I welcome the Minister and his officials. A letter has been circulated by the chairman of the Oireachtas Joint Committee on Finance and the Public Service, which relates to the Cork School of Music. Representatives from the school made a presentation to the committee six weeks ago and we agreed to ask the Minister to update us on the current position. I thank the Minister for attending.
Cork School of Music: Ministerial Presentation.
I am glad to have the opportunity to discuss with the committee the issue of the Cork School of Music and the public private partnership project. I am not sure that I will have a whole lot to add to what the committee has heard in this regard but I thank the Chairman for the invitation to attend. I am very much aware of the importance of this project to the committee and the Cork region in general and of the interest in the project by the city council, the chamber of commerce and the people of Cork. The concern of the people about the school is well known and accepted by me.
This issue has been raised on a number of occasions and I will keep my comments on its background to a minimum. The project was launched in July 2000. A total of 12 consortia expressed an interest in bidding for the project. Following the initial presentation and interviews, a final shortlist of three bidders was issued with an invitation to negotiate documentation inNovember 2000. At that stage detailed evaluation of the final bids was undertaken and Jarvis Projects Limited was selected as the preferred bidder in March 2001.
My Department's officials and advisers entered into a period of intense discussion with Jarvis Projects Limited with a view to reaching financial closure on the project. During this period, JPL, under the terms of the project, sought and received planning permission from Cork City Council. However, An Taisce decided to submit a planning appeal to An Bord Pleanála against the grant of permission and that appeal took a number of months. Planning permission was not granted until 24 December 2001 as a result of the objection.
The Department of Finance had concerns regarding the perceived increase in the cost of the project. The original project comprised a 5,400 square metre extension and the refurbishment of the existing Cork School of Music building at an estimated cost of €15 million but during the bidding phase each of the bidders recommended independently a ground up development as the solution that provided the best value for money. That solution was proposed by the preferred bidder at a capital cost of €63 million.
When the project was launched the economic climate was much healthier than it is now, so much so that the question of affordability of each capital project must be examined closely in terms of overall Government expenditure. That brings me to the nub of the problem, the general Government balance. That is the critical measure of what can be accommodated within our obligations under the Stability and Growth Pact of the Maastricht treaty. Under EU rules, where projects are financed on a deferred payment basis by the private sector, the capital value of such projects is a charge on the general Government balance over the construction phase.
As the committee will be aware, a EUROSTAT group is reviewing the accounting rules in this issue, as will a standing committee established recently by my colleague, the Minister for Finance, to advise on the general Government balance implications of private sector finance projects. However, EUROSTAT has given a ruling on the initial pilot bundle of five post primary schools under a PPP approach and while the agency will not be required to rule on the school of music until it goes to construction, there is nothing based on current information to indicate that the school of music project will be considered differently from the schools bundle and it will, therefore, impact on the GGB.
The final approval for the Cork School of Music will be a matter for the Government itself and its consideration will be based on a thorough assessment of affordability of the project in the context of competing demands on the likelycapital funding envelopes and taking into account the issues surrounding the GGB. My Department continues to pursue this matter with the concerned parties with a view to having the matter determined by Government in the near future.
I welcome the Minister. I hope there will be a resolution to this issue as everybody has been working hard on it. Was it all systems go on this project until relatively recently? When did the EUROSTAT issue arise? Was it raised by the Department of Finance, as is being rumoured, the Minister's Department or someone else? Is the Minister aware that the director general of EUROSTAT has said he has not been made aware of this, has not been officially contacted about the school of music project and was never asked his opinion on its classification. Will the Minister comment on that?
Will the Minister give a timescale as to when decisions will be reached? Has the standing committee been established yet? If it has, when does the Minister expect it to reach a conclusion? Is it true that the EUROSTAT group is to reach a decision next July? Does that mean nothing can be decided until it has come to a decision on the general issue of the GGB? Why did this issue not arise earlier given that advisers from the Minister's Department, the Department of Finance and outside agencies were involved in the project all along? Why was it only at the 11th hour that this issue arose?
Is it the case that the State finances are in such disarray that projects such as the Cork School of Music cannot proceed? The Minister said a ruling had been given on the bundle of five schools. Will he inform us of the nature of that decision? Is EUROSTAT happy or unhappy with the way those five schools have been built? This is the first time I have heard of this specific ruling.
Has the Minister anything to say to the students, teachers and other staff in Cork who have been left in limbo in this regard? Is he not concerned about the impact it is having on the city of culture project as well as the longer-term tradition of music teaching in the city?
