Dáil Éireann Debate, Thursday - 6 May 2004
30 Ms Shortall asked the Minister for Finance the implications of the proposals from EUROSTAT to change the method of calculation of the general Government balance; the way in which the forecast general Government balance for 2004, 2005 and 2006 would be affected; and if he will make a statement on the matter. [12991/04]
Amharc ar fhreagraThe EUROSTAT decision of 11 February 2004 gives guidance as to how public private partnership projects should impact on the general Government balance, GGB. The EUROSTAT decision means that an asset is off balance sheet and, therefore, does not affect the GGB upfront, provided the private sector partner carries the construction risk and carries either availability or demand risk. This means that some projects' costs previously included up-front in the GGB can now be treated as off the Government's balance sheet. Annual payments made by Government to the private operators of such public private partnership projects will impact on the GGB as they are made.
If a public private partnership project is on the Government's balance sheet, then the full construction costs count against the GGB upfront. The capital element of the subsequent annual payments by Government does not affect the GGB but the interest and service charge element does.
The fact that some public private partnership projects which hitherto were on balance sheet might now be off it does not in any sense obviate the need for value for money assessment of all public private partnership projects. Evaluation and value for money appraisal is just as important for projects involving annual payments as it is for other projects. The overall framework for the delivery of all public private partnership projects, involving annual payments, whether on or off balance sheet is the five year rolling multi-annual capital investment envelopes which I set out in the Budget Statement 2004.The multi-annual envelopes will be subject to review in budget 2005.
As regards specific budgetary impact the EUROSTAT decision will leadto a minor disimprovement in the 2004 budgetary arithmetic of about €2 million in respect of capital payments made by Government in relation to the bundle of schools public private partnership project. This arises because the capital costs which up to now were charged to the GGB upfront will now be a charge on the GGB over the life of the public private partnership agreement.
The general Government budgets for 2005 and 2006 had provided for more public private partnership projects impacting on the GGB upfront than is now likely to be the case. Under the EUROSTAT decision the GGB for 2005 and 2006 may improve by about 0.1% — €100 million to €150 million — or so, assuming that nothing else in the budgetary arithmetic changes, with these costs being spread over subsequent budgets.
