Leo Varadkar (Dublin West, Fine Gael) | Oireachtas source

I thank the Deputy. He asked me about my interview this morning on Newstalk. I was asked if I found any aspect of the national children's hospital controversy scandalous, and I said that I did. What I found to be scandalous was that some of our agents - agents employed by Government, albeit indirectly through the National Paediatric Hospital Development Board - underestimated the costs so significantly. They did, and while I was not terribly surprised the hospital might turn out to cost more than we thought, I was really shocked that it was €450 million more than we thought. That was down to a number of factors, ranging from VAT to construction inflation, which nobody could have controlled, but the underestimate of some of the costs could have been foreseen and should have been foreseen earlier. That is the element I said I found scandalous. Obviously, as Head of Government, I take responsibility for that. I cannot come in here and claim credit for the public finances being in balance, for full employment or for all of the aspects of the capital programme that are happening on time and on budget, whether Luas cross-city, the Gort-Tuam motorway, the schools programme or pretty much everything else for the past ten years, and then wash my hands of this. I take responsibility, as Head of Government, for the fact people we employed and trusted to get their numbers right got them so enormously wrong. That explains a significant chunk of the unanticipated higher cost of the children's hospital project.

As to what we are doing about it, first, the PwC analysis is being carried out to see what can be learned and also to see if there are ways that we can pare back the cost. I am sceptical as to whether that will be possible but we have to leave no stone unturned in seeing if there are ways that we can pare back the cost of the project, provided it does not in any way result in downgrading, diminution or de-speccing of the project. We had that before with new hospitals built 20 or 30 years ago, where corners were cut and phases were removed, and we spent 30 years adding all that back on at much greater expense. I would only be in favour of cost-cutting if it did not diminish the value of the project in terms of healthcare and paediatric care.

The project is now very much under way. It is something that has been promised for as long as I can remember. It was first talked about in the 1960s, first called for by doctors in 1993 and it is now well under construction. The first aspect of it, the satellite centre in Blanchardstown, will open to children this year, Tallaght next year and then the main campus at St. James's in 2023. At long last this is being done, albeit at 50% more than we anticipated it would cost.

There are definitely lessons in terms of public procurement into the future. While we have made no final decisions on this, among the areas we are examining is factoring in a risk premium around big projects when we are projecting the cost of a project. There is always a degree of what is called optimism bias or promoter bias, where the people or the agency promoting the project will often believe it is going to come in cheaper than it really does, and that applies from all-weather pitches to major projects. We would factor in some risk premiums around that. The other thing we are considering is whether we should pay a bit more attention to the median price of the bids.

There has been criticism from some quarters that, in the public sector, we tend to go for the lowest priced bid or tend to weight very heavily who comes in with the cheapest price. Perhaps that is not the right approach. Maybe we should look at the median price and then give a score to those who are below it. I will talk about that in the future.

The third is one that I strongly believe in and I am determined to make happen, that is, what I call a past form or public sector reference clause. It is not possible for us under EU procurement law to ban a contractor from tendering for a job even if it has not done a very good job in the past. I am not talking about any particular contractor. There are numerous examples, quite frankly, of companies that have done a bad job in providing public buildings or doing other work for the Government. I would like to see written into public procurement a sort of reference. If the Deputy was going for a job in any office in this city or any business around the country, he would come with a reference based on what his previous employers thought about how he did. I would like to work something like that into public procurement so that, in respect of those companies - contractors and professional services companies, whoever they are - we would be able to take and weight more heavily their previous form in doing work for the Government. These are the kinds of reform that we should make in future.

The National Economic and Social Council, NESC, has done three reports relating to housing. There is the Urban Development Land, Housing and Infrastructure: Fixing Ireland's Broken System report, which was published back in May. There are also the International Approaches to Land Use, Housing and Urban Development and the Land Value Capture and Urban Public Transport reports. They are all very good and worth a read. They helped to inform the decision to establish the Land Development Agency, LDA, which I see as an ESB for housing. I see it as a semi-State and as the Government getting involved more in the business of development, construction, building houses and building communities. A lot of that is done through local authorities already and through approved housing bodies, but this is additional to that. That is what we need - additionality. We need councils building more and we need approved housing bodies building more, but we also need the LDA, particularly when it comes to high-density, high-rise sites in more urban areas. What it will do is build housing of all sorts - social housing for people who are on the housing list; cost rental housing, which is a model that we have not used much of in Ireland, but it has merit and is going to start in places like Emmet Road; affordable housing scheme houses, particularly in urban areas where there is a real affordability issue; and houses for purchase. However, the LDA is only getting started. At the moment, it is just a board established by statutory instrument and a small number of executive staff, so it will take it a bit of time to ramp up, but we anticipate it being on site building houses in 2020. That is what I want to see happen.