Wednesday, 25 February 2004

Ceisteanna (1, 2, 3, 4, 5, 6, 7)

Enda Kenny


1 Mr. Kenny asked the Taoiseach when the cross-departmental team on infrastructure and public private partnerships will next meet; the number of meetings of the team planned for 2004; and if he will make a statement on the matter. [1018/04]

Amharc ar fhreagra

Enda Kenny


2 Mr. Kenny asked the Taoiseach if he will report on the December 2003 meeting of the cross-departmental team on infrastructure and public private partnerships; and if he will make a statement on the matter. [1040/04]

Amharc ar fhreagra

Enda Kenny


3 Mr. Kenny asked the Taoiseach when the last meeting of the cross-departmental team on infrastructure and public private partnership was held; when the next meeting will be held; the number of meetings held during 2003; if he will report on the work of the committee; and if he will make a statement on the matter. [1041/04]

Amharc ar fhreagra

Trevor Sargent


4 Mr. Sargent asked the Taoiseach when the next meeting of the cross-departmental team on infrastructure and public private partnerships will be held; the agenda of the meeting; and if he will make a statement on the matter. [1281/04]

Amharc ar fhreagra

Joe Higgins


5 Mr. J. Higgins asked the Taoiseach if he will report on the work of the cross-departmental team on infrastructure and public private partnerships; and if he will make a statement on the matter. [1842/04]

Amharc ar fhreagra

Pat Rabbitte


6 Mr. Rabbitte asked the Taoiseach if he will report on the work of the cross-departmental team on infrastructure and public private partnerships; when the team last met; when the next meeting is due to be held; and if he will make a statement on the matter. [2897/04]

Amharc ar fhreagra

Caoimhghín Ó Caoláin


7 Caoimhghín Ó Caoláin asked the Taoiseach when the cross-departmental team on housing, infrastructure and PPPs, which is chaired by a senior official from his Department, last met; its programme of work for 2004; and if he will make a statement on the matter. [4774/04]

Amharc ar fhreagra

Freagraí ó Béal (47 píosaí cainte) (Ceist ar Taoiseach)

I propose to take Questions Nos. 1 to 7, inclusive, together.

The national spatial strategy and Gaeltacht and islands infrastructure were the main themes considered by the cross-departmental team on housing, infrastructure and PPPs at its meetings on 10 December and 14 January. The team's work programme for 2004 and a review of progress in 2003 were also on the agenda for the January meeting. The most recent meeting of the team took place on 4 February. The main topics on the agenda were ports infrastructure and social and affordable housing.

On ports, particular attention was given to the options available to Government by way of follow-up to the review and public consultation process on future policy. I understand from the Minister for Communications, Marine and Natural Resources that he hopes to be in a position to finalise proposals for Government consideration in the near future.

Regarding social and affordable housing, the team placed special emphasis on the development by local authorities of action plans in the context of the five-year multi-annual financial envelopes being put in place. In overall infrastructure terms, such envelopes for different forms of capital activity, as announced in the budget, will play a very important role in delivering the remainder of the NDP infrastructure programme and advancing the aims of the national spatial strategy. Additionally, the new EUROSTAT ruling on the accounting treatment of PPPs, issued on 11 February, will provide Departments with much greater certainty in respect of the planning and management of medium and long-term projects and programmes.

Regarding meetings, the cross-departmental team met on 11 occasions last year and it is envisaged that there will be a similar number this year. On the 2004 work programme, the team has identified the main items requiring particular consideration, including the actual subjects to be discussed at each of the meetings until July. The education capital programme will be the principal agenda item at the team's next meeting on 3 March. It is envisaged that the three subsequent meetings will deal with project management and cost control issues, waste management, transport infrastructure and regional planning guidelines.

Has the cross-departmental team on infrastructure considered a possible programme of development arising from the changed accounting method from the EU, in other words, the extra available money to which the Government may have access? What is the position in regard to the production of legislation for the national infrastructure board, projects of major national importance? Did the cross-departmental team consider the range of possibilities that exist, whether for power stations, incinerators, rail lines, motorways or whatever?

