Léim ar aghaidh chuig an bpríomhábhar

Dáil Éireann díospóireacht -
Wednesday, 31 Jan 2007

Vol. 630 No. 3

National Development Finance Agency (Amendment) Bill 2006 [Seanad]: Second Stage.

I move: "That the Bill be now read a Second Time."

I am pleased to bring before the House the Bill, which was initiated and passed all Stages in the Seanad last November. I acknowledge the support received in that House and I look forward to consideration of the Bill by this House. However, I must emphasise this is amending legislation. It 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, in addition to its existing functions. One of the key activities of the NDFA is to advise on the optimum means of financing public capital investment projects within the State sector, including PPPs. The NDFA reports that, to date, it has been asked to advise on more than 100 projects, of which PPP procurement has been considered for more than 60. It completed its advice on 28 projects at the end of 2006, the cumulative value of which was more than €3 billion. The basic legislative provisions for State authorities to undertake PPPs and for the establishment of the NDFA are in place in the State Authorities (Public Private Partnership Arrangements) Act 2002 and the original National Development Finance Agency Act 2002.

The background to this Bill is the Government decision in 2005, following a period of review, to improve the capability of Departments and agencies to undertake public private partnerships, PPPs. The centre of expertise for PPP procurement in the NDFA will facilitate the procurement of PPP projects funded by a stream of annual payments from Votes. This is but one of a number of measures put in place by the Government to secure improved management and delivery of the capital investment programme by Departments and agencies. Others include the establishment of the NDFA in 2003 with a key role in advising Departments and agencies on the optimum means of financing large capital investment projects. Since 2004, a medium-term planning framework has been provided in the five-year rolling capital investment envelopes for Departments, published with the annual budget. My Department issued revised capital appraisal guidelines in 2005 that clarify the delegation, evaluation and accountability requirements of Departments-agencies for undertaking all capital investment projects. All capital projects worth more than €30 million must be subject to full cost benefit analysis and an individual must also be appointed as project manager for all such projects.

I have also recently established the central expenditure evaluation unit in my Department to promote best practice in evaluation and project appraisal and compliance by Departments and agencies with the capital appraisal guidelines and value for money requirements. The Government also undertook procurement management reform resulting in the development of fixed price contracts in the traditional procurement area and capacity building of the public sector to manage these contracts. This period also witnessed the development of improved skills and capacity in procurement agencies such as the National Roads Authority. To help address the issue of planning and legal delays, the Government brought forward the measures enacted in the Strategic Infrastructure Act last year. All these underpin the Government's programme of capital investment, as set out in the recently launched national development plan.

I will outline some background on PPPs generally and then I will go through the specific provisions in the Bill. The overall context for the use of PPP arrangements includes a national framework for PPPs agreed under partnership structures with the relevant social partners in 2001; legislation in 2002 to facilitate State authorities' engagement in PPPs and to establish the NDFA; the inclusion of PPP targets in the rolling multi-annual capital investment envelopes from 2004; and the targets for PPP in the new NDP, under which it is estimated that such partnerships will fund €13.35 billion of plan investment across the economic infrastructure, human capital, social infrastructure and enterprise science and innovation priorities. PPPs are only one means of procurement in the NDP which includes overall investment of almost €184 billion over the next seven years. We have seen the use of PPPs become well established in the roads area, with a steady stream of projects coming through the planning process and reaching the market. Three toll-funded PPP roads are in operation, procured by the National Roads Authority — Kilcock-Kinnegad, the Dundalk bypass, and the Rathcormac-Fermoy bypass.

In the area of environment and local government, local authorities have brought forward a range of projects in water services and housing, both with and without the use of private finance, and are also advancing waste projects. The PPP process is demanding but it has the potential to provide value for money and timely delivery of infrastructure when applied to projects of the right risk, scale and operational profile and when managed by experienced and skilled practitioners. The process is demanding up front in that it requires that the whole life costs and service requirements of the asset being procured be quantified. It involves the negotiation of a contract that, typically, will be of between 25 and 30 years' duration. Our central guidance for State authorities has been updated to take account of our experience of the process as it has developed.

