Public Private Partnership on Capital Infrastructure: Statements

Minister of State at the Department of Public Expenditure and Reform (Deputy Patrick O'Donovan)

I acknowledge the presence of Deputy Cowen and note that he has moved position. I wish him and Deputies O'Reilly and Michael McGrath well. As the Minister, Deputy Donohoe, is on business he cannot be here today.

I welcome this opportunity to address Members of the Dáil on public private partnerships, PPPs, and their role in delivering public capital infrastructure in Ireland. Since the late 1990s, significant infrastructure projects have been delivered on behalf of the State using the PPP approach, including the pilot schools bundle of 2002, the National Maritime College in 2004, the Cork School of Music in 2007, the Criminal Courts complex, the National Conference Centre in 2010, further schools bundles and, of course, a number of major motorway projects from 2005 onwards.

In July 2012, in response to the fiscal crisis, the then Government announced plans for a new €1.4 billion PPP programme of investment in public infrastructure as part of a wider €2.25 billion stimulus plan. This comprised eight new PPP projects across the health, justice, transport and education sectors. This new phase of stimulus PPPs was followed up in 2014 with a second phase, valued at €300 million, to deliver social housing, and a third phase in 2015, to deliver projects to a value of €500 million across the higher education, health and justice sectors. It is clear, therefore, that PPPs have played a very significant role in facilitating the delivery of important infrastructure projects across a range of sectors. They were particularly useful in recent years, when the Exchequer was seriously constrained in terms of its ability to fund infrastructure directly. PPPs, and their use of private finance on an off-balance-sheet basis, enabled important projects to proceed during this period, which would not otherwise have been deliverable on the basis of Exchequer funding alone. However, now that we have emerged from the economic and fiscal crisis and the recovery is well under way, the Government has decided to prioritise and significantly increase direct Exchequer investment in capital and infrastructure. Under the national development plan, NDP, Exchequer-funded capital investment is set to increase to 3.8% of national income, as measured by GNI*, in 2021, and 4% by 2024, with sustained investment averaging 4% on an annual basis over the period 2022 to 2027. This is a very significant level of planned capital investment, which will see Ireland move to among the highest levels of investment in the European Union.

Against that background, it is appropriate to review the role that PPPs should play in delivering public capital infrastructure into the future. With that in mind, an interdepartmental group was established in 2017, comprising Departments and agencies with experience of using PPP to deliver capital infrastructure, to review that experience and to report to the Minister for Public Expenditure and Reform, Deputy Donohoe, with recommendations on the future role of PPPs in the context of the new ten-year NDP being developed at that time. The detailed report of that PPP review is currently with the Minister, and he will publish the report once he has brought it to Government for noting. However, the key findings and recommendations of the review have already been published in the NDP.

In summary, the review noted that PPPs have been very useful in the past in facilitating the delivery of important infrastructure projects, particularly, as I have already indicated, when the Exchequer was seriously constrained in terms of its ability to fund infrastructure directly. However, given the NDP plans to significantly increase public capital investment to among the highest levels in the EU, the report concludes that there is no longer the same requirement to use PPPs for the delivery of additional projects to compensate for a sub-optimal level of Exchequer investment in infrastructure, as was the case in recent years. Seeking to procure additional projects by PPP, which would further expand the investment programme outlined in the national development plan, would put even greater pressure on the capacity of the construction sector to respond to the increased demand. Following such an approach could contribute to inflationary pressures and potentially undermine value for money for the increased investment. The PPP review therefore recommends that PPPs should continue to feature as a procurement option available to the Government for appropriately structured projects which demonstrate value for money over a traditional procurement option and which meet the robust and rigorous tests for project appraisal that apply to all public investment projects under the public spending code. However, this should be as part of the national development plan, rather than in addition to what is planned under the national development plan. Accordingly, in delivering the national development plan, all large-scale projects will be assessed as required under the public spending code in terms of the most appropriate delivery mechanism, that is, traditional or PPP, with value for money being the key consideration when assessing the procurement options. In this way, decisions on pursuing further PPPs will be taken on a case-by-case basis, based on the merits of using PPP in the case of each individual project.

The review recommends that projects which have the potential to cover some of their cost by generating revenue, for example from user charges, should, in particular, be considered in terms of their suitability for procurement as PPPs, based on a concession model. This approach to future PPP policy is also fully consistent with the recommendations of the recent IMF public investment management assessment, PIMA, of Ireland, which was also undertaken in 2017.

Having established that PPPs can potentially play a valuable role in the delivery of public infrastructure, the review also examined the budgetary control mechanism used to ensure that PPPs are used in a sustainable manner which is affordable in the long term. The purpose of the budgetary control mechanism is to avoid a situation in which excessive use of PPPs could lead to the precommitment of unsustainable levels of Exchequer capital resources to fund the future unitary payment costs over an extended period of time.

On the basis of the recent reviews, it has been decided to discontinue the policy introduced in 2015, of limiting future PPP-related expenditure to 10% of the aggregate Exchequer capital allocation. Instead, there will be a return to the budgetary control arrangement which applied prior to the financial crisis, whereby the capital cost of a PPP project is notionally charged to the relevant Department’s approved Exchequer capital allocation over the construction period as if it was being delivered with Exchequer funding. This approach, which was recommended by both the IMF PIMA report and the PPP review, will ensure that the use of PPPs is assessed on a level playing field with traditional procurement, with value for money being the key deciding factor in selecting the procurement option for each project. This arrangement will apply to all new PPPs but it will not affect PPPs which have already been announced and which are in planning or procurement, that is, those projects being pursued under phases 2 and 3 announced in budget 2015 and budget 2016, respectively.

The Department of Public Expenditure and Reform will oversee the implementation of this mechanism and will monitor the build-up of future PPP unitary payment liabilities, details of which will be published on an annual basis as part of the budget documentation, as also recommended by the recent reviews. It is recognised that as our PPP programme continues to be pursued, the experiences and learning gained on each project must be assessed and shared between the relevant Departments and agencies. Post-project reviews, which are to be undertaken for all PPPs and which will now be published, will facilitate greater transparency on the costs and benefits of PPPs, while the institutional learning will continue to be facilitated, in particular, through the bimonthly meetings of the interdepartmental PPP steering group, chaired by the Department of Public Expenditure and Reform.

A number of other changes in the reporting arrangements for PPPs have also been recommended and will be implemented with a view to increasing transparency on PPPs in order that there can be a better informed debate about their use. Details of these will be announced when the report of the PPP review is published.

Finally, in recognition of the scale, complexity and long-term nature of typical PPPs, the review also recommended that consideration be given to the possible development of a new, alternative PPP model to complement the existing PPP model. Such a new option could comprise a less complex and shorter-term alternative PPP-type contractual arrangement that could still offer some of the advantages of PPP but for smaller scale projects, maybe at a value of between €20 million and €50 million, and over a shorter time period - for instance, ten years. Such an alternative option could also facilitate greater competitive tension in the procurement process, as it would open up the PPP market to smaller, domestic contractors, which tend to be too small in scale to bid alone for typical PPP projects, where the market tends to be heavily reliant on the participation of the larger international players. That issue has been raised in the House previously. The Minister, Deputy Donohoe, intends to have this option explored by the Department in conjunction with the National Development Finance Agency, NDFA.

Having set out the Government’s position on PPPs and how we see them being used into the future, I am interested, as is the Department, in hearing what the other Deputies may have to say on the subject, and in particular any proposals that could further improve our approach to using PPP as a value-for-money procurement option into the future.

An Leas-Cheann Comhairle

Deputies Barry Cowen and Michael McGrath are sharing time.

Deputy Barry Cowen

It is interesting to hear the Minister of State talking about the review and the recommendations emanating from it in respect of how public private partnerships should work into the future. Unfortunately, that review has not been published; I would have hoped it would have been in advance of this debate, if not earlier. I implore the Minister of State to use his good offices to ensure it is published as soon as possible so we can scrutinise its recommendations in order to ensure we get the best value for money for the State.

Public private partnership is the only off-balance sheet mechanism open to Government that can comply with EU fiscal rules. It is an option that can cater for the delivery of additional infrastructure and services that might not otherwise be possible. Where the project is appropriate and is structured properly, PPPs can provide a useful alternative to direct Government investment. At a time when direct Exchequer borrowing is highly constrained, they provide a viable alternative. It was interesting to hear the Minister of State say again that the restriction placed on their use by the Government in 2015 has been lifted in the context of the national development plan. We welcome this. We did not believe it was the prudent thing to do at the time. It cut off a vital alternative when our fiscal space was very tight. As a result, it could be argued, we lost out on vital funding from the European Investment Bank and the Junker plan. Fianna Fáil believes that public private partnerships can and do play a leading role in providing major capital projects. We recognise that issues have been highlighted recently in Ireland and the UK, particularly the UK. We recognise that they do not necessarily give free money. However, we cannot ignore them. We must commit to using them when the project is appropriate and the structure is correct.

As for how it would be framed and best interests served, we would establish a national infrastructural commission that would work with the National Development Finance Agency and the central PPP unit in the Department of Public Expenditure and Reform to ensure that the right projects are identified and the correct structures put in place for each project. Many parties to the left will continue to be opposed to public private partnerships purely on ideological grounds. While issues have been exposed, these parties continue to ignore the fact that public private partnerships have worked, are working and can play a constructive role into the future. Large parts of our road network, connecting all parts of the country, have been provided by public private partnerships, in addition to major projects in our health and education sectors. Parties on the left which oppose this mechanism simply wish to add to a national debt that is already large and to incur the cost associated with major construction projects.

The Parliamentary Budget Office produced a paper on PPPs recently. Under "definition and purposes of PPPs", it states that the Department of Housing, Planning and Local Government was unable to identify any new off-balance sheet model capable of being classified as off-balance sheet under EUROSTAT rules. It is vitally important that we are made aware of what those models or proposals were in order for them to be adjudicated by parties other than those in government. We believe this mechanism should be made available to the sector to address the huge crisis we have at present. The likes of the credit unions and public-private equity funds are prepared to invest over and above the amount put forward by the State. They can get over the EU rules and can contract developers to build on private lands and lease back to local authorities for 80 years if need be. A return on that investment would be welcome for investors.

