the risk exposure of the Exchequer by transferring risk, including construction risk, to the private sector.

Since the publication of the NDP in 1999 the cost of the national roads programme mandated in the NDP has increased substantially from €6.96 billion, which reflected early 1999 prices at preliminary design stage, to €16.4 billion based on end 2003 prices and more refined estimates. The reasons for this increase from initial estimates drawn up in advance of detailed scheme design to the more refined scheme estimates now available have been examined in some detail by the Comptroller and Auditor General and major independent evaluations of the national roads programme by Fitzpatrick Associates in 2002 and Indecon in 2003.

The main reasons for the increase in costs are construction cost inflation, which accounts for 40% of the increase — since 2001 construction cost inflation has moderated from an annual average of 12% to less than 5%; more reliable estimates as schemes were refined as the design process proceeded; changes in scope of projects including upgrading of routes and higher road standards; and additional cost of land acquisition. The various measures taken to date are acknowledged in the report of the Comptroller and Auditor General and the other evaluations of the roads programme both of which acknowledged that the national roads investment programme is, in general, well managed and, in particular, as regards factors within the control of the NRA.

As part of the continuing effort by the NRA to improve management of the programme a major consultancy assignment on arrangements for the implementation of the programme, including cost estimation and control, has recently been completed. Its recommendations are being given detailed consideration and I will be anxious to ensure that those relating particularly to programme management and cost control will be implemented as a matter of priority.

Does the Minister agree that the cost of the project which is now €9 billion in excess of the original estimation gives rise to serious concern? It is now costing €16 million per mile to construct our roads programme. No comment has been made by the National Roads Authority and the absence of a comment from the Minister until today is a damning indictment of this massive cost overrun. Money has been thrown away and it is robbing from key infrastructure required in many parts of the country, especially the west, which is underdeveloped.

While the Minister made the comment regarding the cost overrun, he did not mention that 25% of the cost overrun was due to underestimation in prices. While the Minister makes the point that this was the pre-2000 case, is it not true that these concerns and the inadequacies in cost estimation were known as far back as 1998? Is it not also true that the cost overruns in 2002 were still at 9%? Does the Minister not agree that is a damning indictment of the Department of Transport, which is supposed to be supervising the NRA? It is my understanding that fixed price contracts cannot extend beyond an 11-month duration. Is that still the case or have those regulations been amended?

The Comptroller and Auditor General identified the main reasons for the increases in the cost of the national primary route programme to be 40% due to construction inflation, 16% due to failure to accurately cost elements at the planning stage, 20% due to changes in the scope of projects and 24% due to project specific increases, such as, some of the motorway schemes and elements of the port tunnel. In the past two years I made two important changes to ensure that projects come in on time and on budget. One was to agree a multi-annual programme with the Minister for Finance which allows for better management of the system by getting rid of the stop-go method we had before that. The second was to ask the NRA to introduce a fixed price system. I will check out the query about the 11 months but my understanding is that fixed pricing can go well beyond a period of 11 months.

I have stated publicly on a number of occasions that I strongly believe the figure for national roads in the 1999 national development plan was totally unrealistic. It did not include a range of projects, a list of which is available, which are now being done. It was envisaged that many of the inter-urban routes to Cork and Galway and so on would be a single carriageway, when, in fact, we decided to build motorways. Another factor, and this happens all the time — I even do it myself — is that when somebody looks at a capital project, he produces a ballpark figure. However, the only relevant figure is the figure in the actual estimate to which one says "yes" or "no" with regard to the cost of carrying out the work. The only sensible comparison is between the price on the day one signed that contract, including the price variation clause and the outturn. It is good politics to compare the original ballpark figure with the final outturn, but it is not accurate to do that.

The Government provided the figures.

Figures may be used to prove anything. The Minister has suggested that 40% of the increased cost is due to inflation. The Comptroller and Auditor General stated that a quarter of that figure was due to under estimation of the prices. My question is what systems have been put in place to ensure that estimates are accurate? A further 16% of the increase was due to a systematic failure to cost certain elements of schemes and a further 20% was due to changes in the scope of projects and new works. It is not possible to deliver a programme when there is such lack of certainty from the very start and such weak systems in place. I acknowledge that the NRA has taken some steps to improve the situation.

I am concerned at the Minister's assertion about fixed price contracts and public private partnerships delivering certainty of cost outturn. While they may do that, what steps is the Minister taking to ensure the public is getting value for money? Has the Minister considered the system that increasingly is being used in Britain and which some members of the Transport Committee had explained to them in detail on a recent visit to the British Department of Transport. They have a system of "preferred prime contractor" based on best value criteria. I think this is the critical issue. We must know what value we are getting for money. There must be a benchmark against which prices and estimates may be measured. Does the Minister intend to move towards such a system and has he inquired about the system in Britain? What can we learn from that?

