Mr. Robert Watt:

The review is completed and is with the Minister. Aspects of it were referenced in the national development plan. I would be happy to give a broad outline of where we are but the Government has not approved it yet. This will happen shortly, at which time it will be published in its entirety.

The PIMA report characterised the institutional strength of the PPP management framework as good, and its effectiveness as medium. The IMF made a small number of recommendations to further strengthen the process and procedures already in place. The PIMA report was published last November and is available on the Department’s website.

The report of the PPP review is with the Minister, who intends to bring the report to Government in the coming weeks for approval to publish. However, the key findings and recommendations agreed were included in the NDP published in February. These can be summarised as follows.

The review concluded that PPPs have been very useful in the past in facilitating the delivery of important infrastructure projects. This was particularly the case when the Exchequer was seriously constrained in its ability to fund infrastructure directly during the fiscal crisis. It was noted that this enabled projects to proceed which would not otherwise have been deliverable on the basis of the Exchequer funding available at that time alone. However, under more normal economic and fiscal circumstances, the ability to use PPPs to deliver "additionality" in that context is now less relevant. The NDP sets out the Government's plans to increase public capital investment to among the highest levels in the EU and sustain it at that level over the period to 2027. In this context, the pursuit of further additional investment projects by PPP, over and above the planned NDP level of investment, is not recommended. To do so would pose a risk that such projects could give rise to a level of public capital investment overall that is not consistent with macroeconomic or fiscal sustainability. The PPP review therefore recommends that PPPs should continue to feature as a procurement option available to 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, projects to be pursued in this way by PPP should be progressed as part of the NDP, as opposed to additional projects. This is consistent with the PIMA recommendations. Accordingly, 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 PPP review recommended two other changes, the first of which was the discontinuation of the budgetary control mechanism limiting exposure to PPPs to 10% of the aggregate Exchequer capital allocation on an annual basis. In effect, this was the approach we introduced a number of years ago which meant that unitary payments in any year could not be more than 10% of the Exchequer capital cost. Therefore, if the overall Exchequer programme was €5 billion, the unitary payments on PPPs could not exceed more than €500 million on an annual basis. The review recommended reinstating the previous budgetary control mechanism of charging the capital value of PPPs to the capital allocation of the sponsoring Department over the construction period. This will ensure that PPPs and traditionally procured projects are treated equally in the selection of the most appropriate procurement mechanism for each individual project. This approach was also recommended by the IMF in the PIMA report. This is a significant recommendation which in effect ensures that Departments face the same incentives when they are choosing between a PPP project or an Exchequer-funded project because the capital cost of the PPP would be notionally charged to their accounts as if it were procured traditionally. This means, regarding the accounting treatment, that there is no bias one way or the other in respect of the selection of projects. This is a fundamental change which will impact how we select, approve and develop this programme into the future. In addition, in order to improve transparency in reporting on PPPs, a number of changes in the reporting arrangements have also been recommended and will be introduced. These involve publishing cost-benefit analyses, CBAs, and public sector benchmark reports and in effect making available the information that is used to make decisions to make that information available publicly.

I hope I have given the committee an understanding of the role of our Department in respect of PPP, some assurance regarding the guidance and procedures which are in place to ensure PPPs are used to provide a value-for-money option for the State, and an update on some of the key policy developments in this area. I am very happy to answer any questions the committee may have.