Vol. 947 No. 2
7. Deputy Brendan Smith asked the Minister for Public Expenditure and Reform if, in view of the particular challenges that will arise for areas such as counties Cavan and Monaghan due to Brexit, consideration will be give to the provision of additional capital funding for projects in the Border region in the review of the capital programme and in the preparation of the next capital programme post-2020; and if he will make a statement on the matter. [18353/17]
8. Deputy Brendan Smith asked the Minister for Public Expenditure and Reform his plans to review the capital programme with a view to increasing investment in infrastructure, such as the road network, in the Border region due to particular challenges that will arise due to Brexit; and if he will make a statement on the matter. [18354/17]
The Minister may recall that last Autumn, at a meeting of the Committee on the Implementation of the Good Friday Agreement, I outlined to him the absolute need in the review of the capital plan to take particular cognisance of the needs of the Border region as we face Brexit. There has been for historical reasons an underinvestment in infrastructure, particularly the road network, over the years in the central Border area. If we are to maintain employment and hopefully be able to grow employment, we need to ensure that out indigenous industries - by and large, our industry is indigenous - can remain as competitive as possible and maintain jobs.
I thank Deputy Smith for raising this matter. I remember very clearly the way in which he raised it at the Good Friday Agreement implementation committee where we had a discussion on it. Regarding our present position, in the capital plan, which Deputy Martin raised with me just a moment ago, we have laid out very clearly that a factor in decisions we will make is the effect that Brexit will have on our country and, within all that, what the regional consequences of Brexit will be. I am well aware of the issues to which the Deputy has referred. I am well aware that the communities to which he refers will feel the brunt of any disruption that may occur as a result of Brexit.
In the capital investment choices we will make in the coming years I am determined to do what I can to offer support through capital investment and other funding choices to ensure the issues to which the Deputy refers are addressed.
The situation will be very challenging and demanding. The issues relating to the nature of a border and the need to make sure we do not return to a hard border have been well recognised in the various texts that have been issued by the European Council, the European Parliament and Prime Minister May, all of which is being driven by the Government's recognition of the scale of the challenge the country faces, in particular the Border counties and communities.
I thank the Minister for his reply, which again reflects the debate we had at the Joint Committee on the Implementation of the Good Friday Agreement. I welcome the fact that the Minister will have an additional €2.65 billion available for capital expenditure following the review of the current plan, which ends in 2021. I hope a clear message will go from the Department of Public Expenditure and Reform to the line Departments that the needs of the Border region must be reprioritised. The Minister is well aware from his colleagues, listening to debates in this House, and engagement both North and South of the Border, that there is significant fear in the Border region due to the uncertainty affecting business there. We must be able to send out the message that the Government will act, and that within the competences available to it, it will make decisions and prioritise the needs of the Border region.
We are one of 27 member states negotiating with the British side on the terms of the EU-British agreement following Brexit. There are decisions the Government alone will make. The Minister and his colleagues in government will make the decisions on where capital expenditure goes. For historical reasons, due to the Troubles that maimed our country for so long, there was not investment in our area. Thankfully, since the signing of the Good Friday Agreement in 1998 there has been a remarkable transformation but we are still some way behind in terms of the infrastructure we need.
I again welcome the fact the Minister will have additional money available to him. I accept he faces huge challenges and plenty of demands but it is important to send a good message to the Border region, both North and South, about a reprioritisation of the capital funds that are available to him for the current plan and also in planning for post-2021.
It is a recognition of that fact and the points the Deputy has raised that drove my Department to move to deal with the maintenance of PEACE and INTERREG funding on the day following the Brexit referendum. I have discussed that with the Deputy previously. We know that funding plays a vital role in supporting projects in his community, and on both sides of the Border, that have contributed to the economic progress to which he refers, and also the social and political stability, especially in the North. We moved to address that. As the Deputy is aware, funding is now in place up to 2020. I recall that Deputy Brendan Smith made the point to me that 2020 can come very quickly. We are already working with other countries that participate in the INTERREG and PEACE funding and I will respond to a question on the issue later this afternoon. We are beginning to work to get a replacement for those funding streams. Deputy Smith recognised the competing demands on me. I will do what I can with the resources available to me to give a very high level of priority to the regional dimension of the consequences of Brexit because I well understand the issue the Deputy raised.
I thank the Minister. As he is aware, unfortunately, we do not have a rail network in the south of Ulster. Our industry is predominantly indigenous and composed of agrifood and construction products. Those sectors of the economy are more dependent on the sterling export area than any other sector in this country. The Border region is more heavily dependent on indigenous industry, which is also more heavily dependent on the sterling area for the export of products. In order to assist enterprises in agrifood, construction and other sectors that have built up good businesses through very difficult times we must try to ensure that we assist those companies to remain competitive. The fluctuation in sterling, Brexit, tariffs and border controls will add to the costs for companies and in order to assist them to maintain their current employment levels, which they built up in very difficult circumstances, the Government must give a clear message by investing in particular projects in the entire Border region. The area I am concerned about is the counties of Cavan and Monaghan. I bring to the attention of the Minister that the road network there needs upgrading.
