Ceisteanna ó Cheannairí - Leaders' Questions

People are genuinely shocked at the extraordinary cost increase in the national children's hospital, which is up by about 126% in four years, a remarkable increase taking into account annual construction inflation costs. People are also very concerned at the prospect of further increases in the cost of the hospital because, of course, the contractors will be able to recoup future costs where the inflation rate exceeds 4% per annum. I believe construction inflation is currently running at up to 10.5%. It is a far cry from the €650 million all-in that the Taoiseach announced, I think, back in 2016.

We learned late last week that the Minister was briefed on 27 August. In a comprehensive note from his assistant secretary he was told the "construction budget is trending very significantly over budget." I am told that at a minimum it is to be an additional €191 million and this was not in dispute. The note also stated that BAM had submitted a further €200 million over the €191 million. This did not include VAT, sectoral employment orders and so on. The note concluded that the CEO would advise the Department in the following week.

What did the Minister do when he got that note? Did he talk to the Secretary General in the Department about this? Was it raised at the regular management meeting of the Department? Did he seek further briefings? Why did he not alert his Government colleague, the Minister for Finance, Deputy Donohoe? We have not had an explanation for this enormous overrun with a significant impact on the capital budget. Why did the Minister for Health not fully inform the Dáil? In fact the Dáil was misled essentially with the €983 million figure. No mention was made of the €191 million or that the costs were trending significantly over budget, of which the Minister would have been apprised in that note in August.

Are we to seriously believe that the Secretaries General at the Departments of Finance and Health had no discussions about this between August and November of last year or that the two Ministers did not? If that is the case, it raises fundamental issues about the governance, competence and management of the budgetary process. Was it that this project was too big to fail? Politically the Government had invested too much and it was too late to stop or to relocate. There was an extraordinary silence about this over a long period of time. Does the Taoiseach understand why people find the explanations we have been offered so far incredible? Does he accept that the overall costs will be higher than the €1.7 billion because of inflation and the obligations the Government has?

Does the Taoiseach accept that the Minister for Health should have alerted the Minister for Finance to this issue as far back as August and that his officials should have alerted the Department of Public Expenditure and Reform?

I fully understand and appreciate that taxpayers are very annoyed at the way the cost of this project has escalated. I do not doubt that for a second. This is not, however, an issue of taxpayers' money being wasted. In fact, taxpayers' money has not even been spent at this stage. Only about €250 million of the €1.5 billion allocated to this project has been spent. It is not a case of taxpayers' money being wasted but it is a case of the Government and its agents underestimating the cost of this project. We have to accept responsibility and be accountable for that. We cannot take the credit for bringing the last three major projects in on budget, that is the M11 in Wexford, the M17 and M18 in Galway and Luas cross-city-----

What about broadband?

Those contracts were drawn up under previous Governments.

-----but not accept responsibility when things go wrong and when there are overruns, as is the case on this occasion. We accept responsibility and we are accountable for what has happened.

The figure used by the Deputy of €1.7 billion relates, as I have stated previously, to many aspects of the project that would happen in any event, including investment in IT and equipment. Even if we were not building a new children's hospital, we would have to replace equipment and bring in new IT systems. The Deputy will be aware that the figure also includes the €30 million or €40 million that was spent on the Mater Hospital site in respect of the failed attempt by previous Governments to build a national children's hospital.

This one is on the Taoiseach's watch.

The Deputy is correct that one of the reasons the children's hospital project has increased in cost is construction inflation. It is not the only reason but it is certainly one of the major ones as to why the cost is much higher than we had anticipated. The contract provides that further claims can be made by the contractor if construction inflation exceeds 4% but we will have to see if that arises in the period ahead.

The Minister for Health will make a statement to the Dáil this afternoon. I am not going to pre-empt the statement that he will make but he has spent nine hours in front of two committees answering questions on this matter. The Secretary General of his Department, Mr. Breslin, has done the same. If Deputy Micheál Martin has a chance to read over those transcripts and study the questions that the Minister and the Secretary General were asked by Members of the House, particularly Fianna Fáil Deputies, he will see that they were very thorough. The Minister and the Secretary General answered all of those questions to the best of their ability already.

The Minister did not release the emails to the committee.