Today's short debate is hardly appropriate to discuss the issue adequately. I ask the Minister of State again to bring to the House or to my party the details of what models were investigated by the Department of Housing, Planning and Local Government in respect of this issue.

Deputy Michael McGrath

I welcome the opportunity to contribute to this debate on PPPs. Like my colleague, Deputy Cowen, it is my view that PPPs have a role to play. Obviously, there needs to be a detailed and forensic financial assessment of the most viable procurement option. What option gives the best value for money? In my view, direct capital expenditure is the preferable option in the vast majority of cases. It is more straightforward, less complex and can be more easily assessed from a financial perspective. However, there are projects where private sector expertise is invaluable. PPPs afford an opportunity for risk sharing, which is important. From an accounting and budgetary point of view, PPPs can potentially afford greater scope for investment in the economy, which is something we want to see.

Nobody can say that PPPs are in some way magic money. There are real and significant financial commitments involved which have to be thoroughly assessed. I commend the Parliamentary Budget Office for the paper it has produced. It is of very high quality and gives an excellent overview of the position concerning PPPs in the country. Some of the first major PPPs that took place were in my own constituency in Cork, such as the National Maritime College and the Cork School of Music. They are two projects that our leader, Deputy Micheál Martin, was very much involved in promoting. They are excellent projects that have stood the test of time.

Learning from the experience of the Carillion collapse, there is a need when a PPP is embarked upon to consider contingency planning. Since there is private sector involvement, the reality of life is that things go wrong. Companies go bust and get put into receivership. Banks move against them. There is a need for a very clear contingency plan in respect of that scenario whenever we are entering into a PPP commitment. The relationship can break down between the public and private entities if something goes wrong on the private sector side.

One of the reasons PPPs have a role is the manner in which direct Exchequer capital expenditure is booked in a budgetary context. We are supporters of the fiscal rules and the fiscal compact. Overall, having those rules is a positive development. There is an issue around how capital expenditure is accounted for in respect of the smoothing effect.

If €100 million is spent on capital expenditure one quarter of that amount is booked in year one and another quarter in year two, etc., until year four. By comparison, in the private sector capital investments are made. For example, capital allowances on plant and machinery are claimed over an eight year period at 12.5% per annum. Investment in buildings can be claimed over a period of 25 years. It is true to say that capital expenditure is booked over a very short-term in respect of the use of fiscal space under the rules. I believe the Government should be raising this issue with the European Commission, because capital investment is, by its nature, a long-term investment in the future of our country and the future of our economy. The dividend and return for the State will be achieved over a much longer period of time than the four years mentioned. That is an issue that should be dealt with.

I welcome the fact that the 10% rule is being removed and replaced with, in essence, a new methodology whereby public private partnerships, PPPs, will be accounted for quite similarly to direct capital expenditure in the way it is booked against the capital allocation of each individual Department.

I ask the Minister of State to take on board the recommendations of the Parliamentary Budget Office that the Estimates of PPP expenditure would be made available on the PPP website in the context of the multi-annual capital allocations for the period 2018 to 2021, and that a breakdown of major PPP projects in the water sector, along with costs, be included on that website as well. That would be an important step forward.

Deputy Jonathan O'Brien

One of the aspects of PPPs we all need to get to grips with is looking at post-project reviews and whether PPPs are more economically viable or better than public procurement. Many experts state that comprehensive post-project reviews cannot be carried out for a number of years. In some cases they cannot be carried out until 20 or 25 years have passed. That obviously poses a challenge when deciding whether PPPs offer the State better value for money than other options, such as public procurement.

I have never come across any evidence, and none has ever been presented to me, to show that PPPs offer better value for money. That evidence does not exist. The Committee of Public Accounts has been looking at the issue, and a number of weeks ago the Department of Education and Skills and Transport Infrastructure Ireland were before that committee to discuss a number of PPP projects. We sought some information on post-project reviews, and at that stage no information was made available. I am sure the Minister is aware of that. We could not analyse the post-project reviews; the Minister told us that to publish those reviews could compromise commercial sensitivity. One analysis exists that PPPs offer us great value for money, but no evidence is being offered to support that. However, since that meeting of the Committee of Public Accounts we have been inundated with information about PPPs. We now have paperwork coming out of our ears about post-project reviews. Why could we not get that information before? We have it now.

In looking at the costs we need to focus on a number of areas. Deputy Michael McGrath touched on one of the areas when he mentioned companies that go into receivership. The State incurs indirect costs when that happens. The Secretary General of the Department of Public Expenditure and Reform has stated that any costs associated with a company going into liquidation can be recouped, but there is no evidence to back up that claim. We do not carry out any review of the indirect costs to the State when a company goes into liquidation. For example, if there was a PPP bungle in the education sector and a company goes into liquidation, with the result that the completion of a project is delayed, there is obviously an indirect cost to the State. Such an incident occurred in the case of a company that was named earlier, Carillion. If classrooms are in prefabs or if buildings are being leased to provide classrooms and there is a delay in completing the project, that will involve an indirect cost to the State. Those indirect costs are not compiled by the Department. We do not know what are the indirect costs to this State. How can it be said on one hand that we get value for money and on the other that we do not have all the information on the costs involved?

Legal costs are another issue when it comes to PPPs. A huge amount of money is spent on legal costs. There is growing evidence that PPPs are more likely to end up in court because of the tendering process in place. Only this morning we received information on a number of projects where one of the tendering parties took a court case, as was its right. The level of legal costs associated with PPPs is significantly higher than would be the case if we took the normal route. Those issues need to be factored into this debate. No evidence has been presented. In fact, the Committee on Public Accounts made a decision this morning that it would set aside two or three days to look at PPPs and settle, once and for all, the question of whether we actually are getting value for money. No evidence has been presented that PPPs offer us greater value for money. There are many gaps in information. Anyone standing up in this Chamber to say that PPPs offer us better value for money is very naive.

Deputy Louise O'Reilly

I had not intended to speak on this, but when considering the issue of PPPs I was reminded of a man I represented when I worked as a full-time union organiser. The school he was a caretaker of was moving to a new premises which was being built under a PPP. The staff providing non-classroom based services - I would call them the support staff, but the company that was taking over called them ancillary staff - were supposed to transfer over to the new company or take redundancy. I have a fundamental difficulty with PPPs because there was no problem at all with the work of the support staff. In fact, there were queues of people lining up to tell us how brilliant they were at the work they did. The problem was with their terms and conditions, which were by no means gold-plated, fantastic conditions, but they were significantly better than what the new company was prepared to offer.

After I was elected I spoke briefly to one of the employees on the phone who had phoned to wish me well. He asked me, if I ever got the chance, to tell people in this House what PPPs are doing to ordinary people. I decided I would take that opportunity today. He was effectively forced out of his job when there was absolutely nothing wrong with how he worked. The school was very happy with him. The difficulty is that models such as PPPs are not compatible with decent terms and conditions for workers very often. Ideology comes into play a little bit. I do not believe there is anything wrong with having an ideological view; I make no apologies for it.

Private companies are responsible to their shareholders. Their job, role and function is to make a profit and to maximise that profit - to sweat their assets, be they people or buildings - whereas the job of the State is the provision of essential services, so the two are often not compatible. In the case of the caretaker working away, his terms and conditions, modest as they were, were simply not compatible with the race to the bottom that was being encouraged by the State and driven by the PPP company. I gave him a promise that if I ever got the opportunity, I would tell people about the impact.

There is less ideology in that and more practical experience. My experience of dealing with the outsourced companies is that they were hostile to trade unions and to decent terms and conditions for their workers. Their sole focus was on keeping their costs low and their profits high. This is the direction in which the State is driving workers' terms and conditions. The Government is doing the driving and, of course, the people in the passenger seat with the map would be its very best friends in Fianna Fáil, cheerleading for private companies and the private sector ahead of decent terms and conditions for public servants. As I said, the man I was representing was a public servant on very modest terms and conditions, but that could not be facilitated when the PPP came into being.

We have a difficulty with PPPs. As my colleague said, there is no evidence to suggest that they represent better value for money and we know they can very often be responsible for firing the starting pistol in the race to the bottom.

Deputy Richard Boyd Barrett

People Before Profit is opposed to PPPs as a means to deliver services and infrastructure. Is that ideological? No, that contention essentially arises from logic. Any logical examination of PPPs would suggest they have to be more expensive in terms of delivering services and infrastructure than the traditional method of the State doing it directly, as it has done in the past and used to do exclusively.

The issue of outsourcing, in one shape or form, the delivery of public services and public infrastructure is a feature of the past 30 years. The neoliberal economic orthodoxy really started with Margaret Thatcher and it has been a disaster. To take housing as an example, Margaret Thatcher's belief that one should do away with directly provided social housing and privatise the housing market is the reason we have a housing crisis. At the most basic level, that is a fact.

When we say the State should provide public housing, the Government always comes back and says that the public sector does not have the capacity to do it any more. There is a very good reason the public sector does not have the capacity to do it any more and it is helpfully pointed out by the Parliamentary Budget Office's assessment of PPPs, a very good document for which I commend the office. It points out that, among other things, what it does is embed the capacity and expertise to deliver infrastructure and services in the private sector. Over time, this guarantees that the State loses the capacity because the skills are run down as it is outsourcing them to the private sector. In fact, the document points out that the danger is that the private sector will then end up in a monopolistic position over those capacities and will then have a gun to the head of the State. If the State wants anything, it no longer has the capacity to deliver it so the private sector's big players, like Carillion, literally have a gun to the head of the State in terms of their ability or inability to deliver key services and infrastructure. When we are talking about big infrastructure projects, it is not small or medium enterprises or construction firms which are involved, but big players.

