Enda Kenny
Ceist:8 Mr. Kenny asked the Taoiseach if he will report on the recent work of the cross-departmental team on infrastructure and public private partnerships; and if he will make a statement on the matter. [13153/02]
Ceisteanna – Questions. - Public Private Partnerships.
Since I last reported to the House on 26 June regarding the work of the reconstituted cross-departmental team on housing, infrastructure and public private partnerships, the team has met on three occasions. As the revised title suggests, the remit has been expanded to include housing, which was previously dealt with by a separate Cabinet committee and team. The cross-departmental team has been giving consideration to the housing issue as well as continuing to focus on the key infrastructure priorities of roads and public transport, especially in the greater Dublin region. The national development plan is now nearing the end of its third year of implementation. Excellent progress has been made so far, especially in regard to the scale and nature of accumulated infrastructural deficits the plan was designed to tackle. The emphasis now must be on maintaining an appropriate momentum on the NDP infrastructure objectives over the remaining lifetime of the plan. That momentum will need to be aligned with the many other national development objectives the Government is pursuing.
Over the coming months the team will continue to consider the issues involved, particularly in light of a number of studies at or near completion, most notably, in regard to roads, public transport and housing. Funding issues are receiving attention and will continue to receive attention in the context of the ongoing process of framing options and proposals for Budget 2003.
I know this is an interdepartmental committee chaired by the Taoiseach's Department. In that context is there any intention of using funds from the National Pension Reserve Fund for key infrastructural projects? Second, will the Taoiseach indicate whether it will be capable of completing the national development plan and why there is such public disquiet about certain projects being shelved and certain projects being dropped? Third, has the committee examined and made progress on the question of public private partnerships for major projects? In view of the failure of the public private partnership scheme to operate effectively in the past five years, why is it now being promoted so strongly?
On the first question, the National Pension Reserve Fund has statutory independence. It would be desirable if it invested some of its resources—
It lost half a billion euro so far this year.
—in the infrastructural programme. However, it must be based on its assessment and the return for the fund. Perhaps the National Development Finance Agency will help to stimulate interest in this regard. It is a matter for the fund to make its own judgments. It is completely independent of the Minister for Finance, the Government and this House in making commercial decisions because it must protect its money and the people's money.
I have been saying for approximately the past year and a half that it will be difficult to fulfil all the projects within the national development plan. However, reflecting the importance the Government attaches to infrastructure investment, particularly from a competitive perspective and coming from the current base, the provision for the national roads network over the period 2000-02, for example, has exceeded the forecasts of the national development plan by more than 10%. In real terms this represents a very high level. However, we have not got the same in capacity terms because of construction price inflation about which we have spoken on many occasions, planning delays, the land difficulties which took months to resolve, capacity constraints and Exchequer funding shortfalls. For these reasons as many projects as we would have liked have not been delivered. While there has been a diminished unit of output per euro of investment relative to the original planned output we hope that will improve. This year there is a considerable easing of capacity constraints and a significant moderation of construction price inflation which will give a good opportunity to achieve better value for money compared to last year and the previous year.
On the third question, the NRA is looking at many options to see how it can best use public private partnerships to move forward some of the existing projects. Given the efforts of the Minister for Transport, I hope new projects and ideas will be found. However, I do not think it is feasible that all the projects will be fulfilled within the timescale.
Is it not a fact that the national development plan has been grossly underestimated in terms of cost? Is it not a fact that the National Roads Authority has already said openly that a long list of projects that were due to be completed, or certainly commenced, in the next five years will not now commence? What is the position, in so far as the Minister for Transport's statement is concerned, on the bringing in of major international contractors to build large sections of roadway? Do the costs envisaged in the national development plan take that into account? This is being opposed strongly by business in Ireland.
There are many projects in the pipeline. That is good because one of the functions of the committee and the Ministers and officials who serve on it is to gear up the State agencies and statutory bodies and to be in a position to have the planning, land acquisition and technical work done so that, as resources become available, projects can be commenced. That has proven to be very beneficial. It would be nice if there were considerable resources so we could start on projects as soon as they are finished the preparatory work. That is less realistic than it was a few years ago.
The NRA is still spending more than €1 billion per year on road construction and there are 28 major to significant projects under construction. That is an enormous amount of money. This year, large amounts of money are available for planning and design. That is helping the work that is taking place. As I said, the NRA has said it will find it difficult to complete all the projects. I accept that, but taking account of public private partnerships on some of the roads, perhaps we will be able to use the National Development Finance Agency to finance more projects in the future.
