Dáil Éireann debate -
Tuesday, 3 Apr 2007

Vol. 635 No. 1

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

Debate resumed on 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.”.”.

—(Deputy Stanton).

Caoimhghín Ó Caoláin

I will add some additional points to what I said prior to the commencement of Private Members' business. I made reference to the report of the Comptroller and Auditor General in 2004. Following a cost-effectiveness assessment of the five school buildings that were constructed under PPP arrangements, he indicated that the projected cost over 25 years was 8% to 13% higher than that which would apply by procuring and running the schools using the conventional approach.

That is a significant additional burden even though it is spread out over a period of years. I again point out that this is the main attraction for the Government, spreading it out over a longer period of time and, thereby, in some way, giving the wider populace the sense that less is being spent. The truth is that more is being spent and more public moneys are being wasted in this PPP approach.

The Government is taking a very short-term view in its approach to PPPs, primarily for its own selfish electoral reasons, and ignoring the fact that the assets and services must be paid for. This must be repeatedly exposed and I welcome the recommendation of the Comptroller and Auditor General. I welcome and made reference earlier to the constant and continuous comment by Dr. Eoin Reeves and other commentators in respect of this approach to public project procurement, which is a very different PPP than the one we are discussing this evening.

I do not believe this Bill is amendable or that it can be saved. This Bill should be withdrawn and the Government should take up an honest position with the electorate and advise it exactly how much things actually cost under the PPP approach. I note the intent of Deputy Bruton but do not believe any effort at ameliorating the real effect and intent of this legislation is worth pursuing.

Minister of State at the Department of Finance (Mr. Parlon)

I will make two general points. This Bill is amending legislation. The basic legislative proposals for State authorities to undertake PPPs are already enacted. This is Report Stage of a small piece of amending legislation designed to improve the capability of Departments or agencies to procure PPP projects outside the areas of transport and environmental areas.

In response to Deputy Boyle, the report of the Committee of Public Accounts on parliamentary scrutiny will be responded to in the normal manner in a minute of the Minister for Finance in the first instance.

A number of issues have been raised in connection with this Bill which are more appropriately dealt with under policy guidance rather than in legislation. This amendment is yet another example in this regard. There is a comprehensive guidance framework in place with regard to the appraisal, management and evaluation of capital projects, which is revised from time to time. In general, decisions regarding the publication of information regarding individual project appraisal are time-sensitive in terms of the public negotiating position. Cost-benefit analysis, like public sector benchmarks, may contain commercially sensitive information which, if published, could prejudice the State's capacity to get best value for money in the procurement of capital projects. Any decision in this regard must be carefully considered and the circumstances may differ from project to project.

It would not be appropriate or consistent with the management arrangements in place for capital spending to give the National Development Finance Agency a function in this regard. Like other aspects of project appraisal and assessment, cost-benefit analysis is a matter for the sponsoring agency in the first instance, not the National Development Finance Agency. Capital investment takes place under a framework of delegated sanction under which primary responsibility for project selection, assessment and evaluation rests with the sponsoring agency. Projects are implemented within this framework and subject to the value for money measures. As I said earlier, the Government will not accept this amendment.

Mr. Boyle

Regardless of the fact that the Department or the Minister will respond to the report of the Committee of Public Accounts by way of a minute, there is an opportunity in this Bill to insert certain principles in respect of PPPs.

The report of the Committee of Public Accounts was clear that there are three reasons that consideration should be given to using a PPP. One would be to use it as an off-balance sheet item to avoid consideration under the Maastricht criteria in terms of infrastructure spending. Another would be to have it as a cash efficiency measure in terms of the annual budget and spending all the money at once rather than spending small amounts each year. The third reason to consider using a PPP would be value for money.

The report of the Committee of Public Accounts is quite clear that while other countries might use PPPs on the basis of the first and second items, they are not reasons to use PPPs in Ireland because we are very low in terms of our debt-GDP ratio and our budget balance. The only reason we would use PPPs is value for money. Even though it is amending legislation, the Bill should have put down clear principles in this respect.

Our objection to this Bill is not as strenuous as that of Deputy Ó Caoláin. We have strong concerns about the use of PPPs and we do not accept that it is the best finance mechanism for the provision of infrastructure. However, if we have PPPs, we need the best oversight mechanisms possible and the problem with this Bill is that it does not go far enough. The Government's unwillingness to accept Deputy Bruton's amendment is a statement of its complacency about the type of oversight mechanisms that exist.

This is a very modest amendment and only represents an interim step. It is a long way from the type of oversight that exists in other countries. PPPs will increase from 1.5% to 10% of infrastructural spending under the national development plan, so we need stronger measures. That is the disappointing aspect of this Bill and it is particularly disappointing that the Minister of State is not willing to accept the Deputy's amendment.

Mr. Stanton

I thought I heard the Minister of State mention value for money, which sounds strange coming from a member of this Government. There has been so much waste and so many instances where the taxpayer did not get value for money. It is one of the issues which concerns many people. This modest amendment tries to ensure that there is more value for taxpayers' money, which does not belong to the Minister of State or the Government. This could be done without compromising commercial sensitivities.

It is important that we have public accountability for performance at critical gateways. This has not been happening. There have been a number of unconnected strategies and projects, such as decentralisation, the spatial strategy and the national development plan. One-off housing is everywhere and there are housing estates with no infrastructure, no schools, playgrounds, parks or transport facilities. The whole thing is a mess because there has been little or no accountability. It is the job of the Government to ensure that there is accountability, but that has not happened. I am disappointed that the Minister of State will not accept this, but I am not surprised because it would have meant accountability. Therefore, I have no choice but to withdraw the amendment.

Amendment, by leave, withdrawn.

Bill received for final consideration.

Question put: "That the Bill do now pass."

An Leas-Cheann Comhairle

Will the Deputies claiming a division please rise?

Deputies Joe Higgins, Seán Crowe and Caoimhghín Ó Caoláin rose.

An Leas-Cheann Comhairle

As fewer than ten Members have risen I declare the question carried. In accordance with Standing Order 68 the names of the Deputies dissenting will be recorded in the Journal of the Proceedings of the Dáil.

Question declared carried.