Last year, my Department revised the central PPP guidelines on the assessment and procurement of projects to take account of the revised capital appraisal guidelines issued in 2005, the establishment of the centre of expertise and my recent value for money initiatives. These aim for a pragmatic approach, while maintaining an appropriate level of rigour in consideration of the various steps. A number of formal value for money tests are applied in the process. After a project is identified as suitable for procurement as a PPP, it can take 18 to 24 months or more to reach construction stage but looking back on the experience of using this approach in the national roads programme and in the first PPP projects in the Government's PPP programme, overall delivery times have been impressive.

I refer to the specific background to the legislation. By 2005, deal flow was established in the roads area and in the local government sector. However, progress was not at the pace anticipated in the area of PPPs funded by unitary payments from departmental Votes. A variety of reasons for this was identified and the need for specialised skills and capability to manage this relatively complex procurement process was singled out as a key factor. Finding the most appropriate way to put in place the full range of skills needed for PPP procurement, particularly in areas that lack experience of the process, has proved to be a challenge across many jurisdictions.

Following a period of review and consultation, the Government decided in July 2005 that the full range of the procurement delivery skills required for PPP procurement in this area should be centralised in a centre of expertise and to locate it in the NDFA. This measure was designed to improve the capacity of the public sector to develop PPPs funded by unitary payments from departmental-agency Votes. As is the case with the National Roads Authority in the roads area and the Railway Procurement Agency in light rail and metro, it will underpin strong continuity in managing PPP procurement in the public sector. In tandem, the Government decided that the PPP projects to be pursued initially, with the assistance of the centre of expertise, should be in a small number of areas initially, moving on to other areas as required.

Projects in train outside the new arrangements have been handled pragmatically in terms of the existing level of involvement of the centre of expertise. Since the announcement of the centre in July 2005, a number of projects have been in train in the area of PPPs funded by unitary payments from Votes. The first major initiative for the centre was in the education sector. The Minister for Education and Science announced PPP programmes of 23 new post-primary schools and four new primary schools, and of 17 projects at third level, to be procured by the centre of expertise on behalf of her Department. Significant progress has been made on the programme. The first bundle of schools in the new programme comprising St. Mary's CBS, Portlaoise, Scoil Chríost Rí, Portlaoise and two amalgamation projects in Ferbane and Banagher is being procured by the NDFA and bidders have been short-listed. A second bundle of schools was announced last November, consisting of six schools on five sites in Cork, Limerick, Kildare, Wicklow and Meath. The NDFA commenced the new PPP procurement role on an interim, non-statutory basis, pending the making of the necessary legislative provisions. Acting on a non-statutory basis does not present significant problems for the early stages of the procurement process. However, statutory provision is necessary to enable the NDFA to conclude contracts for PPP schools projects in the first half of 2007.

I would like to set in context the procurement role of the NDFA. The agency is a project taker and it is responsible for the procurement to delivery stage of projects within the parameters set by the sponsoring Department or agency. There is a clear distinction between the project development phase and the procurement delivery phase. Project development is the primary responsibility of the sponsoring Department or agency, with the assistance of advisers, including NDFA financial advice, as necessary while procurement delivery is the responsibility of the centre of expertise in the agency. The centre undertakes the procurement after all policy issues are cleared by the sponsoring Department or agency, the output specifications are set and the public sector benchmark, PSB, is signed off.

The existing arrangements for NDFA accountability to the Committee of Public Accounts will embrace the new procurement function being given to the agency in the proposed legislation. These arrangements mirror those for other State agencies and Departments.

The projects will be returned to the Department or agency at turnkey stage and the unitary payments to the private sector partner will be made from the Vote of the Department or agency. The procurement phase for all future PPPs in the areas funded by unitary payments by Votes or agencies will be centralised in the centre of expertise, with the exception of projects agreed between the appropriate Minister and the Minister for Finance. These new arrangements will not apply to the transport sector or local government where PPP deal flow is established and where the existing procurement arrangements will continue.

The Government decision of 25 July 2005 also provided for the strengthening of the NDFA board by the appointment of two additional members. As an interim measure, I appointed two additional members to the board on a non-statutory basis, Mr. Fred Barry, Chief Executive of the National Roads Authority, and Mr. Stewart Harrington, a quantity surveyor, but their formal appointment requires amending legislation to increase the statutory limit on the number of board members in the National Development Finance Agency Act 2002. Provision is included in the Bill for a third additional board member. In the context of negotiations with the social partners on Towards 2016, it was agreed that the Government would favourably consider the appointment of a trade union representative to the board of the NDFA. Mr. Liam Berney of the Irish Congress of Trade Unions was appointed to the board on an interim non-statutory basis pending enactment of this Bill.

