Oireachtas Joint and Select Committees
Thursday, 12 October 2017
Public Accounts Committee
Transport Infrastructure Ireland: Financial Statements 2016
9:00 am
Seán Fleming (Laois, Fianna Fail)
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We are now back in public session and this morning we will examine the 2016 financial statement for Transport Infrastructure Ireland. I welcome Mr. Michael Nolan, chief executive officer, CEO, of Transport Infrastructure Ireland. He is accompanied by Mr. Nigel O'Neill, director of commercial operations, Mr. Michael Kennedy, public private partnership, PPP, procurement and PPP finance section, Mr. Declan Wylde, head of finance, Ms Audrey Keogh, financial controller.
We are also joined by Dominic Mullaney principal officer roads division and Kevin Doyle, public transport, corporate and services division at the Department of Transport, Tourism and Sport. I remind members, witnesses and those in the Visitors Gallery to turn off their mobile phones. That means putting them in airplane, not just on silent.
I advise the witnesses to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.
Members are reminded of the provisions of Standing Orders that the committee shall also refrain from inquiring into the merits of a policy or policies of the Government or a Minister of the Government or the merits of the objectives of such policies.
I call the Comptroller and Auditor General to make an opening statement.
Mr. Seamus McCarthy:
Transport Infrastructure Ireland, TII, was established on 1 August 2015 through a merger of the National Roads Authority and the Railway Procurement Agency. The primary function of TII is to provide quality transport infrastructure and services. Its main responsibilities relate to the construction, repair and maintenance of the network of motorways and national primary and secondary roads, and the construction, maintenance, and operation of the Luas light rail system in Dublin. In addition, TII acts as the payment agent for grants to local authorities for local and regional roads on behalf of the Department of Transport, Tourism and Sport. The Department retains decision making over the allocation of the funding, and is responsible for the oversight and monitoring function for those roads.
The financial statements for TII for 2016 received an unqualified opinion. TII's income in 2016 totalled €1,078 million. This sum included State grants of €919 million from the Department of Transport, Tourism and Sport's Vote; road toll income of €137 million, mostly from the M50 and the Dublin Port tunnel; and other income of €21.7 million. TII's expenditure in 2016, including interest and other finance charges, amounted to €911 million. Over 90% of TII's recurrent expenditure in 2016 was related to payments in respect of the road network. In 2016 TII paid local authorities just under €200 million for national primary and secondary roads and, on behalf of the Department, €371 million for regional and local roads. TII also paid almost €87 million in operational payments for public private partnership road projects, plus €29 million in related finance charges. It paid €49 million in respect of tunnel and tolling operations, plus €7.4 million in related finance charges. Its administration charges amounted to €22 million in the year. In addition to its recurrent expenditure, it invested over €230 million directly in transport infrastructure in 2016.
TII has undertaken a significant number of PPP projects as a means of providing a substantial part of the national motorway network and related service areas. Eleven public private partnership road projects were in operation in July 2017, with a further three under construction. The M17-M18 motorway has since been opened.
Chapter 4 of my report on the accounts of public services 2016 aims to provide an overview of and update on public private partnerships. I previously reported on such projects in my 2012 report. Apart from recording the agreement of new PPP deals in the intervening period, the chapter identifies notable developments in three areas in respect of TII's PPP projects. A number of risk-sharing arrangements in place for road schemes have given rise to significant income for TII in the period reviewed. They arose from contract provisions for toll revenue-sharing and insurance cost rebates. Requesting variations after a PPP contract has been agreed or a motorway has come into operation will, in general, lead to additional costs for TII. Such variations requested in the period 2013 to 2016 have added costs for TII estimated at a total of €13.3 million. It has incurred additional expenditure in respect of two contracts which included provision for guaranteed payments to the private partner where traffic levels fell below specified floor levels set out in the PPP contract. In 2016, €1.2 million was paid to the private partner under the M3 Clonee-Kells contract and €4.6 million in the case of the Limerick tunnel contract. As the diagrams shown on screen illustrate, the guaranteed payments under the M3 project are projected to end in 2019 in a medium traffic growth scenario. However, annual traffic guaranteed payments are expected to continue for the full duration of the Limerick tunnel contract. TII provides on its balance sheet for the projected future expenditure under the guarantees, estimated at €133 million on a current net value basis.
