Dáil Éireann debate -
Tuesday, 3 Apr 2007

Vol. 635 No. 1

National Development Finance Agency (Amendment) Bill 2006: Report Stage.

Mr. Stanton

I move amendment No. 1:

In page 3, to delete lines 22 to 32 and in page 4, to delete lines 1 and 2 and substitute the following:

"3.—Section 3 of the Principal Act is amended in subsection (1)—

(a) by deleting “and” where it last occurs in paragraph (c) and by substituting “public investment projects,” for “public investment projects.” in paragraph (d), and

(b) by inserting the following after paragraph (d):

"(e) to enter into a public private partnership arrangement with a view to transferring the rights and obligations under such an arrangement to any State authority,

(f) to act as agent for any State authority in connection with the entry or proposed entry by that State authority into a public private partnership arrangement, and

(g) to publish, or cause to be published, the assumptions underpinning the cost-benefit analysis conducted on any public investment project before any agreement in respect of that project is finalised.”.".

I am taking this amendment for Deputy Bruton who is otherwise engaged. What he wants is to publish or cause to be published the assumptions underpinning the cost benefit analysis conducted into any public investment project before any agreement in respect of that project is finalised. He maintains it would be an excellent discipline on projects to have to justify the underlying assumptions. It would not cause any damage or give away any commercial secrets. We maintain there is a need for greater transparency in the selection of projects which are to be given the go-ahead. This would be a useful and important way of giving greater transparency in the selection of projects as well as providing strong discipline if the underlying assumptions had to be justified. As this would lead to more transparency and openness perhaps the Minister would accept the amendment.

Minister for Finance (Mr. Cowen)

My officials have not shown up with my brief but I have seen it. In terms of the commercial sensitivity of that whole area and the discretion that is necessary it would be inappropriate to publish that particular information. Certainly the timing could be negative in terms of the information it would give to other players in the whole process. The intention is certainly not to accept the amendment.

Mr. Stanton

I understand the intention is that this would come into effect after the tendering process had been completed and selections had been made. Since it would occur after the event, it should not impede the commercial sensitivities to which the Minister alluded. From that viewpoint, the assumptions underpinning the cost-benefit analysis would be published after the event. That means that during the event there would be far more discipline on projects and we would obtain better value for money.

Mr. Broughan

The Labour Party is minded to support Deputy Bruton's amendment. It seems reasonable that the assumptions underpinning the cost-benefit analysis should be transparent. Our party's finance spokesperson, Deputy Burton, referred at length on Second Stage and Committee Stage to a draft report on this matter by the Committee of Public Accounts. It dealt in particular with the kind of practices undertaken by other countries, including Australia and Canada. There is tension between the issues of commercial confidentiality and transparent public accountability, but other jurisdictions have been able to address the matter. This provision would afford the Comptroller and Auditor General, who is the guardian of our public expenditure, the fullest basis for assessing particularly important projects. We have all been examining the development of PPP structures in education and other areas compared to State projects. In general terms, Deputy Bruton's amendment is worthy of support.

Mr. Boyle

It seems I am the only party finance spokesperson present for this debate. If it continues after 8.30 p.m., however, perhaps other spokespersons will also have an opportunity to contribute. I fully support Deputy Bruton's amendment. The principle of the legislation has been accepted as a requirement for an oversight mechanism for the use of PPPs by the State and its agencies. Deputy Broughan referred to the report published last week by the Committee of Public Accounts and I had the privilege of being the rapporteur. As it was a report by the Committee of Public Accounts, I did not think it was in order to take elements directly from it and submit amendments to the Bill on Report Stage because the committee works by consensus. I had hoped the Minister for Finance and his Department would have taken the opportunity directly to examine that report and insert a number of Government amendments to the Bill on Report Stage. The report has addressed a number of principles concerning public accountability, confidence in using the PPP mechanism, and questions about the effectiveness and efficiency of PPPs. On those grounds, I am disappointed that there has yet to be a formal response to the report from the Department or the Minister. Report Stage would have presented a good opportunity to table Government amendments to the Bill, based on the report.

As Deputy Broughan said, the report examined best international practice not only in Australia and Canada but also in the United Kingdom. Difficulties are being experienced in other EU countries such as Germany as to whether the PPP is an effective mechanism and how one can publicly account for it. The difficulty is that when public money is being used by a private sector interest, the Committee of Public Accounts has said, through this report, that it has no way of knowing whether it is being used effectively. Deputy Bruton's amendment is at least an attempt to insert a mechanism in the Bill for doing so. The legislation tries to give a particular State agency responsibility for a degree of oversight that has been lacking in the past. Even when the Bill is passed, however, we will still have oversight mechanisms that fall short of those in other countries. That was the purpose of the report by the Committee of Public Accounts. I reiterate my disappointment that the opportunity was not taken to insert many of the report's recommendations into the legislation. I hope the Minister of State will see fit to accept Deputy Bruton's amendment, at least as an interim measure.

Caoimhghín Ó Caoláin

We have all been slightly wrongfooted by the early commencement of Report Stage. Nevertheless, I wish to record Sinn Féin's opposition to the Bill and what it seeks to achieve. There can be no doubt that it is placing the centre of expertise for public private partnerships on a statutory footing. It seeks to improve the capacity of Departments to initiate PPP arrangements in order to progress specific capital works. Sinn Féin is fundamentally opposed to the use of PPPs, which have a dreadful record, not only domestically but also internationally. It is surprising that the Government is pressing ahead with the increased use of PPPs at this time, despite the problems associated with this method of financing public infrastructure. It has already been acknowledged by the Minister himself as a complex process of procurement. It certainly is all of that. The Government is clearly ignoring the fundamental flaws of the PPP system.

I note that the Acting Chairman for this evening's deliberations is a Limerick Deputy and I would like to refer to Dr. Owen Reeves who is the director of privatisation and PPP research at the University of Limerick. He has stated: "It is quite astonishing that the PPP programme is expanding so rapidly, given that the experience with PPPs in Ireland has been either unfavourable or untested." That is an important point. The untested aspect of it has already been reflected upon by the Comptroller and Auditor General in his report at the end of last year. Several eminent contributions have raised real and deep concerns about what can only be described as the squandering of public money. There is no doubt that private finance is more expensive than Government debt. There are no two ways about it. We are paying over the odds in all the pilot or experimental PPP projects undertaken by the Government over the past decade; all the facts indicate that it has been an expensive experience for the Exchequer and for the public. It is the Government's bounden duty to ensure essential public capital projects are progressed in the first instance at the most affordable rate possible, and not by falling for the temptation to extend piecemeal the return or repayment on moneys accessed through PPPs over 20 or 25 years.

Some schools and colleges were constructed using this approach.

Debate adjourned.