I take the Deputy’s point. I am aware that the level of support that is needed is multifaceted. Deputy Smith referred to the impact of currency change. We know that is already having an impact on the competitiveness of Irish exports, in particular in the food sector. My view is that the bigger impact to be faced will be the nature of the negotiations that will take place on the trading relationship with the UK when it is no longer a member of the Single Market. It is only as those discussions take shape that it will be clear to us what kind of intervention we need to put in place, if any, but I believe support will be needed for Irish companies that seek to sell goods, in particular food, into the UK.
In response to the Deputy's point about roads, I have done my best to recognise the point by stating that in the criteria we have laid out for deciding where resources will go, we make specific reference to the regional consequences of Brexit. While I accept there are so many demands on the money and Deputy after Deputy raises different points each day – I do not refer to Deputy Brendan Smith – about where the funding should go – we have to try to make the wisest choices we can, which I will do my best to do, and I look forward to the support of the Deputy in doing that, if he can give it.
9. Deputy Clare Daly asked the Minister for Public Expenditure and Reform if his Department has been contacted by a group (details supplied) or Fingal County Council regarding an application for funds for dune protection works at Portrane, County Dublin. [18700/17]
It has been more than two months since the Minister of State, Deputy Canney, visited Portrane. I wonder what has happened in the intervening time to deal with the critically dangerous and worrying situation of coastal erosion in the area. When we raised the issue previously we heard that on the one hand Fingal County Council was given money and it is up to it to apply for funding but on the other hand Fingal County Council has said it is not in a position to do anything. How can the heads be brought together in order to address the issue?
The management of problems of coastal protection in the area indicated is a matter for Fingal County Council in the first instance. The council must assess the problem and, if it is considered that specific measures and works are required, it is open to the council to apply for funding under the Office of Public Works, OPW, minor flood mitigation works and coastal protection scheme. Any application received will be assessed under the eligibility criteria, which include a requirement that any measures are cost beneficial, and having regard to the overall availability of funding.
Fingal County Council applied for and was approved funding of €57,800 under this scheme in 2012 to carry out a coastal erosion risk management study of Portrane to Rush. The funding was drawn down in 2013 following completion of the study. Following the severe storms of winter 2013 to 2014 and on foot of submissions made by the local authority, total funding of €200,000 was provided by the OPW to Fingal County Council under the Government decision S180/20/10/1272 of 11 February 2014 to allocate funding for the repair of damaged coastal protection infrastructure. Part of this funding was for a dunes repair project at Burrow beach, Portrane. This project was not proceeded with by Fingal County Council at the time and the council indicated that this would form part of a separate application under the minor works scheme.
The Minister of State, Deputy Canney, visited Portrane on 21 February 2017 to view himself the effects of coastal erosion in the area. He met with local Deputies, local representatives, residents and property owners and he was impressed by the level of engagement locally and with the council officials in exploring options to address the problem. He knows that Fingal County Council is working hard to identify an appropriate and sustainable solution to the problem at Portrane in advance of submitting an application to the OPW for funding to carry out works.
The Minister of State has been advised that his office is not currently in receipt of any application from Fingal County Council under the minor flood mitigation works and coastal protection scheme for dune protection works at Portrane. His office remains available to work in partnership with Fingal County Council to provide any assistance possible to alleviate the effects of coastal erosion at this location.
I have a feeling of déjà vu about this. The reply seems to be very similar to the one we got in the previous round of Question Time, which also followed the visit of the Minister of State. I am conscious that he will be replaced by another Minister of State in a week or two when the ministerial rota shifts, and he will be the third Minister who has visited Portrane.
In 2012, another Minister came out there and said the same thing. The problem is that in the intervening period the damage that has been done to the dunes and the threat to people's homes is becoming critical. I acknowledge that the local authority is being given responsibility for this matter. I also recognise that moneys have been made available, but that funding has not been utilised. I have not seen any evidence of a sufficiently quick, urgent or efficient response to what is a dire necessity.
It is all right for a Minister - I know the Minister of State is just standing in - to say that he is working in partnership with the council, but it is not working. Can somebody deal with this situation urgently, so that we can get some works done on the ground there?
I appreciate the Deputy's commitment to this issue. I was in the House on a previous occasion when it was debated with the Deputy and the Minister of State, Deputy Canny. Of course there is a need for urgency, but we must ensure that the right coastal and flood protection work is carried out. The correct process must be followed in this regard. Fingal County Council has to identify the appropriate sustainable and viable solution for the problems at Portrane. Once that has been done they can apply for OPW funding. If the funding is approved it is then a matter for the council to progress the necessary works.