One of the defining characteristics of the Government's response to this issue from the outset has been its refusal to accept that any error was made or that it got it wrong. The Minister, as recently as 6 February, when he was asked about the cost of the national children's hospital, replied that it was a reasonable cost and that it represented reasonable value. However, PwC has been appointed by the Government so it is obvious that something is wrong. We cannot actually say that the taxpayer has not been ripped off. Memos showing the interaction between the hospital board, the Department and the contractors are beginning to emerge. At one stage, the contractor was threatening to reconsider its participation in the project, which is extraordinary. It seems that the Government was paralysed and powerless to do anything. It is quite extraordinary that the Government and the Minister are of the view that €1.7 billion represents a reasonable cost for the hospital. Is that still the Government's position? We have not had a satisfactory explanation as to why this was not put on the Government's early warning system and how everybody, particularly the Minister for Finance, was oblivious to it. Nobody bothered to tell the latter until November.

Fianna Fáil is giving him a free pass.

I have been following this debate very closely in the past couple of weeks and it seems that virtually nobody is opposed to building a new national children's hospital. While it has been promised for decades by successive Governments, it is now being delivered. It is under construction, with the first phase due to open in Blanchardstown next year and the final project due to be completed by 2022 or 2023. Nobody is disputing the Government's decision, made in December, to proceed with the project. We were faced with three possibilities, namely, to cancel the project all together and set aside over €250 million invested to date, to retender, which would have delayed matters and probably ended up costing even more, or to proceed.

We decided to proceed and very few people opposite have argued that we made the wrong decision to proceed at that time. As I said, this is not an issue of taxpayers' money being wasted, but it is an issue of the Government and its agents underestimating the true cost of this project. We accept responsibility for that and we are accountable for it. As I said earlier, the last three big projects brought in by this Government, Luas cross city, the M11 and the M17 and M18 projects, costing between €250 million and €500 million, came in broadly on time and on budget. In the same way as we accept the credit for that, we, of course, accept the responsibility when things go wrong. We do accept responsibility. We also accept that lessons have to be learned. Perhaps in my next intervention I can talk about some of the decisions that Cabinet made today in that regard.

There are three extraordinary facts at the heart of this fiasco. The first is the extraordinary achievement of delivering what we are advised will be the world's most expensive hospital, ever, at an overrun to the taxpayer of €450 million. This is extraordinary stuff. Second, it is extraordinary to hear the Taoiseach again try to justify or explain away this fiasco, as if to suggest to the taxpayer that it is not such a big deal after all, that is, €450 million of taxpayers' money in any overspend. Perhaps, what is most extraordinary in this scenario is to hear the Government's coalition partner, Deputy Micheál Martin, extol the extraordinariness of the situation and then resolve to back the Government and its incompetent Minister for Health, Deputy Harris. This is truly extraordinary stuff.

It is extraordinary that the Tánaiste and other members of Government choose to label efforts to seek accountability as stunts. It is extraordinary that the Cabinet and Government are so arrogant at this stage that they defy the prerogative and duty of the Opposition to hold them to account because that is a democratic imperative and it is essential. It is essential because of this hospital overrun but it would be necessary in any event because the Minister for Health's record, frankly, is shambolic. Whatever the Taoiseach may think, or whatever his friend, Deputy Micheál Martin, might suggest we have a crisis in the health service. It is crystal clear at this juncture that the Minister for Health is incapable of resolving it. In fact, it has become apparent that he is part of the problem and not part of the solution.

We have the worst waiting lists across Europe. Last month, more than 10,000 patients were on hospital trolleys. Last year was the worst year on record in a perpetual trolley crisis that nobody seems to be accountable for. It is a farce. We had nurses and midwives on picket lines, which was totally avoidable but for the overbearing arrogance of this Government and the Minister for Health, who would only at the eleventh hour engage respectfully with our nurses and midwives. Then, we have the small matter of €450 million of taxpayers' money. Fianna Fáil might be prepared to sit on its hands but we will not. The anger around all this debacle is very real and it will not go away. I understand that the Minister for Health, Deputy Harris, proposes to make a brief statement following Leaders' Questions, with no facility for questions or answers or even the most basic accountability. I suggest to the Taoiseach that rather than facilitating this fiasco any further he should do the right thing and relieve the Minister for Health, Deputy Harris, of his duties.


Hear, hear.