I already noted that the NDFA is carrying out the new procurement functions on a non-statutory basis. I am informed that practical arrangements have been developed to manage the interface between the centre of expertise and the relevant sponsoring Departments. I also understand these have facilitated access to pre-existing expertise. The centre of expertise continues to expand and is building up the necessary skills to ensure the sustained delivery of projects in the future. The NDFA annual report for 2005 set out the significant work already undertaken in its new role and the resourcing arrangements being put in place.

The Bill I present to the House formally allocates the new procurement function to the NDFA. The provisions are enabling rather than prescriptive. The Bill also allows for the appointment of the three additional board members. It includes consequential amendments to existing provisions governing the NDFA's functions which address issues such as ministerial guidelines and charging of costs and makes provision for a code of conduct to be put in place by the NDFA to govern its functions in regard to PPPs. It also provides for a small number of other matters pertaining to the legislation generally.

I will now outline the specific provisions of the Bill. Section 1 is a standard interpretation section to define terms used in the Bill, in this case defining the National Development Finance Agency Act 2002 as the principal Act. Section 2 is a technical amendment to the definitions in the principal Act to make the text consistent with the wording used elsewhere in legislation.

Section 3 amends section 3 of the principal Act, which sets out the functions of the NDFA. The amending provision enables the NDFA to carry out two new functions, namely, to enter into PPPs with a view to transferring the rights and obligations under the PPP to a State authority and to act as agent for any State authority in entering into PPPs. It is anticipated that in most cases the NDFA will act as agent for a State authority.

Section 4 inserts a new section in the principal Act, requiring the NDFA to draw up a code of conduct on PPPs based on best practices to ensure good corporate governance and to be approved by the Minister for Finance. The code of conduct is intended to address, inter alia, any potential conflicts of interest or objectives. It is considered desirable to provide for a statutory code of conduct in the context of the new procurement functions and the legislative framework governing public procurement at European level.

Section 5 makes a consequential amendment to section 4 of the principal Act. It extends the existing obligation on the agency to have regard to ministerial policy and guidelines on PPPs to include the exercise of the new procurement functions.

Section 6 amends sections 12 and 14 of the principal Act, providing for the appointment of three additional members to the board and making a consequential increase to the quorum for meetings from three to four.

Section 7 amends existing provisions governing the signing of contracts by the NDFA in section 15 of the principal Act. The provision will allow for contracts to be signed by any two staff authorised in writing by the board as well as by members of the board in recognition of the volume of documentation involved in PPP contracts. As the NDFA does not directly employ staff but carries out its functions through the National Treasury Management Agency, the section refers to NTMA employees signing contracts.

Section 8 amends section 18 of the principal Act to allow the NDFA to disclose confidential information to an "appropriate Minister" as well as to the Minister for Finance. "Appropriate Minister" is defined in the principal Act and covers any Minister of the Government who has functions or general responsibility in connection with a PPP or a State authority.

Section 9 amends section 22 of the principal Act to bring the procedures for adding bodies to the list of State authorities covered by the legislation into line with current good practice in regard to the use of secondary legislation. The new provision takes account of developing case law in this area.

Section 10 substitutes a revised section for section 26 of the National Development Finance Agency Act 2002, which deals with the expenses of the NDFA and how they are to be met. In an elaboration of the original provisions in the principal Act, it is proposed that expenses incurred by the NDFA from specific projects, which in practice means the cost of specialist external advisers, should be charged directly to the relevant State authorities and not solely to Votes, as was previously the provision. The provision for recovery of expenses is being extended to cover the new procurement functions of the NDFA, as well as its advisory functions. The provision also clarifies that the NDFA may pay expenses from the Central Fund in the first instance, with subsequent recoupment from the relevant bodies. Deputies will be aware that the NDFA's functions are performed through the NTMA under section 11 of the principal Act. The NTMA also incurs costs in performing these functions, including staffing costs, and these are met from the Central Fund, which is the case for NTMA costs generally.