The solution that has been proposed in the risk management report, however, may not be the best one, or environmentally sustainable. The council is currently examining that matter but once it has made an application, the OPW will not be remiss in playing its part in this process to ensure that the protection works can take place at the appropriate time.
There are two problems. In works like this the indirect impact on the environment has to be considered, as well as other consequences and knock-on effects. That cannot outweigh the direct impact on people's lives and homes, however. They are literally hanging onto a cliff edge there. Do we have to see a house collapse before something is done? I accept that the local authority has a statutory responsibility, but it has not delivered on that. The Minister's Department should sit down and say listen lads, we have given you this money, you spent some of it on a study and you have not implemented anything from that and we still got nothing else done, although we have given you other moneys.
When we raised this matter before, Deputies from other counties said hang on a minute, you have allocated money to them, but they are not drawing on it while we have a dire need in our areas yet we cannot get the money. It is absolutely ludicrous. Can we call the council in and get to the bottom of this once and for all? If this is not sorted out, there will be a house in the sea.
On the same issue, I absolutely agree with Deputy Daly. When one engages with councils on erosion they say they do not have the money. When one puts a parliamentary question in to the Minister, one is told that the Department has allocated the money. I think we should call in every council around the country and ask how they have spent their money or why they have not spent it. If they are not spending it and just sitting on it, it should be taken off them.
The Deputy is right about finding the right balance in terms of the need to protect our coastal areas, as well as lives and property. We must proceed on this in the right way. Funding is available for these works to take place but we need to ensure that we are doing the right works. The risk management report showed that the proposed solution may not be the correct one or the best one. I will relay the Deputy's concerns to the Minister of State, Deputy Canney, and will suggest that he should call in the council to see what urgent solution it can find together with the OPW.
And the then Minister of State, Deputy Moran. He will be in place, will he not?
The Deputy knows more than we do.
11. Deputy Niamh Smyth asked the Minister for Public Expenditure and Reform his plans to purchase property for Garda stations; the stages in negotiation for each one; and if he will make a statement on the matter. [18715/17]
I wish to ask the Minister for Public Expenditure and Reform his plans to purchase property for Garda stations, the stages in negotiation for each one, and if he will make a statement on the matter.
On 21 October 2015, the Government launched a capital investment plan for An Garda Síochána for 2016-21. The capital investment plan includes plans which involve the construction of new Garda stations in eight locations, major refurbishment of existing stations and facilities, essential remedial works to certain Garda properties, upgrading and modernising prisoner detention areas to meet current and emerging health, safety and human rights compliance requirements and developing property and evidence material stores.
The following projects involve the acquisition and-or purchase of new sites or buildings for Garda stations.
|
Garda Station Building and Refurbishment Programme 2016 - 2021 |
||
|
Location |
Description of Project |
Current status |
|
Planned New Garda Stations |
- |
- |
|
Glanmire, Cork |
Alternative accommodation for Garda Station |
Site & building acquired in January 2017 |
|
Bailieborough, Co Cavan |
New Garda Station |
Site identified and legal transfer nearing completion |
|
Sligo, Co. Sligo |
New Garda Station |
Assessment of submissions received following national/local advertisement in March 2017 |
|
Macroom, Co. Cork |
New Garda Station |
Identified Site acquired. |
|
Clonmel, Co. Tipperary |
New Garda Station |
Site identified and Legal transfer in hand |
|
Kevin Street, Dublin |
New Divisional HQ facility to serve DMR South Central |
Site acquired. Construction underway |
|
Galway |
New Regional HQ facility for Galway and the Western Region |
Site acquired. Construction underway |
|
Wexford Town |
New Divisional HQ facility to serve the Division of Wexford |
Site transfer. Construction underway. |
Nothing in Stepaside.
I thank the Minister of State for his reply. I am specifically addressing the issue of Bailieborough Garda Station because it is almost 18 months since it was first announced. We have heard rumours about where it will be located. Will it be a greenfield site or in the main street of Bailieborough? Can the Minister of State confirm exactly what premises are being considered for the main Garda station? It is the headquarters for the entire east Cavan district covering Ballyjamesduff to Tullyvin. The chosen site will be hugely important because it must be central to the district.
We often see Portakabins being put into school grounds because the existing buildings do not have the capacity to house students and teachers. The same scenario exists in Bailieborough Garda station with gardaí, who are trying to do a good job, housed in Portakabins. Can the Minister of State confirm where the new Garda station will be located?
