JOINT COMMITTEE ON COMMUNICATIONS, MARINE AND NATURAL RESOURCES debate

Marine Leisure Projects: Presentation.

Chairman

I want to remind members of the committee that they will be invited to speak first, unless they yield to members from any given area who wish to make a comment on any particular projects affecting their own areas. Everybody will be allowed to speak, however, so there is plenty of time.

I welcome Mr. Brendan Tuohy, Secretary General of the Department of Communications, Marine and Natural Resources, and his officials. I wish to draw everybody's attention to the fact that members of the committee have absolute privilege but the same privilege does not apply to witnesses appearing before it. The committee cannot guarantee any level of privilege to witnesses appearing before it.

Under the salient rules of the Chair, members should not comment on, criticise or make charges against a person outside the House, or an official, by name or in such a way as to make him or her identifiable. I would remind members that I will be rigorous, as always, in my application of this ruling.

Before asking Mr. Tuohy to begin, he will recall the strategy statement of 10 February which he presented to the committee. At that time, there was a question over one of the marine projects. I am sure he has the transcript of the meeting as well. It is one of the reasons that led us to hold this meeting today. Mr. Tuohy might recall me having said that we would have to discuss the matter at some later stage.

Last week we also received a letter addressed to me from the Minister for Communications, Marine and Natural Resources as follows. An allocation of €5.7 million was provided for marine leisure projects as part of budget 2002. Four projects were chosen as flagship projects for marine access infrastructure development in the State. These were in Caherciveen, Kenmare, Rosses Point and Roundstone. Since that time some aspects of these projects have proven contentious and have made little progress. While he is eager to follow through on the commitment to fund these projects, I would be aware that planning, legal and process issues have prevented progress on these projects to date. In view of these issues, he would be grateful if I would consider holding at an early date a meeting of the Oireachtas joint committee to provide an opportunity for all interested parties to present their views publicly on such issues. Such a meeting could, he believes, play a significant role in resolving the outstanding issues.

To advise the committee, I also received a number of verbal representations from Members of the Oireachtas on the four issues. That is another reason we are here today, to hear from the Secretary General and his officials and also to hear from the promoters and developers of the four projects. I will invite those promoters and developers to make a presentation to the committee after we have heard from the Secretary General and his officials.

Before we start, Senator O'Meara has something on her mind regarding the Silvermines project. I want to deal with that as quickly as possible and we will move on from there.

Senator O’Meara

Thank you, Chairman, for agreeing to allow me to raise this matter which is not on the agenda but which, as you will be aware, is an urgent issue. Last January members of this committee visited the Gortmore tailings facility outside Silvermines and since then a delegation from the area has made a presentation to the committee. In that regard, I have a particular question to put to the officials who are here today. As the committee will be aware, the Department is attempting to implement clause K of the mining lease against Mogul of Ireland in an attempt to ensure that the company lives up to its legal responsibilities to the community and, indeed, to the State with regard to the condition of the mine sites at Silvermines. However, that process appears to me and to the community to be running into serious difficulties and while that is happening the protective surface on the tailings pond itself is deteriorating considerably owing to the neglect by the company of the need to maintain the site. I do not intend to go into the technical detail because the officials will know what I am speaking about.

It is six months since the committee's visit to the site. At the time a commitment was given that we were close to resolution. Not only are we no closer to a resolution but it seems that the process has run into serious difficulties. I put it to Mr. Tuohy that it is time to look at a different strategy, that the implementation of clause K, the legal process and the pursuing of the company is not coming up with the desired result. In fact, it appears that there may be questions over whether the company is capable financially, technically or in terms of its commitment to the area, to carry out the necessary rehabilitation. I also put it to Mr. Tuohy that it may be time to look at another strategy in order to achieve the urgent necessity to rehabilitate this site and to ensure that the environment of the area is cleaned up as soon as possible. We can no longer wait months and we certainly can no longer wait years for this to happen.

Chairman

Did you want to address the same issue, Senator Finucane?

Senator Finucane

I chaired the meeting with the Silvermines people. Having read the papers again, these people have been complaining about being subject to the effects of much dust being blown in the dry wind and they are concerned about their health and safety. It is an issue that has gone on much too long as far as the residents of the area are concerned. It is about time the State stopped going back over discussions with the company involved, Mogul of Ireland, which states it cannot pay for what is required. It is about time the State took some serious action to alleviate the distress being caused to the people in the area.

Chairman, you visited the site with us. We saw at first hand the deplorable conditions which this mining company left behind and the legacy which these people must put up with as a result of the type of activity carried on by this mining company in the past.

Mr. Brendan Tuohy

The Department shares the committee's concerns and those of the residents in the area which were specifically outlined by Senators O'Meara and Finucane. This obviously does not just involve the Department. It also involves the local authority, the EPA and the company concerned. If I may, I will ask my colleague, Mr. Michael Guilfoyle, the assistant secretary, who is dealing with this on a day-to-day basis, to update the committee.

Chairman

I ask Mr. Guilfoyle to be brief because we want to move on to the issue we are here to discuss today.

Mr. Michael Guilfoyle

The committee will be aware there have been long-standing negotiations going on between the Department and Mogul on the remediation of the sites encompassed by clause K at Silvermines. The object of the exercise is to receive from Mogul detailed design proposals that would satisfy the Department, the EPA and the local authority that once and for all the environmental problems of the tailings pond at Gortmore and the other sites in the area which are encompassed by clause K will be addressed. There have been a number of meetings between the local authority, the EPA and Mogul and we have been assisted in that work by consultants SRK which we appointed.

The meetings have been aimed at agreeing in principle the design of measures for the remediation of all of the derelict sites encompassed by clause K and the object has been that the mining company responsible for the state of these sites rather than the taxpayer will bear the cost of remediation. That has been our abiding interest and has been articulated as such by the Minister on a number of occasions.

The current position is that the Department expects to receive detailed design proposals by the end of this week. We expect that they will be quite detailed and we have asked that they be detailed. They will be required to be evaluated by the Department, the EPA and the local authority and we will engage our own consultants in it. We also intend to involve the local community, as we have been doing at all stages throughout this process.

We are approaching a point where we need to make a judgment on whether or not the company has a technical proposal that, first, will be sufficient to meet the requirements under clause K and, second, will have the financial, technical, engineering and other resources to deliver on that particular set of proposals. The process of establishing these two aspects - the technical issue and the resource issue - may take some time but we are hopeful that we could complete that within a two-month period approximately. I cannot give a guarantee that it will be done within a two-month period. At that point, a political decision will be required as to whether we break off the negotiations with Mogul and go a legal route, which we are investigating at present. That is all I can say.

Senator O’Meara

I thank Mr. Guilfoyle and acknowledge his work and the work of Mr. Daly, who is not here today, on this issue. I am pleased to hear that a plan B appears to be developing because there is serious concern in the community that plan A, that is, the clause K route, may not work. I hope it does and I certainly look forward to seeing this technical report as soon as possible. I would ask that the community be made aware of it and be given sight of it as soon as is appropriate and as soon as possible. I suggest that in the autumn when it is appropriate we would hear from these officials again on the Department's decision because that would be very important.

As we speak and while all this important process which must happen is going on, the condition of the tailings pond is deteriorating. I was out there last Thursday and was shocked at how bare some areas have become. There is no short-term plan in place. There is no maintenance ongoing. We are looking at a rapid deterioration of that site. That, in itself, must be dealt with urgently. I would ask the Department to look at that as well and use its good offices.

Chairman

Mr. Guilfoyle, please keep the committee informed of your progress on this matter. I want to acknowledge the presence of the Chairman of the Committee of Public Accounts, Deputy Perry, and indeed the Vice-Chairman of that committee, Deputy McGuinness. I ask Mr. Tuohy to make his presentation.

Mr. Tuohy

The committee has asked that the Department make a statement or presentation on planning, legal and process issues in regard to marine leisure projects at Caherciveen, Roundstone, Kenmare and Rosses Point. The committee will be aware of the background to these projects in light of its consideration of issues surrounding the Kenmare project at its meeting on 10 February on the Department's statement of strategy.

In view of the committee's wish to review the planning, legal and process issues in regard to all of these projects at today's meeting, it will be important that the committee is aware of how these projects came, as it were, onto the Department's agenda, the difficulties for the Department in progressing these projects, and the current state of processing by the Department of applications for assistance in respect of these projects by their respective promoters.

The Department considers it opportune, in view of exceptional circumstances surrounding the inception and processing of these projects, that its presentation in that regard should be comprehensive and clear and the Department asks for the indulgence of the committee in allowing me some time to do that. The crucial date in terms of the entry of these projects onto the Department's agenda was budget day, 6 December 2000. The Budget Statement allocated €5.7 million for marine access infrastructure. The allocation of funds to individual projects was made politically subsequent to the budget day announcement.

At the time, the Department was developing a competitive scheme, open to marine infrastructure project promoters nationally, under the tourism measure of the national development plan. This scheme, the marine tourism grant scheme, was one of five sub-measures of the tourism measure and was to be operated on an open, competitive and objective basis. The aim of this process was to select from an inevitably wide range of applicants the ones that would best serve the public policy objectives of the measure. This meant that fully-developed proposals, demonstrated to be viable, accurately costed and clearly articulated to contribute to tourism objectives, would compete within an objective process, with inevitably only a small number of projects surviving the rigorous selection process.

It is important the committee should realise the Department was in the early stages of putting together such a competitive scheme when it was asked to progress €5.7 million of assistance to the four marina projects in question. The operational guidelines for the scheme were not published until February 2002 and the scheme was suspended for budgetary reasons in December 2002. The task given to the Department was fundamentally at variance with the task it envisaged for itself within the structures and selection processes of the marine tourism sub-measure of the tourism measure. It is worth noting these fundamental differences as they go to the heart of many of the processes, and some of the legal and planning issues, in progressing the four projects.

The major differences were, first, successful projects under the sub-measure would have undergone a searching, competitive process which would have produced a clear rationale for State assistance - the criteria for selection of the four projects for inclusion in the budget day announcement of assistance were not known, or if they were known elsewhere, they were not communicated to the Department; second, the competitive selection process required fully-developed proposals allowing for comparison, ranking and selection of high value projects - virtually no relevant information on the viability or tourism value of the projects was made available to the Department at the time assistance was announced in December 2000; third, no commitment or other indication of support could or would be made to promoters under the competitive scheme until they had been identified as successful following searching evaluation - in contrast, strong political commitments were made to these four projects when only incomplete information was available in respect of them; fourth, the NDP scheme would have had bounded time periods for submission and completion of fully-developed schemes - the processing of the four marinas was not so bound, the result being that important issues are still the subject of dialogue between the Department and the planning authorities and the promoters over 3.5 years after the announcement of assistance; and, fifth, the selection, evaluation and decision-making processes envisaged under the NDP sub-measure were to be objective and independent. These four projects, on the other hand, were subject to very close political and ministerial interest and direction, from both inside and outside the Department, at all stages of the management process.