On the first question, the EUROSTAT rules are to be welcomed. I and other Members of the House have made the point here a number of times that the accounting procedure that operated was entirely unreasonable and restrictive but it was used for some considerable years. The new guidelines which the EUROSTAT has issued on how PPP projects should impact on future general Government balances are welcome. The Minister for Finance has brought forward proposals on the technicalities and procedures so that the system will work for the various interests.

There are many details and rules and regulations, as is always the case with these matters, but if one boils it down, what does the decision mean? At the heart of the EUROSTAT decision is that, in assessing whether a public private partnership project affects the general Government deficit in future, whether it should be up front as it was before 11 February, the cost of the PPP contract and its impact on the GGB can be spread over the full period of the contract provided. In normal cases, that would mean that if there is construction risk and either demand or availability risk is transferred to the private sector it could be over the full period. In many cases the project could be spread over seven, ten, 15, 20 or 30 years, and that is the right way to proceed. In that way it does not impact on the GGB to the same extent.

The key isssue is that the EUROSTAT makes the determination on whether the private sector is involved in the risk. Therefore, one cannot go out and do a State or a local authority project and have a small element of a public private partnership. The risk has to be carried by the private sector, and this will continue to be the problem. The rules are clear for the accountants who advise many of those in the construction and investment industries. Up to now they had an argument, which I made here a number of times.

On the second question, legislation is being drafted. We had some discussions on the matter. The view, as I stated here previously, was that there should be a narrow interpretation and it should not be a broad Bill that includes everything and anything. It should be for major national projects only.

Did the cross-departmental team on infrastructure and public private partnerships consider decentralisation because major infrastructure will be needed if that programme is to become a reality — it seems to be running into difficulties? The provision of new Departments, of power, water and sewerage, access and so on involves major infrastructural developments. Does the team have a view on that matter?

What is the Taoiseach's current assessment of the national spatial strategy and its implementation? I cannot recall having had a worthwhile discussion on this strategy in the House. How does the cross-departmental team view implementation of the national spatial strategy?

On Deputy Kenny's first question, there is a separate group under a separate chairmanship, with the Office of Public Works and outside experts working on decentralisation so it is not being dealt with by this committee.

The group takes account of the national spatial strategy. A wide range of measures have been put in place. It would be useful if the House was to have a debate on that matter at some stage because it is two years since its introduction. At national, regional and local levels there is a 20-year plan and framework. The Department of the Environment, Heritage and Local Government is leading and overseeing the process of imbedding the policies and moving on the programmes and activities. An interdepartmental steering committee chaired by the Department of the Environment, Heritage and Local Government reports to the infrastructural committee. At regional level, the regional authorities are working in conjunction with their constituent local authorities. I am informed they are making good progress in developing regional planning guidelines to roll out the national spatial strategy in more detail at regional level. I understand that some of the regional planning guidelines have issued and more will be issued this spring.

It is anticipated that the draft regional planning guidelines will have been published for public consultation for all the regions by the end of March and that the intention is to have the guidelines formally adopted in all the regions by the end of May. At local level, planning authorities, in consultation with the relevant public agencies and the public generally, are in the process of putting in place local development frameworks and plans for gateways, hubs and other strategically important towns. There has been a number of highlights during the past year. The regional planning guidelines are well advanced. A number of local authorities have issued frameworks. There is the Cork area strategic plan and the Galway transportation plan and study. A number of plans have been published and they will be implemented over the next few years.

At all the meetings there are presentations by companies such as the ESB. A €4.4 billion plan is being rolled out over this decade for sewerage and drainage. The various Departments and agencies are working far better than they have ever worked in dealing with these plans.

I listened to the Taoiseach welcoming the EUROSTAT ruling. I would not be so sure it will be welcomed by many taxpayers who will have a ten or 20 year payback bill for the public private partnerships which may be involved. Will the agenda of the cross-departmental team lead to the type of financial burden on taxpayers which I raised in the House yesterday in the context of the example of the €300 million annual cost of non-compliance with the Kyoto Protocol? Will this also be on the agenda in regard to infrastructure?

