Wednesday, 27 March 2019

Questions (46, 47)

Oral answers (21 contributions) (Question to Communications)

The first question is in the name of Deputy Dooley, who has 30 seconds to introduce it.

Was it wrong to have grouped the answers to Deputy Dooley's and Deputy Stanley's questions together?

Priority questions can be linked.

I am sure Deputy Stanley will not object.

I have no objection to what the Minister is saying.

The first Member who tables a question gets the 30 seconds to introduce it. Deputy Stanley is deprived of that under Standing Orders.

That is okay. I will forfeit the 30 seconds.

Deputy Stanley and I are good friends so we will not fall out over stuff like that.

Timmy Dooley

Question:

46. Deputy Timmy Dooley asked the Minister for Communications, Climate Action and Environment the process by which the decision to proceed or not with the national broadband plan will be taken; and if he will make a statement on the matter. [14175/19]

View answer

Brian Stanley

Question:

47. Deputy Brian Stanley asked the Minister for Communications, Climate Action and Environment the progress with regard to completion of the tender for the national broadband plan; and if it is decided not to progress with the tender, the alternative course of action being considered. [14277/19]

View answer

This question concerns recent comments made by the Taoiseach on the national broadband plan. We understand from those comments that a recommendation will be brought to Cabinet before Easter. Thereafter, the Oireachtas will be consulted on whether the national broadband plan as it is currently constituted will go ahead. Can the Minister confirm this, and perhaps enlighten us as to what is the overall thinking of the Government and the Taoiseach in this regard?

I propose to take Questions Nos. 46 and 47 together.

First I will put the Deputies in the picture. They are well aware of the position of the national broadband plan. Since its inception it has driven very significant private sector investment, as it was intended to do. When we entered Government in 2016, 50% of premises had access to high-speed broadband. Over the past five years commercial development has led to investment of €2.75 billion in upgrading, expanding and modernising the networks. We are now in a position where 74% of premises have high-speed broadband. Despite that substantial progress, more than 1 million people and 100,000 enterprises, mostly in rural areas, are unlikely to receive this vital service from the private sector. These are mostly located in the more remote, dispersed and harder to reach areas in rural Ireland, which encompass 96% of our landmass. The challenges involved in providing high-speed broadband network in Ireland are significant due to the dispersed nature of the rural population.

As for the present plan, I note we have received a final bid from the tenderer. That is undergoing due diligence in my own Department with the involvement of the Department of Public Expenditure and Reform. I intend to bring a recommendation, as the Deputy said, to Cabinet before Easter. What happens after that will obviously depend on the Government's decision, but if a decision is being made one way or the other, we will obviously consult with the Opposition and the House at large. How that will be done will be decided as part of the decision.

While I accept the Minister's response, the second part of it is somewhat problematic because of the information available to the Oireachtas. We have had no role in this tender process to date, notwithstanding my best efforts and those of many others to elicit information along the way. We understand that the bidders' initial requirement was a clear position that the State would invest €500 million. SIRO and Eir cited their failure to develop a business case on that basis and as such did not proceed with a tender. We now understand from utterances of the Taoiseach that the cost will run to many multiples of that, possibly as high as €3 billion. That raises serious questions about how the Government can proceed with a project with an entity that went ahead and bid €3 billion when others were told that moneys like that were not available and pulled out of the race. There are issues around competency and whether this is the appropriate way to proceed. There are also issues regarding the role of Eir in providing broadband to another 80,000 premises, and perhaps that of Imagine, which has announced plans to cover 400,000 premises. The Minister expects the Dáil to make determinations on a lot of questions but we have been provided with no information along the way.

It is somewhat disingenuous of the Taoiseach to suggest he will let the Dáil be the final arbiter on a tender process into which we have had no input whatsoever.

The Taoiseach has been clear that the Government fully accepts responsibility for making a decision, but he has also signalled that a decision of this nature would bind future Governments. There would obviously be a significant period between the appointment of a preferred bidder and the signing of contracts and the Taoiseach has indicated that he would provide the opportunity for the Oireachtas to be consulted on it. I intend, depending on what decision is taken, to make full and extensive information available to Deputies for them to evaluate. As the Deputy knows, we have had debates here during which I have been at pains to point out that the issues being raised by Deputies such as the robustness of the technology, the adequacy of the governance arrangements, the way in which this issue is being scrutinised in view of the fact that there was only one tender left standing have been the subject of immense due diligence and detailed work by the Department. When I am in a position to bring forward a recommendation, one way or the other, it will be after the completion of the work the Oireachtas is very keen should be done. We intend to make information available to the House at that point, but I recognise that it is my responsibility to bring a recommendation to the Government having completed the scrutiny. I am very aware of the concerns the Deputies have raised.