Road projects account for over one half of the projected future payments under PPP projects. Post-implementation review of PPP projects is important in identifying lessons that can be learned for future projects. Publication of such reviews would assist in improving accountability for and public understanding of whether PPPs achieve value for money. To date, TII has reviewed nine road projects, but the results have not been published. The Secretary General of the Department of Public Expenditure and Reform has committed to including a requirement to publish post-project reviews, subject to redaction of any commercially sensitive information, in a revision of the public spending code under way and revised PPP guidance to be issued in the near future.
Seán Fleming (Laois, Fianna Fail)
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I ask Mr. Nolan to make his opening statement.
Mr. Michael Nolan:
I thank the committee for the invitation to appear before it to discuss TII's 2016 financial statements. Following the August 2015 merger of the National Roads Authority and the Railway Procurement Agency, our remit in respect of national road infrastructure has been expanded to also include light rail infrastructure.
Light rail infrastructure activities within the greater Dublin area are determined by the National Transport Authority, NTA, which provides the strategic framework for the planning and delivery of public transport infrastructure and the provision of passenger services in the greater Dublin area. The NTA has assigned its functions in securing the provision of light rail passenger services and the management of the Luas operating contract to TII. Since the commissioning of the initial lines in 2004, Luas has been operationally self-sufficient in ongoing operating costs, including maintenance, which are met without the need for a Government subvention.
TII is managing the programme of works associated with the extension of the Luas Green Line northward from its current terminus at St. Stephen's Green. When the Luas cross city extensions come into operation this December, the Luas Red Line and the Luas Green Line will cross in the city centre, with an easy passenger interchange between the two. The Luas Green Line will at that point extend from Brides Glen to Broombridge, adjacent to Irish Rail's Broombridge station in the north west of the city.
The Government's seven-year capital investment plan includes provision for a new metro project for Dublin. The project is defined as a high-speed, high-capacity, high-frequency public transport link from the city centre to Dublin Airport and Swords, with an underground city centre section. It is anticipated that the metro will ultimately tie into the existing Luas Green Line rail system, enabling the through-running of metro trams from Swords to Brides Glen. TII is engaged, in collaboration with the NTA, in the process of developing the design of the new metro north project with the stated objective of the commencement of construction in 2021, subject to a number of positive outcomes, including the securing of planning approval, funding and the procurement of various works packages.
TII has succeeded in modernising much of the national primary road network in recent years, bringing significant economic and other benefits, including much safer driving conditions on the improved roads, reduced journey times, reduced wear and tear on travellers and vehicles, as well as environmental improvements. The completion of the major inter-urban motorway network marked a tipping point as TII's activities have become increasingly focused on managing and maintaining the road assets in place and improving safety, as well as removing bottlenecks where resources allow. Current funding levels for investment in the national road network are historically low. There is now a gap between the funding allocation and what is actually required to maintain the existing network in an adequate condition.
The Department of Transport, Tourism and Sport's study Strategic Investment Framework for Land Transport acknowledges that the road network should be maintained to a sufficient standard to ensure the value of the original capital investment will not depreciate prematurely in the coming years. The framework states, "Amongst the main priorities over the medium term will be ensuring adequate maintenance of the National Road Network in order to protect the value of previous investments and target the improvement of specific road segments where there is a clear economic justification". The replacement cost of the network is in the order of €30 billion and, on the basis of a 20 to 30-year average life cycle, it would deteriorate to the extent of €1 billion per year in the absence of this investment. Within this context and mindful of the limited funding levels earmarked for the national roads programme in the early years of the Government's infrastructure and capital investment plan 2016 to 2021, TII's priorities in 2016 were as follows.
Priority No. 1 is asset management, network rehabilitation and network operations. The first priority beyond existing liabilities is to maintain the asset value of the network and ensure its safety, reliability and functionality. This is critical to ensuring the network performs efficiently and safely and continues to support national economic growth and competitiveness.
Priority No. 2 is national secondary road improvements, bottleneck improvement projects, safety projects and traffic management projects. It is the case that most of the national secondary network routes are deficient in terms of capacity, safety and alignment. TII will seek to implement improvements as funding permits.