I asked the Taoiseach whether he recalled hearing the leading European expert on transport, Tom Sleddens, saying that the Irish roads programme failed every one of the 27 indicators of good transport policy from a European perspective. The Taoiseach was at the meeting in Dublin Castle at which that was said. Has he had a chance to reflect on it, given the tortuous analysis in regard to the metro in contrast to the blithe passing off of capacity increases on the M50 and that type of road? Is there any shift of mindset within the cross-departmental body which recognises we must put sustainability at the centre of infrastructural projects?

That is an environmental issue. Whether it is the cross-departmental team or the Lisbon strategy, environment is at the centre.

It is an economic issue.

Allow the Taoiseach to answer.

Economic, social and environmental issues are at the centre of the Lisbon strategy, which directs so many of the European issues, and feed into the Structural and Cohesion Funds, overall economic planning and the work that any of the agencies carry out. Sustainable development is a key issue. I assure the Deputy that such environmental issues are taken seriously by Government and, more importantly, by the agencies and those dealing with day-to-day issues. There is considerable evidence in this regard, such as how we deal with environmental issues in regard to Dublin Bay, rivers, water and pollution. While it is for other Ministers to provide the details, there has been significant progress in this area.

Is the metro going ahead?

Deputy Sargent should refrain from interrupting when the Taoiseach is trying to answer his question.

In regard to PPPs, the capital programme is still the capital programme. PPPs, as I have said many times, can only be used as an additional method of completing a project more quickly. The private sector can be brought into projects so that it carries the risk, which is spread out over a period. The Deputy is correct that PPPs will not be used to replace the capital programme because that would entail a higher burden on the State which will always borrow far more cheaply and efficiently than other sectors, a point made by the National Treasury Management Agency on many occasions.

However, other projects and countries have taken a different route in this regard. Portugal and Spain are examples of countries which have used PPPs for many projects and got themselves into deep water with the European Union in recent years because of that. While we are not talking about such problems in regard to Ireland, it makes sense to take on public private partnerships where we can, as happened with the Dublin sewerage scheme, especially when the private sector carries the risk. It is then possible to have a design, build and manage system spread over a number of years.

I would be the first to admit that a limited number of projects can be undertaken through PPPs. Nonetheless, PPP works effectively in such projects and is not a burden on taxpayers. If it was to be used for the entire capital programme, I would agree with the Deputy's point, as I have said. However, that is not the case. The issue for Government will be to get the private sector to invest in some of the projects. The interest it was thought there would be seven or eight years ago in such projects has not materialised. Some English companies which entered the Irish market quickly left it. While there have been some successes in roads projects and some other projects, I am referring to the more complex areas in which the private sector has not been very brave.

What is the exact role of the cross-departmental team on infrastructure with regard to the Government's promise to take a major initiative with regard to affordable homes? Will the Taoiseach report on the current position of the project in that regard?

I see the Taoiseach has the dust of repentance on his forehead this morning. Apparently, the first act of repentance is acknowledgement of sin. In regard to the housing crisis, is the Taoiseach alarmed that the cost of housing continues to rise considerably and that, therefore, his sin over seven years of allowing the greed of the speculator and the--——

The Deputy is moving away from the substance of the seven questions. His first question is in order but detailed questions should be addressed to the Minister responsible.

I was merely making the point that fundamental to the housing crisis, to which the question I addressed relates, is the sin of greed on the part of speculators and landlords. Given the serious crisis which exists, the Taoiseach undertook-——

The Deputy is well outside the remit of the seven questions.

What is the timescale for the major initiative on affordable homes and how it relates to the cross-departmental team on infrastructure?

The first question is in order. The others are more appropriate to the Minister for the Environment, Heritage and Local Government.

In reply to the first question, the Deputy will be aware that, last July, the Government announced the release of sites in counties Dublin, Meath and Kildare with the potential to deliver 1,100 affordable homes. This was followed by the release of further lands in December in counties Dublin, Cork and Waterford for a further 3,600 homes. Taken with part 5 affordable housing, there is a potential yield from this of approximately 6,100 units of land. The cross-departmental team continues to try to make more sites available.