Section 11 updates the Schedule to the principal Act to include all public bodies added to the Schedule by statutory instrument since the enactment of the principal Act and includes a new general category in line with the provisions of section 9 of the Bill. Section 12 amends the Schedule to the State Authorities (Public Private Partnership Arrangements) Act 2002 by adding the NDFA, to ensure those PPP arrangements that the NDFA enters as principal are also covered by that Act. Section 13 is a standard construction and citation provision.

The establishment of the centre of expertise is one of a range of measures to enable the public sector to avail of PPPs where they are appropriate. As I stated on a number of occasions, the PPP approach has benefits when applied to projects of the appropriate scale, risk and operational profile. PPPs are not the main procurement option for the capital investment programme but they have an important role in the new NDP. Of course, PPPs are ultimately only a means to an end. The objective is to put in place public services and infrastructure on a value for money basis for the taxpayer so that Ireland remains well placed to meet the challenges it will face in the coming decades. In the new NDP, we have set out a role for PPPs, with other procurement options, in delivering investment in our economic and social infrastructure. In that context, the provisions contained in this amending legislation, together with the other steps the Government has taken to support the process in a practical and realistic fashion, will help to bring about the kind of world-class investment in social and economic infrastructure we are committed to delivering over the coming years. Applying the necessary skills in the area of PPPs, within a robust framework of guidance, is consistent with the Government's overall commitment to achieving value for money in public investment.

I look forward to hearing the comments of Deputies on this Bill and to a more detailed debate on Committee Stage. I commend this Bill to the House.

There is consensus across this House on the major need for investment in social and economic infrastructure. We have fallen behind in many key areas of infrastructural availability, which jeopardises the continuance of our economic success. That is the background against which every proposal, whether PPP or otherwise, has to be judged. We need investment and if PPPs have a constructive contribution to make, we should facilitate them.

The National Development Plan 2000-2006 was an ambitious programme which experienced successes as well as failures. The crucial question we must ask is whether we can be confident that the new NDP addresses the problems which led to failures in significant areas. Have the flaws that arose in the last NDP been corrected? One of the disheartening aspects of the NDP is the failure to honestly appraise what happened between 2000 and 2006. The appraisal included in this programme is anything but honest.

There is no mention of any of the failures. It adverts to the fact that PPP collapsed as a source of funding but does not analyse why it happened or whether changes are needed. We have had dismal failings. The health strategy is just one of them. We were to have 3,000 extra hospital beds and 600 extra primary care centres. Housing is another area. We should have twice as many affordable and social houses as have been delivered at this stage. Whatever about the gloss the Minister wants to put on it by claiming that the Government is very competent, he and his officials need to face up honestly to those failures and analyse what was the ambition that collapsed in many of these cases. Was it bad project formulation? Was it bad design? Was it badly thought out? Were they just presenting no more than glossy press releases that were not really based on hard thinking?

The Minister is right that PPP needs to be considered as a very serious instrument. As he has admitted, it is not a panacea. It is a tool that needs to be carefully used. We need to be confident that it is delivering better value for money when it does so. It has the scope to deliver better value in certain cases, most of which are complex projects where the private sector brings expertise that clearly is not available to us. It is all very well to have in the NDFA a champion of the case for PPPs, who brings together expertise to progress them. As the Oireachtas is ultimately responsible for ensuring that the taxpayer is getting value, we need to have some vehicle to determine whether the projects deliver better value.

I know the Minister is sceptical of the one evaluation carried out by the Committee of Public Accounts of the schools. He believes that just because of that evaluation we should not feel that PPP is damaged, with which I agree to an extent. However, the Minister and his officials who champion this cause need to present in some forum the evidence that these projects are delivering. The annual report of the NDFA contains no evaluation. It claims to have considered the funding of projects worth €4 billion. At no point has it done an evaluation to identify how PPP can add value, in what sort of projects it adds value and what are the pitfalls and strengths. We need to build that confidence. The Minister expects some 15% of the Government's capital programme to be funded by PPP in time. If that is to happen we need to have confidence that it will not result in a rip-off for the consumer who must pay bloated tolls or result in Departments needing to pay too much in various shadow charges, etc.

I welcome the changes in the Bill. The 2002 Bill was very hastily conceived. It came from the programme for government to try to kick-start activity. That we are discussing so soon a new Bill to radically change its mandate and effectively jettison many of the elements of the original mandate shows that the original Bill was not well thought out. Perhaps it could be claimed that PPP was in its infancy and that justifies it to an extent. However, there was an inherent conflict of interest built into that Bill between the role of advising on the one hand and participating in the financial packages on the other. That inconsistency and conflict emerged as the process went on and needed to be addressed. However, it had been flagged in this House long before it became an issue that needed to be resolved. There was an element of hastiness in the Minister's predecessor's move to push this ahead without anticipating such matters.