I thank the Deputy for her question. I am heartened by the newfound interest of Sinn Féin in taxpayers' money. This is the party that regularly before the budget every year proposes €2 billion to €3 billion in extra taxes to be imposed on workers and on businesses.

It proposes an extra €2.3 billion every year, not €400 million spread over three or four years. It wants to impose an extra €2,000 million on taxpayers and businesses every year in the form of tax increases. Sinn Féin is no friend of the taxpayer. Let nobody in the Chamber have any doubt about that.

Accountability is about accepting responsibility for one's decisions, actions and perhaps in some cases inaction. The Minister, Deputy Harris, the Government and I, as head of Government, accept responsibility for underestimating the cost of this project. Accountability is not about giving in to the baying mob, witch hunts and the almost weekly demand for a head, any head, somebody's head. Who is next? That is not accountability in my view.

We should not forget the value and benefits of this project, not just to taxpayers, but to our children, who make up 25% of our population, as well as their children and their children's children. This will be a state-of-the-art children's hospital - not the most expensive hospital in the world but certainly one of the best. It will be a truly national facility - born digital and connected to paediatric units and hospitals all over the country. It will have 380 single rooms with infection control, a place for parents to stay overnight, a 60-bed ICU block, 22 theatres where we now have 14, five MRI machines and room for two more where we only have two at the moment, 20 ultrasound rooms, academic centres, parent accommodation and research centres. This is truly a project of enormous value. Yes, Government and its agencies underestimated the cost of this project. We got that wrong. It will cost more than we thought it would but nobody is saying it can do it any cheaper or any faster so we have taken the decision to go ahead with it and build it and we shall do so.

Just so that I have the record of the Dáil straight, it is the most expensive hospital per bed. I reckon that still makes it the most expensive hospital but I will not quibble with the Taoiseach over that. It is not just that there was a miscalculation of the costs. That happened for sure and there are governance issues that percolate all the way down through the board reappointed by the Minister in July 2018. No doubt, we will uncover the individual actions, inaction and bad calls that were made.

However, it is not just about that and the Taoiseach knows that. The Minister had information that we are advised he did not share with his Cabinet colleagues. The Minister had information that we are advised he did not share with his colleagues in government, in Fianna Fáil. In fact, Fianna Fáil had extensive pre-budget negotiations. Reviewing the confidence and supply arrangement was a very long process during which we were told an in-depth review of every Department took place yet Fianna Fáil was not informed about this or it missed it.

This is not simply about incompetence and bad management, which the Government has demonstrated previously. It is also about concealing or failure to reveal the full facts. The facts are that whatever the mood on the Government benches is, the people do not accept that an apology from the Minister is sufficient and will not tolerate a Government that is an apologist for bad governance rather than one that is prepared to face real accountability.

The Cabinet decided this morning to re-profile about €100 million in expenditure and infrastructure. It is important to put that into context. The budget for infrastructure for this year is €7,000 million. That is an increase of €1,500 million on last year so we are re-profiling €100 million of an increase of €1,500 million. It does not affect or change the budget ceilings agreed by this Parliament in October. As many people know by now, the largest single deferral, which is, of course, not a deferral in reality, is the €27 million we had allocated to A5 this year. That project cannot go ahead because, unfortunately, there is no Executive and there are no Ministers in Northern Ireland-----

In the teeth of Brexit.

The payment will not now fall due this year.

It is due to start at the end of this year.

However, should Sinn Féin and others take up their responsibilities in government, form an Executive and approve the project, we will find the money to proceed with it this year. As those in Sinn Féin have failed to take up their responsibilities to deliver infrastructure projects, that €27 million payment we were to pay to the Northern Ireland Executive will not fall due this year. In addition, €10 million is being re-profiled from the national forensic science laboratory, which is under construction, but the payment can be deferred.

It will be deferred next year as well.

The Department of Education and Skills, which is contributing €10 million to the cost of a school for the new children's hospital, is willing to bring forward that payment to this year. When it comes to the funds for Project Ireland 2040, the next drawdown and announcement, as I imagine Members opposite will not be sad to hear, will be deferred by a number of weeks.

Defer all the fanfare and all the spin.

There are other changes in respect of between €2 million and €4 million in other Departments and €24 million in the Department of Health.

The Taoiseach should have a few roadshows to tell everyone.