Regarding the other part of the first question, we are awaiting the All-Party Committee on the Constitution report and the NESC report, both of which will be discussed by the team as soon as they are available. The latest estimate is that the all-party committee report will be published in March and the NESC report in April.

As a result of the EUROSTAT ruling, has there been any revamp of the model inside the Department of Finance? The critical point made by the Taoiseach is the correct one regarding the transfer of risk to the private sector, which is immensely important. However, if the risk is transferred to the private sector in the three different areas identified, can we presume that the sector will then try to protect itself in that circumstance? Therefore, how can we quantify the exact imposition on taxpayers?

The Taoiseach made the point that PPPs have been slow to be taken up, and so on. However, if they are to be successful, will the informed Irish taxpayer not want to know the exact cost of this? Does the Department of Finance intend to publish with some clarity what the particular terms of PPPs will be as a result of the Government's ability to plan ahead with increased certainty and in the knowledge that risk has been transferred to the private sector?

I take the Deputy's point. The Department has carried out a good analysis of the new treatment of public private partnership documents. The best I can do is to make that information available. Some of it is in the form of a memorandum but there is an information note which I will seek to make available to Deputy Rabbitte.

There is value in EUROSTAT's position, principally in the clarity we now have. I accept that statistical analysis is not easy and provision must be made for unforeseen events, but at least there is now a clear, readable position for everyone. It is not just readable for us but for those investing in projects as they can understand what they are to do. The risk to the taxpayer is clear, as is the mechanism for spreading that risk over the period involved. I will try to put together the material from these three documents for the Deputy. I asked for some material in question and answer format, which would also be useful, and I will arrange to have that material sent to party leaders.

On the overall question, the general Government balance, GGB, issue was obviously the major difficulty for the Government. The EUROSTAT problem meant English companies coming into Ireland were not getting much clarity from us and they wrote many letters of complaint about the process. Apart from this, the key issue is that many companies want to invest in projects which cannot go wrong. We cannot design a gilt-edged system which is foolproof and risk-free for investors. This is where EUROSTAT is correct. It has now defined the risks. I could put this information on the record, but there are lengthy notes on this issue and I can include them in the document I will circulate.

We must encourage involvement in these projects. There is an abundance of capital in the country for projects, especially in financial institutions. I have made the point at many conferences, including the recent Dublin Chamber of Commerce dinner which Deputy Kenny may recall, that the difficulty is that many institutions are prepared to involve pension funds in construction in Thailand and Vietnam, but there are complexities and problems involved in funding straightforward infrastructural projects in Ireland. I understand that but projects in Ireland should also be examined. Until the EUROSTAT ruling, many institutions said the process was too complex, but that is not the case now. I have met some of those involved and told them they should look at infrastructural projects in Ireland because we have a huge infrastructure deficit in many areas despite the enormous amount of work taking place.

Now there are clear rules for those who wish to become involved in such projects and Members should encourage financial institutions to become involved in those projects. We are already trying to get pension funds to examine these projects. These bodies should become more involved — the system is now a good one — rather than seeking gilt-edged projects in countries about which they know little and about whose regimes they know nothing.

I am grateful to the Taoiseach for that. I would appreciate the information he has promised, especially if it is available in question and answer format. Some of us have been questioned on this issue.

A company flush with money, such as National Toll Roads, might undertake the grade separation work required at the Red Cow roundabout because it is clear where the risks lie. While most motorists would be happy for the company to build it, the informed taxpayer would want to know the payback over an agreed period. This is not likely to take off unless there is some clarity in the informed public mind about that but, if work is being done in this area, I welcome it.

My next question may only be tendentiously associated with this matter. Does this mean the pressure for modifications of the Stability and Growth Pact has eased? Is that being examined during the Irish Presidency and are some modifications in certain circumstances likely to be agreed?