My question relates to the completion of the tender process and the options if the State decides not to go ahead with the current tender process. In 2012 Sinn Féin brought forward a proposal that we use the State and semi-State infrastructure already in place, in particular the ESB and metropolitan area network, MAN, systems. A strange thing happened over the weekend. The Taoiseach and leader of the Minister's party said on Sunday that we could not use the ESB pole infrastructure for this purpose. In fact, he said we could not use poles at all, that it all had to be underground, even in rural areas. If that is the case, the ducting will have to be run underground as far the Black Valley in County Kerry, but it is not the case. I do not know who is briefing the Taoiseach. Is he not aware that Eir is already using poles? Is he not aware that the ESB is already using poles to hang SIRO broadband fibre cables? Let us try to put that notion to bed. It raised significant concerns for me when I heard the Taoiseach talking about it at the weekend. There are question marks over whether the Government and the Taoiseach fully understand the entire process. There have been four Ministers involved in this process and it looks farcical from the outside. We have one bidder and costs that have gone from €500 million to €3 billion. The Government has no bargaining power. Does the Minister honestly believe this is still a competitive tender process? Is the real story not that the whole project is in serious trouble?

The project was opened for a competitive dialogue at the end of 2015. Contrary to what the Deputy said, there was not a financial framework imposed by the State. There was no indication as to what the framework would be. It was a competitive dialogue because it had been designed to ensure we would have the best technology-----

The best technology available at the time.

-----to meet the 100% target set by the Government. State enterprises such as the ESB did enter the competition, but, as we now know, it withdrew. The process had been very competitive until the point at which it was decided that the remaining competitors would withdraw. At that point, an additional approach of scrutiny was put in place by the Government to ensure that, even though there were no longer separate bids, the issue of value for money could be properly evaluated. It has been put in place and outside consultants have looked at a range of costs and tested the various assumptions, projections and submissions made by the tenderer. When I come to make a recommendation, albeit there is only one tender standing, it will be on the basis of a tender which has been scrutinised, with all proper due diligence. It has been a robust process. As the Deputy has indicated, the issue is that this is not cheap. We will have to make a decision on whether we want to go ahead with it.

The Minister indicated that, because the lifetime of the project would potentially traverse a number of Administrations, he would seek the views of the House. Most big infrastructural projects have the capacity to be a burden on the State which runs beyond one or two Administrations and it is not always necessarily the case that the Government comes back to the House.

The Minister also indicated that there will be an interregnum between the appointment of the contractor as a preferred bidder and the signing of the contract. Will he give some indication as to the timeframe he sees between identifying a preferred bidder and the signing of the contract?

The Minister said it had started out as a competitive process. I was here for all of that time and followed it day by day. That is correct. However, it is not now a competitive process and it does not matter what scrutiny process the Minister's Department puts in place, or what consultant comes in to undertake it, the Government is still at the mercy of that one bidder. That fact seems to be completely lost on it. It will be tied to this one, privatised model and one particular company. The cost has escalated many times over, if the Taoiseach is telling the truth. Britain has found that over one third of its public private partnerships are renegotiated within a five-year period. Will there be a further escalation of cost in the course of the contract if there are renegotiations?

The Minister has referred to the number of places, houses and businesses now connected as opposed to the number three years ago. That is in spite of, not because of, the broadband plan. The Department and the broadband plan had nothing to do with it. Eir cherry-picked the households which were easiest to reach throughout the county.

Deputy Stanley is simply wrong. The previous Government decided that 750,000 premises would be included in the intervention area but Eir decided that it did not want to let it go. Therefore, it committed to making an investment that would deliver a service to 300,000 homes. That was its right under the state aid procedure.

It is now €40,000 more expensive.

The Deputy needs to understand it is an obligation of the State that a commercial bid from a private company has to be granted. That stimulated Eir to come in with a commercial proposition.

To answer Deputy Dooley's question, the period between a preferred bidder being identified and the finalisation of the contract will be several weeks. This is a 25-year contract to build and operate a broadband network. There will always be one operation doing it and part of the contract is to look at a number of costs that will have to be incurred over a 25-year period and the take-up during that 25-year period which will have an impact on the revenue received by the operator. This will always involve the due diligence and scrutiny we have undertaken because an individual company will have to be selected to deliver the process and effective governance will be needed having undertaken due diligence ahead of the process.