Priority No. 3 deals with major improvement projects. The investment in the national road network in recent years has vastly improved the level of service provided on many of the country’s busiest and most strategic national roads. However, there remain many improvement schemes that are highly desirable and would generate significant economic, safety, regional growth and environmental benefits, and these schemes will be advanced as the capital investment plan funding profile permits. These priorities were reflected in TII’s work programme for 2016 and will continue to form the strategic framework for our national road activities in the coming years.
I would like to highlight two particularly positive developments. The M17-M18 motorway PPP scheme opened for use two months earlier than expected on 27 September 2017. This was one of three national road projects that was included in the Government’s PPP stimulus programme. The use of the PPP funding mechanism, with the support of the European Investment Bank, for these major national road infrastructure projects allowed us to get them started at a time when Ireland’s capital investment capacity was greatly constrained by the fiscal crisis.
The second major development that I would highlight is that the contractor for the Luas cross city extension of the Green Line achieved an early handover of the tracks to the Luas operator on the weekend of 9 September. This allowed the operator’s driver training programme to commence on time, which is a precursor to the system coming into operation in December. In the context of benefits realisation, the early handover of these motorway and light rail projects is a significant milestone for these complex and challenging projects.
We have, as requested, submitted a briefing paper which contains some detail on the delivery of national road and light rail projects under the capital investment plan, investments in asset renewals and minor roads realignment safety projects. We are pleased that the Comptroller and Auditor General, who audited our 2016 financial statements, noted that the statements give a true and fair view of the assets, liabilities and financial position of TII as at the 31 December 2016, and of its income and expenditure for the year then ended, and that the financial statements have been properly prepared in accordance with generally accepted accounting practice.
We will, of course, be happy to answer the committee’s questions. If there are any questions that we cannot answer today we will, as always, follow up with a written response.
Seán Fleming (Laois, Fianna Fail)
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I thank Mr. Nolan. The members who have indicated will be called in the following sequence: Deputy Catherine Murphy with 20 minutes; Deputy David Cullinane with 15 minutes and ten minutes each for Deputies Shane Cassells, Catherine Connolly and Alan Kelly.
Catherine Murphy (Kildare North, Social Democrats)
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I thank Mr Nolan. It states in the report of the Comptroller and Auditor General that TII acts as an agent in the allocation of funding to the local authorities, which in turn act as agents and do the practical work on the ground. As I understand it, TII distributes the resources for local, regional, national and secondary roads. Is that the case?
Mr. Michael Nolan:
We look after the resources and allocation of funds to various different national roads projects between the local authorities. As an agent for the Department of Transport, Tourism and Sport, TII administers the payment system through local authorities but it is the Department which determines where the allocation of resources would be directed in any given year.
Perhaps the officials from the Department of Transport, Tourism and Sport would like to answer part of that question.
Catherine Murphy (Kildare North, Social Democrats)
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Chairman, I think it would be useful to call one of the officials to keep the subject compartmentalised.
Mr. Dominic Mullaney:
The regional and local road grants are determined by the Minister every year. Once they are determined and the allocations are made, they go on to TII's PRS system. Essentially TII looks after the actual payment of the grants on behalf of the Department. All dealings in terms of the grants are dealt with directly by the Department.
Catherine Murphy (Kildare North, Social Democrats)
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I will not dwell on that aspect but will deal with the Department directly outside of this forum.
The underfunding for the protection of the asset is a major issue in terms of value for money. Mr. Nolan refers to the amount allocated for maintenance. I presume TII undertakes condition surveys on the motorways, that TII will have a timeline for examining the overlay to see that it is of a certain standard.
Catherine Murphy (Kildare North, Social Democrats)
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What is the level of underfunding annually at this point?