Two other critical areas that impact significantly on the escalating cost of the road programme, is the cost of property acquisition and professional fees. Promises have been made for a new national roads authority Bill, or a critical infrastructure Bill or other such names. There is an urgent need to introduce legislation to control this area. What stage is it at and when can we expect to see the Bill? We have an archaic system whereby consultant engineers are paid a fee based on 4% of the contract price. They have no incentive to keep costs down. For example, if the cost of a project escalates by 200%, the consultant engineers get an increase of 200% in their fees. Could we have a fixed fee for consultant engineer or some type of incentive built into the project to keeps costs under some level of control?

I agree with the Deputy on many of the points she raised. The Minister for Finance decided recently that consultant fees on all projects would change from a proportional fee to a negotiated figure that was settled upon. Obviously that cannot apply to existing projects but it will apply to new projects. I agree entirely with the Deputy that professionals must be paid for the job as opposed to being paid a percentage of the cost of the job to give them an incentive to finish early.

I have asked the National Roads Authority to supply a costing of the cost per kilometre of identical roads in the United Kingdom, Germany and France and I hope to have that information very shortly. The Deputies may be aware that we carried out a similar exercise in regard to Luas, where we compared the cost of building a kilometre of light rail in other member states, which came out at €30 million per kilometre and we benchmarked that against the cost of a kilometre of Luas, which was there or thereabouts. It would be useful to benchmark a kilometre of road.

In my travels around the country when I would open these projects, I inquired on site, having compared the figures, which ranged from €7 million to €17 million per kilometre, the reason for the cost variation of a kilometre of road. I was taken to the section of road and shown that it had four overpasses and 16 viaducts which explained the difference. When the documentation was provided, the argument stacked up. I will try to do more benchmarking exercises, so that we can ensure that the work is carried out at a comparable cost to similar work in other member states. At the end of the day, the real test is to be able to build a kilometre of motorway at approximately the same cost as in nine or ten other countries. I will draw a comparison with international experiences.

I reassure the House that virtually all the projects are coming in on schedule. The changes I have made on fixed price contracting and multi-annual budgeting has ensured that is the case. I will keep the pressure on.

On the proposed legislation on critical infrastructure.

The Minister for the Environment, Heritage and Local Government is preparing legislation on that. It is no secret that it is running into serious constitutional type problems with the cost of land, who owns it and how much one pays for it.

Road Traffic Offences.

Paudge Connolly


36 Mr. Connolly asked the Minister for Transport if he has had discussions with the Northern authorities regarding the integration of the penalty points system North and South; and if he will make a statement on the matter. [20581/04]

Penalty points are being applied to the driving licence records of those convicted of speeding, seat belt wearing, insurance and careless driving offences, and to those who pay a fixed charge to the Garda in the case of speeding and seat belt wearing offences to prevent the instigation of court proceedings. The full application of the penalty points system will be achieved when the relevant information technology systems being developed by the Department of Justice, Equality and Law Reform and the Garda Síochána are completed.

Penalty point systems now operate in this country, Northern Ireland and Great Britain. The authorities in both jurisdictions are considering the introduction of a scheme to provide for the mutual recognition of penalty points between the United Kingdom and Ireland. This consideration is being pursued under the auspices of the British-Irish Council. One of the first matters that needs to be addressed before full mutual recognition can be realised will be the introduction of bilateral recognition of the separate penalty points systems operating in Great Britain and Northern Ireland.

I thank the Minister for his answer. I live in the Border area and would be familiar with driver patterns in Northern Ireland. Drivers in Northern Ireland in particular are law-abiding. Will the Minister explain why these same drivers tend to lose all respect for the law when they come south of the Border and their driving behaviour differs dramatically in this jurisdiction? Drivers in the Republic quite often tend to follow the flow. Does the Minister believe non-harmonisation of penalties for Northern Ireland drivers with those levied in this jurisdiction might be responsible for the fact that of the nine national blackspots for accidents, five are located in the North Eastern Health Board area which is bordered by northern counties? Some 25% of all fatal accidents occur within the North Eastern Health Board area.

It should also be borne in mind that in my own county, Monaghan, there is the main north-south Derry-Dublin access and the east-west Belfast-west of Ireland access. In spite of this there is no accident and emergency department in Monaghan General Hospital. That is one of the dangers there.