Deputy O'Sullivan has indicated that Senator Brendan Ryan will take the Labour Party slot on this issue.
I thank my colleague, Deputy O'Sullivan. I was on strike last Thursday so I will have saved the Minister a day's salary - I am a member of the staff of Cork Institute of Technology.
The Minister's Department persuaded my colleagues in the school of music to move to a less than congenial building across the river to facilitate this project. Good teachers gave up poor accommodation to move to worse accommodation because of assurances given by the Minister's Department. Only one question needs to be asked and answered honestly. What is the Department's proposal for the Cork School of Music next September and the following September when or if there is no approval for this building? The existing facilities are unworkable and the degree of discomfort of students and staff is a direct consequence of their believing the Minister's assurances. What is the Department saying now to the students and staff of the school of music? Is it saying that the school should close or that the students should endure the worst accommodation in which any students could be asked to work?
This is not a project that was at a preliminary stage. I would like the Minister, for future purposes, to give us one answer to the following question. At what stage can anyone now believe the Department of Education and Science when it says that a project is approved? Must we wait until the builders are on-site before a project can be approved? What is the future now? Why did the Department request the people in question to move out? When can we believe the Department in future?
The Minister is in a lonely position.
He is not. Eight of us are present to support him.
Is the project proceeding? If it fails, 3,700 students will be without a school and the taxpayer will pay for it because Jarvis has indicated that it will sue if the project proceeds and its expenses are not covered. It highlights the problem with the public private partnership model. I have spoken to the Minister about the difficulties surrounding this issue. It is not the way forward and, surprisingly, I appear to share that view with the Department of Finance. There are a number of suggestions if the Minister is stuck for funding, such as bonds, and these may arise in the Estimates. It is an area that certainly needs to be examined.
The difficulty in this case appears to be that the students and teachers were requested to move out of the school to a temporary building, and hotel rooms have been used as well. The reality is that they moved out of the old school at the behest of the Department and have suffered for the past two years wondering when and if the new school will be built. If it is not built, how will the school be affected, especially in the year of culture in 2005, to which others have referred?
I will take very brief comments from the four Cork Deputies present. Senator Dardis is present to represent Senator Minihan who is indisposed and sends his regrets. He very much regrets that he is unable to attend this meeting.
I acknowledge the hundreds of millions of euro the Department of Education and Science has invested in University College Cork and the Cork Institute of Technology in the past five to six years. The Minister was in Cork recently to lay the foundation stone of another development in the CIT.
The Cork School of Music is a vital part of the infrastructure in Cork. It was a vital plank in obtaining the status of city of culture for 2005. I am not concerned about the city of culture, rather about the thousands of students who are unable to attend their classes in proper conditions. I appeal to the Minister to find some mechanism to progress this project. Are there any legal implications if the project does not proceed given the work done already by contractors under the public private partnership?
I apologise for Senator Minihan's absence which is due to illness. I will not repeat what has been said and will highlight a slightly different issue. I do not understand how a Government decision in June 1999 which led to a contract in March 2001 comes within the remit of the Stability and Growth Pact because it appears to pre-date it. Perhaps the Minister will comment on that.
There is the wider question of the relevance of this matter to the concept of public private partnerships of which I am an enthusiastic supporter. This project has wide implications for the concept. Will the Minister give the committee a precise timescale as to when this matter can be resolved? I do not understand how young people, especially those learning music, can be taught in hotel bedrooms and other unsuitable places. How can we have a pretence to describe Cork as a city of culture in 2005 if a music school is not located there?
I am not a member of this committee but I came here to support the efforts of colleagues to try to progress this matter in some way. There is major unrest and concern in Cork, especially given that the students and staff had to vacate an old building on the assumption that when they returned, it would be to a modern, purpose-built school of music. As has already been outlined, students are being taught in hotel bedrooms, houses and bed and breakfast accommodation throughout the city which are being rented to try to make space available to children studying in the school of music. The school is an integral part of the city and I am aware the Minister is conscious of that and of the pressure coming from Cork through public representatives and other voices to try to ensure that this project is progressed.
The Department of Education and Science monitored this as it went through the tendering process. Was the view not formed at any stage that the Department of Finance opposed public private partnerships? In this regard, is there a cost implication to the Exchequer if this tender does not proceed? What will happen in that case to the 3,700 students in the school of music?