I can confirm that no projects are being cancelled.

What of the €10 million for schools?

Whatever scaremongering may be happening about projects being cancelled because of the children's hospital, I can confirm that it is not the case..

On the same subject, whatever about the reality, the perception among working people means that they are questioning the misuse of public moneys. I want to ask a question regarding PwC, which has been engaged by the Government to explain this gross miscalculation. I am curious to understand what procurement procedure was followed to appoint this firm. One could argue that a conflict of interest exists because PwC received in excess of €30 million over the past nine years in fees from BAM. We now have a situation where PwC is conducting an analysis and assessment of the reasons we have this gigantic overrun. BAM will most certainly play a central role in that examination. Can the Taoiseach explain why the Office of the Comptroller and Auditor General was not utilised as the watchdog to carry out this function, particularly in view of the fact that its statutory remit is to improve the use of public moneys and resources and strengthen public accountability? Is it the case that the Office of the Comptroller and Auditor General is not adequately staffed to provide this resource? Why are we farming out so much of our public service work to a small, select group of accountancy and legal firms. Is it accurate to contend that the public service no longer has the talent or the expertise to conduct such onerous exercises?

At a time when, generally, many Irish households struggle with everyday costs such as those relating to childcare, mortgages, rent and insurance, there is a strongly held sentiment that public moneys are being squandered due to unnecessary layers of bureaucracy. Growing numbers of quangos - yes, the quangos are most definitely back - and committees of review are established yet no one is held responsible for costly decisions. In 2011, Fine Gael and Labour separately promised to abolish or merge many dozens of what they described as wasteful agencies. Fine Gael listed 145 quangos which would be terminated when it came to power. While a total of 62 were terminated, as many as 40 new agencies have been created. Some 14 of those involved mergers of old agencies. There are now, at enormous cost to the taxpayer, an estimated 257 quangos. It is ironic that their existence creates further distance between the public and the relevant Minister or Department when policy issues, controversies or the need to apportion blame arise. The quango culture is alive and thriving at a growing cost to the Irish taxpayer while, at the same time, diminishing even more the responsibility of the Minister or the Department involved.

The cost of the administering the State, together with so much unaccountable allocation of public moneys, is infuriating for a hard-pressed workforce. What measures can the Taoiseach and the Government take to rein in the cost of public administration?

I thank the Deputy. He will be aware that the main cost of public administration is salaries and, as we increase pay across the public sector this year and next year, that is likely to increase. The number of State agencies and bodies, as the Deputy rightly acknowledges, has decreased in recent years but not by as much as perhaps we had intended.

One of the new bodies established was the National Paediatric Hospital Development Board because the view was taken that the necessary skills perhaps did not exist within the relevant agencies to deliver a project of this scale. As a result, a dedicated body was established by the Government and given statutory powers by the Oireachtas to proceed with the project. Perhaps, on reflection, that was not the right thing to do. Perhaps HSE Estates, which has done such a good job on other health projects, might have done as good a job, or better, on this project. However, we are beyond that point now.

In terms of the work being undertaken by PwC, the commissioning of this review was done by the HSE, which has a framework for the provision of professional services to assist in the programme for health service improvement. It provides resourcing and experience to be drawn down from PwC, as required. Under the terms of this framework, it was agreed that PwC would carry out a review of cost increases relating to the new children's hospital construction project. The terms of reference have been finalised and published. The review is scheduled for completion by the end of March, subject to the availability of relevant documentation and personnel and will inform any governance or other changes required.

On the Deputy's question regarding the Comptroller and Auditor General, that was raised at the Committee of Public Accounts on 31 January, including in the context of what information was available to the Department and the group at any given time. It was acknowledged that the role of the Comptroller and Auditor General is to look back on expenditure that has already been incurred. As Deputies will be aware, this is a controversy about €450 million that the Government has decided will be spent in the years ahead. The expenditure has not yet been incurred. So far, between €200 million and €250 million has been spent on the project, and that is on budget and on time. The controversy relates to spending that has yet to happen. We believe it is the right decision to go ahead with this project because suspending it or stalling it could mean that we would have no children's hospital for a generation and because retendering would probably cost more. As already stated, the role of the Comptroller and Auditor General is to look back at expenditure that has been incurred. This expenditure has not been incurred. This is not about a waste of taxpayers' money; this is about underestimating the true cost of the project.

