Adjournment Matters (Resumed). - Cork School of Music.

I am not sure if the Minister is familiar with the background to this issue. I have raised it consistently in the Seanad over the past year. There is no need for me to make the case for the Cork School of Music. It has been well made and the case was accepted by the Government inasmuch as it entered into a public private partnership process to secure the construction of a new school. Unfortunately, that has not happened.

There is growing frustration in Cork about this, mainly because the city successfully bid to be designated European capital of culture in 2005. Winning the bid was a great reflection on the people of Cork and of this country. However, the bid hinged on the construction of the flagship new school of music. We have been let down. The school has not been built and it is unlikely to be built. Even if it is given the go ahead in the next couple of weeks, we will be lucky to see it completed by 2005. Not only is this a potential embarrassment for the people of Cork, it is also a potential embarrassment for the Government and the country. We have let the side down with regard to this bid.

I have received a number of different answers when I have raised this issue. I hope the Minister will be able to clarify a number of points this evening. We are told by the Government that there is a difficulty with EUROSTAT. The problem is that EUROSTAT claims it has not been consulted on the matter and it has put that claim in writing. I believe the other problem relates to an interpretation of EUROSTAT's ruling by the CSO. The Taoiseach said in Cork last Thursday that he was doing everything possible about this issue but he then went on to repeat the EUROSTAT opinion or interpretation. Will the Minister write to EUROSTAT and ask for its interpretation? The Minister should then make the correspondence public so we will know, once and for all, whether EUROSTAT has a problem with it or if it is an internal problem in this country.

Much as I hate to say it, I believe it is an internal problem. There seems to be a blockage in the Department of Finance even though that should not be the case, given that the Department was represented in the processing of the public private partnership and in the tendering process. If there were problems or difficulties, they should have been highlighted then. We should not have reached the stage of selecting a preferred bidder and then not placing the contract.

There is also a serious industrial relations problem looming and it will be upon us next September. The staff and students vacated the school of music 18 months ago to facilitate its demolition and the construction of the new school. They are in temporary accommodation in hotel rooms and other venues, which causes huge health and safety issues. The students and staff have had tremendous patience but I cannot see that continuing into next September. There is a window of opportunity in the next couple of weeks to remove this blockage and do what is right. We must honour the case that was made and, more importantly, ensure this country is not let down in the eyes of our European colleagues in 2005. Otherwise, it will be an eternal embarrassment for us.

I apologise if I sound frustrated but the Cathaoirleach and other Senators are aware that I have been raising this issue for 12 months. I am only reflecting the frustration of the people of Cork about it.

I thank the Senator for raising this issue. For his benefit, I am happy to hear of any issue that concerns Cork because my mother is a Cork lady.

I hope that will be reflected in the answer.

News about anything in the Cork area is of specific interest for me. I do not take offence at anything that the Senator has said and understand the frustration he is expressing on behalf of the people of Cork. I presume he was referring not only to those associated with or who have an interest in the School of Music but also to all other participants, including those who might be looking at PPPs and other such projects. I appreciate that there are obstacles, cumbersome and otherwise, in the system but one recognises that in a fair and balanced system where people can avail of an appeals process, it can take time to surmount them. The democratic appeals process is part of the hiccup in the case of the Cork School of Music. To be as fair as possible, I will outline to the House the position to date.

The project was launched in July 2000 and 12 consortia expressed an interest in bidding. After initial presentations and interviews, a final shortlist of three bidders was issued with the invitation to negotiate documentation in November 2000. In that short period, July to November 2000, the project made quick progress. Detailed evaluation of the final bids was undertaken just two months later in February 2001. Jarvis Projects Limited was selected as the preferred bidder just four weeks later in the following month.

The officials and advisers of the Department of Education and Science entered into a period of intense discussions with Jarvis with a view to reaching financial close on the project. During this period Jarvis, under the terms of the project, sought and received planning permission for the project from Cork City Council. However, An Taisce, as it was entitled to do, submitted a planning appeal to An Bord Pleanála against the grant of permission. During the period of the appeal, work on the project was suspended and resumed only after An Bord Pleanála rejected the appeal and granted planning permission for the development on 24 December 2001.

When the project was first launched, the economic climate was healthy. Since then, however, as we are all aware, the economy has suffered significantly, particularly because of the downturn in the global economy, so much so that the affordability of each capital project must be examined closely in the context of overall Government expenditure. This brings me to the question of the general government balance, the critical measure of what can be accommodated within our obligations under the stability and growth pact of the Maastricht Treaty. Under EU rules, where projects are financed on a deferred payment basis by the private sector, the capital value of such projects is a charge on the general government balance over the construction phase.

Senator Minihan referred to the role of EUROSTAT. I would like to clarify the position for him. If he has any further questions, I will be happy to provide further clarification. A EUROSTAT group is reviewing the accounting rules on the issue to which I have referred. A standing committee, established by my colleague, the Minister for Finance, will also advise on the general government balance implications of private sector financed projects. EUROSTAT ruled on the GGB implications of the bundle of five post-primary schools and found that the capital cost must be reckoned for GGB purposes. To answer the question the Senator posed specifically, it has not ruled on the Cork School of Music project. The prudent approach, therefore, is to adopt a working assumption that the cost of the project will have to be counted for GGB purposes.

Ultimately, final approval for the Cork School of Music project will be a matter for the Government. Consideration will be based on a thorough assessment of its affordability in the context of the competing demands on the likely capital funding envelopes in the future, taking into account the issues surrounding the general government balance. The Minister for Education and Science, Deputy Noel Dempsey, expressed his desire that I inform the Senator that both he and his Department will continue to pursue the matter with all concerned with a view to having it determined by Government in the very near future. I hope this is helpful.

The Seanad adjourned at 8.25 p.m. until 10.30 a.m. on Thursday, 3 July 2003.