These fundamental differences presented the Department with very considerable difficulties in progressing the four projects. It was made absolutely clear to the Department there was a strong political wish that these projects progress. Difficulties arising for the Department were to be seen in the context of the projects progressing as rapidly as possible. The Department proposed, and it was accepted, that the projects be appraised in accordance with the criteria for marine access infrastructure under the upcoming scheme. In the event, this proved impossible and illusory, for reasons of the fundamental differences between the NDP processes and the four marinas, as outlined. The detailed criteria for the NDP scheme were not worked up at the time, and pre-selection had already occurred. Thus, the Department officials were being asked to "retro-fit" the selection criteria to projects that had effectively been already selected even though little was known about them at the time of selection.

This was an impossible task. One project, the Kenmare marine leisure project, comprised a sail-canoe training school and ancillary facilities, including the provision of a pier and slipway. It was not a marina project, and would have been unlikely to qualify for grant aid under the marine tourism grant scheme, which was to be specifically directed at marine access infrastructure. Thus, the application of the selection criteria to that project would have been meaningless and would have been virtually certain to rule it out. On the other hand, there was a clear and strongly communicated political need for this project to progress.

As regards Caherciveen marina, this project was for a 93-berth marina to be developed by Caherciveen Community Development Company at an estimated cost of €3.4 million. While the concept had the potential to meet the eligibility criteria under the marine tourism grant scheme, it was still at an early stage of planning at the point at which it was selected for support. When details did become available, the shortcomings in the plans for the project resulted in a scaling down but, with the same grant allocation - €2.54 million - the result was an 83% grant to cost ratio. Both the change in the scale of the project and the grant aid envisaged would have presented major problems were this project being progressed through the NDP scheme.

The Rosses Point and Roundstone marina projects are considerably behind the projects at Kenmare and Caherciveen. These projects, by reason of the passage of time since the strong political impetus in 2000 and immediately thereafter, the publicised concerns about Kenmare, in particular, earlier this year, the change of Minister in 2002, and the recent strong interest of the Comptroller and Auditor General, resulting in a detailed audit query of 3 June to the Department's Accounting Officer have, of necessity, been subject to particular scrutiny. Neither of these projects was developed in any sense when the relevant commitments were made in 2000. The Department only received a business plan in respect of Roundstone earlier this year, more than three years after the initial commitment to financing.

As evidence of how embryonic and superficial the concepts for these marinas have been, Rosses Point has had to be scaled back from 47 to 27 berths, while the grant assistance offer has been maintained, and Roundstone's costs have escalated from €1.75 million to €2.66 million, with the promoters currently seeking a grant of €1.91 million as compared to the original approval of €1.16 million in 2002.

It is almost certainly the case that the escalation of costs, repeated viability issues and scaling down of the latter projects would have resulted, were the NDP scheme up and running, in their not qualifying for assistance even having regard to these narrower financial criteria. There are also major questions as to whether State support for these marinas will create a public as opposed to a largely private good, meeting the tourism enhancement requirement of the NDP tourism measure.

Earlier comments relate mainly to process issues. The current status of the four projects points up a range of legal and planning issues. With regard to Caherciveen, the marina is operational since August 2002, all grant funds have been expended and the Marine Institute has been asked to carry out a post project review. It was intended that security for the grant aid would be put in place by way of a deed of covenant but pressure to expedite payment to the promoters meant the deed was not put in place in advance of payment. The Chief State Solicitor's office has drawn up such a deed but it is not yet agreed.

With regard to Roundstone, a technical difficulty remains relating to the foreshore lease. A difficulty is also presented by the apparent change of status of the applicants from Roundstone Community Development Council Limited to Roundstone Marina Limited. The Department's advice is that this may constitute a private project, attracting a maximum of 55% level of aid whereas the amount of funding on which the finances of the project are based requires a 75% grant from the Department. The fact that 25 of the 34 berths are reserved for private use, leaving only nine berths for tourism purposes, makes the value for money and tourism value of this project highly doubtful. These are issues for further consideration by the Minister.

With regard to Kenmare, the first payment in respect of this project of €332,312 was made in December 2002 on the basis of copies of planning and foreshore approvals and invoices in respect of matured liabilities. No requests were made for further grant payments and, as the committee is already aware, the Department became aware that the building was in contravention of planning approval in October 2002. Steps were taken by Kerry County Council to enforce the planning permission and in February 2004 the applicants informed the Department that the illegal building had been demolished and that it was intended to complete the project in line with the original planning permission and to apply for further draw-down of the suspended grant. On foot of legal advice the Minister has directed that the Chief State Solicitor's office be instructed to put in place the necessary legal formalities to regularise the position.

Regarding Rosses Point, the applicant, Sligo County Council, has still not been approved for a foreshore lease and has recently appealed to the Department for the valuation in respect of the lease to be reconsidered. Objections have been raised by the harbour master against the proposed site and moreover, the margins in the business plan have been assessed by an accountant on behalf of the Department and have been found to be very tight. The Department requires Sligo County Council to underwrite the project by undertaking to make sufficient working capital available to keep it operational for a period of ten years. The council has indicated a reluctance to do so to the satisfaction of the CSSO.

In addition, as the majority of the berths are to be let for private use, the tourism value of the facility is limited to 12 berths on the floating breakwater. As with Roundstone, this makes it questionable as to how the value for money and tourism value criteria can be satisfactorily addressed. Again, this is a matter to be addressed by the Minister and the Department.

In conclusion, the committee will be aware from the foregoing that these marina projects presented and continue to present severe process, legal and planning difficulties. Most of these difficulties would not arise from the accountability limbo within which these projects reside, neither the subject of clear ministerial direction nor permitted to be assessed in accordance with the normal public policy effectiveness review. Further decisions will be required in respect of progressing Rosses Point and Roundstone, namely, whether they should progress, having regard to the limited public policy objectives they are likely to deliver. The other legal, planning and viability issues will be progressed in accordance with relevant legal and other professional advice.

We have also been in correspondence with the Comptroller and Auditor General who has issued an audit query to us. We have responded to that and I presume it will be incorporated in his report to the PAC later this year.

Chairman

Before I bring in Senators MacSharry and Finucane, I advise Mr. Tuohy that the committee has decided to issue an invitation to the Minister for Communications, Marine and Natural Resources and the Minister for Community, Rural and Gaeltacht Affairs and the former Minister for the Marine, Deputy Fahey, to appear before the committee at the end of September. It is possible we will not conclude our business here today. I will take questions from members now.

As regards objections from the harbour master, we must take on board his view. I take the point that there is a new harbour master. The issue raised by the harbour master has been referred to the marine safety section of the Department. If we did not take his view on board, and something happened, I would be up before this committee or some other committee to explain why we did not take the advice of the person concerned. There is a process in place and, for the past two years, the Minister and I have made a great commitment to safety which we do not want to undermine in any way. From memory, I believe commercial night-time traffic was the issue about which the new harbour master had concerns. His response was that this might be impeded.

Senator MacSharry

There are no navigation lights in Sligo so that is a physical impossibility. If Mr. Tuohy was familiar with the area he would know there is no night-time traffic.

Mr. Tuohy

I believe he wanted to move in that direction.

Senator MacSharry

It sounds like a convenient——

Mr. Tuohy

I take exception to that remark. At the end of the day, we must deal with objections raised by people who have legal and statutory positions, which the harbour master has. I did not create the position.

On the lack of will by the Department, the Department is committed to development across all areas of responsibility. My colleagues and I have been before this committee on many occasions. Most of our concerns are around development and the different aspects of the work of the committee. The Department is absolutely committed to development, but it must be done in accordance with the guidelines, rules, regulations and, in particular, the financial procedures in place.

With regard to the indemnification of the Minister, Sligo County Council is the sponsoring authority in this situation. The first formal application for funding for a 47-berth marina was received in February 2001. Grant assistance of €1.27 million was approved in June of that year. Sligo County Council estimated the cost of the project to be €1.75 million. By April 2002, the cost had risen to €2.62 million. The Department indicated that no additional moneys would be provided.

In August 2002, Sligo County Council divided the project into two phases and submitted a revised application in respect of phase 1 - the construction of the 27-berth marina. Sligo County Council requested that the full grant of €1.27 million be allocated towards phase 1. As the council gave no indication of how phase 2 would be funded or when it might be completed, the revised scaled down marina had to be assessed for viability as a stand alone option. The Department's engineering division highlighted technical and safety issues, with consequent liabilities for the Minister. These issues were later addressed to our satisfaction. We negotiated with them and addressed the issues. However, the engineer's report noted that the revised plan was not feasible as a stand alone option and that the applicants would have to guarantee completion of the full marina within three years. The financial assessment concluded that the marina itself was not financially viable unless spin-off activities, which would provide economic benefit to the local community, could be quantified. The application of the capital investment technique showed a very poor return on investment, with a negative discounted cashflow project and payback period of 106 years.

In June 2003, the estimated cost for phase 1 had again risen to €2.2 million. Further financial information was submitted by the council and evaluated within the Department. The internal auditor commented that the sale of berths to members of the local yacht club represented very good value for these members and not such good value for the community and taxpayers. The finance unit examined the business plan. There was an incomplete balance sheet, with a very tight margin between profit and loss, which suggested potential liquidity problems. Questions were also raised about the concept of the proposed management company being limited by guarantee. Such an arrangement would effectively limit the council's liability, thus giving credence to our concerns about getting some type of guarantee from the council.

I have appeared before other committees, including the Committee of Public Accounts, about ensuring these procedures are put in place. We are responding to the financial procedures issued by the Department of Finance, in addition to the work of the different committees, not just the PAC. We are trying to progress these projects, but within the constraints set down both by the Oireachtas and the Department of Finance. This is what we have been trying to do in this instance.

One or two other issues were raised about communication between Departments and so on. I have listed a number of issues which must be resolved. I am not saying they cannot be resolved, but there are issues which must be progressed. No one here would thank me if we signed off on issues if something was incomplete. My job as Accounting Officer to the committee and the Oireachtas is to ensure the probity and regularity of the process are abided by.

Chairman

I thank Mr. Tuohy. Perhaps you and your officials will remain for the entire meeting. We will receive four presentations, following which we will ask you back to answer any questions members may have. Perhaps we will come up with some solution to this problem.

Mr. Tuohy

We will be more than pleased to comment at the end and follow up on any issues. I do not want to get into an aggressive——

Chairman

I hope we will find a positive way forward at the end of the session.

Senator Finucane

On a point of clarification, Mr. Tuohy indicated that the first phase of €332,000 was paid on 3 December 2002. When he was here on 10 February last, Mr. Guilfoyle indicated it was 3 December 2001. Which is the correct date?

Mr. Tuohy

Will the Senator give me one second?

Senator Finucane

I see council officials going out and inspecting planning applications. There is rigidity in planning regulations for single houses. The Department has paid out more than €330,000 on the basis of documentation submitted to it with no verification by way of a physical visit to Kenmare to satisfy the Department as to the status of the application. Surely the Department was remiss in what it did. Mr. Tuohy may use the word "trust" but it is a bit rich to talk about trust with regard to €330,000. The Department should have done much more. There are surveyors and engineering personnel in the Department who could have established what was happening. The Department of Communications, Marine and Natural Resources was remiss in not discharging its duty effectively and has left itself exposed. A large amount of money has been paid over. Can the money be retrieved?

Mr. Tuohy

I would prefer not to share the legal advice with the committee because there will be ongoing discussions with the developers. It would be unfair for the State to expose our legal advice. The Senator will appreciate that. We are going into negotiations with developers.