Of course, because these private sector players are profit-driven, they are, as we saw with Carillion, subject to the vagaries of the market. Essentially, greed caused the collapse of Carillion, with massive salaries for its executives and massive over-borrowing that it was completely unable to sustain. It was a little like the way the banks operate when, driven by profit and the greed of top executives, the thing goes over the cliff and the public is left to pick up the bill. We see this with the impact of the Carillion collapse on the five school projects which have been affected, namely, those at Coláiste Ráithín, St. Philomena’s, Eureka secondary school, Tyndall college and the Carlow Institute of Further Education, and which are left not knowing when they are going to get their schools or colleges.

The subcontractors working for the contractors employed by Carillion have been left high and dry. I received a letter yesterday from one of the subcontractors. It states:

I am a subcontractor left unpaid due to the collapse of Sammon [the company contracted by Carillion]. We had a meeting with our local TD, Helen McEntee, last night about our plight. She did not seem to realise that among the eight men that were there last night, there was €1 million of debt. We were told the Minister for Education can't help and the examiner will pay a pittance. The anxiety and despair among these men was unreal. Nobody wants to know. If you could get the opportunity to bring this to the attention of someone who would further the cause, I would appreciate the airing.

These are ordinary working people, who, by the way, are not in my constituency but in the constituency of the Minister of State at the Department of Foreign Affairs and Trade, Deputy McEntee, and they have been hung out to dry, along with the parents and the children who need those schools, because of these PPPs. I was talking to the mother of a child due to go to Coláiste Ráithín next week and she told me that they have no idea what is happening. As a result of the fact that Sammon is out of the picture, the project has gone to tender and they do not know when that tender process will be completed. Clearly, those school students, who desperately need this and who have been looking to get out of totally unsuitable school premises at Coláiste Ráithín, do not know if they will get out of them this year. The school has employed teachers but does not have the space for those teachers to do their work and deliver the curriculum. That is just one example. There is also the example of the Bernard McNamara-Dublin City Council PPP that banjaxed the planned delivery of new social housing and social housing regeneration in Dominick Street, St. Michael's Estate and so on. That means more people who are counting the cost.

It was obvious this would be the case and, as I said, it is not particularly ideological. Why? It is because these private firms need to make profits. The State, when it delivers public infrastructure or public services, just needs the thing to wash its own face but these guys have to make a profit and that inevitably inflates the cost. As Deputy Michael McGrath mentioned, there are also tax reliefs, so we are paying on the double in many cases because these same private firms making big profits from public infrastructure projects also get these very significant tax reliefs. In addition, the cost of their finance is more expensive than the cost of finance for the State. Inevitably, there is also a pressure for PPPs to have user charges for services and infrastructure that previously would not have had them, so it creates a pressure to move to user charges, as against the older model of public services being provided on the basis of need and paid for in a progressive way through central taxation. The Comptroller and Auditor General points out there are very likely to be significantly increased legal costs, as the lawyers have to get their cut, as well as transaction and process costs because of the complicated process involved in PPPs. This is a labyrinthine process about which we know - and are able to know - little because of commercial sensitivity, which means we cannot properly examine the contracts that are given out in respect of these PPPs.

Deputy O'Reilly made a point about the efficiencies and cost savings that are supposed to be delivered, although there is no evidence for them, a point I will come onto in a minute. How do firms deliver these so-called efficiencies and cost savings? There is really only a couple of ways they can do it. One is to drive down the costs of production by attacking the wages and conditions of the workers they employ, and the evidence that they do that is legion. The other approach is to cut corners, the cost of which we only discover later. The State then has to pick up the bill somewhere further down the line.

I find it quite startling to examine the figures provided by the Parliamentary Budget Office, PBO, on the estimated cost of the payments of these PPPs. The estimated cost of the annual unitary payments made by the State up to 2027 in respect of the five pilot schools that are now delayed because of the Carillion collapse is €290 million. For five schools, that works out at a cost of €58 million per school. Now, I do not know the exact breakdown of what it costs to build a school-----

Deputy Mick Wallace

I will do it for less.

Deputy Richard Boyd Barrett

Exactly. A cost of €58 million to build a school, rather than have the State do it directly, sounds like a hell of a lot to me. Furthermore, we are now discovering that because the traffic going through the Limerick tunnel is not as heavy as was originally envisioned, the State will have to fork out €200 million to make up the shortfall.

In conclusion, the other side will fire back by asking how we are supposed to meet the upfront capital costs to do it if we carry out these projects ourselves. They will contend that PPPs allow us to leverage money from the private sector and so on. This is where the madness of the application of the fiscal rules to capital expenditure comes in. That is something that even some of the Government's people have acknowledged. It is madness for the fiscal rules to treat vital capital infrastructure spending in the same way as current spending where our debt is concerned. Infrastructure spending or capital investment spending actually creates an asset for the State, and in many cases creates revenue streams that will more than cover the costs of projects over the long term. That should not be treated in the same way as current expenditure.

Deputy Mick Wallace

The 2012 Fine Gael and Labour stimulus plan spent €2.25 billion on capital projects, predominantly based on the use of public private partnerships. It was announced at a time when the use of PPP contracts was on the wane worldwide. That same year, the UK Treasury was in the process of reviewing its PPP system because as the Treasury review put it, there was "widespread concern that the public sector has not been getting value for money and taxpayers have not been getting a fair deal now and over the longer-term". There was an apparent lack of analysis of the history of PPPs in Ireland at the time. The only extensive review had been carried by the Comptroller and Auditor General in 2004. That body had complained that a lack of transparency and limited access to essential documents, coupled with the short timeframe allowed for the report, had hindered the possibility of making a properly informed decision about the value of PPPs.

Prior to the Fine Gael-Labour stimulus plan, there was a substantial record of abandoned and delayed projects between 2009 and 2012, some 24 cases in all. In 2012, the Comptroller and Auditor General showed that the cost already incurred on cancelled projects amounted to €229.2 million, showing that PPPs have huge liability issues attached to them. The Comptroller and Auditor General also recommended that the Government publish its evaluations of the value for money expected to be achieved through PPPs, but strangely this never happened. All we get is outlandish figures for job creation that are never verified after the fact. One has to wonder if there was a solid rationale for the effectiveness of a PPP-dominated stimulus package at all.

In-depth studies that get to the crux of the issue have been conducted elsewhere. An extensive review of the use of PPPs and private finance initiatives, PFIs, in Northern Ireland over the course of ten years published by the Centre for International Public Health Policy in the University of Edinburgh found that:

Private finance creates a public debt. The public bodies involved in PPPs have to pay annual payments to the private sector over a long period, often 30 years.

The review also concluded:

The “additionality” of private finance is illusory – an accounting anomaly which distorts financing decisions. Similarly, the notion that PPP can help to rebalance the economy is a misconception. This is a policy that will channel work to large, overseas companies at the expense of domestic providers, curtailing private sector growth... The evidence demonstrates that finance costs are higher for the private sector, and this, combined with an excessive rate of return on capital, has led to very high costs for the public authorities involved in contracts.

Aside from the liability issues, the lack of transparency, the lack of incentive to provide value for money and the recent disaster of the collapse of Carillion, there is a serious question about the role of the State in appointing these firms. As I mentioned in the Dáil in January, the past ten years saw Carillion's profits continuously decline while its debt level skyrocketed. According to a British parliamentary paper published in January, it ran up debts and sold assets worth £217 million to continue paying dividends to shareholders between 2012 and 2016. How in God's name Fine Gael and Labour thought that this firm was fit for purpose to build a range of schools in Ireland is beyond me.

The group paid out dividends of £376 million over the five-year period, but it generated just £159 million of net cash from operations. Apparently we paid no attention to this. On top of all that, from late 2015 onwards, it became the subject of a financial bet by hedge funds to the effect that it would collapse. Around a quarter of all its shares have been lent to speculators since that time, which begs the obvious question. If everybody in the market knew Carillion was in trouble, why did the Government go on handing the firm lucrative contracts?

Public private partnerships are non-existent in 13 of the 28 EU member states. Some of these countries have the highest levels of public capital spending, and yet Ireland has the fourth highest level of engagement with PPPs and the fifth lowest public capital spend. That is a figure that has to be looked at. It is mad. The notion that PPPs are necessary or that we would spend less on capital investment without them is pure fabrication. Although we know that there is no proof that PPPs provide value for money, the whole notion of value for money is the wrong way to think about these services, since the cheapest option is very seldom the best one, as my experience in the construction industry brought home to me.

Last January, the Minister for Education and Skills, Deputy Richard Bruton, told the House during a Topical Issue debate: "A key advantage of the public private partnership model is that the construction and funding risk is transferred to the private partner." He should tell that to the subcontractors. I am sure someone from the Minister of State's constituency is contacting him about this. Despite the legislation that was brought in a few years ago, the subcontractors are unprotected. A subcontractor by the name of Philip O'Grady in Wexford is owed more than €80,000 by Sammon. Sammon has gone under because it was working for Carillion. It has now gone into examinership. The Revenue Commissioners expects payment from Mr. O'Grady at the moment. Where is he supposed to get the money if Sammon does not pay him? The banks will not give it to him. If the State had a direct role in the construction work, he would get paid.

In the same debate in January the Minister for Education and Skills said "we have six buildings close to completion and in State ownership, for which no payments have been made, other than for off-site works". If the State has not paid this absolute fabrication of a business called Carillion, is money available to pay the subcontractors? It would be very interesting to know that. Deputy Boyd Barrett mentioned Mr. Niall Reynolds in Meath. He contacted me this morning as well. It is a sad story. He says that people in his position seem to be nobody's business and are left to wait for a pittance from the examiner after all their hard and honest work.

The Construction Contracts Act 2013 must be revisited. I will tell the House something we do an awful lot in this country.