I support the views expressed. There is great disappointment because there was great expectation. Significant disruption is being caused to 17 and 18 year old students who are being taught in different locations throughout the city. That is very unsatisfactory. We all thought this item was off the agenda. The Minister knows our views; we are asking that this proceed as quickly as possible, even with all the impediments that are there. It is not just about Cork as there are students from all over the country there. Anything that can be done or any support we can give will be given but this should proceed as quickly as possible.
I am not a member of the committee but I appeal to the Minister to vigorously contest any involvement by EUROSTAT not just in this project but in our national development plan in general. We will be in trouble if that is not contested. Cork will be the European city of culture and as a former lord mayor of the city I believe it is critically important not just for that event but for the future well-being of all new musicians in the whole region, not just in Cork city and county. I appeal to the Minister to take every possible action to ensure this goes forward immediately. A specific building programme is required.
Like Deputy Kelleher, I want to know what the options are. The Minister should spell out the options if this does not go ahead. The students cannot be left in hotel rooms and the union involved has already agreed its members will no longer teach after September if they are left in those conditions, which are probably unhealthy and unsafe.
Despite what people may think or say, none of us is at odds with our desire to advance this project as quickly as possible. However, there is no easy way around the realities we face. There is no point in me, or someone else, coming in here and saying this issue can be resolved easily or giving timescales I cannot stand over. I reiterate that I and my Department are committed to this project but we have to find a way forward, which we have not yet managed to do. Discussions are ongoing between ourselves and the Department of Finance as well as at European level.
The committee set up to address this matter has met twice and is scheduled to meet again tomorrow. Regarding the GGB, this was initially raised with us in December and the Department of Finance issued a circular letter in February about the effect on the GGB and how PPP projects were supposed to be taken into consideration. That arose on foot of a query from our Department on the National Maritime College but more particularly because of the bundle of five second level schools that went through the PPP process. Those were returned by the CSO as being on balance sheet and therefore affecting the GGB. That ruling or decision highlighted the issue for the Department of Finance and my Department.
We as a Government do not particularly agree with the ruling made regarding the GGB but we must operate within the rules. That is why we are working locally and at European level to try to change it. We have a real difficulty as a country and the Government would have said on a number of occasions in Europe that our debt-GDP ratio is well below the European average of 59% - we are at 34%. Obviously we are behind in the race on infrastructure and we should be given more flexibility and freedom. However, we cannot do that unilaterally - we must get agreement from our European colleagues and we have been trying to do so.
The Cork School of Music will currently be treated as part of our GGB if we go ahead with it. That is the difficulty we must address. I was asked why this was allowed to go on for so long before being called to a halt this year. The ruling on the bundle of schools came late in 2002 and the CSO advised EUROSTAT, which acted independently - it is an independent body - and we are at the current stage as a result. Members asked why this did not arise earlier. The Department of Finance was represented on the committee which dealt with PPPs and was aware of everything we were doing through all the stages. However, at the end the GGB issue came up.
I accept what Members are saying in relation to the current situation, which is far from satisfactory. Already approximately €1.5 million has been spent on refurbishing the accommodation the school of music is currently using and another €1 million is to be spent this year. Members say it is not suitable for music, which I accept, but it is not unsafe, as some have said.
Deputy O'Flynn asked about the legal implications of not going ahead. Without being smart, there is only one place that will be decided, in the courts, if it gets to court. As the Deputy knows, one can get as many legal opinions as lawyers. I do not know what the legal implications are and there are different interpretations——
Is there legal advice?
There is, but the Deputy will appreciate I am not going to make that advice public with a case pending.
As for the relevance of this issue to PPPs in general, I am a great supporter of PPPs in general, as Senator Dardis knows. I pushed them as much as I could when Minister for the Environment and Local Government. To put this in layman's terms, if the current ruling remains, one would have to have an almost complete risk transfer from the public to the private sector for it not to affect the GGB. That is my understanding of the ruling. If this project were to start some time this year, the students and teachers would still be in temporary accommodation for the next two to three years, which is obviously being taken into account. We have been in close contact with CIT regarding temporary accommodation in September this year and next year.
I do not want to contemplate this project not going ahead but I have to stay within the rules. To put it bluntly, as things stand if the rules remain as they are and I want to go ahead with the Cork School of Music I would have to take €60 million from the first, second or third level budget to proceed with that project. Sums of that order are not available to me.
Perhaps that is the best note on which to finish. The select committee will reconvene at 12.15 p.m. sharp as there is a vote at about 12.30 p.m.
The joint committee adjourned at 12 noon sine die.