This was a one-off scheme. It was suspended the year it was introduced because the budgetary facility was withdrawn at the end of 2002. The first four projects were approved before the details of the scheme were announced. Our Department was developing a system to respond to this and we ended up with only four projects. Hindsight is a great thing. In hindsight, as I said to the committee earlier this year, we have changed the practice. Where payments are involved one of our engineers inspects. However, this was the first project in a new scheme. Documentation - planning permissions and so on - was coming in and on that basis the payments were made. We have learned from this and we have tightened up our own process. Nevertheless, when submissions are made there must be an element of trust and faith. If we check too carefully we will be accused of being too bureaucratic. There is a balance to be struck. We now follow the process outlined by Senator Finucane. We check them.

Senator Finucane

A sum of €750,000 is a substantial amount of money. Checks and balances within the Department should have operated even at that time. We should not have to learn through hindsight from an experience such as this.

What is the status of the project now that the building which was not built in accordance with planning permission has been demolished? Is the project going ahead? Is the amount of funding from the Department still €750,000? Will the other 50% be paid when the development is finished or will the legal action prejudice what is likely to happen?

Mr. Tuohy

The Department has written to the developers asking for details of their solicitors. Our legal people will correspond with their legal people on the issues.

I am told - and the committee may check this later with the developers if they are here - that the developers have not asked for further funding beyond what they have already received. I gather they intend to complete the project in line with the original planning permission. I presume they will meet any additional costs themselves because they have not applied to the Department for additional funding.

I cannot share our legal advice with the committee today. The issues of recouping the money paid and allowing the project to finish out as it was on day one will continue in negotiation between our legal people and their legal people.

Deputy Devins

I welcome the officials to the joint committee. I am delighted to see Ms Taylor, who I know well from much correspondence regarding this marina project in recent years. I also congratulate you, Chairman, for responding so quickly to the Minister's request and putting the question of marinas on the agenda today.

I am from Sligo and my main interest is in the Rosses Point marina. Rosses Point is now a suburb of Sligo, which is one of the recently designated gateway cities. I ask the Department to consider the economic, social and tourism benefits that will accrue from a marina such as this. Sligo and Rosses Point are located in the west of Ireland and are deprived in comparison with the east coast. Rosses Point is certainly not like Dún Laoghaire. I understand Mr. Tuohy when he says he is obliged to look at the project on a financial basis but to look at in on a purely financial basis is to miss the wider picture.

The issue raised by the present harbour master had already been investigated in depth by the previous harbour master, by the county council and by officials of the Department. It has, to all intents and purposes, been resolved. Can Mr. Tuohy let the committee know if the letter has been withdrawn?

Mr. Tuohy is correct. There are 12 berths for tourists in plan one. It is my understanding that most of the yachts will have left the private berths during the tourism season. Some of them will be sailing around the coast or in other places. As such, the number of berths available to tourists will be increased considerably during the summer months, which is when tourists tend to visit the west of Ireland by sea. It is an inhospitable place at any other time of the year.

The commitment by the promoters in the local community is outstanding. It is not only private yacht owners who have contributed. Business people in the locality who have no interest in sailing have contributed to the project. That local promoters have left more than €300,000 on deposit in a bank for the past three years shows how much they believe in the project. Likewise, the county council has committed almost €400,000. The promoters and the county council have secured more than €300,000 from the International Fund for Ireland. Overall, the commitment by the local people almost matches the grant from the Department but I am flabbergasted by the amount of legalistic jargon being used to make them jump through hoops during the past three years.

Can Mr. Tuohy tell the committee if it is common practice for the Department to subject projects such as this to the intense level of scrutiny to which this project has been subjected in recent years? The amount is substantial at €1.2 million. However, in the overall context of the Department it is not that much compared to the outstanding social, business and tourism benefits which would flow from it. Many of the issues raised in the presentation boil down to the main issue of ongoing liability. At a recent meeting the county council indicated to its solicitor that no further ongoing liabilities would accrue to the Department of Communications, Marine and Natural Resources on the marina at Rosses Point. However, for some reason the deed of covenant which the Department has sent down seeks a much stricter control on liability.

The investigation into the Jeanie Johnston and the Troman report resulted in a circular being issued in June this year which says the review is critical of the practice of certain public bodies seeking and obtaining guarantees from other public bodies as a means of passing off some of the risks inherent in funding decisions. As the local authority and the Department are public bodies, does this not mean we are kicking the issue of further liability from one to the other? Ultimately the people who will benefit will be the people in the west of Ireland and tourism in general. This is the kernel of the issue and if we can resolve it today we will have taken a huge step forward in making sure this worthwhile project goes ahead.

Chairman

Before returning to Mr. Tuohy I shall take some questions from Deputies Perry and Broughan because I presume they will be on the same lines.

Deputy Perry

With regard to the BMW region, is any derogation of cross-Border funding due to Sligo due to its recognition as a Border county? Is any derogation given as a result of BMW region status or an allocation to the region as a result of being one of the six Southern Border counties?

With regard to the future of this project, has the Department not been negligent? The project was announced in December 2000, the guidelines were not issued until 2002, and then the scheme was suspended for budgetary reasons in December 2002. If the Department had concerns, it had two years from December 2002 to when the application was reactivated to deal with them. If it had concerns with regard to the development of Rosses Point at that stage and difficulties with the evaluation and the business plan, why was that not clearly identified?

Chairman

We will deal with Deputy Devins's and Deputy Perry's questions before moving on to Deputy Broughan's.

Mr. Tuohy

Deputy Devins asked about the social and tourism benefits with regard to Rosses Point. The opportunity and the cost benefit analysis are there to do that project. It is not a purely financial issue. There are two elements to the project. The first is the finance in the sense of whether it is viable going forward and whether it can be maintained. The second issue is really what this whole project and the tourism measure of the NDP were about. It concerns the benefits to the community and whether they can be catalogued. The issue raised by the Deputy links back to two matters, to the number of berths that would be available and the knock-on impact of that. To my knowledge, there is nothing in the business plans and no guaranteed commitments or legal agreements that people would vacate their berths during the summer to make them available to others.

Somebody raised the issue earlier of the Jeanie Johnston. One of the experiences resulting from that is the criticism of the funding arrangements. Different agencies had different arrangements and developers, whoever they were, picked from those and added them up. Therefore, the level of commitment locally and by developers was far less because they were playing many grants against each other. As the committee can appreciate, we must be careful in that regard.

From memory, the issue was that the approach of Bord Fáilte or Fáilte Ireland in examining projects was mainly concerned with funding only the tourism elements. In that sense it was concerned that the berths available were not owned by the locals. Going from memory on this, its concern was that those were the ones with the public good element and the ones that would have the knock-on impact in the community. Therefore, there is an issue around the cost benefit analysis that incorporates the economic impact, particularly the tourism impact in the area. We have always been very open to getting information about that and seeing how it impacts on the area.

The current position is that 27 berths have been sold off to private developers, 12 of which are available as seasonal berths for tourism purposes. Therefore when one considers the financing, one must consider from where one will get one's revenue. The other berths are already paid for up front and, effectively, owned by the individuals while the tourism ones are available, but the revenue from them, looking at the business plan, is very small. The committee would not thank me or the Department if we had a situation where the Government had to start bailing out specific projects later on.

The initial announcement was made in the budget and the scheme was put in place subsequently. I did not work for this Department, which was not formed until 2002, when the work on the scheme started in 2001. My evidence is based on the information I have received from my colleagues. The scheme was being worked on in 2001 and an announcement was made in that year's budget. The committee is aware that schemes of this type need State aid clearance from Brussels before they can be publicised. Clearance did not come from Brussels until early 2002. The scheme was frozen later that year and no funding was provided for it in 2002. We are talking about just four projects. I recall that approximately 60 projects were submitted under the call for proposals, but they were not processed.

It was originally conceived that the scheme would run in the way that Government schemes are normally run under the national development plan. The process involves setting the conditions and allowing people to apply. Applicants are self-selected, in a sense, because they are ranked and they do different things before they submit their applications. In this case, the four projects were announced as flagship projects in advance of the scheme being specified. By definition, there was no competitive tendering process for the ranking of the schemes. Four of them were announced up-front as being approved.

Chairman

Is it ever legitimate for a Minister to make a political decision to fund a particular project, without any studies having been undertaken? I understand that officials ensure that the political decisions which are made every day are followed through in Departments.

Mr. Tuohy

The Chairman will appreciate that anything done must be done in accordance with procedures. There are a number of elements to this issue. Governments can make decisions and they do so all the time, thankfully. One follows the appropriate procedures to implement such decisions. The schemes that were designed, the conditions of which were outlined after the announcement, were based on a competitive tendering process.

As I said in my submission, the problem is that the four projects in question were not subject to a competitive process. They were announced before the scheme was published. The State aid issue then became relevant. I wish to discuss the other point that was made in that regard. In the BMW region, the relevant figure is 75% for a publicly funded and supported project. It is not an issue in the Rosses Point case. The levels are fine in that sense.

Deputy Perry also asked about the Department of Finance's application of the capital projects guidelines. I often emphasise to my officials that the guidelines are there to be implemented. I presume every other Secretary General does likewise. It is inevitable that we will have a problem if we do not implement the guidelines. The guidelines are part of our process and part of the project that takes place.

The members are making strong points about a number of projects. Am I correct to say it is not all about money? One is creating marine and other infrastructure in areas where it is needed. Must there be a return on investment with every infrastructural development given the contribution to the improvement of the general infrastructure of areas where there is, for example, a decline in population? The project at Roundstone is typical of one in an area in which there has been a decline in population. Western and rural development is very important and has an impact on the policies of different Departments. It is not all about euros and cents, is it?

Mr. Tuohy

There are two elements. There are establishment and construction costs and ongoing subventions and there is the issue of EU approval regarding state aid issues. If the Government is involved in the provision of funding, it might crowd out a private sector investor who wishes to carry out a similar development. That is not permitted. The state-aid rules have stood Ireland in good stead internationally and are very important to us when one takes it up a level to industries in which some countries have tried to compete by subventing. We saw with Aer Lingus that the Government was not allowed to invest state aid. While nobody argues with the principle, when it comes down a level, one is dealing with very difficult issues.

The issue was raised about wanting to invest in specific types of project. It is not just about the financial but the economic and spin off benefits to a community in terms of tourism etc. Those are the issues. The Department has worked with the developers on the four projects and we continue to discuss and debate the matters with them. There are conditions to be complied with however.

Chairman

We shall have to hear from the other groups as the members and I are getting only half the picture here. Mr. Tuohy, we must resolve some of these problems today.

Deputy Broughan

I am astonished at the reaction of the Chairman of the Committee of Public Accounts, who is sitting beside me. This seems to me to be an episode of pork barrel politics at its very worst. It is an astonishing and appalling story. We are talking about the expenditure of €6 million. I have children who do not have the most basic changing facilities at GAA and soccer pitches. We must consider this matter in the context of overall State spending.

While marine leisure facilities are desirable, the key, outrageous point is that no procedures were adhered to in this case. The civil servants in question and this Secretary General were left in an invidious and desperate position. I presume we are talking about Deputy Fahey as the then Minister. This is not the only episode of this nature which happened under his regime from 2000 to 2002. There are a number of other issues which we should also address.