We legislate but we do not follow up on it. We have rules and regulations which are not implemented, imposed or monitored. Section 19 of the Criminal Justice Act 2011 provides that a person who becomes aware of corruption is obliged to inform An Garda Síochána. However, the National Asset Management Agency does not do so because it could not care less about the Act. According to the law, companies are obliged to report wrongdoing to the Garda. At the same time, it is grand if they do not do so because at most they will receive a slap on the wrist. NAMA has not even been given a slap on the wrist.

The same applies in the case of the Construction Contracts Act 2013. This legislation was intended to protect subcontractors but does not do so because it is not enforced. To take the example of a subcontractor whose contract states he must be paid within 60 days of doing work, if the contractor has not paid after 100 days and the subcontractor says he needs the money because his company is small, the contractor may say he will pay within a month because he is also stuck. What is the subcontractor supposed to do in that scenario? Should he refuse to do any further work until he is paid? If his company was strong enough, he probably would refuse to do further work but most subcontractors are not in that position. This means they will keep working, which sometimes results in them digging a deeper hole, as was the case with most of the subcontractors who worked for Sammon.

The number of subcontractors complaining about the fallout from Carillion is horrific. Joe Gabbett, a steel fabricator from Wexford town, is owed €180,000 by Sammon for steelwork he did in a number of the company's buildings. Sammon was working for Carillion. What will happen if Mr. Gabbett does not certify the steelwork he did? The law provides that no one will be able to move into a school unless the work is certified. This is creating serious problems. At the end of January, when Deputy Clare Daly and I spoke on a Topical Issue debate on this matter, the impression given was that the issue would be sorted out within weeks. I stated at the time that there was not a prayer that it would be solved in a few weeks because these problems are extremely complicated. In fairness to Mr. Gabbett, he stated his company will survive because it is strong. However, he also described the lack of protection for subcontractors as bordering on criminal and said the Construction Contracts Act was not worth toilet paper because it was not being implemented.

Subcontractors are being hung out to dry. I walk along Molesworth Street on my way to the Italian quarter twice a day. I am repeatedly stopped by subcontractors who are working on new offices on the street being built with investment money from US companies and vulture funds. They ask me to do something to protect subcontractors and ensure small Irish companies are treated fairly. Subcontractors have been left out on limb because of the closure of Carillion and the subsequent collapse of Sammon. Subcontractors are not normally paid in such circumstances. The Government must examine this issue because it is a major problem for small businesses employing Irish people.

Deputy Mattie McGrath

I am pleased to speak on this issue. I read the Minister of State's speech, as I was not present when he contributed. It states that we have been experimenting with public private partnerships for a long time, certainly longer than I had thought. I was an advocate for public private partnerships at one time. However, the jury is out on them. We also have many design, build and operate contracts, including in County Tipperary, for water infrastructure, sewage treatment plants and many other public services. I have questions about that approach. Yesterday, at a committee meeting with Uisce Éireann, I raised a major contamination of a water source in the River Anner at Mullinahone, County Tipperary, the birthplace of Charles J. Kickham. The scheme was built under a design, build and operate contract. I received reports that the company operating the scheme handed it back, having maintained the plant in pristine condition for the duration of the contract, and the contamination was not spotted on time. This resulted in significant costs, upset and upheaval for consumers and is a matter of concern. Who is monitoring the scheme for flaws? Irish Water and Tipperary County Council deserve praise for their diligence and hard work in trying to get the scheme back into operation. The Health Service Executive was also involved.

Public private partnerships operate to deliver projects. I note €1.2 billion was spent on these partnerships during the crisis that followed the crash. There were many fancy sod turning ceremonies, engagements and brochures associated with them and I supported this approach, because I believed public private partnerships offered a way to fast-track the delivery of some badly-needed projects. People had waited for years for some projects. The Burncourt and Fethard water scheme, for example, was 50 years in gestation before it was officially opened last year by the Minister of State, Deputy English. People were drinking bad water for a long time. Once the project was completed and the scheme opened, we thought everything had been rectified.

Deputy Wallace referred to a number of issues associated with public private partnerships. We have a problem with a bundle of schools at the moment. Not a week passes that I am not contacted by people from different counties who have been caught out by these partnerships. The subcontractor is the last man to be paid. Subcontractors must buy materials, run vans, pay for insurance, obtain health and safety statements and ensure all employees have safe passes. They are badly stung when a contractor collapses. Deputy Wallace mentioned Carillion which, as far as I am concerned, was recklessly trading. God knows we have too many agencies but someone in one of the agencies or elsewhere in government must be monitoring the billions that are being invested in public private partnerships.

How are these private companies trading and what are their financial returns? Deputy Wallace cited the financial returns of some of them and they were extraordinary. Somebody must keep an eye on these projects because when one of them is not delivered, the consequences are felt by the ordinary subcontractor, whether a self-employed individual or a small company with five or six employees. These companies are the backbone of the country because no project can be delivered without them.

The closure of a large company has knock-on effects. The collapse of Carillion resulted in the closure of Sammon, which delayed the school projects and left behind a mess. The smaller guys, those who do the second and first fixes and finish the tarmac, electrical and plumbing work, are caught time and again when this happens.

In 2008, I attended a meeting at a hotel in Dublin called after a company, whose name I cannot recall, went bust. There were 600 subcontractors involved and 500 of them attended the meeting. We fought hard on this issue, raising it in the House every second day to try to get the Government to enact the Construction Contracts Bill. The legislation was eventually passed but, as Deputy Wallace correctly pointed out, while it is fine to pass legislation, the issue is implementing it. We do not examine the impact of legislation either. It is not rural-proofed and in this case it was not proofed on behalf of subcontractors to find out what would be the knock-on effects if a project were to go belly up. Such cases have resulted in suicides and caused severe distress for the wives and families of subcontractors, who come under financial pressure from the banks which show no mercy. The people who feel the pressure are subcontractors in local communities employing local staff who they do not want to leave unpaid. However, one cannot get blood from a stone and if the subcontractor is not paid, he cannot pay anyone else. Who is monitoring this?

Deputy Wallace referred also to the record of these companies when it comes to paying within 60 days. It can be 120 or 130 days. One does the work in good faith and in the hope of getting paid and one's hand is in the dog's mouth. That dog can bite and he can bark and he can bite worse than he barks. One is caught then and in a cycle of trying to keep employees on the books and paying suppliers for materials while the big companies hold one to ransom.

I saw the evaluation of public private partnerships by the Government. Who carries out that evaluation? We need people with expertise and people who have been affected within these review groups. We need people from industry to have an input. While the CIF will be involved, it does not represent the small self-employed person in any shape or form. It is interested in big business. Who is looking after this and how are the people on the ground who have been hurt the most being represented? They are providing three to six jobs in villages or rural areas and the equipment and vans to do the work. They need an NCT and certificates and they have to deal with more and more regulation. It is not funny. We must examine this seriously, including the situation with Sammon and the school projects. Behind those school projects and the delay in their delivery is the anguish and trauma of subcontractors, their wives and families. They have to put food on the table. They have to pay their employees and their taxes, in regard to which they get no mercy from Revenue. They are subject to savage penalties and interest from Revenue if they are late because they cannot get paid. They have to pay their VAT every month. Many of them pay their PRSI every week but there is no compassion, understanding or empathy. The big companies can get away with whatever they like. They collapse, go into receivership and one sees them back operating within a short period.

We have to question public private partnerships in relation to tolling and other lucrative contracts where deals have been done. They are very flimsy and not good for the taxpayer. Who is in charge here? No one is and these contracts roll along. None of the public servants advising the Ministers has ever worked in this industry. They do not understand it or have any empathy in respect of it. That is the problem. The CIF is too close to Government and pally with the big lads. No one is looking after the daoine beaga, the little people, who are the enablers and providers who get up early in the morning, to use the phrase of certain Deputies, and stay out working late at night. We must give those people some semblance of respect and revisit the Construction Contracts Act which is clearly not working. There should be a review date after 12 months at least in respect of all legislation we pass here to determine how it is bedding down and whether it is having the desired impact or a negative one. We do not do so however. We may take years to pass a Bill, as with the construction contracts legislation, but once it is implemented, we forget about it. It was not even commenced for a long time, albeit it is now. How is it bedding down?

NERA is walking into businesses around the country to check the entitlements of staff, which is fine. However, we need a new body or to change NERA into a support unit to assist small, self-employed operators. They are very busy people and they do not have the expertise to deal with all this paperwork and regulations. They are able to do their jobs very well and they employ people and create an economy in their local areas, but they are often not into the legislative aspects of it or the engagement with health and safety and the plethora of other regulations. They need to be helped but above all they need protection from these large conglomerates which have public private partnership contracts. The work is passed down through sizable companies like Sammon but when the salmon is caught in the river, pardon the pun, numerous small business and tradespeople are impacted. It is just not good enough.

Deputy Fergus O'Dowd

This issue is very important and the Minister of State's speech identified and recognised a number of the points made by Opposition Members. As the economic situation has improved, the Government has prioritised significantly increased direct Exchequer investment in capital infrastructure. That will grow to 4% of our national income by 2027. This is a huge reliance on State capital, not on public private partnerships. It is money from the taxpayer to carry out the projects which are so urgently and badly needed. In the 2040 capital investment plan, the Government has identified the projects which it will support and which will be built. I am Chairman of the transport committee which dealt yesterday with the metro project. This project will involve expenditure of over €3 billion to provide a modern, efficient metro system in the city of Dublin. The Government is also expanding the DART and is providing over €2 billion to bring the service to places like Drogheda, which I welcome. That commitment is mentioned in the national planning framework.