The special purpose companies were to be the key vehicles for PPPs. I have not heard mention of them since. The Minister's speech made no mention of them. To what extent has the €5 billion of guaranteed borrowing afforded to the NDFA been drawn down? We are greatly changing the NDFA, which is not a bad thing if we are now moving on the right track.

One of the flaws in the old Act was the gagging order on the NDFA and I ask the Minister to reconsider it. When its representatives appear before committees of the Houses, they are gagged from commenting on demerits, projects put together poorly, bad ideas and shoddy projects. If the NDFA is the main unit for driving these projects forward, it should not be gagged from presenting an honest appraisal of what it handles. It has had €4 billion worth of projects. As the people who vote taxpayers' money, we should ascertain whether it finds many of these projects are shoddy and ill thought out. It may be finding them wonderful. However, it should not be gagged from saying so. We need much more evaluation and transparency on the performance of such projects.

When and where PPPs are desirable should be openly debated. Most of the experts would claim that schools would not be the first area where they should be used. They are not particularly complex projects. They should be financed in the traditional way with the Government being the chief source of funds. They do not seem to be the projects that one would champion for this system. They may have represented an easy way for the agency to cut its teeth. Presumably it is on complex projects such as the metro that PPP will significantly add value in its capacity to conceptualise a much more complex project and arrive at innovative solutions. There is an onus on the Minister to provide to the House material from the NDFA showing that its selection of schools, radiation oncology services, prisons, etc, are genuinely well framed for the PPP model and that we can have confidence that it is going in the right direction. For example, if the prison project goes wrong, is it genuinely possible to transfer risk to the private sector? It is likely that the only risk that could possibly be transferred is the cost overrun risk. We are probably stuck with any other risks. We need to see this risk transfer occurring.

The public benchmark needs to be properly chosen. In the new arrangements the sponsoring Minister will sign off on the public comparator. The Minister for Finance and his Department seem to have no role in this regard. I understood the Minister wanted a strong level of independent evaluation included so that optimistic views from the sponsoring Department could not dictate bad projects getting approval. I wonder whether it is correct to give line Ministers this responsibility. Perhaps the Minister for Finance and his Department should continue to have a role. There seems to be a belief that the Department of Finance is the bad boy and it needs to be taken out of the mix. I do not share that view. I have a certain degree of confidence in the Department of Finance and its scepticism is well founded. That is not to suggest that PPP cannot do great things to accelerate badly needed projects if it is appropriately managed.

Perhaps the Department of Finance has been too traditional. However, its prudential concerns are good ones and it ought to play more of a role than is envisaged in the new model, beyond publishing the requirements to carry out evaluations and cost-benefit analyses. I have not seen any of those evaluations. I know the Minister said that every project of more than €50 million had cost-benefit evaluation. Since October 2005, every project of more than €30 million is required to have such cost-benefit evaluations. They are not being published and are not available. If they are to be serious tools in holding Minister's and sponsors to account, they must be published. We cannot seriously have evaluations that are not published as otherwise they would be internal and there would be huge temptation to doctor the figures afterwards if the outcome were different from the evaluation. It is about gamekeepers and poachers. The evaluation needs to be in the public domain so that we understand the basis on which we sign up to the project.

As the Minister rightly said, someone should be responsible for overseeing that process. If he keeps it a secret, his model will fail. It is important to publish these ex ante evaluations for which he has brought down the threshold. I have not seen them published or the responsibility nominated and pinned on projects, as it should be. Maybe the Minister will tell me in his summing up that it is there. Until I see evaluations published, and interested members of the public or experts in the field able to pull them apart and say whether the process is well or badly put together, we will not have made the crucial necessary changes.

Fine Gael and the Labour Party have thought a great deal about this because we hope to be in Government shortly, facing the problems the Minister faces now. It is important to make this material public and to have proper gateway systems. It should be a public function to announce successful passage through these gateways, that the person responsible has signed off on the critical factors and the information is available. The Minister has said there will be monitoring of this sort but it is private. There will be no public monitoring.