Mr. Michael Nolan:
Deputy Murphy mentioned TII's condition surveys. TII has 5,500 km of network of which approximately 3,000 km is legacy roadway, which has very poorly engineered pavement structures. We have 2,500 km of engineered pavement which is in better condition because these roads were designed and constructed to a certain standard. We undertake condition surveys every year on the network and with that information we are able to prioritise where the funding is directed. Various different factors are taken into account in the condition survey. Based on the annual condition surveys, where we survey the strength of the pavement on the underlying structure and we also look for skid resistance and so on, on that information we should be spending ideally of the order of €140 million annually on repaving the national road network. Pavements last for a seven to 12 year cycle, depending on the surfacing, so TII should be working on 400 km of roadway every year. At present we are only reaching 130 km of roadway. In monetary terms the underfunding - this is acknowledged by TII and the Department - is of the order of €90 million to €100 million each year, depending on the year. One can get around underfunding in the short term, for one or two years. When underfunding is persistent, TII will find that it will spend €2 in future years to fix what €1 would do today. We do not intervene when we see potholes, we intervene with our condition surveys when we can determine the underlying structure of roads and we know when the interventions are needed.
Catherine Murphy (Kildare North, Social Democrats)
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Has TII identified a critical timeline or has Mr. Nolan identified the roads in need of work?
Catherine Murphy (Kildare North, Social Democrats)
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Right.
Catherine Murphy (Kildare North, Social Democrats)
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So it will cost more-----
Catherine Murphy (Kildare North, Social Democrats)
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Mr. Nolan has told us that it would cost between €90 million and €100 million per annum to carry out the maintenance programme.
Catherine Murphy (Kildare North, Social Democrats)
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Is that for national primary and secondary roads or is it for the totality of the road network?
Mr. Michael Nolan:
It is for the totality. If I may Chairman, we constructed at great expense to the taxpayer a major portion of the national road infrastructure between the years 2000 and 2010. We constructed 900 km of new motorway and dual carriageway. All these roads will require significant intervention in resurfacing and asset renewal in the next ten years, as the cycle comes round again. While it may have been new infrastructure in the years 2008-10, it will come up for an intervention on its pavement in the next ten years. We will see a spike in our needs. As this is a high speed, high quality network that will be the focus of TII's attention in the next number of years.
Catherine Murphy (Kildare North, Social Democrats)
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One of TII's income streams is the money generated by tolls. The buy-out of the tolls on the M50 which would have predated the establishment of TII, generates tolls in the region of €137 million. Is that income exclusively for the M50?
Catherine Murphy (Kildare North, Social Democrats)
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Has the outlay for the buy-out of the toll for the M50 been recouped? If not when is it likely to happen?
Catherine Murphy (Kildare North, Social Democrats)
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How much is the annual payment?
Catherine Murphy (Kildare North, Social Democrats)
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In that case, TII is bringing in more than it is paying out.
Catherine Murphy (Kildare North, Social Democrats)
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I will return to Mr. O'Neill when he finds the figures. I will turn to the issue of public private partnerships and the Limerick tunnel. Given the issues related to climate change and the desire for a modal shift in transport, including a reduction in the number of car journeys and so forth, I presume in hindsight Mr. Nolan would consider it a bad idea to include in contracts a requirement to reach a certain number of journeys because, beyond paying the operator when the numbers fall short of the target, this type of approach has other costs. For example, the committee was told a couple of months ago that Ireland faces fines of approximately €600 million per annum for missing our climate targets. Some of this money could be spent on making sure our roads are maintained in good condition. There is a circle to be squared here. I presume TII would not design a public private partnership using the model applied to the Limerick tunnel again. Is that a fair assumption?
Mr. Michael Nolan:
That is fair. On the variable operation payments in respect of the Limerick tunnel and M3, at the time, we had gone through a series of PPP projects where all of the demand risk was taken on by the PPP companies and concessionaires. At the time of the development of the M3 and Limerick tunnel, because of the scale, complexity and risk associated with these schemes, the industry was not able or willing to take on all of the demand risk. We had an option of the State sharing the risk with the PPP concessionaire or taking all the risk. What we did in the end was share the risk with the concessionaires on those two schemes. With the traffic levels and growth rate we have experienced over the past few years, some of the risks we had envisaged or contemplated will not materialise.
Catherine Murphy (Kildare North, Social Democrats)
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Is it fair to say that with regard to the Limerick tunnel, the model has not proved to be beneficial since the payment will be required for the full duration of the contract?