This seems to me an astonishing story. Did Mr. Tuohy receive any proposals for a marine leisure development by promoters in any other county while a competitive scheme was being drawn up? Was there something which was ready to go? Mr. Tuohy seems to feel very strongly that because certain Deputies in Kerry and elsewhere had to be placated, these measures were insisted on against his better judgment. What does a Secretary General and his colleagues do in that scenario? Does anyone contact the head of the Civil Service? Did anyone take the matter to the Taoiseach or raise it with the Comptroller and Auditor General? Mr. Tuohy said that a retroactive fitting had to be carried out and that the Department was therefore looking for a good scheme in principle to develop marine leisure around the country. The Department was provided with what appear to me to be a number of pork barrel proposals which had to be retro-fitted into the schemes. Did Mr. Tuohy blow the whistle at that stage or was there anything he could do?

While I am no longer a member of the Committee of Public Accounts, the astonishing and outrageous events at Punchestown have emerged since then and there have been various similar episodes in recent times. What does a senior civil servant do when he or she can see categorical circumstances such as these? In the case of the Roundstone scheme, there was no foreshore licence and no planning permission and in the case of Rosses Point there was no foreshore licence. At Kenmare, there was a planning disaster which we had to discuss in the Dáil earlier this year and in Caherciveen the project's facilities were 83% private. Some of Mr. Tuohy's concerns appear to be very valid.

Most people would want these questions to be asked; if there are other schemes and if promoters in other counties were seriously disadvantaged by the fact that this small scheme of €5.7 million came to an end in 2002. Is that the sum total of the funding available? How much has been drawn down for each scheme and how much is left of that original tranche? People want a level playing pitch which they did not get in this case. One had to come along and retro-fit it. Surely that is not the way Government should operate. It is important to have another perspective on this. The public deserves value for money. While we may need leisure facilities in these locations, we should have had a scheme that was properly developed. The Secretary General should be able to say with confidence that it was approved, that the Department was happy with it, that it fulfilled all the criteria of planning, business plans and so on.

Chairman

For the information of Deputy Broughan who arrived late; the committee decided to invite the Minister for Communications, Marine and Natural Resources to answer some of the political questions he is asking. We also agreed to invite the Minister for Community, Rural and Gaeltacht Affairs for his views on the importance of these developments as part of his remit under western development and rural development. In addition, we agreed to invite the former Minister for the Marine and Natural Resources, Deputy Fahey, in case there were questions to be asked in regard to these projects.

I am astonished by what is being ruled out here today, not only in terms of the scenario presented by the Department but also in terms of the response by certain members present. It is clearly not just a case of a Department being stingy with money. There seems to be an impression that the Department will not allow the money to be spent. From my reading of the document, there is a very clear reason for this; the criteria have not been met.

It is a question of public money, the spending of which must be transparent and accountable, as Deputy Broughan said. The Chairman of the Committee of Public Accounts is present and I am not surprised all these issues are before that committee. So they should be. Given that the Secretary General says strong political commitments were made to these four projects when only incomplete information was available in respect of them, I would have expected the Department to do no less than it did.

Chairman

There are three elements to this programme and we have not yet heard the other side of the story, which we certainly want to hear. The four marine groups are present and we will soon hear their presentations. Afterwards, we will hear about the political aspect.

Senator O’Meara

The Chairman has spoken about a resolution. I hope there will be one but it should be in the context of accountability and transparency in the spending of public money, in the rules and regulations surrounding its spending and in the manner in which the public service and Civil Service make decisions on behalf of the public. Some members have said the amount in question is small. Relatively speaking, it is, but it would make a large difference to many organisations, schools and hospitals. The manner in which public money is spent, particularly when it is abundant, is very important. I am surprised that there is an attitude of urging that a way be found to spend the money, as if it were so widely available.

Senator Finucane

The Kilrush project was subject to severe financial overrun and there was a very thorough investigation at the time. The money that was spent was regarded as being excessive. I am glad the Ministers will be before the committee in September because I would not share in the eulogising of the former Minister, Deputy Fahey, in regard to some of these developments.

There is a need to put the record straight in respect of Mr. Tuohy's statement because the Kenmare representatives will soon be before the committee. Mr. Tuohy clarified that December 2002 should be December 2001. Later in his presentation he stated the Department became aware that the building was in contravention of planning approval in October 2002. I presume he should have said "December 2001" in this case also.

Deputy Perry

In case there is any misunderstanding, I must state I am certainly not familiar with the projects at Cahirciveen, Roundstone or Kenmare, but I am totally familiar with that at Rosses Point. As Chairman of the Committee of Public Accounts, I am very conscious of my responsibility and, as the Secretary General knows only too well, Mr. Purcell does his job in a most diligent manner to obtain value for money for the taxpayer. Anything I say will totally enforce that. I am a Dáil Deputy for Sligo-Leitrim, but it would involve no derogation of my responsibility to assess independently the development taking place at Rosses Point. I would have no difficulty if the Comptroller and Auditor General came to Sligo, examined the application, met the county council and considered all the relevant documents. The project will stack up in terms of value for money and a return on a tourism development. The benefit will be enormous. The project is very well advanced by the county council. It is not a pie in the sky aspiration but a reality that people are prepared to fund.

It would be a major mistake not to consider each of the four applications separately. I have no doubt that Mr. Tuohy will have considered the situation carefully. I am speaking with knowledge of the Sligo application and cannot speak for the other three. This must be stated lest there be any misunderstanding that I am pushing something irresponsible which would represent bad value for money for taxpayers.

My information indicates that the Sligo application is by far the most advanced of the four. It is ready to go, the funding is in place and, more importantly, we are availing of cross-Border funding of which no other applicant can avail. We have private investment. I can give an assurance that all that is required is agreement by the Department to a derogation regarding a legal document. The taxpayer will not lose out because of the investment in Sligo.

Chairman

Will Mr. Tuohy, with his officials, respond to the various questions raised? I have every confidence in him. We will then suspend the sitting. I am conscious that a number of groups have travelled long distances today and I apologise to the groups that have been waiting. I expected the current session to finish at 1 p.m. but it did not. We will have to suspend the sitting until 2.15 p.m. or 2.20 p.m. before we take the four presentations. I ask Mr. Tuohy also to return after the suspension.

Mr. Tuohy

Deputy Finneran covered one of the issues mentioned by Senator Feeney. The PAC did a major review of the Kilrush marina and the project ran into major financial problems at the time. I would need to refresh my memory of the review but I can remember it and I remember the debate about it. I am not saying that things do not subsequently pick up. Sometimes one needs a sense of vision to get things done. However, one tries to do one's best at the time by obtaining a viable business plan and putting it in place. This committee and the PAC would be the first people to ask me why we did not look for that. I do not set the rules; they are already set. Members trust me, as the Accounting Officer, to implement them. I am doing that and we are doing it in a positive spirit and encouraging development. I said that at the start. We will continue to engage with the groups to see whether we can bring them within the ambit of the Department in view of the constraints on us. However, people must come some way along the route also. They must comply with the rules. This is a sensible business approach.

Senator MacSharry spoke about the Rosses Point development. We will follow up on the issue of the harbour master. If he has written back to us or made contact, that will be referred back to our marine safety people. Nobody wants to end up dealing with a tragedy as a result of such an oversight. We must take on board comments made by the statutory people, in this case the harbour masters. On the issue of the foreshore lease, there are technical issues still to be ironed out, but I do not believe these are insurmountable, as I said earlier. We will consider these issues. The point was made about valuation. That is probably in our own system at this stage.

My use of the phrase "very tight" was mentioned and the issue of financial viability into the future. We have debated this issue many times before. There is no doubt that some of these are subjective calls. However, any new installation whether it is a harbour or a marina, cannot just be left, particularly where there is a danger of degradation which might cause accidents. When we commit to building infrastructure we must make an ongoing commitment to maintain it. If not, there will be a problem if the infrastructure does not become useful and there is also an issue of potential liability. It would be imprudent of us and of the developers not to make that provision. We need the ongoing cost to ensure sustainability and viability. For the Rosses Point development we sought a ten-year commitment and we felt at that stage that we had discharged the State's investment. There is obviously the potential for flexibility on some of these issues. I take on board the points made by the Deputies and Senators on this.

Senator O'Meara made a statement on which I will not comment other than to say that I have already covered some of those issues. Deputy Finucane mentioned the Kilrush marina. With regard to Deputy Perry's issue, I appreciate, in light of all my dealings with the PAC, that the issues we have talked about today are to the forefront in everyone's consideration. As I have said, I do not make the rules; I implement them. In this case I implement them as Accounting Officer on behalf of the Oireachtas. As Secretary General I implement the Minister's directions, but I am a direct Accounting Officer to the Oireachtas, not to the Minister. I and my colleagues are entrusted with implementing the relevant procedures and practices. That is all we can do. We do it in as positive a spirit as possible. Members expect us to do this and we will do no more and no less than we are expected to.

Deputy Kelly

Chairman

I understand that the delegates from the Marina at Cahirciveen Group have not returned yet, so we will move on to Rosses Point. I know that the Rosses Point delegates have a flight to catch also. There was a proposal from Deputy Kelly before we adjourned that the Minister of State, Deputy Fahey, who was the former Minister with responsibility for the marine, address the meeting, even though an invitation is going directly to the Minister for the September meeting. I believe it was agreed that the members should allow that. Ms Clarke may make a five-minute presentation, as we are running way behind time after dealing with the departmental officials earlier.

Unfortunately, I have a doctor's appointment at 3.30 p.m. and must leave at 3.00 p.m. or shortly after. The Deputy Chairman will take the Chair, and subsequently Deputy Brady, who is the Government Chief Whip, if the Deputy Chairman has to leave. I apologise to everyone in advance.

Ms Dorothy Clarke

I will explain the background to the project and our involvement in it, highlighting some of the current issues. The project involves the development of marina facilities at Rosses Point, County Sligo. The development will consist of a fixed rock arm or breakwater, a floating breakwater, a total of 54 fixed berths and 12 on the floating breakwater, which have been referred to as the visiting berths, pump-out facilities and onshore facilities alongside the yacht club. The location is Rosses Point in County Sligo, which is a village located about five miles north of Sligo town. It is a major tourism destination in the region, something that has been highlighted. There has been strong investment in tourism facilities in the region in recent times, with new hotel developments and so forth. We feel the development of the marina facilities at Rosses Point will complement and add value to the existing amenities in the area.

The background to the project goes back some time in the sense that the initial project was conceived by the yacht club at Rosses Point. Approaches would have been made to the county council to join forces with it, and a partnership was developed. An application would first have been sent to the Department of the Marine and Natural Resources in 2001. Subsequently, in June 2001, the Department of the Marine and Natural Resources approved in principle IR£1 million - €1.27 million - for the development of the facility at Rosses Point, subject to several conditions, including matters such as the county council co-funding the project, local contributions being sourced from the sale of marina berths, proper accounting records and documentation, and foreshore and planning issues having been settled.