We in the Oireachtas receive no public monitoring of critical projects in the PPP cost-benefit process. That must change. The Government, the Minister and his advisers seem to want to be virtuous, but not yet. They are keeping back this information which is a mistake.

We must be careful about the PPP process because it has the capacity to go wrong if not properly managed. There are many up front costs and we must be careful in selecting projects to make sure that the process brings a benefit.

Against that background, I tentatively approve the Minister's proposal. It is right that if the NDFA is to become a centre of expertise it should have the authority to act as an agent on behalf of the sponsoring Departments. We will discuss the different elements of the Bill on Committee Stage. The important point is to build confidence here and in the public that the use of PPPs is well founded and that public sector organisations use sound and robust models to ensure that we use the PPP process only in appropriate cases, and handle and control it well as a tool. That confidence does not exist yet.

One way to build it is to commit immediately to the publication of these cost-benefit proposals, including some of the early indications on why the PPP process is chosen. As the project rolls through a public process of monitoring, we could see that it was delivering on its initial ambitions. That public element would concentrate minds magnificently and the Minister ought to make that change.

I am glad the Minister is in the House because I wish to begin with an important question which I hope the Minister will be willing to answer. Some time ago the NDFA advised us that it was getting involved in the acquisition of 36 new linear accelerator facilities for the treatment of cancer through a PPP. As a member of the Committee of Public Accounts, I saw press releases and reports from the NDFA and its parent company, the NTMA, to the effect that this was a major development in the PPP process. I also saw detailed reference to it at several conferences I attended on the development of PPPs and the role of the NDFA. Officials from the NDFA and the NTMA gave a presentation and answered questions on this issue among others before the Committee of Public Accounts some months ago.

What is the situation regarding the HSE report of July 2006 which advised that there would be additional delays due to the PPP process and that the necessary equipment could be sourced more quickly outside the PPP model? The Minister may recall, if he was in Ireland over Christmas, as I am sure Deputy Bruton does, that the relevant officer from the HSE was interviewed at length on several radio and television programmes. He was adamant that the PPP process in this case was adding time and would therefore increase the pain and reduce the prospects of recovery for people suffering from cancer. It is reasonable to ask the Minister not to hide behind the fudge of commercial confidentiality in respect of PPP projects. That is why the Government will not answer any questions or be accountable to the Dáil on PPPs. It is important not to fudge this question and that the Minister tell us what has happened in this case and why an experienced official from the HSE can say authoritatively, and the Minister for Health and Children appears to have accepted it, that the HSE advises that hiring or leasing this specialised cancer treatment equipment through a PPP would add to the delay.

We all pray that the tens of thousands of people who unfortunately require cancer treatment and are not wealthy enough to afford one of the Minister's tax break private hospitals can avail of this equipment, which the project was intended to provide in a timely way to the public service. We are told that the Minister for Health and Children accepted the advice of the HSE that the PPP was adding to the delays. I hope the Minister will not hide behind commercial confidentiality but give us an answer to this important question.

Like most people involved in economics, I believe that the core issue in the PPP model is whether it is fit for purpose and does what it says on the tin — procures certain projects for public infrastructural investment in a timely, cost-efficient, value for money way and possibly offers a time and project management advantage that might be lacking under traditional public sector procurement methods.

The PPP process does not overtly reflect an ideology but the NDFA Act of 2002 and the launch of the NDFA was one of the Government's great announcements in that year. The Minister's predecessor, Mr. McCreevy, discovered it and brought it to an astonished nation as the new way to acquire infrastructure to plug the infrastructure deficit, whether in schools, roads, hospitals or telecommunications. There was a new flag and new way, the PPP way. It was the mechanism whereby much of the deficit from schools to hospitals was to be addressed.

We are now being presented with a new 2006 NDFA enactment Bill, from the Seanad, which seeks to create capacity for the NDFA that was obviously omitted from the first Act. That the Government must introduce a new amendment Bill less than four years after the introduction of the first Act indicates that it could not make up its mind as to the role of the NDFA. That may well be what happened after the former Minister for Finance, Mr. McCreevy, was thrown overboard and told to swim to Brussels following the walk on the beach in Inchydoney.

The Minister has to pick up the pieces and put some shape on something that was a Charlie McCreevy runner intended to win votes at the last election. Did Mr. McCreevy, as Minister for Finance, mess up? Did the Minister, Deputy Cowen, as his successor, do so in failing to recognise that the NDFA did not have the capacity suggested by the original Act?