The Government is doing the right thing and relying more on our own money to do the jobs which must be done to provide critical infrastructure. While it acknowledges the need for public private partnerships, it limits them to not more than any project included in the national development plan. Public private partnerships will assist the State rather than, as Opposition Members said, constitute uncontrollable companies which exploit users. I agree in particular with Deputy Mattie McGrath on tolls and the way tolling operates. There is a toll in my constituency on the M1. In the last year or so, over 1,000 drivers were overcharged by the toll operator which never bothered to tell anybody about it. When I discovered after public complaints what was going on there, the fine imposed under the Transport Infrastructure Ireland arrangement was €3,800 in total notwithstanding that thousands were overcharged. The money was also refunded. As the Minister of State said in his speech, what is important is to have much greater accountability and transparency for the public private partnerships that are actually in place. I am concerned about the impact this toll has had in my constituency and on the people who live there. They are concerned that they are being exploited and that the toll operator is not accountable.

When the M1 was built, Julianstown and north Drogheda were bypassed. However, the traffic flows in the village of Julianstown stood at 25 vehicles per day in 2004 before the toll came in. In 2018, that figure is now approaching 20,000 vehicles per day. What is needed is a bypass of that village for the huge volume of traffic which continues to be generated not only because more people are living in the area, but also because of the use of the alternative route by people who feel the toll is too great an imposition on an everyday basis. Our constituency needs a bypass around Julianstown and a proper and decent Platin Road interchange. The road from the Platin interchange into Drogheda is appalling and fit only for 19th century horse and cart traffic. It is not fit for the modern city Drogheda is becoming. How do we deal with these issues and address the impact of capital infrastructure like the tolled road on our area? Julianstown is choc-a-bloc with traffic 24/7 and we have an unacceptable infrastructure distributor road around the town.

We also have another problem on the northern side of the town where a new distributor road is being built not by public private partnership but on the basis of developer contributions, which is almost the same thing, in regard to the 5,000 houses which will be built there. As the houses are built, the contribution will be provided by the developer to the local authority to provide the northern cross route. That is not good enough because it will take five to ten years while the town of Drogheda is choked by HGVs, heavy traffic and a port which is seeking to expand. Local communities are up in arms about HGVs going through their town. We need a new bridge on the eastern side of the town and that is in our Drogheda Port plan. We also need a new distributor road back to the motorway. The issue is whether these things are going to be provided through public private partnership or taxpayer spending.

I want to ensure it happens. The designation by the Government of Drogheda as an area for significant regional investment in both jobs and housing, as well as for population growth, needs a proper plan. That is why we should look at a PPP, public private partnership, if necessary, to provide this infrastructure but in a way in which the taxpayer and the community can control the policies. That is what is not happening with PPPs now.

Significant capital infrastructure investment is needed in our rail network. We welcome the fact that the DART is coming to Drogheda, with thousands more passenger spaces coming in and out of the town. However, we need a new railway station on the north of the town and in the village of Dunleer. Both of these proposals are predicated upon the development of housing. It is only when the houses are built that the capital will be provided for that rail network infrastructure. We need an interim or short-term PPP to provide that infrastructure. That is what the Minister of State spoke about when he referred to a ten-year maximum period within which PPPs will operate. The M1 toll operation PPP was designed to operate for 20 years. Accordingly, taxpayers feel they are not getting any benefit and are being ripped off by the toll operators. A shorter period in future projects, as proposed in the Minister of State's speech, would make much sense.

There is a structural deficit in north County Louth. The proposed Narrow Water bridge, a North-South project, would be advantageous to both counties Down and Louth, as well as to tourism in the area. When it was first proposed, the price came in at €19 million. However, later the prices came in between €25 million and €27 million. This made it impossible under project analysis to proceed with. Private enterprises were looking for significant amounts of money which were disproportionate to the actual costs.

As Government funding increases, the economy gets better and as more people are working, more funds will be available. The core of the Government's plan is that our capital projects will be increasingly funded not by PPPs but by the taxpayer. That would make much more sense and is what Members on the far side of the House were advocating. However, it must be remembered when times were bad and the economy collapsed, we were spending €18 billion more than we actually had. That is why we were held in hock, not just by the banks and the international financial community, but by paying for PPPs because we had no other way of funding infrastructure projects. I welcome the fact all of that is changing.

Accountability is important, as is the reduction in the duration of PPPs. More transparency and accountability, as well as a better deal for the taxpayer with more oversight of all of these projects, is necessary. It is absolutely unacceptable that, when over 1,000 motorists were ripped off by the M1 tolls outside Drogheda, I only got back one sheet of paper through freedom of information requests. The only record that exists is actually my original complaint about it. No explanation has been given and we do not know what happened. That is not good enough. It symbolises what is wrong and what has happened in the past. I welcome the administrative commitment to change that. We all have to ensure we get proper value for money, the Government infrastructure we need, as well as the capital plan dealt with. Our towns and cities are growing and we have to ensure the infrastructure is in place to meet future demands.

Deputy Eoin Ó Broin

Rebuilding Ireland has a commitment to provide 50,000 social houses over the next six years. As we have been saying for some time on this side of the Chamber, a significant portion of those are not real social houses at all. Up to 30% of that 50,000 will be delivered through PPPs or various forms of leasing from the private sector, the most recent of which is a kind of PPP on steroids. The problem is that, just as the rest of the world is actually walking away from the use of PPPs in the delivery of social and affordable housing, we have, for the first time in the history of this State, a Government embracing it with gusto.

It is not my opinion that these do not represent value for money or a good way to deliver social and affordable housing. Much more eminent and mainstream organisations than Sinn Féin or other Opposition parties are on public record as saying this is a bad way to proceed. The European Court of Auditors published a detailed report in March this year, specifying right across the European Union the failure of PPPs to deliver quality infrastructure and value for money. The European Services Strategy Unit has done a detailed paper, particularly focusing on PPP failures in housing provision. We have had the House of Commons Treasury Select Committee, no bastion of radical political action, arguing strongly against the use of PPPs in regeneration and social housing projects. Even our own Comptroller and Auditor General has highlighted problems with PPPs. I urge the Minister of State to consider some of these points, notwithstanding the superficial presentation he made at the start, because he ignores the real concerns many of these organisations and some of us on the Opposition Benches have.

The first thing that has to happen with a PPP for social and affordable housing is this mysterious exercise called the public sector benchmark. It involves a small group of civil servants going into a room to calculate what it would cost the public sector to do a particular project over a set period, ranging from how to finance, build, maintain and manage the tenancy of a social house over 25 years. That is then locked away in secret. There is no scrutiny from politicians in local or central government or in Parliament. Tenders are then requested. If the private sector comes in at or below that public sector benchmark, then it has an opportunity to secure the contract. At no stage is there any proper public scrutiny of how those figures were established. With respect to the PPPs for social housing, we do not see what the public service benchmark exercise is until after the tenders are awarded. There is no transparency, no accountability or no mechanism to ensure the interests of the taxpayer, let alone tenants in social housing, are adequately protected.

That raises real questions about value for money. The idea that PPPs represent better value for money than standard State investment or borrowing simply does not add up. In addition to the standard costs to build a house, to maintain it and to manage the tenant, one also has to factor in the profit premium for the PPP consortium over 25 years of the arrangement, plus one has to factor in an additional cushion of risk in case things change. We know for example that the maintenance of buildings of any kind, particularly public housing, is expensive with changes in technology, price of materials, labour etc. One just does not have a profit margin but an additional cushion of risk which the taxpayer ends up paying for. Even on the most basic analysis, assuming nothing goes wrong, we already know they are going to be 7% to 10% to 15% more expensive over the lifetime of the project than if the State were to do the exact same job itself.

The second issue is the contracts. This is not just a simple tendering contract one would have with a builder to provide social housing. These are incredibly complex contractual arrangements. It takes an enormous amount of time for public officials in the Department of Housing, Planning and Local Government and the local authorities to negotiate these. They are filled with all sorts of additional risks. The most recent study of PPPs in Britain for social housing and regeneration has shown that additional costs will be incurred when the PPP consortium identifies additional costs halfway through the project after five, ten or 15 years, and then threatens to withdraw from the project if additional funds are not provided. In some cases, the local authorities said they were not providing them. Accordingly, the PPP consortium withdrew and the Treasury had to pick up the tab. In other cases, the local authorities paid the extra money. This idea that the PPPs work because they transfer risk on to consortia simply is not borne out by the history of the projects.

There is also the issue of timescales. When he was Minister for Housing, Planning and Local Government, the Tánaiste, Deputy Coveney, announced 1,500 PPP social houses were to be delivered in three tranches of 500.

What we are hearing today from officials in local authorities in the five areas where these houses are to be delivered is that not only is it taking longer to negotiate these contracts but that the private sector may not actually be interested because the deal is not strong enough in terms of profitability. This has led the Government to find new ways to offer incentives to the private sector, something I will return to later. Not only is it more expensive, and has greater risks, but it takes significantly longer. On the basis of this first tranche, it may be adding an additional 12 months onto the three years it already takes to deliver a social housing project in this State.

As someone who wants to see social housing being delivered and who has voted for planning permissions for local authorities that unfortunately will be funded by public private partnerships, if the Government does not listen to the advice from this side of the House, it simply makes no sense. That is not an ideological argument, it is based on evidence provided by a range of eminent bodies.

I mentioned that the first tranche of public private partnership is experiencing some difficulties. I have heard that private sector investors do not think there is a sufficient level of profit, notwithstanding the additional cost to taxpayers, so what has the Department of Housing, Planning and Local Government done? It has gone back to the drawing board and asked investors, in particular real estate investment trusts and other so-called tax-efficient vehicles, such as Irish collective asset management vehicles, ICAVs, to go away and design a new scheme. It came back with a wonderful entity called the enhanced leasing scheme. Not only will it have the disadvantage of the public private partnership, additional premiums and risks, but there will be a greater level of payment to the consortium over the 25 years. Unlike PPPs, which are bad enough, at the end of that 25 years, the State will not even own the asset. It will pay over the odds for social housing for 25 years and at the end of that period, the so-called tax-efficient vehicles, the REITs or the ICAVs can sell it on and, because of the way they are structured regarding tax, they will pay no capital gains tax and will not even have to pay dividend withholding tax to many of their investors.

