The Minister of State has an opening statement.
National Development Finance Agency (Amendment) Bill 2006 [Seanad]: Committee Stage.
The basic legislative provisions for the State authorities to undertake public private partnerships, PPPs, and for the establishment of the National Development Finance Agency, NDFA, are already in place. This amendment Bill extends the existing powers of the National Development Finance Agency to allow it to provide a centre of expertise for procuring PPP projects on behalf of State authorities to facilitate the procurement of PPP projects funded by a stream of annual payments from Votes. Those authorities have already the vires to procure PPPs. Existing procurement arrangements in the transport and environmental areas are not affected.
The measure should improve the capability to manage PPPs by centralising expertise and experience of negotiation of contracts. Enactment is critical to allow the NDFA to sign contracts in the first half of 2007.
Capital investment takes place under a framework of delegated sanction under which primary responsibility for project selection, assessment and evaluation rests with the sponsoring agency. PPPs, like other capital projects, are implemented within this framework and subject to the value for money measures. This is the best way to inculcate a culture of value for money across the system and it is fully consistent with the concept of delegation from the centre which is a key part of the public service modernisation agenda.
Sections 1 and 2 agreed to.
NEW SECTION.
I move amendment No. 1:
In page 3, before section 3, to insert the following new section:
3. — Section 3 of the Principal Act is amended in subsection (1) -
(a) by deleting “and” where it last occurs in paragraph (c) and by substituting “public investment projects,” for “public investment projects.” in paragraph (d), and
(b) by inserting the following after paragraph (d):
"(e) to enter into a public private partnership arrangement with a view to transferring the rights and obligations under such an arrangement to any State authority,
(f) to act as agent for any State authority in connection with the entry or proposed entry by that State authority into a public private partnership arrangement, and
(g) to publish, or cause to be published, the assumptions underpinning the cost-benefit analysis conducted on any public investment project before any agreement in respect of that project is finalised.”.”.
I welcome the opportunity to move this important amendment and look forward to the Minister of State's response. Section 3, as it stands, states:
(b) by inserting the following after paragraph (d):
"(e) to enter into a public private partnership arrangement with a view to transferring the rights and obligations under such an arrangement to any State authority, and
(f) to act as agent for any State authority...
Our amendment proposes to insert a third subsection as it is important to be able to see the cost benefit analysis of any project. I believe the Minister of State will accept this amendment because he went half way down the road in his opening statement where he said:
Capital investment takes place under a framework of delegated sanction under which primary responsibility for project selection, assessment and evaluation rests with the sponsoring agency. PPPs, like other capital projects, are implemented within this framework and subject to the value for money measures. This is the best way to inculcate a culture of value for money across the system and it is fully consistent with the concept of delegation from the centre which is a key part of the public service modernisation agenda.
In other words, the Minister of State has said it will be important to have a cost benefit analysis and for the State body concerned to prepare and make available such an analysis. We are simply adding a little extra but stating that the cost benefit analysis should be made public. Is it not reasonable to expect that he who pays the piper calls the tune? "He" in this case is the taxpayer who should be able to analyse the cost benefit analysis. It should all be out in the open. What is there to hide?
The clerk and my colleague, Deputy Nolan, may well smile but we recently visited New Zealand where we looked at the operation of the Freedom of Information Act there, the question of projects, etc. New Zealand's economy is very similar to ours. It has approximately the same population as Ireland, although it has a larger landmass. However, cost benefit analyses, back-up information on projects, etc., are all published on a website. They are available for the public to analyse.
We met civil servants in New Zealand and asked them how they dealt with the fact all this information is published. They said they were delighted that happened because it gave them the opportunity to put into the public domain what they thought about issues. One could see the real work of a Minister which is to make a decision on whether a project should proceed.
The Minister of State has gone half way down the road but let us go the whole hog.
That is a bit rich coming from someone from a party that does not even give the results of its own selection conventions.
We do. If Deputy Finneran wants to go down the road of selection conventions, he should hold on.
We will stick to the legislation.
