Tuesday, 21 May 2019

Ceisteanna (49)

Brian Stanley

Ceist:

49. Deputy Brian Stanley asked the Minister for Communications, Climate Action and Environment if he will seek a full cost-benefit analysis of all State owned alternative models to deliver the national broadband plan. [21700/19]

Amharc ar fhreagra

Oral answers (10 contributions) (Ceist ar Communications)

My question also relates to the national broadband plan. Has the Minister considered commissioning a cost-benefit analysis on alternative models, given the difficulty with the current plan and the difficulties arising from it, particularly with regard to the option taken by the Government of the gap model with the sole bidder, Granahan McCourt?

The availability of high speed broadband to every home in the country will unlock the door to equal participation in digital transformation which is already transforming our lives and will continue to bring fresh opportunities that will be crucial to operations in Ireland's regions.

My Department commissioned a comprehensive cost-benefit analysis on the national broadband plan, as is a mandatory requirement under the public spending code. A cost-benefit analysis benefits report and a detailed benefits calculation annex were published in 2015. This analysis was updated over the last four years and the finalised cost-benefit analysis was published earlier this month. Alternative options for delivering high speed broadband were also considered in the context of only one bidder remaining in the process and this analysis has also been published. Each of these alternatives was considered against the cost-benefit analysis framework. In stress testing a number of alternative options, it is not expected that a full cost-benefit analysis will be carried out. Rather, the approach is to evaluate the salient changes that other options would bring in the context of the general framework of benefits and costs. Some options sought to reduce the area covered, alter the technology, delay the roll-out or alter the model underpinning the tender. This all involved an examination of costs, potential changes in timing and roll-out, state aid requirements and so forth, depending on the alternative under consideration. That analysis concluded that these alternatives would take longer to reach 100% of the premises in the intervention area and in some scenarios would involve leaving some premises behind. In addition, the analysis concluded that the alternatives considered could potentially result in a higher cost to the State and would require a consultation on a new strategy, along with a new procurement process and state aid application. Some of the alternatives considered were unlikely to provide the level of future proofing required under the European Commission's strategy for a gigabit society.

I thank the Minister for his reply. Unfortunately, a detailed cost-benefit analysis was not done on the alternatives. It is clear that the Government does not have a plan B, despite what has unfolded in recent weeks. The Minister is responsible for the national broadband plan which is a disaster for the Irish taxpayer. It is based on a failed tendering process, a flawed cost-benefit analysis, as pointed out by his own Department, and it does not represent value for money. What is even worse is that the taxpayer will not own one metre of cable when the 25 years are up. Everything stays with the private company which will be bankrolled by the Irish taxpayer. The failure to conduct a proper cost-benefit analysis of the alternatives is reckless, both from the point of view of providing broadband and from a financial perspective.

We know from the documents released last week that there have been two contingency reports, one carried out in 2018 and one in 2019. They told of two viable options. To quote directly from the 2019 report, officials in the Minister's Department reported that alternative options "have not undergone a project appraisal or any CBA analysis". Will the Minister tell the taxpayer why he chooses not to carry out a cost-benefit analysis on viable State-led alternative options?

I assure the Deputy that the cost-benefit analysis was conducted according to strict procedures and that, contrary to his claim, my Department did not in any way suggest that it was not done in the correct manner. I also assure the Deputy that we have examined every alternative. One of the things we have learned from conducting public projects in a robust way is that one has to be sceptical about the different alternatives. In 2015, five alternatives were considered, ten were considered in 2018, and three alternatives were considered in 2019. At no point did we overlook the importance of testing plan A, the one we now have on the table, against possible alternatives. Every time we did so we found that the alternatives would result in some people being left out, a longer delay for the project, or a higher cost. I do not know whether the Deputy wants people to be left out - it is not clear from his comment whether he is advocating for that - or whether he wants the process to be delayed to allow a new tendering process to be completed. I know he advocates a different model that would require such delay. It is important that the Deputy and other Deputies be honest with the public. We have a plan that is capable of delivering. If one wants to take an alternative approach, one has to look at whether it will deliver cheaper, sooner, and in a better way.

The Minister suggests that an alternative would have to be cheaper. How much of the €2.95 billion State subsidy will be paid to another private company, Eir, for the use of its poles and ducting? We have a network in place. As regards people being left out, the network to which I am referring, that of the ESB, covers every house while Eir's does not, even though it has poles all over the place, some of which are falling over. As regards the cost, if we have infrastructure, why does it make sense to rent or lease other infrastructure on which to hang cables or through which to duct it? Sinn Féin has tabled a motion to bring this issue before the Dáil on 11 June. We have put forward the basis of an alternative plan for delivering value for money through public ownership, which we believe is the best model. I fail to see why the Minister has ignored the advice of the most senior officials in the Department of Public Expenditure of Reform and in his own Department. Perhaps he will tell me.

To explain to the Deputy, the proposal involves rolling out 146,000 km of fibre. We chose to adopt the approach of using an existing network, which could either be that of Eir or the ESB. Of course, because this project involves state aid, one cannot specify which must be used. It is up to those delivering to choose based on market competition. One option cannot be designated. However, the price paid for rental is controlled by ComReg. It is entirely independently controlled.

How much is that?

That price will be payable whether ESB poles or Eir poles are used. Under the estimate, the cost of rental over 25 years will be €1 billion, which is €40 million a year.

That is €1 billion of taxpayers' money.

That is a ComReg regulated price which is independently set. It can be altered by ComReg. It would have to paid whether ESB poles or Eir poles were used. This contract allows the contractor to choose whether to use the ESB, Eir, the metropolitan area networks, MANs, or any other network it chooses.