In some ways, the debate around public private partnerships and social housing has moved on to this much worse funding mechanism, the enhanced leasing scheme. However, the most sensible way to do this, the way it was done in the 1950s and the 1970s when the State built more houses than at any time in its history, is to fund local authorities directly, either through Exchequer revenue or through low-interest borrowing by the State or the Housing Finance Agency, to build the units directly. It is crucial to ensure there is sufficient revenue, some of which can come from affordable rental or cost rental to the social housing stock alongside traditional differential rent, to ensure that there is proper maintenance.

We are at a time when mainstream and now even right-wing economists are telling us that public private partnerships do not work. Colm McCarthy, whom many on this side of the House would have long regarded as a bogeyman of right-wing economics, has argued publicly that they do not represent value for taxpayers' money, that the State does not get to control the asset to the same extent as if there was direct State, central or local government involvement. They produce poor-quality housing stock with poor systems of management in a way that is bad for tenants, communities and taxpayers. I do not hold much hope that he will do so but I urge the Minister of State not to listen to myself, Deputies Boyd Barrett and O'Reilly or others who spoke, but to read the European Court of Auditors report from April 2018. Read the reports from the House of Commons or the Comptroller and Auditor General, particularly with respect to housing, which is the area I know more than others, and try to understand that this is a bad way to fund 30% of housing output from now until 2021. Abandon those plans and start to allow local authorities and approved housing bodies access to the funding they need because otherwise we will return in five, six or 12 months when projects have collapsed, as they are doing in the school sector, or in ten or 15 years when we are dealing with poorly run social housing estates, managed by the private construction sector, or worse again in 25 years when the State has paid above the odds for these units and they have been sold on into the private sector and tenants have to be rehoused in real public housing, as we have warned.

Deputy John McGuinness

I join the previous speaker in his view in public private partnerships and link it with the failure rate and cost of projects already delivered. I will focus on the SME sector. A considerable number of these public private partnerships exclude the SME sector in this country and as a result, the bigger players in the market are awarded contracts because smaller businesses cannot meet the criteria set out in the procurement process. For example, a company might be required to have a turnover of €8 million or €10 million over several years. Those in the construction business from 2007 onwards would not have had that kind of turnover unless they were quite a large company. The market is limited and the State is not getting value for money. Where there is value for money, one finds that the larger contractor gives a price but is screwing the subcontractors. We have seen so many of these larger firms go broke and it is the smaller businesses that pick up the slack and carry the debt, so that several of them have gone out of business. They cannot afford the type of hits they have endured from losses of revenue because they are not covered in these contracts.

Similarly, in the construction of roads, contracts are awarded which are generally subcontracted to smaller companies or there may be a number of subcontractors involved in the scheme itself. Should the main contractor go broke, the small business invariably suffers. There must be some rules within the procurement process that protect SMEs. The contract might stipulate payment regulations, such as how and when they should be paid, and there should be a hold in the Department or the local authority on the payment sums being made to the main contractor, so that there would have to be proof of payment to the SMEs, and proof of efficient payment, which might limit the amount of money that could be lost should the main contractor go broke.

Until Government changes that, we will continue to see SMEs under threat from bigger contractors which make their profits on the backs of the SME sector. That is what is happening. The State is not getting a good price, and it is certainly not getting a good social dividend for SMEs; it is getting a risk-based price, and the risk is being carried by the small businesses that become involved with the contractor.

The Government should not turn a blind eye to what has happened recently in terms of future contracts. It should change the contract and its emphasis. I ask that it examines the value for money element of PPPs. The Comptroller and Auditor General wrote a report some time ago which was discussed by previous Committees of Public Accounts. It seems that the figures bear out that the management of these PPPs, up to their end, can cost up to 43% extra in the actual cost of the project. I would like to see house construction return to the local authorities, for example. How was it that when our country had little or nothing in the 1950s and 1960s we built huge housing schemes? Over the years, the people living there formed strongly based, sustainable communities, where neighbours looked out for one another. That is what happened. We do not have that now. I ask that the Government examines procurement through local authorities at a local level, delivering the number of houses that are required by each local authority area. There are 3,500 people on the list in Kilkenny. I do not anticipate that will fall much given Government policy on housing construction because the houses are not being built. Looking around the country, it seems that the councils do not want to build houses; they have no interest in doing so. They certainly have no interest in carrying out repairs. They continue to bring in guidelines and so on for tenants.

These guidelines dictate to the tenants that once they get the house, everything else is their responsibility and that, as a landlord, the council is going to stand back and do nothing for them. It will collect the rent and do nothing. That seems to be the position of county councils on this issue. I ask the Minister of State to look at the possibility of changing the procurement and funding model so that, as I have said, we can have a sustainable plan and strategy in place to ensure the delivery of housing schemes and their sustainability after they are constructed without a cost to the State.

To return to PPPs and recent events, I tabled questions to the Minister regarding the subcontractors who were caught out in respect of the schools being constructed, particularly the one in Carlow, although there are many more around. There are suppliers to those schools who have, for example, already supplied furniture. The schools are ready to open. They will be using the furniture manufactured or purchased by these small businesses. The latter may not have been paid sums of as much as €250,000. How can the Government stand by and watch that happen? How can it watch a small business being threatened with the possible loss of jobs? How can it stand back and say that it is not really its responsibility and that these businesses should go away and try to deal with the original contractor knowing full well that they will not be paid? Something has to be done.

Next week in Kilkenny or Carlow there will be a meeting of all the subcontractors involved with one of these contracts. They will tell the Minister of State, if he listens, that while they are caught on this contract, there is a high risk of getting caught on similar contracts. They will say that they will not be paid and that they are turning to the Government for support. Will the Minister of State address that matter in his response? Will he address the possibility of the Government introducing something retrospective to ensure that these businesses are paid something or to ensure that the new contractor brought in to complete the job will look at the existing contracts and ensure they are paid? Otherwise, the Minister of State risks the possibility of an action being taken to prevent the takeover or use of schools that are completed and furnished because subcontractors are waiting to be paid. The students or pupils in these schools may be sitting on seats and working on desks which have not been paid for. That is simply wrong. We have seen too much of it in this country and we have seen too little from Government in the context of the protections required for small businesses and the jobs they create in the sort of communities that the Minister of State and I represent. It is a simple thing to do. It is a contractual matter.

After that, the Minister of State must look at the procurement process and go back to the old way of doing things, which is to do them directly. For example, in the case of those contracts that involve management after handover, no one can change a light bulb. The manager must be called out to do it. No one can do anything within the school unless the management company is engaged. The Minister of State should look at all of the costs attached to that. He should also look at the schools built in the traditional way. The community input into those schools saved the State the cost of management.

We are moving towards a situation in which the Government and the politicians in this House will be proved wrong in respect of obtaining value for money. This is because we have stuck our heads in the sand and ignored not only the results to date in this country but also those in other European countries where this PPP system has failed. It has failed the public sector and the small and medium enterprise sector and the figures have proved that it will result in a huge cost to the State in the end. Procurement is important. Getting value for money is important. However, sustaining jobs and looking at the figures are also important. If the Minister of State looks at the figures, he will have to accept that there is a need for radical change in this area.

Deputy Clare Daly

I may be sharing time with Deputy Broughan if he comes back in time. If he does not, he may share with Deputy Joan Collins. We will get there in the end. I am very glad to have the opportunity to speak on this subject because there are huge ideological issues underpinning this debate. There is a certain irony to the situation. We hear an enormous amount about, for example, the role of foreign direct investment in the economy and about all the jobs that are so dependent on it. That mantra continues on and on. The reality is, however, that the public sector and the jobs sustained by public service are actually the backbone of this economy, as they are also the backbone of every other economy. When we look at PPPs, we have to see them in that context. What this is really about, as far as I am concerned, is extending the influence of capital into the public sphere by allowing private companies like Capita or Seetec to rebrand themselves as providers of public goods. What we are talking about here is public goods which belong to the State and which should remain in the hands of the State to be managed by State structures and not be outsourced to unaccountable private companies. That is the backdrop to this issue.

The advantages which it is claimed derive from the use of PPPs include a supposed ability to use the expertise of private companies. Let us look at that claim for a moment because there is no good reason why we cannot pay for expertise if it is out there and if it is needed. It does not have to come at the cost of giving away long-term control or ownership of our infrastructure. I find it a little bit ironic to hear the representatives of Fianna Fáil and the Labour Party "ochóning" the tragedy of PPPs when they were in Governments which stood over and accelerated the use of PPPs in our society.

It is a far cry from the days when we paid for expertise. People have talked a lot about the 1950s and 1960s. Let us talk about the 1930s, when electricity was brought to Ireland. When the ESB embarked on a process of rural electrification in the 1930s it hired expertise from the German engineering company Siemens. It did not give ownership of the ESB to the Germans. It retained Irish ownership and paid for the expertise from Germany. It was such an ambitious project that editorials in newspapers at the time were saying that the scale of electrification was going to result in people being fried in their beds because so much power was going to be generated. Those who sponsored the project had vision, however. It was run by the State, owned by the State and the State kept that expertise and used it for the benefit of the public good. We would have to say that those days are long gone, not just under this Government but also under the previous ones.

The supposed reason given for using PPPs is that the private partner shares some of the risk. What a load of absolute and utter rubbish. It is just not true. Ultimately, we all know that when private concerns are involved in public infrastructure projects, such projects are too important to fail so the State invariably ends up stepping in to complete the project and pay off any debts that have been accrued along the way. The case of Carillion is a very obvious example. The real reason the Government is now looking at PPPs is that debacle. This was a huge private company that had been handed massive public contracts in the areas of health, education, construction and even school dinners. Using private companies such as this to finance public infrastructure projects off balance sheet is incredibly risky. It is not risky for the private companies; they do not face the risk. The risk is for the State because the projects may be off balance sheet but, as the briefing from the Parliamentary Budget Office emphasised, the liabilities still exist. Invariably it is the State that ends up stepping in and carrying that risk.