It seems strange that we are being presented with a new Bill to provide a legislative basis for the development of a centre of expertise which was announced by the Government in 2005 but which appears to lack an essential legal foundation. When the relevant experts came together to deal with this matter, did they discover that the bird they were attempting to encourage to fly had no wings? That seems to be what happened. Someone in Government messed up. I do not know if the Government ever takes responsibility for anything. It is obvious, however, that someone messed up because we are being presented with another Bill, even though the establishment of the centre of expertise was announced in 2005.

This is an opportune time to consider this entire area and, for that reason, I welcome this debate. We need to examine the experience in other jurisdictions such as the UK, Australia, Canada and Portugal, which have had more experience of PPPs than Ireland. Several matters stand out in this regard. The Comptroller and Auditor General referred to the first of these in the context of his report on the initial tranche of school projects. PPPs financed by the private sector are much more expensive in terms of finance costs because the private sector concerns are obliged to pay higher interest rates than national governments. When Ireland, the debt level of which is low, purchases debt or borrows money, it can avail of a particularly advantageous rate that cannot be matched by any private banking capacity. The differential in interest rates can be between three to five points, which gives rise to significant additional costs. The Comptroller and Auditor General has already highlighted this fact in respect of the first clutch of school projects.

As a result of commercial confidentiality clauses, there is little public accountability and almost no parliamentary oversight, except long after projects have been either commenced or completed, in respect of PPP projects. This means that if the taxpayer is ripped off by means of a PPP, we may not discover that fact until years later. That is probably the greatest difficulty with the approach of this Administration to PPPs. The Government has used the commercial confidentiality clause to completely duck any sense of accountability in respect of performance, value for money and cost, which is wrong. It is convenient for the Government to be able to avoid being accountable to Dáil Éireann but such behaviour is wrong because the taxpayer — on whose behalf PPP projects are committed to — is obliged to pay the piper.

While the management of many PPPs is handed over to private sector concerns for up to 25 years, it has become apparent, from the experience in countries such as Scotland, that the ongoing public service management relating to a PPP's delivery of service is much more onerous than originally envisaged. I made a two-day visit to Scotland with the Comptroller and Auditor General earlier this month. One of the issues we discussed with our colleagues from the Scottish Parliament and officials from Audit Scotland was that of PPPs. As a result of the parallels between the private finance initiative in the United Kingdom and the system in operation here, I am of the view that our colleagues across the water have valuable insights to offer us. The key insight is that the requirement for public service quality monitoring of the service maintenance delivery over the long life of a project is extremely onerous. I do not know if we have made the necessary developments in our public service to provide for monitoring of this nature. If the public service does not ride shotgun on the delivery of PPP projects over their long lives, taxpayers may end up being ripped off.

PPPs are a bonanza not just for the banks, which specialise in getting the debt together, but also for lawyers and accountants. I acknowledge that the Minister has somewhat reduced the incredible and unbelievable structure initiated — I am not sure if he saw it put in place — by Mr. McCreevy.

The centre of expertise is, I am sure all parties will agree, fundamentally a good idea in the context of buying public procurement. Anyone who has ever been involved in purchasing or procuring a major project would agree with me in this regard. We all admire the record of the NTMA and we recognise the potential of its child, the NDFA, to contribute to the proper management of PPP projects. I do not have a difficulty in that regard. However, the various matters to which I refer are being overseen by the Department of Finance and its various sections. A legitimate question arises as to what the PPP section in the Department is doing. Does it have the same number of staff as previously and are those employed by it in a position to report and provide some level of accountability, via the Minister, to the Dáil in respect of what is happening in the context of PPPs?

There are three examples of PPP-type projects in my constituency. I first wish to comment on the first major procurement in respect of roads, via tolls, and the current model, which the Minister has stated is now producing roads on time. In my opinion, the NRA has got the management of road projects under much better control than was the case up to two years ago. We must, however, remember the West Link toll bridge, which the Government is going to buy out for approximately €600 million. Where is the capacity in the Bill to deal with circumstances where a project such as that involving the toll bridge is put in train and where there is considerable appreciation in the value of that project because, for example, of the number of cars seeking to use such a bridge? Alternatively, where lies the capacity to deal with a situation such as the toll bridge screwing up traffic in the greater Dublin area and causing the kind of misery on the M50 with which everyone is familiar? What is being done to prevent the occurrence of events of this nature?