At that point Sligo County Council engaged the services of marine specialists Kirk McClure Morton to assist with and advise on the technical aspects of the project. At that stage plans were developed and drawings and specifications drawn up. All issues of a technical or safety nature were addressed to move the project forward. A great deal of negotiation and discussion would have taken place at that stage between Kirk McClure Morton, the county council and the Department of the Marine and Natural Resources officials. A feasibility study and business plans were already in place. That would have drawn on the expertise of members of Sligo Yacht Club at Rosses Point in particular.

Once the plans and specifications had been finalised, in October 2001, the project went out to tender. However, the lowest tender received at that time, of €1.78 million, exceeded the funding available. At that stage discussions were held with the Department of the Marine and Natural Resources regarding the shortfall in funding, and additional funding was sought. Subsequently, however, it was agreed that, for the project to progress, it would be necessary to scale down or phase it to match the funding available. The Department of the Marine and Natural Resources agreed. Revised drawings and figures were submitted to the Department for its consideration and approval in August 2002. To advance the project further, a meeting was sought and held with the Minister for the Marine and Natural Resources and officials from the Department of the Marine and Natural Resources in February 2003.

At that stage, the Minister raised the following concerns regarding the project. In particular, there were matters that he insisted be included in phase 1. He wanted more up-to-date, revised costings, as the initial tender had been received in October 2001, and it was now February 2003. In addition, for safety reasons, the inclusion of a floating breakwater in phase 1 was considered a priority. The Department also insisted on pump-out facilities to be incorporated into phase 1 of the project.

The county council agreed to take those concerns on board, and following that meeting revised tenders were sought, in April 2003. On receipt of the revised tenders, the cost of the project came in at €2.214 million. Several things would have happened locally at that point. As a result of the costings, the county council increased its contribution to the project to €304,000. The yacht club and local contributions also increased to €340,000. The county council secured funding from the international fund for Ireland, as was highlighted earlier, of €300,000. That will specifically cover the cost of the floating breakwater. All matters of a technical, nautical and safety nature were considered and incorporated into the final plans and specifications. Those would have been agreed and approved by the local harbour master and Harbour Commissioners, as well as the technical division of the Department of the Marine and Natural Resources. The advice and requirements of the Department of the Marine and Natural Resources and the Harbour Commissioners were taken into account before completion of the final plans.

Following examination of the tenders, we reported back to the Department in June 2003. Phase 1, at a cost of €2.214, was to provide dredging, a rock arm or breakwater, floating breakwater, pump-out facilities, 12 tourist berths along the floating breakwater, plus 28 permanent or fixed berths. The contributions to make that happen were coming from the county council, local contributions, the International Fund for Ireland and, one hoped, the Department of the Marine and Natural Resources, which was to provided €1.27 million. The estimated cost for putting phase 2 in place is €357,000. We have agreed that it will be completed within a three to five-year time scale. The partnership approached the county council in line with the local yacht club, and the community agreed that it would be necessary to complete the project as quickly as possible. We have given a commitment that, once we can get working on phase 1, phase 2 will be completed within a three to five-year period.

Approval for phase 1 of the project was requested from the Department of the Marine and Natural Resources in June 2003. The following information was provided: a full set of revised plans and drawings for the project; confirmation of the increased contributions from the county council, the yacht club and the local community; confirmation of support from the international fund for Ireland; a draft memorandum and articles of association for the new management structure, as the facility will be managed by a new management company; a full financial appraisal, including the cost savings that had to be undertaken as a result of the phasing of the project; and confirmation that no ongoing liability would attach to the Minister for the Marine regarding the project.

I emphasise the commitment of Sligo County Council to this project to date. To make the project happen, Sligo County Council would have had to purchase a piece of ground with foreshore frontage from an adjacent land owner at the proposed site to allow the project to go ahead. That has gone ahead and been confirmed to the Department of the Marine and Natural Resources. The planning requirements, which were part aid, are in place. The feasibility study and business plan commissioned for the project were revisited and reappraised. A further appraisal was carried out by our own internal head of finance. That was forwarded to the Department for its consideration. A foreshore licence has been applied for. We are aware that there is probably one minor issue outstanding. Site investigation bore holes and sediment analysis have been completed. The material to be excavated as part of the dredging has also been accounted for. A hydrographic survey commissioned for use by the harbour master and Harbour Commissioners to assess the site and navigation channels for safety in nautical matters has been paid for by the county council. We have letters of approval from the harbour master and the Harbour Commissioners on file that were obtained for this project at this location. Several meetings would have been held with those individuals before finalising any plans for the project. The management structure has been agreed by the parties involved, and a draft memorandum and articles of association are with our legal advisers. That is in addition to the financial contribution that the county council has agreed to make to the project.

We are not for turning and are totally committed to bringing this project to fruition. A further meeting, sought by the county manager, was held in October and November 2003 with officials from the Department. It was agreed at the meeting that one of the issues to be highlighted was the form of wording required in regard to the guarantee and underwriting of the project. Minor issues regarding the foreshore were also discussed.

The outstanding issues of critical importance to this project are the provision of a guarantee by the local authority to underwrite the project and an agreement to indemnify the Minister for Communications, Marine and Natural Resources against any current or future liabilities that may arise. We accepted the conditions in regard to the first approval in principle, subject to putting the structure in place, and this would have included an underwriting element. However, given recent correspondence from the Department, we are confused as to the extent of the guarantee and indemnity.

The correspondence stated: "...the county council is to provide written confirmation that it is prepared to underwrite the entire project including the capital costs and any borrowings or operational losses that might be incurred by the project...". Further correspondence stated: "...to provide all necessary finance for the completion of the works out of moneys to be provided by the council or by local contributions and to ensure that the council maintains at all times satisfactory working capital for the operation of the facilities...". In addition, we have been asked to indemnify the Minister and the State from and against all actions, proceedings, costs, claims, demands and liabilities arising now and in the future from all activities carried out on the facility.

A ten-year timescale may have been mentioned in one item of correspondence, but our legal advice is that what is required by the Department in terms of a guarantee is excessive. We need clarification from the Department as to the extent of our liability, particularly in the context of the recent circulars brought to our attention by the Department of the Environment, Heritage and Local Government. The Department of Finance circular S74/17/03, which came out in January 2004, was superseded by the circular from the Department of the Environment, Heritage and Local Government to all local authorities in regard to the provision of financial guarantees by local authorities for non-Department funded projects. We have requested clarification on this from the Department of Communications, Marine and Natural Resources and are still awaiting a reply. We need clarification on the extent of the guarantee and indemnification because it seems that, from now on, we will be expected to underwrite every aspect of the project, including demands, claims, liabilities arising etc.

Under the new Local Government Act, the giving of a guarantee is a reserved function of the county council. We are prepared to bring this project to fruition as best we can.

Chairman

Was Ms Clarke present for the presentation by the officials? They have indicated they will try to work through the difficulties with the Rosses Point project. As an optimist, I am confident that they will do so. I ask Ms Clarke to be brief.

Ms Clarke

I will be brief. We are not aware that any subvention is required. In fact, we have given a commitment in writing to the Department that we will not go back to it to look for any further financing of this project, for phase two or beyond. Another concern is that, as we have been told by the Minister and his officials, the deadline for the drawdown of grant moneys is the end of 2004. As the committee is aware, if we do not get approval for the project soon, the position will be critical.

Mr. Connery

There seems to be some argument with the Department in regard to the criteria laid down and to the status under which these projects occur. The Department made it clear that the allocations in the budget of 2000 were additional to the marine leisure initiative in regard to these projects. While there is no further funding at present for the initiative, the Department made it clear that the criteria which apply to these four projects are as laid down in the operational guidelines for the national development plan tourism grant scheme, sub-measure five. The Roundstone marina group accepted the guidelines and has worked within them. The nub of the question is that, under the guidelines, we have had a lot of deliverables to get through.

We have split the project into four phases: planning, funding, construction and closing phase. Within that we have carried out in the region of 25 preliminary surveys and reports and issued in the region of 30 design drawings and specifications. We have achieved that, unlike what was said here this morning by the Department. It is an issue for me. We have all the statutory licences, leases and permissions in place. We have planning permission and foreshore approval, which are the requirements of the Department. We have a letter from the Department of Communications, Marine and Natural Resources, dated 17 December 2003, granting us foreshore approval. In addition, it requires a sum of money in the region of €110,000 for giving us that approval, which increases our costs. However, all our statutory licences, leases and permissions are in place.

We have produced contract documents and have gone to public tender. We have received seven replies to our public tender. The basis of these replies was from seven companies. The tender review shows that the lowest tender we had was €1.97 million and the highest tender was €2.815 million, a difference of €841,000. We subsequently negotiated with the lowest tenderer and received a fixed contract price of €2.54 million. This is because the Department and, I believe, the Government, would require us to have a fixed contract price. Therefore, we would be mitigating the risk for the major stakeholders who in this project are the Roundstone Community Development Council and the Department of Communications, Marine and Natural Resources in partnership.

In addition, we went through the procedures. We have now got to the point where we have gone to tender. We had to raise funds. We have raised €750,000 from Roundstone Marina Limited. We have applied to the Department for a capital grant of €1.9 million and we cannot go any further. We are awaiting approval but we have not yet received it. There are two or three issues that the Secretary General raised today, which is the first I have heard of them, but I will address them in a minute. We cannot issue a contract until we get a grant letter from the Department. That is the way the criteria operate. We are staying within the criteria.

We then go to the construction and closing phases. We set out a schedule for the project whereby the planning would be completed by 2003, which we have done, funding would be in place by May - we have our funding in place and are waiting for the Department's funding, and construction would start in June and be completed in October. The Department would then sanction the project and give us the final payment in November. Obviously, that has not happened because we are now in July.

I fully appreciate the Department's dilemma. It has set down the criteria within which we must operate. The committee has been hearing that side of the coin, namely, an argument about whether or not it fits into this or that. I appreciate that our tax money is being looked after by the Secretary General and his Department. Nevertheless, all these criteria and issues we have to satisfy cost a lot of money. We have spent approximately €250,000 just to get to this position and we have not received a penny from the Department. I understand that, within the criteria, we are not yet entitled to that but we have spent the money. There are a number of other stakeholders in this project who have not been paid.

The main issue for us now is that we have produced a capital cost for the project, the outlines of which can be seen here. The project will cost €2.66 million. This is based on tenders and is a fact of life. Giving us an amount of money to manufacture a project does not work. I accept that the Secretary General has said something similar. Of the four pilot projects, ours is ready to go and others can speak for themselves. One has already gone through the process and has achieved that result.

I would like to quote something here. The Secretary General made a point of saying that there were two main criteria, one of which was the capital cost of the project. We were asked to provide 25% within the guidelines, and we have provided 28%. We are seeking the balance - a 75% grant - from the Department on the basis that we are in the Border, midlands and west region. In fact, we are looking for less, because we have provided 28%.

From our point of view, the issue still remains as to the delays. We are now getting into a period where, to carry out our dredging, we will get into winter difficulties if we do not get a reasonable decision fast. However, the criteria as laid down came from the recommendations of the Marine Institute. These recommendations were made in July 1999 and became part of the national development plan. Effectively, marinas do not make money. It is very difficult for them to make money. It is particularly difficult for a 34-berth marina to make money.