The Deputy is right to raise the importance of this particular station. I can confirm that plans are well advanced. As she knows, the current station is in poor condition. Some minimal upgrading work was done to allow the station to tide over until the new one is built. The OPW is currently in the process of purchasing a property with a view to building a new Garda station and that site has been identified. The Deputy might be aware of the property and I can confirm that with her, but unfortunately not here in the Dáil.
The purchase is being expedited and it is hoped that it will conclude shortly. Once the property is transferred the OPW will process the planning application under Part 9. However, the draft plans for the site have already been agreed.
I welcome the positive news that we are nearing the end of what has been a protracted procedure. We are cognisant of Brexit as we are in a Border county. Unfortunately rural crime has increased in the area so gardaí do need the requisite facilities to do their job properly. We do not have those facilities at the moment. I have been involved with gardaí through the community alert scheme and various other projects. Members of An Garda Síochána are doing their utmost to provide a good service.
Businesses require a good policing service but gardaí are currently operating from cramped, outdated and poor facilities. I would like to see a new Garda district headquarters in Bailieborough in the very near future.
The Deputy is correct to say that 21st century policing requires new resources. However, I am pleased to hear from the OPW that plans are well advanced in this regard. Once the legal transfer has been completed, which will happen shortly, we can move straight into the planning process and get the station built. Once that legal transfer is complete the Deputy will be notified immediately of the site's location.
12. Deputy Dara Calleary asked the Minister for Public Expenditure and Reform the way in which his Department calculates departmental expenditure ceilings; if he has satisfied himself that these methodologies are fit for purpose; the way in which his Department reviews departmental expenditure; the penalties that exist for Departments that breach their ceilings; if there are no penalties, his plans to bring in such penalties; and if he will make a statement on the matter. [18705/17]
I am seeking the Minister's opinion on the robustness of the Government's expenditure ceilings. I note from recent Exchequer returns that all Government Departments are more or less within profile in terms of expenditure. Is the Minister satisfied with the robustness of the system, or does it need to be reviewed? What are the penalties for Departments that breach those ceilings?
Expenditure ceilings provide Departments with greater clarity regarding available resources. They also help underpin significant engagement on expenditure priorities throughout the year rebalancing the previous focus on one single budgetary event in October of each year.
The Estimates process and the determination of expenditure ceilings now take place as part of a whole-of-year budgetary cycle. The Summer Economic Statement sets out the broad fiscal position and the National Economic Dialogue facilitates engagement between the Government and stakeholders. The pre-Estimates departmental expenditure position is provided in the Mid-Year Expenditure Report, MYER. This sets the baseline for examination of budgetary priorities by the Government and the Oireachtas. Following detailed consideration, ministerial expenditure ceilings are published in the budget day expenditure report and are informed by a medium-term perspective on known expenditure pressures and developments. For example, the three-year ceilings for 2017-19 are informed by a number of pre-commitments as follows: demographics in the social protection, education and health sectors. IGEES staff in my Department conduct regular analysis of such trends to better inform the expenditure ceilings in the expenditure report. This analysis is available on the IGEES website. Just over €0.4 billion has been provided for these purposes in 2018; the Lansdowne Road agreement - some €0.32 billion is included for the LRA in 2018; scheduled increases in the public capital plan - €0.26 billion is included for capital in 2018; and the ceilings also include an amount of unallocated resources in 2018 and 2019, based on the fiscal projections at budget time last year. These can be utilised to meet the carryover impact of budget 2017 measures or for new expenditure measures. The flexibility provided within the ceilings allows Government to direct available additional resources towards key services at a time of increased demand and to new priorities.
The management of the annual Exchequer funding provision allocated to Departments is governed by the rules detailed in Public Financial Procedures.
As evidenced by the moderate, prudent and sustainable increases in public expenditure over recent years, the introduction of expenditure ceilings, as part of a series of reforms introduced in the Medium-Term Expenditure Framework, MTEF, has been a major innovation in strengthening expenditure control playing a major role in restoring the stability of the public finances.
The pre-Estimates departmental expenditure position is provided in the mid-year expenditure report. It sets out the baseline for the examination of budgetary priorities by the Government and the Oireachtas. Following detailed consideration, these ceilings are published in the budget day expenditure report and then informed by a medium-term perspective on known pressures and developments. For example, the three-year ceilings from 2017 to 2019 are informed by a number of pre-commitments. One such commitment relates to demographics in social protection, education and health. Staff in my Department conduct a regular analysis of these trends to better inform expenditure ceilings. This is all available on our departmental website. For example, in 2018, €400 million has been provided for these purposes. Some €320 million is provided for the Landsdowne Road agreement in 2018. Regarding scheduled increases in the public capital plan, €260 million is included for capital ependiture in 2018.