In response to questions from committee members as to whether he might examine the project at some point, the Comptroller and Auditor General did not rule it out, if, as he stated, it could add something valuable. Again, he noted that, typically, his role is to look back at expenditure previously incurred.

The HSE has confirmed that it is satisfied that there are no conflicts of interest in the context of the review by PwC of the escalation of costs associated with the construction of the new hospital. The HSE has indicated that it is aware that PwC was auditor to BAM. That contract ceased at the end of 2015, however, which means it is four years since PwC has audited BAM.

I agree with the Taoiseach that the national children's hospital project should progress but the public is demanding value for money while it does so.

On the general point I made, there are 257 agencies in this country. We used to call them quangos. At the same time, we witness all the errors, mistakes and abject systems failures right across the public service. After all of those mistakes, one could only conclude that governance levels have disimproved. A decline in public confidence exists despite the massive cost in the increase of oversight. Are all the quangos and oversight bodies necessary? Does the Taoiseach have any plans to review the agencies? Will he ensure that a stocktake is carried out? Has he identified any agencies for abolition? The public are bewildered by this waste of public funds at a time when they are enduring personal financial strain and pressure. The public want to see the restoration of proper responsibility and accountability, particularly in the context of major projects that are under way.

There has been a significant rationalisation of public bodies in recent years. The House will be aware that town councils were abolished, education and training boards, formerly vocational educational committees, VECs, were merged and county enterprise boards, as stand-alone entities, were abolished and reintegrated into local authorities. Many mergers also took place. To give one small example, the National Sports Campus Development Authority was merged with the Irish Sports Council. If Deputy Lowry or any other Deputies have suggestions regarding public bodies that should be abolished or merged, the Government would be interested to hear which ones they have identified and the reasoning behind their choices. What is undoubted is that lessons have to be learned by the Government. Further lessons will be learned. The Cabinet decided at its meeting this morning that among the matters which should be examined is whether we should avoid two-phase tenders in the future.

There are definitely advantages to it but there may be disadvantages as well because one does not know the full cost of a project until the second tender comes in. We are considering whether we should factor in optimism bias and promoter bias, whereby projects that people want to see delivered tend to give rise to optimism about the real cost. We also will examine the issue of low-price tenders and whether we should look more at median price because we have a real concern that some companies have been low-balling, coming in with very low tender prices to get the contract and then coming back with claims thereafter. We also particularly want to look at contractors' past form and public service references.

Some of us have been saying that for a while.

There are one or two contractors who, quite frankly, I would not like to see get a public contract again in this State.

However, EU procurement law does not allow us to ban people from tendering. Perhaps we can work into the scoring system a public service reference or a past form clause looking at previous projects.

Finally, with apologies to the Ceann Comhairle for going over time, I should say this is something we have got right in the past. The National Roads Authority, NRA, ran over and ran late for years and years. Deputies opposite me will remember this. However it got it right subsequently. Transport Infrastructure Ireland, TII, is bringing all the road projects in on time and on budget at the moment. Local authorities were notorious for running late and running over on water projects. Irish Water delivers its projects on time and on budget. We can learn from past mistakes and past successes.

We need to be forensic in determining what went wrong and how the Government blew €500 million of the public's money on this hospital, €500 million more than what was indicated in the contract in February 2017. At a meeting of the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach on 5 February, I asked Deputy Donohoe to provide to the committee a detailed account of the drawings and how advanced they were when the contract was agreed in February 2017. Every expert I talk to about this issue says the Government's fatal mistake was agreeing a contract on the basis of drawings that were little more than planning design drawings. Anyone would know that a contract should be concluded on the basis of the most detailed drawings, including equipment and IT. It is not easy being a Minister, as one is there learning the ropes. Unfortunately, however, we had a Minister who let go of the key rope. This ship has sailed around for the last two years adding costs for the Irish taxpayer.