I will not take much longer, Chairman. It is one thing to raise the money, which we have had extreme difficulty with, as one can see, but the other issue is the operational viability of the marina. We have proved that our operation is viable. We have produced figures and have come up with an innovative idea. We have a small community in Roundstone of in excess of 400 people, and we had to raise €750,000. We came up with a scheme whereby we got 25 people to invest €30,000 each, which gave us our €750,000.

The normal way of raising capital and apportioning capital costs for a marina would be to lease out berths for ten years. I am open to correction but I think the going rate in Cahirciveen is approximately €12,500, including VAT. For that sum one gets a berth for ten years. Our guys have put in €30,000 and have agreed to guarantee up to €3,000 per annum for the next five years and will continue a substantial investment to make this work. This guarantees the operational viability, therefore not putting the Department under any strain in future as to the marina's viability. Effectively, we then have 34 berths generating income. We have allowed nine of those berths, which is 26%, for tourism visitors.

We are in the west and it should be noted that there is no marina between Kilrush and Northern Ireland. The Minister of State, Deputy Fahey, was trying to achieve that as part of the Marine Institute's published investigation. He should be commended on it.

We are proposing a marina at Roundstone and another one at Rosses Point. If these can proceed as pilot projects, other marinas will develop between them. As regards the impact, the marina does not generate a lot of money. The Marine Institute's recommendations on marinas state:

A marina can have a significant impact at the local and regional levels. Generally, marinas do not in themselves make profits, but the presence of small, medium-sized marinas can generate from €430,000 to €690,000 of revenue annually. Between 20 and 32 full-time equivalent jobs may also be generated. While the marina facilities may not generate significant profits themselves, up to 13 times as much income may accrue to the local area from associated activities.

This information comes from the Marine Institute, not from me. One can rate that according to the number of berths, but these are its investigations and these are its recommendations.

From our point of view, we have met all the criteria. Ours is a viable project and we are requesting the Department for funds to get moving on the project and to complete it. We are ready to go.

Vice-Chairman

Before Mr. O'Sullivan makes the presentation on behalf of Cahirciveen, I draw attention to the fact that while members of this committee have absolute privilege, the same privilege does not apply to witnesses appearing before it. The committee cannot guarantee any level of privilege to witnesses appearing before it. Under the salient rulings of the Chair, members of the committee are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable.

Mr. Denis O’Sullivan

The Cahirciveen marina, built by the community company ACARD is a success story. As we got the invitation at half past four on Friday evening, we are not in a position to make a proper presentation to justify what we have done but I will do my best. The project cost €3.23 million. We got €2.54 million in Government funding and made up the shortfall through the sale of ten-year leases on berths plus day-to-day trading. It is a 109 berth marina. There are 29 long-term leases and 80 day-to-day or short-term berths available for tourism. Cahirciveen was traditionally based on fishing and farming, but both these sectors are in decline and tourism is the way forward. The purpose of the marina project was to improve the infrastructure to invite investment.

The marina project has been such a fantastic achievement and of such great benefit to Cahirciveen that there are other projects being looked at. There are investors from outside Kerry coming to look at other projects. I am not in a position to say what those projects are at present, but they would be worth €10 million or €20 million. This is part of what I mean by improving the infrastructure to invite investment.

On the marina itself, we got the support of the other marinas like Lawrence Cove, Dingle and Fenit. The idea would be to build a necklace of marinas around the coast and, as previous speakers have said, the more of those one has, the better. All the small marinas in the south of England are full to capacity and the overflow will come to Ireland.

I noted the comment made this morning about Kilrush. We all held for years that it was not a success but today the committee heard what a success it is and that it is full to capacity. The overflow from there, which will come to Cahirciveen, will come from the continent and from all over the world. There are people coming into Cahirciveen who have money to spend and who are very easy to deal with. This is a fantastic success story.

I take this opportunity to compliment Minister for Arts, Sport and Tourism, Deputy O'Donoghue, and the Minister of State, Deputy Fahey, who was Minister for the Marine and Natural Resources at the time, on having the vision to support our project. The taxpayer is definitely getting value for money. The project is worth about €1 million per annum to Cahirciveen and its environs.

We formed the company in 1988 and formed the marina concept about three or four years later. We spent seven or eight years trying to deal with it. One of the main obstacles we encountered was the process of getting the foreshore licence. There were major problems with the Department in that regard because of a change of personnel and it took three or four years to get a foreshore licence.

The Department imposes criteria and bureaucracy that are too strict. One cannot get through them. One gets bogged down in the bureaucracy. We as a company give our time on a voluntary basis. None of us is paid and we do not get expenses, etc. If the Department blocks the likes of us taking such initiatives, it will not help. Marinas are the answer for coastal areas which are on the periphery of Europe.

The other matter with which we have a problem at present is the navigation of the river, which is being addressed by Kerry County Council, and that is an ongoing issue. When that is addressed, we will let them flow in because they are very positive about what they are doing at present.

The marina is a major success. On that note, I will let Mr. Frank Curran continue.

Mr. Frank Curran

The Cahirciveen marina has been a community project from the start. It is owned and run by the community. The other side of it is the spin-off from it. It is not only a marina but also a water sports activity centre which is important for the youth of the area.

Cahirciveen got the European angling competitions two years ago, which was a major feather in its cap. They are back again this year because of the marina and the connected facilities. This is the first time this has been heard of. Cahirciveen is on the west coast of Ireland where one cannot guarantee the weather. Angling is the perfect sport because it is an all-weather sport. One need not worry about the weather. If one is to look towards tourism, activity tourism is the way to go.

Our marina is not catering for round-the-world yachtsmen, etc., but for the amateur. The amateur will sail for a couple of hours and the more marinas there are along the west coast, the more the west coast will develop. The more marinas there are, the more they will help each other. That is what we found with our development, namely, that the existing marinas in the area, such as Dingle marina, were more than helpful because they see that the future of their project lies in the future of all the other developments which will happen around the west coast. That is why I say it is foresight to see it. There is a massive opportunity there to be grasped for the future of the country and of the west coast.

Chairman

We will move on to the presentation of Mr. McCarty from Kenmare.

Mr. Daniel McCarty

I am the programme promoter of the Star training centre in Kenmare. As the committee will be aware from reports on the television, six or seven months ago there were many problems with planning. At the time I had all my planning permission when there were a few changes made by my architect and engineer. They re-applied for planning permission for an apartment in the top of the building for a marina manager for insurance purposes. The architect and engineer had a meeting with the planning officer who at the time saw no problem with it. When we submitted the new plan, one objection was raised, and the person kept objecting and would not be happy with it. The council passed the project. The matter went before An Bord Pleanála which objected to it. We had done everything possible to speak with An Taisce etc., and finally I was left with no option but to take the building down. Luckily we had only put up the blocks, the steel and windows and I retrieved all the materials and put them aside in storage. At present, I am building the exact marina for which I got planning permission on day one. It is half-built and will be ready for roofing over the next two weeks. I hope to have it in operation by October.

I know I went through a tough time for two years. I got approximately €331,000 from the Government. I had to do the work below the road and some work above the road. When I went through it and taking my own investment into account, I definitely had to shoulder a shortfall of about €120,000 after taking the building down. I will forget about that.

I want to go ahead and make the marina a successful place for people who come to Kenmare. We have done a great deal of marketing and we will do more. I hope it will be up and running by next October or early November. I would like to keep it open all year round. Kenmare has fantastic hotels and it is a great town. It won a Tidy Towns award and is going from strength to strength. Our greatest problem will to be keep up with the massive business attracted to the town over the next 12 months.

Minister of State at the Department of Enterprise, Trade and Employment (Deputy Fahey)

I took office in the Department of the Marine and Natural Resources in January 2000 at the mid-point of the previous Government's term. I was appointed when the former Minister, David Andrews, retired. I was presented with a number of reports dating back to 1999, such as A Development Strategy for Marine Leisure Infrastructure, published by the Marine Institute. The national development plan, NDP, commenced at the beginning of 2000. At the end of that year, I was not in a position to obtain from the Department the criteria to commence this programme. As the Department pointed out in its report, the criteria did not come on stream until February 2002, two years after the NDP commenced. I made a proposal to the Government at the end of 2000 or the beginning of 2001, which was approved, to select four pilot projects under the development strategy. The money referred to in the Department's report was allocated in principle subject to stringent conditions.

I am glad I made the decision and, if I were asked to make the same decision today, I would do so. What we have today is a whitewash by the officials of the Department of Communications, Marine and Natural Resources. It is an attempt by officials to cover their butts. I was in the Department for two and a half years and departmental officials worked with me in progressing these proposals. None of the commentary in their report was put to me as Minister for the Marine and Natural Resources. The criteria which, as the official stated, they tried to "retro-fit" were not introduced until 15 months after the projects were announced.

We informed the people who initiated the projects to proceed with their planning. We adhered to the criteria when they were introduced, but if they had been introduced when the projects were approved, funding would not have been sanctioned for them. There would be no marinas in those locations. It is interesting that Cahirciveen marina has been completed and is successful and viable. The backers do not seek money from the Department to maintain it. The representatives of the Rosses Point project stated they have given a guarantee to the Department that they will underwrite losses in the running of the marina. There is, therefore, no need for a covenant or a guarantee from Sligo County Council.

I refer to Roundstone in my constituency. Four reasons were given not to proceed with that project but they are patently wrong, as Mr. Cooney outlined. This is a public project sited on lands owned by the community council. The dressing rooms for this marina are being built on the site of the local community sports hall which is being developed for that purpose. It has the support of Galway County Council. The reason Roundstone Marina Limited was brought in was that the only way this community of 400 people could raise the €750,000 needed was to get 30 people who were prepared to invest their money for the good of the community. They put up €25,000 each and every berth will be available for tourist boats. It is patently wrong to say only nine will be available.

I brought this group to meet the Minister for Communications, Marine and Natural Resources and his officials a number of months ago. I allocated €1.1 million for the project initially, which was €800,000 short. A number of weeks later the Minister contacted the promoters of the Roundstone project and informed them he was allocating another €600,000. Unfortunately, this marina project is dead because the promoters had agreed a fixed price for work to commence last month and conclude in October. This whitewash will mean the Roundstone marina will never proceed, even though the figures that have been produced offer the State value for money comparable to the money being spent on any project this year. The same applies to Rosses Point and Kenmare and it has been proved at Cahirciveen.

However, there is one problem. The Pale is alive and well. Leeson Street housed a regulatory Department when I took up office but I turned it into a developmental Department. It has returned to being a regulatory Department, despite the best efforts of the present Minister. There would never be a marina in the State if the criteria outlined earlier were adopted. The controversy at Kilrush is a good example. If it had not been for the foresight of those who built the marina there, it would not be the fantastic development it is today. It is one of the most successful developments in County Clare. Another 50 berths are being sought at the marina.

I proceeded with this necklace of marinas which was outlined in a map in the 1999 report. There was significant demand among European tourists to sail their yachts along the west coast, the finest yachting waters in Europe. There was no marina along the coast, with the exception of Kilrush, which was built a few years ago. The idea was to proceed with a number of pilot projects to commence that necklace at Roundstone and Rosses Point. As a west of Ireland Deputy, I am proud of the decision I made. This attempt to whitewash what was done typifies how the west and the south west have been left to die.