The ceilings also provide an amount of unallocated resources in 2018 and 2019, based on the fiscal projections at budget time last year. I am satisfied as to their robustness. The fact that overall gross expenditure in the first three months of the year was slightly behind profile, even though it was up significantly, by 5% or 5.5%, versus that in the previous year is evidence of this robustness.
The issue of penalties does not arise because all Departments have to deliver their expenditure ceilings or below them. My Department and I track this on a monthly basis.
Additional information not given on the floor of the House
These ceilings can be utilised to meet the carryover impact of budget 2017 measures or new expenditure measures. The flexibility provided within the ceilings allows the Government to direct available additional resources towards key services at a time of increased demand and towards new priorities.
The management of the annual Exchequer funding provision allocated to Departments is governed by the rules detailed in public financial procedures. As evidenced by the moderate, prudent and sustainable increases in public expenditure in recent years, the introduction of expenditure ceilings as part of a series of reforms introduced in the medium-term expenditure framework has been a major innovation in strengthening expenditure control playing a major role in restoring the stability of the public finances.
The Irish Fiscal Advisory Council is quite critical of expenditure ceilings. It states they have not worked effectively owing to continual upward revisions in spending. It quoted every expenditure report since 2012. To give an example, the Minister did some public service pay deals on the hoof, including the Garda pay deal and bringing forward increases under the Landsdowne Road agreement. At the Committee on Budgetary Oversight last week we questioned his Secretary General about where the money for the increases had been found. He said that had yet to be identified but that the money would be found. However, he could not give us any more detail. Does that way of doing business not breach the spirit of expenditure ceilings? If the Minister in charge is making policy and spending money in that manner, how does that reflect on other Ministers who are supposed to follow his leadership and guidance?
I have not yet heard any Deputy come into the House and criticise me for increasing expenditure ceilings to put more resources into the health service last year or make funding available to deal with flooding and the refurbishment of primary school buildings. If anything, every day I face criticism for not increasing them enough. There are continual demands for more expenditure in many areas in which I know expenditure is needed, but as of yet I have not heard a single Deputy compliment me or praise the fact that we have managed to stay inside the expenditure ceilings, or criticise us when we change them at any point.
As to where we are this year, the Deputy is correct. We made an adjustment in respect of the timing of a Landsdowne Road agreement payment and bringing it forward. The cost for the year, as is known, is €125 million. At the end of the first quarter, the net underspend as against profile was €150 million. Across the year, I will deal with how the adjustment is to be funded.
We always welcome extra expenditure as long as it is sustainable. If the expenditure ceilings were right in the first place, the Minister would not need to change them. Again, I challenge him, as the Minister in charge of ensuring discipline on expenditure, to state whether that is a good way of doing business. How does it reflect on other Ministers? We can have this debate again. The health budget, in particular, has always proved challenging. It was within profile in the first quarter of the year. The Minister will not be in a position this year to bring forward Supplementary Estimates. Is he confident that the health budget is robust enough to face any challenge that may be ahead? I am looking strictly at waiting lists which are growing longer and longer. The waiting lists published in the past few days were the worst that had ever been seen.
Yes, I am confident that the expenditure ceilings for the health budget this year are robust. They need, however, to be tracked every single month, as they are. I engage in this matter with the Minister for Health, Deputy Simon Harris, who is as committed as I am. In respect of maintaining discipline on overall Government expenditure, it is evidenced by the fact that expenditure in the first three months of the year was, as I said, below profile. Last year, after we had made a needed revision of health budget figures, expenditure came in below the Estimate for 2016 which, in turn, allowed us to make some decisions on, for example, payment of the Christmas bonus. The discipline and commitment are evident. The commitment in respect of maintaining discipline and making sure we meet our commitments will be particularly important in the light of the difficult decisions we will have to make on budget 2018.
14. Deputy Bríd Smith asked the Minister for Public Expenditure and Reform the cost to the Exchequer of all planned PPP projects for the coming period; if his attention has been drawn to research that suggests such projects ultimately cost the State more than alternative funding models; and if he will make a statement on the matter. [18712/17]
I want to ask the Minister about public private partnerships, PPPs. Specifically, what is the cost to the Exchequer of all planned PPPs for the coming period? Has he given any thought, or paid any attention, to the plethora of research that has been carried out into whether it ultimately costs the State more to fund projects in this way than through other models? Will he, please, make a statement on the matter?
Aggregate information on the future cost of each PPP project is available on my Department's website, but I will take the Deputy through the figures she has requested. My Department is updating the projections for the future cost of these projects, with the assistance of the various sponsoring agencies, as part of the regular annual updating of PPP statistics. However, provisional figures indicate that the aggregate cost to the Exchequer of all outstanding unitary payments for existing PPPs is €6.6 billion. Projects currently in planning or procurement will, of course, add to this figure. Once these projects are finalised, my Department will update the table to include the relevant costs associated with the new projects.