We have seen the knock-on effects of that in the case of Carillion and the impact on the Irish construction firm the Sammon Group, which has entered examinership as a direct result. Sammon had been subcontracted by Carillion to build six education facilities under a PPP deal with the State and now, of course, we have to have another tendering process in order to finish some of those projects.

While Sammon, as a private company, will of course attempt to rescue its business, the public projects to which it has committed are far down its list of priorities. This should not surprise us because as soon as Carillion began to struggle, its board began to change its own rules, not in order that the public could get this important public job to which we had signed up, but to protect the executive bonuses in that company. The chief executive officer, CEO, received a £1.5 million golden handshake on top of his £600,000 salary, despite the debacle the company stood over. We need to be aware of this when we commit €9.6 billion of taxpayers' money to public expenditure on PPPs. There are many PPPs, many of which are just privatisation by another name. We need to see transparency on all the categories in terms of value for money for the State, as well as efficiency in the delivery of services.

Broadband is a particular example in this regard. As we have plenty of time now, I am sure Deputy Broughan will not mind being moved to the next speaking slot, seeing as we are all on the one side and in the one camp. I will finish out this point. Broadband is incredibly important. When we talk about rural Ireland, it is ironic to think that rural Ireland actually contains huge chunks of north County Dublin within a very short radius of our national airport, yet these areas are deemed to be rural from the point of view of the provision of our national broadband services. I refer to areas such as Ballyboughal, Oldtown and so on. Let us consider the present scheme and the recent announcement that the European Investment Bank will invest €500 million in the roll-out of Irish broadband. When I sought to ask questions about this and asked the Minister the terms of this funding, a reasonable question in the context of public money being spent, the Minister refused to answer and we are still none the wiser in that regard.

A huge part of this is that these are public services and public infrastructural projects. It is an absolute fact that if one hands them over to the private sector, the private companies do not do it for the good of their health but to make money. Handing over ownership is a lunatic proposition, as far as I am concerned, but when it is done, there absolutely must be transparency in its administration, in order that the public gets that for which it paid and to which it is entitled. The same discrepancies apply throughout the system and there is a knock-on impact on the broader area of procurement and how our rules are not transparent and are ignored.

Only this week I was contacted by a firm that is on the OPW's list as a supplier in respect of the provision of services. The firm did not supply and was not chosen to install windows in the new Garda office in Wexford. It maintains it was bypassed on the list and that the types of windows and the quality of the work put in by those who got the contract to install them are not up to spec, not up to standard and it is not being administered properly. The firm contends that the use of the type of glass that is being used in detention areas there poses a very high risk of breakage due to the low strength of the glass. The firm cannot get answers even though it is on the procurement panel. This might be a small example but it is an important one to this Irish firm, which is on the list. There is a knock-on effect as well. We see it in so many areas. We had a company that excelled in the provision of educational books fold because the contract was set up at a level at which no Irish firm could compete and the English market came over and took up our supply of educational books. Procurement and the delivery of public goods are public services for the Irish people. They should be held, as far as I am concerned, in State ownership and by the public, whereby we employ expertise for cost but do not hand over ownership. Carillion and other examples have shown what an absolute disaster that can be.

Acting Chairman (Deputy Eugene Murphy)

I unintentionally hit the bell. I apologise. I call Deputy Bríd Smith, and then we will go to Deputy Broughan.

Deputy Joan Collins

No. Joan Collins.

Acting Chairman (Deputy Eugene Murphy)

Sorry. I was given Deputy Bríd Smith's name but Deputy Collins has the floor. She should proceed.

Deputy Joan Collins

I am sharing five minutes of my time with Deputy Broughan.

I also am opposed to PPPs. From what I have seen of them, they are a capital grab on State ownership and resources and are used to create huge profits for their CEOs. Many of them do not deliver to the standard to which they should deliver and they are normally for short-term gain. Many examples have been given already, such as Carillion and other companies that have used PPPs. This increasingly became policy in the 1980s, after Thatcher. Then there was the Thatcherite-Reaganite type of light-touch regulation, public private partnerships and the sell-off of utilities and services in State ownership to private companies. What we have seen in most instances in which the State has had to move in if these projects fail - most of them do - is that the taxpayer has had to pay more, tax breaks are given, etc.

I wish to make a particular point about housing. I know other points have been made about this and the fact that 30% of social housing under the Government's Rebuilding Ireland plan to 2021 is to be funded by public private partnerships. This is a real sell-out for the people of this country. We are in the biggest housing crisis we have seen in decades, with 3,500 children homeless, 100,000 people on the housing waiting list and people who cannot access mortgages because of low wages, yet the Government is still looking to public private partnerships to deliver.

I wish to put on the record of the Dáil a real alternative that makes so much sense it is unbelievable. The Government cannot see the wood for the trees. This morning I attended a briefing by representatives of the St. Michael's Estate family resource centre and other community activists, who put forward a programme for their estate which I will outline here because the Minister of State, Deputy O'Donovan, will be the person who will make a decision whether this capital expenditure for next year of €55 million to build these public houses on public lands will be provided. The main point they made was that people are looking to the Government to use our public resources wisely and for public good, not private gain. This was also acknowledged by the Department of Housing, Planning and Local Government following the publication in April 2018 of the report entitled "Review of Delivery Costs and Viability for Affordable Residential Developments". It is estimated that local authorities have 1,200 ha of land with the potential for 38,000 homes. This land is already serviced and zoned as residential land yet is not being allocated to public housing. The State is the single biggest land hoarder in Ireland, according to many property analysts. In addition, it appears that land sold by the State agency NAMA to various vulture funds could have accommodated 50,000 homes, yet fewer than 4,000 are completed or under construction on lands formerly owned by NAMA. A large proportion of the sites lie vacant - for example, 98% in Cork, 87% in Dublin and 87% in Meath.

There is a better way to use publicly owned land. It is to build public housing on public land. These activists are putting forward a plan for a cost-rental model, which they call the fair rents home model, whereby 300 units would be built in St. Michael's Estate for €55 million. The idea is that the rent would pay for the cost in the long term. They say annual rent collected for 150 social differential rental units would be €457,000 a year, and annual rent collected for 150 fair rent homes - cost-rental units - would be €1.62 million. Annual rent collected for the whole scheme would be €2 million per year. The return to the State per annum would be 3.71%. This makes sense because we are talking about people who are over the cap for social housing. These would be professionals, possibly teachers. There was a young girl at the briefing this morning who said she works in a particular multinational, cannot afford to get a mortgage but earns too much to be eligible for social housing. This would be a game changer if it were rolled out right across the country on all public lands, which it should be. It should be seriously looked at in the context of what landlords are now charging for rent and the cost of housing in the longer term. This is an ideological line that the Government finds difficult to cross.

As for Fianna Fáil and the Labour Party procuring these public private partnerships, I remind Members it was Martin Cullen in 2003, after the St. Michael's task force on regeneration was set up, who rejected the plan put forward and instructed the council to pursue a public private partnership deal for the site. We are still waiting for those houses to be built.

Deputy Thomas P. Broughan

The UK started its private finance initiative, PFI, programme in 1990 and the total estimated value of its public private partnerships is approximately £32 billion, whereas in Ireland so far it is €2.3 billion. Over the existence of previous Governments and the current Government, we have been used to school bundles and other proposals on housing and critical infrastructure. The reason the Government turned in that direction is precisely because of the blanket bank guarantee, the crash and the decision to totally eviscerate capital spending in this country for a decade. This was a deplorable decision and nobody involved in it really should be in the House.

If we look at the British record there has been severe criticism of the operation of public private partnerships. It has also had the experience of Carillion. One of its most distinguished economists, Martin Wolf, who writes in the Financial Times, stated:

A PFI contract creates a long-term contractual liability, just as government borrowing does. ... Accounting procedures that treat these two ways of financing services differently are fraudulent. ... [A] PFI must not be used simply to shift a liability off the balance sheet. That is a swindle and, as such, quite disgraceful.

He is right; basically it is a swindle. We have seen a range of economists bringing very critical study to bear on the operation of public private partnerships in this country. People such as Colm McCarthy have called the whole idea of entertaining a public private partnership without doing a cost-benefit or cost-assessment analysis before proceeding with any major project as, frankly, totally crazy, because one does not know what the discount rate would be.

In 2013, through the excellent Nevin Economic Research Institute, headed by Dr. Tom Healy, and the Economic and Social Research Institute, Dr. Eoin Reeves produced a paper entitled "Public-Private Partnerships in Ireland: A Review of the Experience". This highlighted grave deficiencies in public private partnerships, particularly around the awarding of contracts, governance issues and proper value for money analysis. A former Chairman of the Committee of Public Accounts has spoken in this debate on public private partnerships. In 2011, a report of the Comptroller and Auditor General made some devastating conclusions on public private partnership expenditure. He called it a sunk cost that has delivered no effective benefit and pointed out the ongoing impact on the national debt. As the Minister of State knows, our national debt, at €206 billion, is still significant.

There was actually a ten-year review of public private partnerships in Northern Ireland entitled "The use of Private Finance Initiative (PFI) Public Private Partnerships (PPPs) in Northern Ireland", which found that the bottom line on public finance is it does create an ongoing public debt. It stated the additionality of public finance is illusory and finance costs are higher for the private sector. The whole rationale in this regard, as advanced by reasonable, credible economists across the board including people such as Mariana Mazzucato at University College London, who always stresses the entrepreneurial nature of the State, is that the State, because of its interest costs and its expertise - if it mobilises it - is the best organisation to provide public infrastructure.

I am a member of the Committee on Budgetary Oversight. Recently, our excellent Parliamentary Budget Office, under director Annette Connolly, published a review of public private partnerships. One would hope there would be higher-quality output, in the knowledge that the private providers would be obliged to maintain it for 20 years into the future, but, at the end of the day, all it offers is moving the cost of critical infrastructure off balance sheets.