What factors inhibit harmonisation of the two systems and when is the likely date for implementation? Will the Government negotiate bilateral agreements with its EU partners for mutual recognition of penalty points throughout the different jurisdictions? This is especially important given that we have many more foreign cars on our roads now on a semi-permanent basis. It would make sense if drivers break the same laws that they should suffer the same penalties throughout the EU.

I share the Deputy's concern and I have approached the Northern Ireland and the UK authorities about speeding up the process of mutual recognition. Both jurisdictions agree in principle that this should be done and we are now working on the logistics of how this should happen. I have seen the statistics and am also aware of the road fatality toll in the north-eastern part of the country, in particular Louth and Meath. The figures are a cause for concern and I am especially conscious of that. The Deputy is right to raise the matter again.

The construction of the M1 motorway has, I suppose, become an attractive speedway for an increasing number of Northern drivers. We will have to sort out the reciprocal penalty points system and we are working on it. I have asked for a meeting with the Northern Ireland Secretary of State in the coming weeks to discuss a range of infrastructural issues, including cross-Border roads. I specifically propose to raise this issue with him to see if more progress can be made.

Rail Network.

Denis Naughten


37 Mr. Naughten asked the Minister for Transport the progress to date with regard to the reopening of the western rail corridor; the maximum cost figure his Department will consider as reasonable for State funding to be invested in such a project; the financial evaluation his Department has carried out on the project; if economic and social considerations such as the growth in tourism will be factored into the financing of the project; if the same consideration given to the financing of Luas and other praiseworthy roadwork initiatives in the greater Dublin area will be applied to the evaluation of the western rail corridor, albeit on a much smaller scale; if he will guarantee that the project will not be delayed by the setting up of more review committees; and if he will make a statement on the matter. [20587/04]

I visited the western rail corridor, WRC, line and location for a full day recently to see for myself the possibilities. I am anxious to provide the proponents of the western rail corridor with the opportunity to put forward their case as comprehensively as possible and to facilitate a thoroughgoing examination of the proposal. Accordingly, I have recently established an expert working group to carry out a full examination of the WRC proposal and to examine the potential for reopening the line.

The working group held its inaugural meeting in Galway, which I attended and addressed, on 14 June under the chairmanship of Mr. Pat McCann, chief executive of JurysDoyle Hotels. The group comprises county managers, directors of the regional authorities, representatives of city and county development boards, the Western Development Commission, West-on-Track, the inter-county rail committee, Iarnród Éireann, the Railway Procurement Agency, RPA, and the Department of Transport.

The working group will examine and evaluate all aspects of the western rail corridor plan, including its costs and benefits, the travel demand that gives rise to the proposal, how such a project might be funded, where the corridor stands in the context of the findings of the national spatial strategy, the strategic rail review, regional planning guidelines, relevant county and city development and land use plans, the submissions put forward as regards the proposal and the current and proposed road investment programmes. In keeping with the criteria governing cost-benefit analyses, the full economic, social and environmental benefits of the proposal, including tourism, will be taken into account in any evaluation of the WRC by the working group.

Before decisions are made to proceed with the funding of any particular transport project, irrespective of its location, it must be evaluated on the basis of the costs and benefits that are likely to accrue from it. By and large, if the benefits outweigh the costs over the life of the project, it is considered worth proceeding with. Whether it is proceeded with, however, and its timescale for completion depends on the availability of funding and the project's degree of prioritisation vis-à-vis other competing demands for funding from the resources available at any one time. The WRC will be evaluated in the same way and I await the working group’s findings. It is an opportunity for the proponents to demonstrate that this western vision can be turned into reality.

If ever I heard a statement indicating that something was going to be long-fingered and shelved, that must be it. I must take a copy of it for some future date. Will the Minister agree that the expert working group was just a long-fingering initiative to tide the Government over the local elections? Another group will probably be set up prior to the general election. The Minister set out a number of criteria as regards the spatial strategy and the roads programme, but he appears to have left one gaping hole, namely EU proposals regarding the "motorway of the sea", which is critically important for many businesses along the western and south-western seaboards as regards development and access to European markets. Why was that not considered as a critical element? I believe it is and should be taken into consideration as regards the western rail corridor.

Are we going to have another chicken and egg situation where the western rail corridor will not be developed until the population is in place and the corridor itself will not be viable without the population? It is going to be the same again. The investment will not be put in without the population and the population will not be there without the investment.