PPPs offer an alternative model for delivering infrastructure that can be effective in particular circumstances. However, the long-term nature of these financial commitments arising from PPPs requires that the use of these arrangements must be carefully planned in order to ensure they meet needs in an affordable manner. It was for this reason that in 2015 the last Government introduced an investment policy framework for PPPs. The purpose of the framework was to set a limit to the extent to which the annual costs of PPPs would pre-commit capital funding available to future Governments for investment purposes in terms of the overall capital allocation projected and made available in any single year. This applies to the future cost of payment charges in respect of both existing and new PPPs, together with the upfront Exchequer costs.
I am aware of the debate to which the Deputy has referred and the different views on PPPs. The way in which I am handling it is to have a specific module which will carefully make a decision on whether PPPs can be of help in the future in the review of the capital plan we have under way. They do offer benefits; however, they also have costs. I am aware of both and it is for this reason that I have required the matter to be reviewed again this year in the light of decisions we might make for next year.
Additional information not given on the floor of the House
The current requirement is that, taken together, such future costs of PPPs should not pre-commit more than 10% of the overall aggregate capital funding projected to be available to future Governments in any individual year.
On the research referred to by the Deputy that suggests PPPs ultimately cost the State more than alternative funding models, I do not know the precise research or the alternative funding models to which she refers, but I would be happy to have any such material reviewed by my Department and the NDFA.
The Minister will probably second-guess my concerns and those of others in the House. We are concerned that, although PPPs may deliver key infrastructure, the State is becoming more and more dependant on them, noticeably in housing provision. For example, we are told that 1,500 housing units will be delivered by PPPs. They will be financed, built and maintained by private operators for 25 years. This is also true of schools, water infrastructure and transport, yet there have been numerous studies carried out, one as recently as 2013 by the University of Limerick, which show that there is no strong evidence to support the idea that PPPs deliver better value for money for the taxpayer.
It is a bit like me as a householder buying my fridge or television on hire purchase rather than paying for it outright or borrowing money from the credit union to pay for it. The State is being forced into a model of PPP that is ultimately much more expensive for the taxpayer without delivering the results we need. We are being forced into it by having to borrow off-balance sheet and because we are being told that we cannot spend over a certain amount on our infrastructure.
I am aware of the debate that the Deputy is referring to and have read literature on the matter. I will be careful in the commitments we make in this area.
The Deputy referred to the 2013 study. What has changed since then is that, in some cases, due to the difference in the rate at which our country can afford to borrow, sourcing projects through public private partnerships so that they do not come onto the State balance sheet has to be looked at.
It is important that the House is aware of the following figures in regard to bullet payments in terms of choices that we will have to make. In 2017, the costs of PPP unitary payments, in other words payments we make to companies that have built public assets, is €224 million. This will increase until 2021, when it is expected to peak at €340 million per year. These are significant commitments.
The other side of the coin, which is very significant, is these payments pay for the maintenance of the asset. If one looks at a school that was delivered via public private partnership, the payments to which I am referring pay for the maintenance of that asset over its lifetime. Not only are we able to build infrastructure in such a way that we can meet demands for current funding, we can use Exchequer funding for projects that the private sector might not want to build because the risk might be too high. That is the space in which PPPs need to be considered. They do have commitments, as I have shared with the Deputy, but they also pay for the maintenance of the asset. When it comes to roads in particular, that is a really significant benefit which has an economic value.
Risk is a factor often given by those advocating public private partnerships as a method of building public infrastructure. That risk factor is a bit of a myth because there is no risk for the private operator in terms of public infrastructure. The risk lies entirely with the public element of it. That is shown by the failure of the project to regenerate St. Michael's estate headed by Bernard McNamara. When he pulled out of the project, it cost Dublin City Council at least €5 million and it cost Mr. McNamara €1.5 million. I see he is back up around the corner, rebuilding again. The State had to fork out €35 million on a PPP that failed to deal properly with odour alleviation at the Poolbeg incinerator. It had to pay that money to shore up mistakes made by the private operator.
There are other risk areas that I could talk about. Most sensible people would look at the question of risk and then say to look at the money made by the privately operated M50 toll bridge. The State built the M50 and then the bridge was built under a PPP. What risk was being taken by the private operator? It was taking no risk. It was on to a good thing and making hundreds of millions out of it for years.
The Government at the time believed the use of that road would not be at a level which would make it viable for the State to build the bridge. That was the risk. The assessment the then Government got did not match up to the level of traffic that materialised on the M50.
The Deputy has pointed to PPPs that have not delivered, but we should also point to the PPPs that have, such as primary care centres, schools and roads. We should particularly point to key roads to the south west of our country. They were built at a time when the State could not afford to build them. The funding model used means the State only has to pay for their maintenance.