Deputy Parlon should be aware that Deputy Finneran would open some can of worms. Midnight meetings in smoke filled rooms with somebody standing up at the beginning of a convention stating that he or she proposes that a Deputy be returned automatically without having to put his or her name forward is not very democratic.
On a serious note, it is important these cost benefit analyses are published because we should analyse them. There should be far more debate about PPPs. I refer to the PPP for the five schools about which I believe I heard the Minister of State speak on an occasion. It transpired that the taxpayer got bad value for money in regard to that PPP because the report on it, which was subsequently published, stated it could have been done more cheaply by building the schools in the ordinary way. That is something about which we should be careful.
A PPP project with which I am very familiar is the N4 and which I believe the Minister of State uses on a regular basis. We must be conscious of what happened there. It is a great road and was a great project. It is operating extremely well and there is never a queue at the barrier. I refer to the breakdown of that project. It would be like me telling the Chairman I had a good project in which he might be interested; asking him to invest 65% of the money to start it off; telling him I would put up the remaining 35% and manage the project; asking him for at least another €600 million over the next 30 years; saying if there were any profits out of the €600 million I would put them in my pocket and that at the end of 30 years, we would discuss it and see what we would do. That is exactly what happened with the M4. If there are any profits out of that €600 million, I will put them in my pocket. At the end of 30 years we will come back, discuss it and see what we will do. That is exactly what happened on the M4.
Is Deputy McGrath against the motorway?
The motorway is in place. That is exactly what happened. The taxpayer put up 65% of the initial cost, the company, Ferrovial, that built it put €40 million up front and borrowed €150 million, the taxpayer will pay a further €600 million into the scheme on the basis of last year's volume of traffic and last year's costs, which have been increased, while Ferrovial will take all the profits. At the end of 30 years we will see what will happen. I will be clairvoyant and tell the Minister of State what will happen at the end of 30 years.
Deputy McGrath will change his mind and run again in Westmeath, as Deputy McGinley did.
The ink is not yet dry on the promise that was made. When the ink is dry, if I am assured it was not photocopied, perhaps I will consider it.
He will be Minister for Transport in the next Government.
Let me finish the point. In about year 20, there will be a large volume of traffic on the M4 and the company will negotiate with the Government to enter into an agreement to transform it from a four-lane to a six-lane highway. They will widen the road, enter into a new PPP involving additional costs, as was done with the M50 bridge, following which the company will make a deal of money for another period.
It is in line with the national development plan.
I would make two criticisms. Why was money from the National Pension Reserve Fund not used? If what followed was akin to Ferrovial's experience, there would have been a good return on it. We made provision that at least €450 million of that fund could be invested in PPPs and, as the Chairman will be aware, we have invested nothing in them. Why did the Minister not take on an excellent project like the M4, which is successful and on which Ferrovial will thrive over the next 30 years because the poor taxpayer, who put in most of the money, will continue to pay?
Returning to the original point, it is important that there be open, transparent accountability in these projects and how better to achieve this than to publish the associated cost benefit analysis. A Minister would probably use the fact that the results of the cost benefit analysis were not good, but he or she would not publish it. He can make reference to, but not publish, it, hiding behind the clouded glass.
I hope the Minister of State will accept this amendment. As I stated at the outset, he came in with a lift in his step and he wants to portray himself in Laois-Offaly, particularly with the Chairman biting at his heels, as an open, broad-minded man who has the consideration of the taxpayer at heart and who knows what is best for the nation. In that context, I hope that he will be magnanimous and accept my party's amendment.
Before the Minister of State responds, Deputy McGrath has given an open transparent analysis of the financial arrangements of the M4 and, based on what he told us, there seems to have been good arrangements for all of that to come out.
No. All of that information took a great deal of gathering by all sorts of means.
It is out there anyway.
I am gobsmacked. I am quite hopeful that, having bowed out, Deputy McGrath will throw his hat back into the ring again.
Will Deputy Parlon make me an offer from the Progressive Democrats? That would be tempting.
My party has not yet dropped to that degree of desperation.
We could raise the number of seats his party will come back with from one to two.
My party has a perfectly good candidate in Deputy McGrath's constituency, as he will be aware, and I am sure she will pick up many of his votes.