I will take the second question first. ECOFIN has decided that there will be an examination of the Stability and Growth Pact, not just in this area but in others as well. It appears to be the view that the process will begin in the Irish Presidency but individual countries may want to take some time. I do not think there will be a major change but there may be some flexibility on certain issues involving transparency, such as the European Commission being satisfied that there are no gains on off-balance sheet items.

On the analysis of the risks in the partnerships that will be carried out in member states and acceding countries, EUROSTAT is of the opinion that information about such risks can easily be obtained by statisticians and that the burden of the different risks in general are identifiable in the contracts. EUROSTAT is also of the opinion that the assessment of risks according to the process described would allow for a straightforward classification of the assets either on or off Government balance sheets in most cases.

To take Deputy Rabbitte's example, if National Toll Roads undertook the project to widen the M50 and deal with the Red Cow roundabout, which is a €500 million project, the question would be whether that would be on or off the Government balance sheet. If the company took the risk, which it probably would in this case, it would obviously look for a return on the toll for an extended period. The amount of money involved would be evaluated over that period and, if a 20 year period were agreed, the general Government balance would reflect one twentieth of the figure each year. This could be classified as an asset on the GGB or not as the case may be.

The system is straightforward enough. The point is that these matters must be identifiable in the contract. Using the National Toll Roads example, taxpayers would know that the Government would include this figure as part of the GGB for the next 20 years and that the toll would be extended for that period. It is now clear whereas in the past it was a convoluted system.

Does the remit of the cross-departmental team extend to the area of homelessness? If so, has it addressed this issue? Last weekend, at the national conference of Simon, the Minister of State at the Department of the Environment, Heritage and Local Government, Deputy Noel Ahern, who has responsibility for housing, indicated that the Government was now proposing a review of homelessness.

That does not arise out of these seven questions, as I pointed out to Deputy Joe Higgins.

Will the cross-departmental team be involved in such a review? Will the Taoiseach ask the cross-departmental team to examine the contradictions whereby on the one hand, Government spokespersons argue that homelessness is being addressed, yet there is a chronic homelessness problem? On the other hand and as we speak, the Joint Committee on Finance and the Public Service is addressing the Finance Bill 2004, a provision of which proposes to extend tax relief to the developers of hotels and holiday homes.

The Deputy is going well outside the remit of the questions.

Is there not a clear contradiction whereby we aid property development, but cannot provide for the homelessness issue and crisis our society faces?

The Taoiseach may be aware that neither the Minister for Finance nor the Department of Finance can quantify the loss to the Exchequer these measures represent. Will the Taoiseach direct the cross-departmental team to address this important matter?

A Department and an agency are dealing with that matter. It is not an infrastructural issue as such. However, I stated earlier that the cross-departmental team takes an interest in social and affordable housing units. The homeless strategy of 2000 which deals with people who are genuinely homeless and in need, is working extremely well.

I welcome the Taoiseach's statement that he hoped we would have a debate on the national spatial strategy since we have not had one thus far. I do not know where it is going at this stage and how it fits in with the decentralisation programme.

Arising from the Taoiseach's response regarding the new EUROSTAT rules, when will a decision be made in regard to the projects which were delayed by the guidelines? For example, the Taoiseach was in Cork recently and stated that he would shortly have a decision on the Cork School of Music. How quickly can we expect to get decisions on projects such as this?

Has any analysis been carried out on the design, build and operate PPP projects to which the Taoiseach referred? I am fearful that the operational element might bring about a creeping privatisation of public service utilities. What are the Taoiseach's views on the analysis of DBOs?

Questions Nos. 1 and 3 are in order. The question on the Cork School of Music might be more appropriate to the Minister responsible.

No, it would not. I just gave it as an example.

All of the projects which were delayed will have to be examined in a new light by the appropriate Departments and that will happen quickly. I cannot be certain of the speed at which that will happen in different Departments.

I have reported on where the national strategy spatial strategy is nationally, regionally and locally and it is working well. Nevertheless, I have no problem with some time being given to a debate on it.