We need to be forensic about the political aspect of this issue. The Minister for Health knew that his predecessor, the Taoiseach himself, had said the only reason this hospital would not open in 2020 would be if an asteroid were to hit Ireland. As such, he may have been under a certain amount of pressure to deliver. All of us here know that Deputies were being met in the coffee dock every day by people lobbying them to put the site in Blanchardstown or at Connolly Hospital instead. Facing the threat of judicial review, there was pressure to sign this quickly and get the deal done. As reported that day the Government agreed a contract worth €950 million, admitting at the time that IT and equipment might cost another couple of hundred million euro. Any quantity surveyor, developer or construction expert of note to whom I have spoken has said that was a fatal mistake. As a result, the main contractor and every subcontractor had the Government over a barrel for the additional €500 million that ensued. Can the Taoiseach give me some sense of this, being specific and precise? I do not want to hear about the number of beds and the benefits, yakety yak. I want to hear why the Minister made the decision to issue a planning contract on the basis of planning drawings rather than the drawings every expert I have spoken to says are needed to cost a hospital. Why did that happen?

I thank the Deputy. We are under pressure to deliver this project, but we are not under pressure from each other. We are under pressure from the children of Ireland and the parents of those children, who deserve much better healthcare facilities. I know the Deputy has a family. I am sure he has been to Crumlin and to Temple Street in particular. He has seen that we operate our paediatric facilities out of Victorian buildings. That is something that needs to change.

My children are not an answer to my question.

The pressure this Government feels to deliver this project arises from our concern for parents, for quality paediatric healthcare and for children.

It is not correct to say that we have blown €0.5 billion in public money. The money has not even been spent yet. We took a decision in December to go ahead with this project. Having discovered that we underestimated the cost of this project, we had three options. The first was to cancel the project, leave €250 million behind us and start all over again, thus potentially deferring the project for a generation. The second option was to re-tender and the best advice was that if we re-tendered we would not find anyone who could do it cheaper or quicker. The third option was to proceed, and we took the decision to proceed and that is now what we are doing.

You could have-----

The Deputy raised some legitimate questions about whether the two-phase approach was the right way to go. That is something we have to inquire into and consider. There are obvious pros and cons with a two-phase approach. The obvious pro was that it is quicker. One can go ahead and get the enabling works, the clearing works, the demolition and the underground works done and then have the second phase done. An obvious downside is that while one knows for sure the cost of the first phase, one does not know for sure the cost of the second phase. Even when one goes for a single-phase contract, and the same experts will tell the Deputy this if he asks them, that does not preclude the fact that the developers can come in with claims after the fact. We see plenty of examples of contracts which were done differently, as a single tender with a single price amount and at the end of the job, the developer came in with additional claims because X, Y or Z was underestimated. It is not necessarily the case that had the alternative approach been followed we would not have found these additional costs arising anyway. They just would not have crystalised yet. They would have crystalised in 2022 or 2023 in the form of claims after the fact-----

That is how tight the budget is.

-----and that perhaps would have been politically easier to bear and easier to manage because we could point to the project and say, "It's done, isn't it great and isn't it worth it?", but that was not the decision that was made.

Any expert I spoke to said it was an amazing decision to give the developer effectively a blank cheque. I have a second precise and forensic question in terms of what went wrong here. It is my understanding that the architects and other professional services companies who worked on the project were on a fixed percentage fee and as the costs continued to rise, their fees rose too. I would appreciate it if the Taoiseach could confirm if that is the case and, if so, what is the cost to the public because in terms of the basic architectural works done in the initial first drawings, when the project cost goes up €500 million one gets another €10 million, €20 million, €30 million or €40 million. Is that the case? Has the Taoiseach worked out whether that happened? If so, what was the Department of Public Expenditure and Reform doing signing off on a two-phase project where the developer is given a blank cheque for any additional costs and signing off on fixed fee professional fees so that the public was on the hook? As the project got bigger, everyone did well except for the public.

The Deputy said that every expert said this and every expert said that. In this project the experts were on the board. The experts were the staff. A decision was taken by Government, endorsed by this Oireachtas, to establish the National Paediatric Hospital Development Board, a dedicated agency to deliver this project. The board is a who's who of experts at delivering projects such as this one, mostly people who have done major construction but many others who know about paediatrics and others who know about the legal aspects were put on it, such as people who delivered projects like the Aviva stadium and Dundrum Town Centre. These were the experts put in charge and these were the decisions they made as our agents but as Government we have to accept responsibility and be accountable for decisions made by our agents.

Fixed percentage fees.

We accept responsibility and accountability for it.

Can I ask a question? The Taoiseach did not answer-----

I would have to check the contracts.