Vol. 562 No. 5
222 Mr. Stanton asked the Minister for Finance the way in which the problem with EUROSTAT regarding the funding of the PPP of the Cork School of Music has arisen; the members of the EUROSTAT group which is currently reviewing the accounting rules and of the standing committee which he has or will establish to advise on the general Government balance implications of private sector financed projects; and if he will make a statement on the matter. [6784/03]
EUROSTAT is part of the EU Commission and, as such, is independent of member states. It is the statistical agency of the Community and exercises particular functions under EU regulations in regard to establishing and applying the accounting rules which govern the treatment of the general Government balance. The question of how public investment projects funded by the private sector impact on the GGB is one that is determined in this way. The CSO works closely with EUROSTAT in interpreting these rules as regards Irish projects. Both EUROSTAT and the CSO are bound by the same EU regulations when deciding whether a particular PPP project is outside or inside general Government. My Department, in conjunction with the CSO, makes returns to the EU of the GGB. This measures the net budget situation all central and local government and public bodies funded by the Exchequer.
One of the general principles underpinning the EU regulations which define the rules governing general Government is that if a deferred financing investment project, for example a PPP project, is funded by user charges with no Government funding, and transfers the main risks to the private sector, the upfront capital costs are not counted as part of Government spending. If the financial charges on a deferred financing project are funded by the Government with little risk to the private sector, the upfront capital costs are counted as part of Government spending during the period when the spending on the project takes place and thus become part of the calculation of the GGB in that period. The capital costs of the bundle of five PPP schools which is funded by Government over a period of 25 years were regarded by EUROSTAT as a charge against the GGB over the construction phase. Any further deals structured on the same basis will also come within the general Government balance during the construction phase.