That is one of the dilemmas facing all major infrastructural projects. Should it be built and wait for the population to arrive or should we have the population in place first and then build it? That dilemma exists regardless of what major project one examines. I have made it clear through the tactical composition of the expert group the way it is to be handled in this case. I have spoken to the county managers and so on at the group's inaugural meeting. They cannot say that they want to reopen the railway line and then, at their country council meetings, zone land away from it or locate their settlement patterns away from the line. If rail lines are to be reopened, then the audit strategies in the hands of local authorities must be complementary. They must indicate in their plans where the populations will be. We cannot have the luxury of the line in one place and the population and facilities in another. There must be land use complementarity because, with that, we can get progress.

I recently announced the reopening of the Midleton railway line at a cost of €90 million. I want to compliment the people of that area and the agencies. They produced approximately €40 million of the money themselves from local industry and investment. It is to their great credit. The Cork county manager, who was instrumental in making that happen, spoke to the western rail corridor expert group at my request on 14 June. I attended the meeting, at which the county manager explained to the group how the project may be pursued. It is a not a question of rushing out to build a few hundred miles of track and keeping one's fingers crossed, but of financing, zoning and an integrated plan, which takes population into account. The whole thing should be brought together in an orderly and phased way.

I find it humorous to hear the Minister talking about land use because there does not seem to be any land use strategy in Dublin. When one travels by train from the west of Ireland to Dublin, one continues to see vast tracts of land that have not been developed until one is almost in the city centre. There has been investment in Dublin despite the fact that there has not been a land use strategy. The Minister is saying that there has to be such a strategy in the west. I agree with the Minister that the population should be focused in the areas in question, but we also need to get a commitment from him that he is prepared to support the project if the thing stacks up. He has not yet made such a commitment.

I will make such a commitment now. I will support the project if it stacks up. I remind the Deputy that the strategic rail review, which examined the future of Irish railways over the next 20 years, recommended against reopening the western——

The study included the line between Limerick and Cork, which is not part of the western rail corridor.

It recommended against it, but I overturned that. I proceeded to examine it despite the recommendation.

Rail Freight.

Liam Twomey


38 Dr. Twomey asked the Minister for Transport if his attention has been drawn to the policy changes by Iarnród Éireann to reduce the number of powerful locomotives which may have an adverse effect on the future of freight travel on the Irish rail system, especially the seasonal haulage of sugar beet. [20586/04]

The allocation and deployment of locomotives and other rolling stock is strictly a matter for Iarnród Éireann. The company has assured me that it has sufficient numbers of suitable locomotives in its fleet to provide for the future demands of the freight business, including the seasonal haulage of sugar beet.

I have raised this issue because there has been a dramatic change in the type of rolling stock being used by Iarnród Éireann. The rolling stock used on the line between Rosslare and Dublin has recently been replaced. The company has replaced the locomotives which were being used and put in place a basic commuter service instead, using trains of limited capacity. Much of the capacity is for standing passengers. I believe that large locomotives have been replaced by commuter-type trains in other parts of the country. The freight service has been practically taken off the railway lines in Northern Ireland. I am aware that Iarnród Éireann has invested in some locomotives, but their use is mainly being restricted to the inter-city service. There does not seem to be ongoing investment in the big locomotives about which I am talking, which are used for hauling sugar beet and other freight.

The Minister has said that Iarnród Éireann has the power to decide on its own policies, but decisions which are made now will have effects down the line, for example on the transport of sugar beet. It was said at one time that the railway line between Waterford and Limerick was to be closed, which would have affected the transport of beet. If locomotives are taken off the line and are not available when we reach a crisis because stock has been run down, it will be the responsibility of the Minister rather than Iarnród Éireann. We are seeing a change in passenger services in that smaller trains, which are not as powerful and do not have the same capacity because they cannot be expanded, are being used. We could have a crisis in this regard in five or ten years time. The Minister should know about this issue rather than saying that it is a matter of Iarnród Éireann policy.

I appreciate the Deputy's concern and I will bring his comments to the attention of Iarnród Éireann. The company has recently gone to tender for a major overhaul of its fleet of large locomotives and has reduced its number of smaller locomotives, many of which had expired. Deputies are aware that the transport of beet by rail was severely disrupted last year when a viaduct collapsed near Cahir. The usual rail transport arrangements will be restored when this year's beet season commences, with services operating from Wellington Bridge in south Wexford to Limerick Junction and on to Mallow.

Iarnród Éireann has informed me that it is reshaping its freight business to focus more on the business best suited to rail. It will concentrate on long-haul heavy goods rather than short journeys which are time-sensitive. As a result of the actions it has taken over the past 18 months, Iarnród Éireann has started to reduce its freight losses and has won back some business, for example from Coillte. I will pass Deputy Twomey's comments and concerns on to the company.