The first so-called PPP project in my area was initiated at Castlecurragh, where land owned by the county council was developed, with a private contractor, namely, Shannon Homes, to provide a mix of social and affordable and private housing. This project has been mired in problems because contained in the small print of the contract relating to this prototype PPP — it was included by the Minister's Department in all the early project lists for PPPs — were extremely onerous requirements relating to management companies. The officials in the PPP evaluation unit never identified any of this and it has resulted in huge charges being levied on the people who bought the houses and also in tremendous confusion. However, we cannot approach Shannon Homes and state that it is costing the council a fortune to put right the mistakes that were made. The public purse is being used to sort out this particular mess.

The third example to which I wish to refer involves Thornton Hall and the new prison. A national children's hospital cannot be located on a decent large site on the fringes of Dublin to ensure easy access for patients' parents from outside the city. However, it can be done for a prison with prime land on the M50 purchased at a high price. Is this down to ideological differences in the Government? Is it that a prison gets higher priority than a national children's hospital?

Have the contracts for the new prison at Thornton been signed? The evaluation tests for the site, set by the Department of Justice, Equality and Law Reform, were seriously breached in several respects. Yet, the building of the prison has entered the PPP process with no accountability from the Tánaiste and Minister for Justice, Equality and Law Reform.

The Bill's presentation is timely. It is an incredibly negative comment on the Minister's predecessor's stewardship of the Department. The PPP structure has been left in considerable confusion. We all heard the publicity for the 50 projects which are ready to go. When the NTMA and the NDFA announced a rapid PPP programme to acquire 36 specialised linear accelerator cancer treatment facilities to bring us on a par with other countries, I was delighted for cancer sufferers and their families. We know what many of them must endure in the health services. It can depend on where one lives or one's particular condition. One may have a good experience with speedy attention from fabulous staff. In other cases, one may be left waiting for long periods, not knowing if one's life is, as a result, being put in danger. In summer 2006, the HSE carried out an evaluation on these 36 projects which came to the conclusion that it would result in a longer acquisition period for these essential facilities. On 22 January, when the Dáil was in recess, The Irish Times reported the Minister for Health and Children saying the procurement process would be slower.

This is a classic test of a PPP. One has a traditional procurement process where the HSE procures the equipment it needs as quickly as possible. The PPP is meant to do it faster. Under commercial confidentiality clauses, the House cannot ask for details of a PPP project. It was the HSE that stated its internal evaluation showed the PPP acquisition method would be slower and more expensive. The Minister must put on the record what happened in this particular case. A PPP does not have a particular ideological content. However, it is important that the Minister answers the questions. Unfortunately, there is a history of bad management of State projects and, in some areas, a history of corruption. Members must know what Departments are proposing in various PPP projects.

The Government cannot just be a good news Government all the time. It has a tremendous management of the media, dominating most daily news bulletins and newspapers with its good news stories. However, as in the case of the linear accelerators, the small print shows it may not be so wonderful and indeed more expensive. I accept not all Members are perfect but we are entitled to answers so we can act on behalf of our constituents. It is important the Minister for Finance, who was once the Minister for Health and Children and famously described the Department as Angola, outlines what happened in the linear accelerators project. The PPP mechanism, in this case, was not the best on offer. The Minister will do us all a service if he addresses that one question before the conclusion of this debate.

Serious savings can be made by having good on-line procurement systems, whether it is in the health services or local authorities. Better value for money can be obtained by spending it differently. The public is increasingly using on-line stores for purchases and it will see the opportunities in this regard.

One aspect of the Bill that concerns me relates to access to information and the outsourcing of accountability. I also have concerns about some elements of the PPP process which can result in bad outcomes for the public interest. For example, it will now cost the State a small fortune, almost €600 million, to purchase back the West Link bridge.

The decisions made on what projects would be subject to a PPP require significant scrutiny but do not get it. For example, the section of the M4 built under a PPP was significantly more expensive to build per mile than the public section. Those who are caught by this are those everyday commuters who pay the toll for using the section of the road. On the M4 it is proposed to have a toll on the way into Galway and Dublin while all other sections are paid for from the public purse.

Debate adjourned.