Does Deputy Parlon want to put €50 on it?
As noted in the Minister's response to the debate on Second Stage, a number of issues have been raised in connection with this Bill that are appropriate to guidelines rather than particular to the legislation before the House. This amendment is yet another example of this.
The publication, as may be appropriate, of information relating to project appraisal such as cost benefit analysis is properly dealt with in guidance rather than legislation, not least because the decision to release or otherwise is time-sensitive in terms of the public negotiating position in competitions. Cost-benefit analysis, like public sector benchmarks, may contain commercially sensitive information which, if published, could prejudice the State's capacity to get best value for money in the procurement of capital projects, and any decision in this regard must be carefully considered and the circumstances may differ from project to project.
Second, cost benefit analysis, like other aspects of project appraisal and assessment is a matter for the sponsoring Department or agency concerned in the first instance, not the National Development Finance Agency. For both traditional or PPP projects, it would not be appropriate or consistent with the management arrangements in place for capital spending to give the National Development Finance Agency a function in this regard. I do not propose to accept the amendment.
Did I hear the Minister of State correctly? Is he indicating that he himself would favour it and it may be contained in the regulations? Is he saying that it might be appropriate for such a thought to be contained in the guidelines?
Deputy McGrath's party wants to expose the State's hand when it is involved in negotiations. Is that what his party proposes here?
Yes. It should be, before the State decides whether or not to go ahead. We can see that an iron curtain has come down around the publication of all information. We saw the way that the Freedom of Information Act was curtailed and shut down by this Government.
That is not true.
What the Government did in that case was a disgrace, as Deputy Finneran will be aware.
I would not like to send Deputy McGrath to the fair to sell a few ewes.
Is the Minister of State hinting that the guidelines that will follow will contain an indication? The Progressive Democrats are anxious to achieve value for money. Perhaps the Minister of state would state if he wishes that there should be some release of information, if not before the project is agreed then immediately afterwards. Would the Minister of State concede on that?
I was precise in stating that it is more appropriate to the guidelines than to the legislation. Of course the primary concern is to ensure that the State gets best value for money by protecting the negotiating position. If Deputy McGrath was selling ewes at a fair, rather than state his bottom line or that he had no grass to which to bring them home, he would talk it up as he is good at doing. From that point of view, it is common sense.
Deputy McGrath referred to his trip to New Zealand. As happens with many trips, people do not bring home the full story. We have been in contact with our counterparts in New Zealand who have advised that a cost benefit analysis is required for significant capital investments in New Zealand but they are not routinely published.
They are routinely published when the project has commenced.
Not in all cases. The New Zealand Treasury also advised that these cost benefit analyses could be released as a result of a request under their official information Act.
It could be released under freedom of information.
Their official information Act also provides grounds for withholding information. Such grounds include that the release may prejudice the proper exercise of the New Zealand Government's commercial affairs. They have the same safeguards as we have,——
They have not. They are far more open and transparent.
—— both in the Freedom of Information Act and in good sense in protecting the negotiating stance.
Once the project is under way, they release them. As a matter of course, they are put on the website. Some of them are released beforehand but, as a matter of course, all are afterwards.
I possess a report from the New Zealand ombudsman that I can give the Minister of State. We met him. He might be inclined to go a little far in areas. He was, however, extremely impressive.
Where projects are truly unique or once off in nature, it may be possible to publish the cost-benefit analysis relating to them when the capital assets have been delivered. This could only be considered at the time and in the context of the details of a specific project. We are not saying it will never happen.
I am reminded of a particular song from the Gilbert and Sullivan opera, "HMS Pinafore", in which Captain Corcoran asks "What never?", to which the Chorus replies "Hardly ever!" In the song in question the Chorus also highlights the fact that he is a "right good captain," to which he replies that he is "never, never sick at sea."
The Deputy has lost me completely.
The Minister of State is not saying never; he is saying hardly ever.
Perhaps the Deputy might give us a flavour of the song to which he refers.
Amendment put and declared lost.
Question, "That section 3 stand part of the Bill," put and declared carried.
Sections 4 to 13, inclusive, agreed to.
Title agreed to.
Bill reported without amendment.