Normally, design, build and operate arrangements are built into PPPs. Some of the designers of these projects do not want to be involved in their management and have an association with a management company. Most companies like to design, construct and get away, although, in other cases, they are prepared to do it. However, there is a management element in regard to the five schools which were undertaken in this manner.

The advantage of it is that we can tie the company involved in the construction of a project to its ongoing maintenance for a certain number of years. Normally, the maintenance reverts back — the company is not involved forever. Therefore, there is no strong argument that in time it could take over the public sector element. Even where companies are involved in management, they only do so for a period before getting out. I know from talking to PPP companies that most are not into management. They usually bring in an operator to carry out management functions for them because they are developers and investors and do not want to manage.

In the context of affordable housing, has the cross-departmental team considered the provision of park and ride facilities? Is that an issue which it would consider? For instance, the cost of affordable housing in Blanchardstown is an average of €280,000 and yet, 40 miles away, that figure drops by €100,000. However, there are no park and ride facilities in that peripheral range of locations to allow people to use public transport. One of the reasons for that is the cost of acquiring land for that purpose. Would the cross-departmental team consider the advantages of acquiring suitable land by CPOs and allocating appropriate tax schemes for the private sector to provide park and ride facilities? This would be advantageous because people could park their cars and travel into the city centre on public transport and a saving would accrue because cheaper affordable housing would be available further from the city centre. Would the cross-departmental consider this proposal in the context of good planning for the future development of the greater Dublin region?

The cross-departmental team is mainly involved in major infrastuctural projects and not in the area to which the Deputy refers. I am a strong supporter of park and ride facilities. A few years ago it was suggested that we introduce tax incentives to try to encourage investors. The first year, the view of accountants and tax experts was that we introduced too restrictive a scheme and the second year, the Minister for Finance had to change the measure comprehensively to make it more attractive. The last time I asked about this, just one party in Cork had displayed any interest in the project, which is unfortunate. We should try to encourage people to invest in such projects because people invest their money in other non gilt-edged and high-risk projects. I am not that familiar with the scheme but I know it is straightforward and attractive, yet just one party in the State took an interest. Nevertheless, the Government is supportive of park and ride schemes.

Deputy Kenny is correct in his observation. I was in Tullamore with Deputy Enright recently opening a new science park beside which three bedroom semi-detached houses with a good garden — from a Dublin perspective — were priced at €180,000. In my constituency, the smallest houses are €290,000 and the two are not that far away any more. Unfortunately, there has been no take up from the private sector in regard to park and ride facilities. Perhaps today's debate might stimulate it.

That is because the Government has let the speculators run riot for seven years.

The State could intervene in this matter without waiting for investors.

Do the changes in the EUROSTAT rules mean that a decision can be taken to go ahead with the metro without the worries which might have made it more unpalatable and when will that decision be taken?

Has the €8 billion, which was guaranteed to the National Roads Authority over the next five years been taken into account, given the ESRI's concerns about the massive scale of the motorway programme? The ESRI has pointed out that only 30% of what is being spent on roads is being spent on public transport. Will that be re-examined in light of the EUROSTAT ruling so the dominant position of the roads programme will be tilted in favour of public transport?

The Deputy has asked a few questions. On the question of sorting out the park and ride facilities, the State has provided the incentive but it will not run car parks. I hope that is not what the Deputy is suggesting. On the metro, the Minister for Transport is engaged with the RPA in examining the various plans. There has been a number of changes and reappraisals based on the Madrid model and that examination is under way.

The Deputy should put down a question to the Minister for Transport. Discussions are ongoing. It is an enormous project which is being carried out over a number of years.

What about the M50?

Sorry, Deputy, this cannot continue.

That took a long time also. People were talking about that since I was born. On the NRA, the Minister has made his allocations for this year. It is now built into the multi-annual programme and what will happen over the next five years is being considered.

I raised a matter earlier.

That is correct. I said I would call the Deputy after Leaders' Questions.

I want to clarify that there was a fault in my office, not in the Whip's office. There was an electronic fault in the fax machine and the hard copy got lost.