Dáil Éireann Debate, Thursday - 22 March 2018
6. Deputy Joan Burton asked the Minister for Public Expenditure and Reform if the cap of 10% of the national development plan being funded by public private partnerships at a time of historic low interest rates in respect of direct Exchequer borrowing has been abolished; and if he will make a statement on the matter. [10867/18]
Amharc ar fhreagraI welcome the fact the Minister's Department has indicated it will review the question of public private partnerships, PPPs. We had PPPs during the years of collapse, and certainly in the years from 2011 to 2014, because it was one of the few ways of borrowing money for desperately needed infrastructure in this country and of keeping the economy afloat, because we could not borrow. However, things have changed. The cost of borrowing for the State is very cheap. I do not understand why the Minister has decided to remove the cap of 10% in the national development plan for 2040. The previous Government, of which the Minister and I were both members, had a cap of 10%. Why has he removed it? Does he mean to allow PPPs to go to 50% or 60% of public construction?
An interdepartmental agency group was established in 2017 to review Ireland's experience of PPPs and to make recommendations on their future role in the context of the new ten-year national development plan, NDP. The NDP summarises the key findings and recommendations agreed as part of the PPP review, the detailed report of which will be published shortly.
One of the recommendations of the review, included in the NDP, is that consideration of PPP as a procurement option should be assessed on a level playing field with the traditional procurement option. In this context, the cap on PPP costs of 10% of the aggregate Exchequer capital allocation in any particular year is to be discontinued in favour of reintroducing the original budgetary control mechanism for PPPs. This approach was also recommended by the International Monetary Fund, IMF, in the public investment management assessment, PIMA, report for Ireland published last year.
Following this review, and in light of the very substantial new public capital investment programme contained in the NDP, it is now recommended that the original budgetary control mechanism for PPPs should be reapplied. This requires that the capital value of PPPs over the construction period should be charged to the Exchequer capital allocation of the sponsoring Department so that PPPs and traditionally procured projects are treated equally when determining which procurement option to adopt. In other words, Departments will only use PPPs when they offer value for money over traditional procurement.
I wonder if the Minister or his Department have had the chance to read the Parliamentary Budget Office's overview of public private partnerships in Ireland. What it says about value for money is very clear. The value for money of PPPs is difficult to assess until the PPP itself has been in place for several years. We know this from the example of some toll roads where the private sector is paid for cars that have never used the road.
Secondly, PPPs can potentially create private sector monopolies. Their duration is frequently a matter of decades, which is the case in the Irish model. In certain circumstances this can provide the private sector with a monopolistic position which may place potential competitors, including from the public sector, at a disadvantage. Where the PPPs relate to the provision of a service it may be very difficult to define the quality of the service. We know this from hundreds of cases in the UK. The cost has been horrendous.
One of the things that occurs to me as I answer these parliamentary questions is that nobody is asking me about the national development plan.
I referenced it.
Deputy Burton asked me about capital investment.
More money.
Deputy Donohoe is becoming like the Taoiseach now. Nobody loves him.
Month after month I stood in this House and Deputies asked me where the national development was. When would it arrive? Now that it has arrived, it has been greeted with silence. Indeed, the only difference in behaviour was that Deputy Jonathan O'Brien welcomed it. Given the number of times I was asked when it would arrive, and what would be in it-----
There was not a lot in it.
-----I was hoping there would at least be some questions on it this morning. Perhaps this demonstrates that it is a good strategy.
The Government can tell the newspapers what to write, but it cannot tell us what to ask.
To answer the question that Deputy Burton put to me a moment ago on the report of the Parliamentary Budget Office and its point about PPPs, I note that one can make that point about any large public capital investment. It takes many years to determine whether it has delivered its objectives and provides value for money. To reiterate the point I made a moment ago, I now see PPPs in a different context. The context is as Deputy Burton has described. We should go ahead with them when they make sense, if the State decides that the money can be sourced more effectively and cheaply than if it was to pay for it.
As a matter of record, the priority question that I submitted to the Minister was in fact about the national development plan but guess what? His Department refused it, and it was posted to the Taoiseach. Perhaps the Minister will check this. As a consequence, I wondered which element of the national development plan I could ask this Minister about. He accepted the question I thought would be acceptable but he refused a question on the national development plan. I have a letter from the Ceann Comhairle, which I can send to the Minister's office if he likes. I know he probably got the same letter, but he may not have seen it himself. This is like a little debating society. However, the fact is that there are horrendous stories from around the world about the downsides of PPPs. The upsides are that they can provide more capital room and be a source of capital at a time of need, as was the case in this country.
I apologise to Deputy Burton for following her questions twice in a row. The issue of PPPs is on the agenda of the Committee of Public Accounts this morning. I am supposed to be at that committee, so I might as well get my spoke in here instead. The Minister referenced the PIMA report. The Government took some of the IMF's recommendations on board. One of the recommendations was that value for money reports should be published. We have not taken that on board yet.
As Deputy Burton knows, I do not determine what questions I get to answer. That is a decision for the Ceann Comhairle and the Questions Office.
Then Deputy Donohoe should not say we did not ask the question.
Take it up with the Ceann Comhairle.
We did. The questions were refused.
The same rules allowed multiple questions about the national development plan to be put to me in previous appearances in this House. To answer the questions Deputies Burton and Jonathan O'Brien have put to me, I am aware of concerns about PPPs that have developed in other jurisdictions. In Ireland, there is a track record of many PPPs delivering important projects and at good value. As I have reiterated on a number of occasions, the context has changed. We have to evaluate them on a project-by-project basis. If it is more affordable and effective for the State to borrow the money or to pay for it out of our tax revenues and deliver it through a traditional procurement process, that is what we will do. Having PPPs available introduces a constructive tension into how we price projects. In response to Deputy Jonathan O'Brien, it is my intention in the future to publish more information about PPPs than we have in the past.
Anois, back to calmer waters, or maybe not. It is a question on flood relief tabled by Deputy Browne.