I sought this hearing and am more convinced than ever that I was correct in the decision I took. One marina has been completed. The second marina encountered problems which have been addressed by the promoter. Two marinas are ready to proceed. I ask the officials to return to their Minister and inform him that what they heard at this meeting is satisfactory to allow the marinas at Roundstone and Rosses Point to proceed immediately. September will be too late. A great opportunity presents itself to build those marinas and the money and guarantees are available. We have a great opportunity to expose one of the finest coastlines in the world. If the Civil Service has been reduced to the comment made by the Secretary General, then God help the future of rural Ireland.

Vice-Chairman

I remind the Minister of State of my opening remarks regarding criticism. They also apply to him. He is attacking the Civil Service.

Deputy Fahey

I am not attacking anybody.

Vice-Chairman

Great latitude is provided regarding criticisms, even though we may disagree with Ministers and their policies from time to time. I ask the Minister of State to observe this latitude. I have given him an opportunity to make a significant contribution.

Deputy Fahey

I am not attacking anybody. However, this document is an attack on my credibility. I was elected by the people and, subsequently, selected as a member of the previous Government. Governments can still take decisions, but if the comment read out by the Secretary General, that it would take 106 years to pay back the cost of the Rosses Point marina, is the attitude which now exists towards the development of our marine infrastructure in the west and south west, then God help the future economic development of that region.

Deputy Broughan

I apologise for being late. I was at another meeting.

On the earlier discussions, what was the process for the original four projects? I presume the Minister for Finance wanted to invest a certain amount of funding in this area. Why were these four projects chosen at that particular time? The Secretary General informed us there were 60 projects subsequent to that. One of the duties of the committee is to ensure that all areas of the country are dealt with fairly and, looking at the presentations, strong cases can be made for individual areas. Were groups of promoters from up to 12 marine leisure developments saying at the time that their projects could be funded either under the new national development plan, NDP, or as a postscript to the budget and were they therefore looking for permission? What was the process whereby the Minister of State decided on these? I presume the Minister for Finance did not decide that this was the right way to go politically.

Deputy Fahey

The decision was taken by the Government on a recommendation from me based on this report from the Marine Institute which gave a list of locations around the coast where marinas should be built. I received deputations from many locations throughout the country, most of which were aspirational. Most of the groups which I met had nothing. We chose three, Roundstone, Rosses Point and Cahirciveen, on the basis that they were best equipped to proceed with their proposals in terms of planning already carried out and money being in place or the ability to raise the money required.

Contrary to what the Secretary General said, the criteria that applied at the time were the exact same criteria that applied to millions of pounds spent by the Department on piers and harbours throughout the country, both those owned and not owned by the Department. There was nothing unusual about the criteria laid down prior to when the national development plan, NDP, criteria came into place. All the requirements in terms of planning, viability, financial contributions and so on had to be adhered to. I was satisfied that all procedures were being followed correctly and carefully. The reason it was decided to go ahead with these four pilot projects was that I realised at the time that, if we did not start the four projects at that stage, we would never complete a project before the end of the NDP. I have subsequently been proved to be correct.

The Deputy is a Dublin TD, and good luck to him.

Deputy Broughan

We need more than luck in Dublin.

Deputy Fahey

The decision to proceed with these four projects in the west and south west, which the Deputy described as a disgrace, is important to these regions. We do not begrudge Dublin the hundreds of millions being spent on Luas and the Dublin Port tunnel. It annoys me, as a west of Ireland Deputy who invested a small amount of money in places that never received anything, to hear someone from Dublin, which the rest of the country perceives as receiving most of the investment, cast an aspersion on rural communities. Those witnesses present are giving their time on a voluntary basis. No one is paying them to be here.

Vice-Chairman

I remind the Minister of State——

Deputy Fahey

There is no private project involved in these cases. They are all public community projects.

Deputy Broughan

The Minister of State should not turn this into a Dublin versus the rest of the country debate because it is not the issue. Other counties received nothing.

(Interruptions).

Vice-Chairman

I remind members that a decision was taken previously by the Chairman who said that the Minister, Deputy Ó Cuív, the Minister of State, Deputy Fahey, and the Minister, Deputy Dermot Ahern, would attend a meeting in September to answer questions on impediments put in people's way, etc. This meeting belongs to the four groupings. We have allowed the Minister of State considerable latitude because he could have been ruled out until September. Any further questions must be directed to the witnesses present.

In fairness to the delegation from Kenmare marina, I raised a specific question earlier. We held a meeting last February and one of the officials said it was significant that the promoters forwarded the planning permission and foreshore lease to them at the same time the building was deemed not to be in accordance with the planning criteria set down by the local authority. When they forwarded the documentation, they were paid €330,000. If the application for planning permission had been rejected at that stage, how could they justify the €330,000?

Mr. McCarty

Mr. McCarty

The job was to start and only one person objected. The person who objected was not happy, no matter what alterations were made, until the project was abandoned. He came to my own place and told me he did not see the plan working from the beginning in 2000. He could not stomach it. He could not see it going ahead. The objection was made by only one person. I was honourable and took the building down. The building will go back up. I have put €1 million of my own money into the project and the other €750,000 is coming from the Government. The project is costing €1.75 million.

I have nothing to hide and I say from my heart that the €120,000 which was wasted was my own money. I am not going back to the Government to ask for another €500,000. I am taking all the losses myself.

Vice-Chairman

Does Mr. McCarty expect that the Department will honour its commitment to the tune of €750,000?

Mr. McCarty

Certainly.

Vice-Chairman

Is this even though the Department is getting legal advice at present?

Mr. McCarty

I am entitled to it. I have nothing to hide. I am the sole owner of the business and I am standing over it. I certainly will.

Mr. Connery

May I deal with issues raised by Deputies Eamon Ryan and Broughan? I represent Roundstone marina. There is no marina between Kilrush and Northern Ireland. A map of Ireland shows marinas all along the east and west coast. The choice of Roundstone as a location for a marina stands up. The interpretation of criteria is an important issue. I agree with Deputy Ryan that the officials of the Department of Communications, Marine and Natural Resources are doing their duty as they are obliged to do. They are doing it very well. The question is whether the criteria apply. They do apply. In Roundstone, we have met every criterion and we have raised the money. The difficulty is that we do not seem to be able to move the project on. Each time there is a delay, the price increases. I am sure the same is true for the other projects. No contractor is going to wait around. We will miss a window of opportunity. If we cannot dredge in Roundstone in August or early September, we will get into weather difficulties. If the project is postponed until next year we will have to re-tender and resubmit to the Department and go through the criteria and procedures again.

This is a public community project. We have put considerable amounts of money into it to get it to this point. It has been chosen; that is not at issue. One can argue whether it should or should not have been chosen but it has been.

Vice-Chairman

Mr. O'Sullivan, you have outlined the success of Cahirciveen. Roundstone, Rosses Point and other marinas are running into problems. Do you agree with the sentiments expressed by Mr. Connery?

Mr. O’Sullivan

I would, yes. If there is a long delay, the tender process must be gone through again and the price increases. The sooner those things are done the better. The more marinas that are built around the coast, the more they will complement each other. This is a national industry. The fact that marinas are in the west coast addresses the imbalance between the west and east coasts. On the east coast there is a large population while on the west coast there is a major population decline. Bringing tourists from all over the world to the west of Ireland, where there has been emigration since the famine, helps to address that problem. Doing things the way we did is the best value the taxpayer can get. The Cahirciveen marina is a monument to the people who backed it and who stuck their necks out to achieve it. I invite anyone who wishes to see it to come and do so. I have brought a photograph of the marina.

Vice-Chairman

I am interested in Rosses Point, particularly with regard to delay and potential cost.

Ms Clarke

We are conscious of the danger that a delay of even a number of months could mean the project may not go ahead. The Department has told us that the end of 2004 is the deadline for the drawdown of grant money. We need to know if that is still the case. We have agreed a fixed price contract with the contractor who tendered the lowest price for the revised contract. That contractor is holding that price but we cannot hold him to it for very much longer. It is critical that we get some sort of decision as soon as possible.

May I correct some mistaken impressions? Rosses Point is not a private marina. It is a partnership between the local community, the local yacht club and Sligo County Council. It is to the benefit of Sligo and the whole region. I support the other projects as parts of a necklace of marinas around the coast, all complementing each other.

The Department has emphasised 106 years as the payback time for its investment. Our appraisal sets the payback time at 25 years and eight months. The time depends on the technique used to calculate it.

Reference has been made to proper procedures and business plans. I hope members are not assuming that we have such procedures. Everything we have done in Rosses Point has been above board and done in a transparent and democratic way. Proper procedures have been applied in all instances throughout the project.

Deputy Devins

This morning the Department made the point that the margins in the Rosses Point marina business plan have been assessed by an accountant on behalf of the Department and found to be very tight. Will members of the deputation inform us of the business plan for the next ten years?

Mr. Rory O’Connor

The Department is right; the margins are tight. That does not mean the project will be loss-making. The only person I have heard mention the question of subsidy is the Secretary General of the Department of Communications, Marine and Natural Resources, who referred to it this morning. There is no question of Sligo County Council or the Department being expected to subsidise the project. Phase one of the project had to be cut back because of escalating building costs. Phase one is tight but it will wash its face. It will break even during the first few years. The promoters, Sligo Yacht Club, have told the county council that any shortfall will be met through the management company. The management company will be made up of representatives of Sligo County Council, Sligo Yacht Club and the other community organisations in Rosses Point, as is the case with clubs and organisations throughout the country. In County Sligo there are four or five other examples of community-council partnerships. Some of them have operated for many years and all of them have operated successfully without recourse to the council for additional funding.

An impression seems to have been given that this is a mega-project which will incur huge costs. A marina is a floating pier. The facilities in the marina, such as showers, toilets and dining facilities, will be shared with Sligo Yacht Club, which is adjacent to the marina. Staffing will be on a part-time basis initially.

Phase one, because it had to be cut back, will break even. Phase two will be bankable as a project. Once phase one is in motion, to start phase two will require bank funding. The projections on phase two are such that the income from the lease of berths on phase two will more than double cover the bank interest incurred, even at 1.5 times the current interest rates. There is no problem with regard to phase two because then the project becomes one that generates funds. This is necessary because, as the Secretary General mentioned, marinas will require ongoing maintenance. It is intended to start phase two in year three, approximately. At that stage, issues such as renewal and wear and tear will arise. Income from phase two will fund these.

Deputy Eamon Ryan

In response to Mr. Connery, I can see the merits of a Roundstone marina. It would be attractive, in a good location and bring tremendous benefits to the village. The point I was making was in response to the attack of the Minister of State, Deputy Fahey, on civil servants. In this instance I refer to what the Department said in its submission earlier. It said that its concern is that the move is towards the development of a marina limited company rather than a development council. Perhaps this would be the right move in that the 25 shareholders have given €30,000 each, which in a sense is a community involvement. One could argue that this is a detail which would should be worked out. However, as a representative member of this committee, I understand the Department's concern. It is highlighting the fact that 25 out of 34 berths are for private use despite that we are concerned with developing the tourism potential. While I could close my eyes and ignore that concern, I understand the Department's point.