The difficulties that were encountered from 2000 to 2002, which was the first period of the plan, were not due to the inadequate release of funds but to a diminished unit of output per euro of investment relative to the original planned output. Deputy Kenny is correct in saying the figures were higher than we envisaged. They were higher because of construction price inflation. As Deputy Howlin well remembers, he pressurised me continually, and rightly so, to come to a conclusion on the land issue. We did, but at an excessive price, which put a fair hole in the budget. We are lucky it took only a year given the kind of money that people were seeking for their lands. Other capacity constraints and non-Exchequer funding shortfall comprised the reasons. We all know the tender prices for the past few years were exorbitant and that they were higher than we expected. That has moderated dramatically, which allows us to obtain better value for money.
Arising from the Taoiseach's responses, and trying to cut through all the jargon and verbiage we have heard, I have a number of related and direct questions. In respect of the National Pension Reserve Fund, does the Taoiseach acknowledge that we are now borrowing €1.5 billion and paying top dollar to borrow money to invest in the stock markets in a period of collapse and that we have lost half a billion euro in the process this year?
Is it not a fact that the roads programme is now €6.8 billion greater than the target required to build the roads proposed in the national development plan? Is the Taoiseach aware that in its report to Government the expert high level com mittee which monitors the plan expressed shock at how wrong the budget projections were?
My next point concerns the 14 roads projects. The Minister for Transport has said it cannot be funded from the moneys available to him. Will the Taoiseach give a commitment that these projects will be funded and, if so, will he indicate how?
The board established under the national pensions legislation is independent and I cannot answer for its decisions.
Does that mean that money is simply provided?
The board will make its investment decisions in line with the provisions of the legislation and it will undertake its functions as prudently as possible. We cannot interfere with the board.
That is bizarre.
It is not bizarre. We passed the legislation and I recall the Deputy agreed with it. At present a sum of €2.488 billion is being spent. This compares with the NDP forecast of €2.224 billion. It is a very high level of expenditure and it means that more than €1 billion is being spent on roads. More than 200 kilometres of top quality roads are under construction.
What about the shortfall of €6.8 billion?
That would arise if all the projects were to be completed at the same time. That is not realistic.
That is the shortfall.
It would be impossible to commence every road plan in the NDP at the same time. At present, expenditure on roads is at historically high levels. During the past three years of the NDP, perhaps for an even longer period, construction price inflation, planning delays, capacity constraints and non-Exchequer funding shortfalls meant the road programme was not providing the envisaged value for money. At present there is a significant easing of capacity constraints and a moderation in construction activity. In view of this, while I do not anticipate that all projects will be completed within the time period envisaged under the NDP, we will secure better value for money. That is what the committee, the NRA and other bodies involved in implementing the plan are doing.
What about the 14 projects to which I have referred?
The Taoiseach has indicated that not all the projects envisaged under the NDP will be completed and that there will be over-runs as a result of construction inflation. Will he agree that many projects are over-running in terms of budget because the figures used in the NDP are inadequate? For example, when it was planned initially, the Dublin port tunnel was to have been a single bore tunnel with single carriageway whereas it will be completed as a double bore tunnel with a dual carriageway. Will the Taoiseach indicate if the cross-departmental team has obtained revised figures for the projects involving roads, public transport and housing and, if so, will he provide them to the House? Will he indicate if anyone in the cross-departmental team has met the pension fund board and asked it to consider the feasibility of it funding the projects under the NDP?
I did not indicate that project delays under the NDP were solely the result of construction price inflation, I outlined a number of other reasons. An additional 10% of the total moneys envisaged under the NDP will be spent on new projects in addition to those that have already been outlined. When the national pensions fund legislation was debated the hope was expressed that it would invest in projects that would provide a commercial return, in keeping with its remit. Many financial articles and journals expressed the same wish. The board will not invest its funding in what it considers to be loss leaders. Stock market fluctuations will always occur and it is for the board to seek to reverse losses sustained there.
As I chair this committee I do not wish to go into the details of individual projects. However, with regard to the port tunnel, design changes were necessary because a decade and a half elapsed from the time the project was first mooted to when it actually began. Planning and development, design issues, traffic flow and all the other aspects add to the cost over such a prolonged period.
What about the height of vehicles?
That happens in many of these projects. Without talking about any particular project, it is one of the issues addressed in the national development plan. Many of the projects fulfilled through the national development plan are ones first mooted back in the 1950s or 1960s where land was held for development and they could not be undertaken at the time. We have been able to address many of them only in the past three years. The sites required for many of the current projects, as well as those which have been completed, were bought a quarter of a century ago or more. It is to the credit of the work of those involved in the national development plan and to the resources they have used that we have been able to move on these projects that were on hold for over a generation or more.