I want this matter reviewed in light of where we are now because PPPs have played a valuable role and can do so in the future. However, I am not rushing blindly into this. I am aware of the debate on the issue. I am aware of the attractions of this being done conventionally, that is, by the State directly building when it can, but we cannot always do that. That is why PPPs might well play a role in how we deliver some very big projects in the future.
16. Deputy Dara Calleary asked the Minister for Public Expenditure and Reform the amount spent of the €3.8 billion provided for 2016 under the capital plan; if he is satisfied that the money allocated has been spent efficiently; the way in which he is satisfied that the money has been spent efficiently; and if he will make a statement on the matter. [18708/17]
This is almost a continuation of the earlier discussion in terms of allocating capital budgets on the one hand but, on the other, monitoring how they are being spent and ensuring they are spent.
The capital plan, when published in 2015, set out an Exchequer envelope of €27 billion for the period 2016 to 2021. The Government strongly recognised the need for increased investment in Ireland's public infrastructure and used economic growth at that point to increase capital expenditure. The provisional outturn of gross voted capital expenditure in 2016 was €4.1 billion. This was noted in the recently published end of quarter 1 of 2017 Exchequer returns. The report noted that expenditure pressures may arise in the transport area following the flooding at the start of 2016 which in turn was recognised in the outturns for capital expenditure in 2016.
As Minister for Public Expenditure and Reform, I am responsible for monitoring the deployment of Exchequer capital expenditure. Funding is made available to individual Departments. Each Department must ensure that individual projects and investment proposals are subject to all relevant appraisal processes. I make every effort to ensure capital funding made available to Departments is spent in the year in which it is made available. When a carryover is possible, it is facilitated, as we did this year for all Departments. However, with the social pressure we have to deal with, some of which can be attributed to the need to increase capital investment, funding is made available in a particular year at a particular point to deliver projects. It should be spent in the way it is committed.
Public housing investment for the first few months of this year is many multiples of where we were last year. That is what I expect to see happen and I expect it to continue throughout this year.
In terms of the Committee on Housing, Planning, Community and Local Government, the outturn for 2016 of €467 million is under the €539 million projection. That comes back to my first question in terms of what is happening in housing.
The Minister leaves it to every line Department and tries to keep it within the budget, but how much of the €4.1 billion was actually spent? How much of it went into projects on the ground?
Transport Infrastructure Ireland, TII among other organisations, has raised the issue of the length of time it takes to initiate any capital project in this country at the moment. Is the Minister looking at the length of time it takes to get a project, be it a school or a road, from the planning stage, through the funding process and to site? Does he consider it a problem?
Overall levels of capital expenditure have been the subject of much debate in this House. The Irish Business Employers Confederation, IBEC, recently published a commentary and views on the matter. It is important that we are clear on what the figures are. In 2013, the State invested €3.4 billion in capital expenditure. For 2017, it is €4.5 billion. It is an increase of €1 billion over a four-year period. Next year, it will go up to €5.3 billion, which is an increase of nearly 50% on 2013. Our plan up to 2021 is to see that capital investment increase to €7.3 billion.
The Deputy makes a fair point on the length of time involved in spending that money.
There are two reasons for that timeline, first, the need for us to go through a public procurement and tendering process which must be done to ensure that Irish and international companies have a chance to give us the best value for the money I am referring to and, second, the planning process. While that is a matter for the Minister, Deputy Coveney, any change to that would be contested. A change has been made relating to housing projects above a certain size. It is the right of citizens who live near areas in which infrastructure or housing is to be put in place to make their views known, but I want to see the figures I referred to spent in the year in which we make the money available.
The Government will meet the medium term objective next year in terms of the structural budget. That will then free up resources for capital expenditure in budget 2019. The Minister is currently in the middle of a capital plan review, but in terms of that pipleline, Transport Infrastructure Ireland, TII, has told us there are not enough projects to go into that pipeline.
In terms of planning for budget 2019 and the capital projections for that, will the Minister confirm that he will be making announcements this October pending the capital plan review in terms of budget 2018? What signals will he give to agencies to start preparing projects in that when we are in a situation in budget 2019 to invest more in capital that they will have projects on which to spend it?
It is my intention to make progress well before October on the process I have referred to. Before the summer, I aim to publish a paper that will provide an update to the House on the position with all capital commitments throughout the country and give an indication of the kind of capital investment we believe will be needed here in the next decade. I want to take stock of where we are now and where we are likely to go in the future.
On the second question, it is my intention in the second half of this year, and it may or may not coincide with budget day as I have not made a decision on that yet, to make announcements on individual projects because there is a need for clarity on where we stand with existing commitments, let alone our ability to make new commitments. I would like to bring that to a conclusion in the second half of this year.
17. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform the degree to which he remains satisfied that the economy continues to recover within the parameters of public expenditure and reform requirements; if he has identified particular issues likely to require attention in this regard; and if he will make a statement on the matter. [18709/17]
The purpose of this question is to elicit information on the extent to which public sector reform and the curtailment of expenditure continues to feature in the monitoring of each Department's budget, and the degree to which it is expected to achieve targets.
Sustainable public finances are essential for the continued progress of our country. The careful management of how we spend the taxpayers' money has played a vital role in stabilising our public finances, with the underlying Government deficit for 2016 estimated to come in below 1% of our national income.
The Deputy will be aware that the economy continues to improve. The Central Statistics Office figures show the economy grew by 5% last year and unemployment fell to 6.4% in March.
Improving budgetary conditions in recent years have allowed the Government to allocate additional resources towards its emerging needs, with Government expenditure increasing on average by approximately 3% per year since the end of 2014, with the prospect of continuing that rate of growth into the coming years.
Departments are managing the figures so far this year inside available resources. We have resources for next year, which the Minister, Deputy Noonan, emphasised again today and on which I made a number of points during the day, but once we pay for the full year cost of our social welfare changes and honour commitments on tax reform, the net amount of resources available to the State are approximately €500 million inside what is defined as fiscal space. That means we will need to make very careful choices regarding how we spend that money next year.
It strikes me that if we consider where our economy is now, in 2007 we had 2.1 million people at work. In 2017, we will have 2.1 million people at work. In 2007, we had tax revenue of €47 billion. In 2017, the corresponding figure is €51 billion. In many cases, therefore, our public finances and our labour market are now back to where they were a decade ago. Our deficit and borrowing requirements are not back to that point yet but in other areas the economic indicators are back.
We have a clear choice ahead of us. We know what happened to the economy after 2007. We saw the huge damage that was inflicted on our country and the pain caused. To make sure we do not go through that again, we need to be sensible about the way we increase expenditure in the coming years, accompany that with reform to make sure we spend money better and then make wise choices regarding the way we manage tax in our country. If we can do that, the prospect of being able to increase spending by 3% each year and accompany that with reform year after year will offer our country a great chance to deal with the issues Deputies raise in this House every day.
I thank the Minister for his comprehensive reply. Does he remain satisfied about the ability of each Department to work within its budget to the extent required, given the existing competing demands and those that are likely to emerge during the year?
Yes, I am, but it is a continual area of real pressure that my colleagues, in responding to the different issues they face in their Departments, must do that within their expenditure ceilings. They and their Departments are fully committed to doing that but a real risk we face in light of the economic fork in the road at which we find ourselves is that each day different expenditure needs are called for of this Government. Week after week it is asked to spend more money in different areas, and the areas change week after week. We need to ensure that the loser in all of this is not the taxpayer through commitments being made to expenditure that end up being unaffordable with our current levels of taxation. The taxation environment is changing. It could change further as a result of what might happen with Brexit, yet we have political party after political party calling for more money to be spent in particular areas or services to be delivered and arguing that they can be achieved at no cost. That is simply not possible.
As we move into the second half of this year in particular, this will be an area in which we will need to make clear and sensible choices. I will do my bit in this regard and I hope the House will do the same.
19. Deputy Dara Calleary asked the Minister for Public Expenditure and Reform the progress of the National Shared Services Office; the progress of the Bill; the preparations in place for an expansion of the National Shared Services Office; the mechanisms in place to assess whether savings are actually made; his views on whether there will be resistance from the Departments to the expansion of the National Shared Services Office; and if he will make a statement on the matter. [18707/17]
We discussed the shared services Bill here in December. I believe it was on the last day of the previous session. First, what is the status of the Bill? Will it come to committee soon? Second, will the Minister outline any further progress since that discussion on the roll-out of shared services as a function within the public service?
To answer the Deputy's question on the Bill, it is my objective to take that Bill to Committee Stage before the summer recess. The Deputy and Deputy Fleming raised a number of points regarding it, although I believe he is broadly supportive of it.
The National Shared Services Office has been in operation since 2014. As the Deputy is aware, the Bill does not propose any change regarding the operation of national shared services but rather looks to put that organisation on a more firm footing.
In terms of progress made since 2014, we have set up two shared services centres. I visited their offices in Killarney and Clonshaugh. I am looking forward to visiting another office in this area in Galway in May.
The office is delivering savings to us already. For example, in 2016, we estimate the savings that have accrued to the State to be of the magnitude of €7.6 million. In 2017, we believe the figure will be €9.7 million. Over the lifetime of the organisation we believe it will deliver savings of approximately €5.5 million per year that will then allow the redeployment of individuals who are currently working on payroll and human resource services to do other work across our civil and public service.