The Minister of State, Deputy Fahey, has launched an attack on the civil servants, yet they have stated that there are concerns about these issues and that they are for further consideration by the Minister. To a certain extent the Department officials are outlining issues about which the Minister of State also has concerns. If he is the only one who can make the fundamental decision, we should launch our attack at him. What drove me to make my comments was his attack on the civil servants for implementing what can only be Government policy or proper procedures.

Deputy Ellis

In this matter it appears that all these projects are being put in jeopardy because of the delay in the issuance of the necessary dredging and foreshore licences. The position in Rosses Point is that the delay is costing money. Will the group inform us of what extra costs there are because of the two or two and a half year delay implemented by the Department?

The west coast had no or few marinas until these projects were put forward. Deputy Broughan must agree with me when I tell him there are more marina berths in Dublin Bay than there are or will be in the west, even after this development. It is important to realise that if we are to have a sailing tourism business, we must have marinas to service that. We are already aware of the problem of berths on the Shannon-Erne waterway. The private sector has provided some berths on that waterway and now in all private schemes a small number of berths must be allocated as public berths. The same situation holds for Roundstone where there is a certain number of private berths and a certain number of private ones.

What is happening now is that each group is trying to score points for itself. The result is that communities are losing out considerably because projects which have been on the cards for some time are being delayed. Ms Clarke mentioned earlier that if the drawdown of money does not take place before the end of 2004, the projects may not proceed. This is a major concern, especially with Rosses Point. If the group is not allowed to proceed, we will stall the initiative that was taken there. It should not be a question of the Department causing a delay. It should assist in progressing the projects rather than, as it appears, creating barriers for the groups trying to promote the projects.

Deputy Broughan

I apologise for missing the presentation on Roundstone. On a point of information, why did the structure of the promoting company change? Are the comments the Department on private and public funding accurate or is there a basic problem in that area?

There is no point in turning the issue into a debate on Dublin versus the rest. As the Secretary General said this morning, the issue is whether the original decision was made on an open, competitive and objective basis. Given that the Minister of State's officials were developing a competitive scheme, I do not understand why we did not wait a few months until a ranking scheme was in place. If the four schemes presenting today were ranked one to four under that scheme and we decided to go with four, everybody would be happy. We have formed the impression from the previous presentations that the problem was that this was imposed on the Oireachtas regardless of whether it wanted it when we could have gone the extra mile and achieved a transparent and accurate scheme.

I have no problem with the motion we agreed regarding the letter. However, the Minister of State, Deputy Fahey, is not responsible for the matter now. The Minister, Deputy Dermot Ahern, has the key responsibility and he asked us to hold this meeting. We called it at short notice and are now seeing documents for the first time, a fact of which I would like the delegations to be aware. What is the Minister up to? If he feels the project should be advanced post-haste, why as operative Minister does he not do it rather than pass the buck to this committee?

Vice-Chairman

The Minister will attend the committee in September. However, I know people are concerned that changes must happen before September. We will return to that issue shortly.

Mr. Connery

I must answer the questions on the issues raised by Deputies Eamon Ryan and Broughan and I appreciate that Deputy Broughan was not here for the full presentation. There was a question concerning a change in the status of our approach. We submitted a full grant application to the Department and are awaiting a reply. I have no argument with the Department. However, I am hearing for the first time now that it is being said that there is a change in the status of the company and that it looks more private than community-based.

The part of the presentation Deputy Broughan missed is that the dilemma here relates to the criteria. I have no problem with the criteria. The same rules apply to all of us. We are obeying the criteria. Where a difficulty arises is whether the criteria as they are being applied to us should be applied in their fullness. The difficulty for any marina, particularly for us as a small marina, is how to raise our 25% of the capital cost of the project. The normal method, as I explained previously, is to lease out a number of the berths to raise the funding. The normal amount in Cahirciveen if I am correct, is about €12,500 for a ten-year lease. If we followed the normal method, we would have to lease out 25 berths at a much higher cost to raise €750,000, the amount we are required to raise to meet the criteria. If we did that, we would be left with nine berths.

The other criterion is that it should be operationally viable. The committee will appreciate that it would not be operationally viable. We got 25 people to invest €30,000. It is not a share proposal in the sense that one would understand it. Deputy Eamon Ryan said that, as a business planner, he never asked anybody for a grant for his projects. Would he take a ten-year lease in a marina for €12,500 or would he invest €30,000 in a share which would entitle him to pay an additional €3,000 per annum for as long as he wants to use the berth? It is not a private proposal for somebody who is a businessman. It is a question of somebody trying to help to get this off the ground. That is what they are trying to do. They are prepared to pay above the odds to get it off the ground. We need their help. We need boats in the marina. We need to fill the berths. If one asks any of the other people at this meeting, especially those who are operating, they will say that their marinas are not full. This is not a private project. To say that it is a private project is to misinterpret the full-share proposal I have presented to the Department. It is not following through on it. A number of the people in question do not own boats at this point.

Deputy Eamon Ryan

I made the point that these issues need further consideration on the part of the Minister. Has the Minister of State passed on my suggestion to his ministerial colleague?

Deputy Fahey

When my ministerial colleague telephoned the promoters and me a number of weeks ago, he informed us that he was approving the additional €600,000. I understand that the decision was taken following consultation with the departmental officials. All these issues were thrashed out when Mr. Conroy, the committee and I met the officials some six or eight weeks ago. The committee was informed of what it needs to do. It is not correct to say that an arrangement was put in place to raise €750,000 for a private marina. The ground on which the marina has been built is owned by Roundstone community council. The changing rooms which will be used are in Roundstone sports hall. The local committee will meet any requirements outlined by the Department to ensure that the marina does not get into private hands. A mechanism was used to ensure that the money was raised. A number of the people in question are happy to make their berths available to visitors during the key summer months. It is not correct to suggest that just nine berths will be available. As Mr. Conroy said, many of the people who have invested money do not own a boat. They have put up their money to ensure that the project goes ahead.

Mr. Pádraig Flanagan

Deputy Ellis spoke about increased costs. Those of us involved with the Rosses Point marina are confident that we can negotiate a tight contract with the contractor with whom we are dealing, who has a major contract in Sligo. As our director said, we need information and approval quickly. The second phase is an issue with the Department. All of the dredging and rock armour is in place. We will get 26 further berths for less than €400,000 and it makes economic sense to do so as soon as possible. We have to put the first phase in place, get it up and running and let the management company deal with it. It makes good economic sense to borrow money to put the extra 26 berths in place.

The 20 investors, who have provided money upfront, have agreed to pay an annual service charge. I want the Department to note that the service charge is not a once-off payment. We have engaged in correspondence with the Department in that regard. It is significant that we will receive an annual income from the 20 investors. They are not making a once-off payment. Those of us involved with the Rosses Point marina are in a positive position, but we need a little help. We appealed the foreshore licence for that reason. We could have accepted the €12,500 immediately, but we are asking for a reduction in that for the first two or three years. We will be able to handle the full cost of that in the second phase. I plead with the committee to respond to my request as soon as possible. We have been involved in this process for three years and we want closure.

Vice-Chairman

Many positives are emerging from this discussion. I do not think the group's trip to Dublin has been in vain. The committee has an appreciation of its difficulties. I wish the Cahirciveen group well. It has achieved a great deal. I wish the Roundstone and Rosses Point organisations, as well as Mr. McCarty in Kenmare, the best of luck in getting their projects off the ground.

I invite Mr. Tuohy, the Secretary General of the Department of Communications, Marine and Natural Resources, to have the final word. He has been listening patiently to contributions. I ask him to outline whether the impediments and roadblocks we face can be confronted. Can we resolve the difficulties?

One must respect civil servants. As a former Chairman of the Committee of Public Accounts, I know that the Comptroller and Auditor General and politicians can be quick to jump on officials when they are reviewing the Civil Service if they find that things have not been done properly or if there has been any impropriety that affects the taxpayer. We must respect civil servants' sense of caution in what they do. They have a right to be cautious because they are handling taxpayers' money. I have seen civil servants being heavily criticised. We must respect where they are coming from. I ask Mr. Tuohy, who has heard the contributions, to shed some light on the matters which have been raised and to bring the discussion to a conclusion.

Mr. Tuohy

I thank the Chairman and I appreciate his comments, which are important. As an Accounting Officer, I am accountable to the Oireachtas for the propriety and regularity of the manner in which money is spent. I take that job seriously, as do my colleagues in the Department which I joined two years ago when it was formed. I was not in the Department at the time of the issues under discussion although I take full responsibility as Accounting Officer. Those involved have been dealing with the project from the outset. I said this morning that they are concerned about development. I reject out of hand any suggestion that we are not concerned about development. Although the Department of Communications, Marine and Natural Resources has a social role, it is primarily an economic Department which is concerned about development. Regulation is a key element of that. It is important to note that good regulation will drive any economy from a developmental point of view.

A number of speakers raised the issue of the set of criteria applying to the scheme. The primary criterion is that there should be a competitive tendering process. In other words, those who apply should do so under certain guidelines. The four flagship projects were announced before the process commenced, however. While some of the conditions of the scheme were subsequently applied, the fundamental condition - competitive tendering - was not applied because the four projects were pre-selected. I want to emphasise that.

Speakers mentioned this morning that proposals for 60 projects were received when the scheme was subsequently advertised. The proposals were to be considered by the project board, but the funding was withdrawn. It is not simply a question of the four projects about which we have spoken but of the many others that were proposed in places such as Donegal, Cork, Mullaghmore, Dungarvan, Wexford, Kerry and Schull. I was asked this morning if the four projects were the only projects to be considered, but 60 other projects were rigorously examined. Those that were placed on the shorter list were ready to go to the project board and would have been considered. Issues such as planning permission and funding would have been addressed. It was not an effort to victimise the four projects in any way. They had to comply as well.

Some issues have been made clear in today's discussion. The Minister of State, Deputy Fahey, argued that the original projects which were approved were very good. The projects changed subsequently, as we have heard. Some of them have been scaled back and their viability has been discussed. I take the point about increases in project costs which will rarely stay static in this type of economy. We are concerned about this issue as well. I wish to point out, in the interests of being fair and equitable to the other 60 projects which are not being discussed today, that they involved a great deal of effort too. In many cases, they received the various permissions, etc. We should not forget those who are not here and who put in a great effort, to be fair.

I wish to speak about my departmental colleagues. They are responsible for implementing the rules which are set by the Oireachtas and the Department of Finance and that is exactly what they have done. They have tried to "retro-fit" some of the rules to the projects at the direction of the current and previous Minister. In other words, the subsequent guidelines which were approved by the European Commission for the reasons I outlined were taken. We had to get state-aid clearance to apply those guidelines as much as possible. There is a whole set of issues in that.

A key issue is the issue public goods. Marinas are different. We heard in the earlier discussion about the involvement of the State and whether the people own the berths. There is an issue with ownership and whether they have boats because they have the right to trade the berths and State money is being invested in private goods. That is not an issue of my making. It is the reality of the situation. The Government generally funds public goods. We spoke about that a little this morning when we discussed the economic and social benefits to a community. Those benefits are different to the benefiting of individuals on a private basis. Everyone can appreciate that.

Marine Leisure Projects: Presentation.

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Mr. Niall Connery

JOINT COMMITTEE ON COMMUNICATIONS, MARINE AND NATURAL RESOURCES debate -
Tuesday, 20 Jul 2004