Is it possible to explain such an excessive underestimate of the costs of the promised major roads programme? It has absolutely shocked people, not only in this Chamber but throughout the State. What methodology will be used to determine the works which will be deferred in the event of consideration being given to a contraction of works to be undertaken in the coming year? Does the Taoiseach recognise that there is great concern, particularly in the provinces, that committed essential works along key arteries such as the N2 and N3 might suffer in any reconfiguration of the works committed? I refer specifically to bypasses of key towns such as Carrickmacross, Castleblayney and Monaghan as well as Virginia, Cavan and Belturbet in County Cavan.
The Deputy should please avoid specific instances that are not covered by the question.
The Ceann Comhairle might have a vested interest in that.
I have no doubt that the Ceann Comhairle will also be concerned about the examples I have quoted—
It is very important, but we must stay within the confines of the question.
I have no doubt that the Ceann Comhairle recognises, as I do, just how important they are and I would be grateful for the Taoiseach's reply.
The intention is that all the projects in the national development plan will be completed. The NRA will have to prioritise and complete them as resources allow. We are spending three times more money now than we did a few years ago on road construction. As resources become available the NRA will roll out the contracts and look at imaginative ways for public private partnerships.
The Minister for Transport is involved in this and I hope the new National Development Finance Agency will also assist. It will take over responsibility for the public private partnership unit of the Department of Finance.
Has the cross-departmental team on infrastructure and public private partnership taken on board the serious concern of many taxpayers that they will fund the major portion of the bill for these joint infrastructural developments and take the major risk while the private capitalists will take the cream with none of the risk in many cases? I believe that the Minister for Transport, Deputy Brennan, will become known as the Minister for privatisation for however long the Government will be in office.
Does the Taoiseach agree that the major example of a public private partnership, the West-Link toll bridge, is an absolute disaster? It is highly profitable for the private company that runs it but hugely expensive for working people on their way to work.
A brief question, please, Deputy Higgins.
It is the biggest obstacle to the free movement of traffic in Dublin. Is the extension of road tolling on a public private partnership basis fundamental to Government policy for all new key roads?
The last part of the supplementary question does not arise from the original question.
It does.
It does not.
It is relevant in so far as the 14 new road projects come under public private partnership and how that concept will be implemented in terms of policy.
It is not a question of the taxpayer or the State carrying the risk in public private partnership because the concept is that the risk is transferred to and borne by the private sector whatever the terms negotiated. Perhaps those terms may not always be as good as one would like, but it is not the case that the arrangement is for all the risk to be borne by the State and none by the private sector.
Tolling is one of the options the National Roads Authority will examine for some roads. While I accept there are design problems with the West Link toll bridge on the M50 over the Liffey Valley, with which the Deputy is familiar, a fair presentation must be made. That was built by the private sector as was the East Link toll bridge. It cannot be said, as the Deputy did, that without the tolls people could drive across without hindrance. If the tolls did not exist, they could not drive across because there would not be a road. That is the way it must be presented.
County councils could have built such roads.
They did not.
Why not?
Why did we not build all the roads on the list? The fact remains they did not. We are endeavouring to avoid proceeding as we did previously and, instead, to find imaginative ways of building roads.
While I accept the Taoiseach's point that many of these projects were designed in the 1950s, does he not agree that we should have examined raising the height of the Dublin Port Tunnel from that which would accommodate lorries from the 1950s? Is it not the case that the Government is providing the funding committed under the national development plan but that projects are not being delivered because the figures have not been revised? Have the figures for the implementation of the NDP been revised and will the Taoiseach furnish them to the House? Is it the case that no one from the Government has approached the board of the National Pension Reserve Fund to see if it will involve itself in public private partnerships? Is it not also the case that the NRA has shelved all but 13 of its road projects due to inadequate funding?
Regarding the updating of the figures for costs, if the Deputy tables a question to the relevant Minister, he will receive the relevant information. The NRA would certainly be revising its figures.
I accept what the Deputy said about design issues and changes. I have heard the arguments about trucks in the context of the port tunnel. I have had to live with heavy goods traffic every day, as has Deputy Richard Bruton, who lives in the same area. Trucks should be reduced in size, not the tunnel increased in height. The argument has been made that trucks are increasing in size because they are becoming more efficient. As far as I am concerned, if they are reduced in size they can use the port tunnel. Already 98% can use the tunnel; the other 2% will have to conform. The height of the tunnel should not be used as an excuse for that 2% to continue to use the public roads as if it were their right to do so.
The pension fund is a matter for the board of the fund. It is aware of this matter and is anxious to invest in projects of a significant size. However, the decision is a matter for the board.
Will the Government ban high trucks from the city centre?
I would favour that. I will have a word with the people involved.