We had a long discussion about the Carillion collapse. I want to mention the treatment of workers. A number of the Deputies in the House, including my colleagues in Independents 4 Change, became aware of the phenomenon of phony employment or phony SMEs in the building industry, whereby people were forced mar dhea to work for themselves when in actual fact in every respect they were employees. They were not permitted social insurance or pension rights and they were treated very badly. That battle is ongoing. As my colleagues have concluded, the public private partnership model is badly flawed. It is something to which we should not resort now that, hopefully, with positive tax revenues coming down the line, we have the significant possibility of spending in the future. We should do it through the State and the House, and provide the infrastructure our people deserve and desperately need in health and education.

Deputy Joan Burton

With regard to public private partnerships, over recent months I have asked a number of detailed questions in respect of each Department, particularly the Departments of Finance and Public Expenditure and Reform, to identify what Departments have public private partnerships, their value and what they are for. The answers are very interesting. What is even more interesting is that in recent times the two major providers of public private partnerships in certain areas, such as education, have been the two big UK and global public private partnership companies, Carillion and Capita, one of which has now gone into a very difficult and costly liquidation, and we read this week that in recent months the second company, Capita, has been enduring increasing financial difficulties. It would be fair to say that at present the jury is out as to whether Capita will now go the way of Carillion.

The collapse of both public private partnership providers and companies has led to the loss of tens of thousands of jobs in the UK and Ireland. In particular in Ireland, we have the loss of a range of jobs. Some very good and reliable contractors who were subcontractors on public private partnerships face receivership before the courts with a lot of difficult efforts being made to save companies that have a long and quite good construction record. The collapse of Carillion and the subsequent difficulties with Capita - some companies are affected by the fact that both of these companies are in difficulty - have come like a bolt out of the blue for such companies.

What is more, and we know this with regard to the schools bundle, the Minister for Education and Skills was quite blasé in answering me on this when he suggested, when the collapse of Carillion first happened and then with the difficulties with Capita, that all would be well quite quickly. The commentary over and over again was there would be no difficulty and no loss to the Irish Exchequer and that the NTMA was not on the hook for any of the losses. In fact, although many of these projects are practically completed and the schools are expected to be in possession of the new buildings, we are still not clear as to when exactly completion will happen. Obviously, we then have the complications of the running and maintenance contracts for up to 25 years after completion. It is not clear who will actually take them over.

The theory behind public private partners is very simple. For large-scale projects, particularly roads and airports, additional funding can be obtained. The funding can be kept off the State's balance sheet in terms of total borrowing. Perhaps efficiencies can be gained, in terms of the type of people involved in the public private partnership, and the project will be managed for 25 years and then handed back to the State.

That is the theory. When this model of financial development was being developed from the 1990s onwards, to be honest, it seemed like the answer to the prayers of a hard-pressed Minister for Finance, whereby without increasing the national debt, one could get a large amount of available capital and build some significant and substantial projects. However, it has not worked out like that. The theory that the PPP was going to result in a significant part of a capital project being transferred from a risk point of view in whole or in part to the private sector, thereby lowering the State's risk profile on its debt, has turned out to be a chimera for a simple reason. If one builds a hospital like the one in Limerick, and this has happened all over the UK, via a PPP and the PPP developer and the PPP company running the hospital thereafter collapse like Carillion or get into difficulty like Capita, what Minister would say he or she will wash his or her hands of it and that the hospital should close? As that would not be possible, the notion that we are transferring risk in a competent way from the public to the private sector is simply not true. Similarly, if we build a public road or railroad and the PPP collapses, one cannot close the road. One must continue with the road but must get somebody else to take on the completion of the project and the running and maintenance of the road. Again, if one builds a primary or secondary school as part of a bundle, can anybody show me an example anywhere in the world where an existing school under the management of a PPP that collapsed was subsequently closed down by either local or national government? I do not believe there are such examples because the kind of projects about which we are talking pertain to public goods which, once built, are for the public in any particular country or region and we are not going to be able to close those public goods that the public has provided for. There is a conceptual flaw with regard to PPPs.

The second point about PPPs is that they save money in some cases by very sharp practices relating to how they reduce costs. They can reduce costs by eliminating pension liabilities from their wages bill or a conscious use of subcontractors who, while registered for tax, are self-employed, in particular for PRSI purposes. The consequences are that what would normally be the employer's contribution to the employees' long-term social retirement pension from the public welfare system of the welfare state is done away with. We have about 30 years' experience of PPPs and we know that they promise a lot if they are perfectly executed but in many historical examples, they have not been perfectly executed and have come back to the door of the State to be taken over by the State and have become much more expensive. In addition, there are a lot of financial, technical and legal costs associated with PPPs that can be extremely high. Consequently, while the rate of interest we see on a PPP appears to be very low, it is nowhere near as low as the rate of interest at which the State is able to borrow.

The reason the IMF came into Ireland was that our banks could no longer borrow. If that situation continued, the banks would have closed down. In the aftermath of the collapse and the disastrous bank guarantee, PPPs were probably one of the few mechanisms still available to Ireland to allow it to borrow money and, critically, not increase the national debt but have it off balance sheet. Thankfully, those days are over. They have been over for about five years because the State can now borrow at significantly cheaper rates. While I can understand that for many officials, the PPP has a tidiness about it that appears to answer pages of tick-box questions that are asked about projects, those answers are very often illusory. We know this very specifically and not just in the case of the UK, which has had such examples for probably ten to 15 years with regard to, for example, NHS trusts in different parts of England which have become completely embroiled in debt brought on by a PPP regime they simply cannot finance with payback.

Will the Minister agree to a serious independent evaluation of PPPs around the world, in particular the many examples of those that have failed, so that if he is looking at these again, he has these failures very clear in his mind? I hope the Minister of State will stand up to say that he will carry out the evaluation because it is necessary.

Minister of State at the Department of Public Expenditure and Reform (Deputy Patrick O'Donovan)

I thank the Deputies for their contributions. I specifically thank those who are consistent in their views and who were always opposed and are still opposed to PPPs. Of course, we have the converts along the road who, once upon a time, were in favour of them but now just 12 months later, are totally against them. This is why some of the arguments in here completely lack credibility. It is incredible to criticise PPPs less than three years after leaving a Government in which one's party advocated and facilitated the construction of the New Ross bypass, the N11, courthouses, the DIT campus at Grangegorman and the Gort to Limerick road, which all had to be done through PPPs. Several Deputies mentioned their opposition to PPPs but none of them said the Gort to Galway motorway should not have been built. None of them said that the DIT campus at Grangegorman should not have happened. None of them said that the bundle of courthouses that were built should not have happened. They cannot have their cake and eat it at a time when the country was basically bankrupt and had been left with the legacy of a massive wallop. Not everything about PPPs is bad, which is why the Minister for Finance has said that as part of the review which is under way and which will be brought to the House when the Government has had a chance to review it, all views will be taken into consideration. However, parties must be somewhat less disingenuous in the first instance because what the voters are seeing on the part of some people - it is manifesting and being reflected in research - is a complete lack of credibility. A party that was in government two years ago advocating that the N11 road to Wexford be built through a PPP or that the DIT campus at Grangegorman should go ahead by way of a PPP through the Department of Education and Skills cannot now state it is against PPPs. That is completely incredible and I do not believe anybody actually takes that seriously. That is a dangerous road for parties to go down because they are ceding part of an electorate that supports the concept of doing capital work when we do not have money to those who have always said they have never supported private investment in capital work.

I welcome that many Deputies spoke about the 10% change and that some Deputies are now talking about fiscal responsibility. Every morning on "Morning Ireland" we hear Opposition Deputies saying they want so many hundred million euro extra for education or for some other area. The Taoiseach is right in saying that the people who are advocating for specific elements of expenditure above and beyond what is committed to in the budget should say which projects in the previous budget or in the capital plan they would not do.

Nobody has referred to the content of the capital plan, with the exception of my colleague, Deputy O'Dowd. Apart from loose references to PPPs not one person referred to the upcoming national development plan. That cuts to the chase. The people who need many of these infrastructural projects to be built are seeing the Government's commitment to spend €116 billion. However, certain Opposition parties, including some which were in government up to recently, are claiming that there is some magic way that things could have been done differently in the past - or even currently - in the absence of PPPs. That is absolutely not the case. The Government is committed to a review. Having come out of recession, we have undertaken that route.

On existing PPP commitments, the Higher Education Authority has 11 projects for institutes of technology. Are certain people here seriously suggesting that they should not go ahead? Some €150 million is set aside for building community nursing homes. Are they saying those should not go ahead? There are Department of Justice and Equality PPP projects for Garda stations and courthouses. If that is what some people believe, let them outline the ones that should not go ahead. They cannot have their cake and eat it. They cannot have fiscal rules laid out by the European Union that everybody now claims to be a convert to and at the same time say they are against everything in the funding models that worked in the past. I do not suggest for one minute that there are not complexities.

Deputy McGuinness was the only person who made reference to procurement from the point of view of the Office of Government Procurement. I have made this offer previously and I make it again that I would welcome the opportunity for anybody who has specific issues relating to procurement or who wants to advocate for particular elements of it - the Acting Chairman has done so - to come forward and make a suggestion which can be done by way of the procurement leadership group.

I sum up where I started off. We were in a very difficult space in 2011 and 2012. Luckily we are now out of it and we have a major capital programme under way. In advocating for that capital programme we need to reflect on why we used PPPs in the past. It completely lacks credibility to suggest we could just erase the past and say all of sudden PPPs are bad while at the same time some of these projects are absolutely necessary. The Minister, Deputy Donohoe, will bring to the House the review I mentioned in my opening remarks, for which some of the Deputies were present, as soon as the Government has had a chance to review it.

I thank the Deputies for all their comments. The officials in my Department have made note of everything and we will try where practicable to get back to people individually.

Dáil Éireann debate - Thursday, 26 Apr 2018

Public Private Partnership on Capital Infrastructure: Statements

Dáil Éireann debate -
Thursday, 26 Apr 2018