Mr. Michael Kennedy:
The National Transport Authority has 13 road public private partnership contracts, of which eight are toll concessions. In the case of six of those schemes, the entirety of the traffic risk was transferred to the private sector so it would take all the hit in terms of whether demand arises or not. In the case of two of them, as Mr. Nolan explained, there was a sharing of the risk. The more recent schemes and the more common method of public private partnership in Ireland is that the State pays the full amount to the private company. This is what happened in our last five schemes, whereby the private sector funds, designs, builds, operates and maintains the scheme but we pay the entirety of it and there are no user charges. In a way, the Limerick tunnel is a mix between pure transfer, which was a great thing to get for us back when we did get it, and what we got in the more recent schemes, which is where the State pays all of the payment for the road in question.
Catherine Murphy (Kildare North, Social Democrats)
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Has Mr. O'Neill found the figures relating to M50?
Mr. Nigel O'Neill:
Yes. We have the toll income we receive on the M50 and the costs we have under the broad category of "M50". We have the National Toll Roads buy-out of €52 million per annum. There was the upgrade of the M50 which was completed in 2010. That is an availability PPP and the availability payment is €25 million per annum. We also have the Dublin Port tunnel, which is part of the toll income we receive and this cost is included in the €137 million figure. We have costs of €21 million per annum, a figure that includes the operation and maintenance of the Dublin Port tunnel and Jack Lynch tunnel in Cork because the control centre in the Dublin tunnel also has oversight of the Cork facility. We also have a motorway traffic control centre located in the Dublin tunnel control building and its costs are included in the €21 million figure.
Mr. Michael Nolan:
On the VAT element, this year, after a ruling of the European courts, the VAT that we were subventing to Revenue is no longer going back to Revenue. We are now able to divert some of that funding into some safety schemes. That has been a positive benefit. Some of the money raised on the M50 will go to safety schemes in the coming years.
Catherine Murphy (Kildare North, Social Democrats)
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There was considerable criticism at the time because people expected a reduction in tolls as a consequence of the European judgment. Essentially, this income is being retained and spent on-----
Catherine Murphy (Kildare North, Social Democrats)
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Will Mr. Nolan estimate how much income this will be?
Catherine Murphy (Kildare North, Social Democrats)
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On the mix of projects, transport is one of the three main areas where we will fail to meet our emissions targets. This will cost us. It should be remembered that the Luas project fell of the tracks, as it were, about 15 years ago and other rail projects were completed instead. The project was originally announced in 1996 so it is a long time coming. The metro is the only other big project. A railway order was in place until 2015 for the DART underground and significant costs were incurred bringing the project to the point at which it was ready to commence. We are informed that some of these costs will not have to be incurred again. Is any work being done on the DART underground project? We are told some redesign work is being done. Who carries the cost of that? Is it TII, Irish Rail or another body? I do not see that cost presented here.
Catherine Murphy (Kildare North, Social Democrats)
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Only right rail.
Catherine Murphy (Kildare North, Social Democrats)
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The next issue is a strange one. A Japanese invasive plant is causing all sorts of problems and it is growing along some of the networks. According to a television report I watched on the issue, it is a difficult plant to deal with. How is TII dealing with it and how much is it costing to do so?
Mr. Michael Nolan:
This has been identified as a significant problem that will get out of control over the coming years unless we intervene. TII identified this as a risk a number of years ago and we developed a programme to address the problem on the network.
We have made grants available to the local authorities that are most impacted by the invasive species, namely those along the western, northern and south western seaboard. In conjunction with the local authorities we have made significant inroads in terms of dealing with Japanese knotweed on the national road network. The programme of works will go on ad infinitumbecause it is not simple. Often it is necessary to treat Japanese knotweed three or four times and one has to keep coming back, over time, to observe and to determine if further treatment is needed.
Catherine Murphy (Kildare North, Social Democrats)
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How much is it costing? What is the effective spend to stop the weed from spreading so that we do not incur further costs into the future?
Catherine Murphy (Kildare North, Social Democrats)
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If we do not spend now, will we end up spending more in the long run?
Mr. Michael Nolan:
We will be spending more, yes. It is not just on the national roads; it is on the local and regional road network too. It is also growing along riverbanks. We can only deal with it where it occurs between the fence lines on the national roads but a lot of landowners are now more aware of how to treat it. This year at the National Ploughing Championships we co-hosted a stand to disseminate information to property owners and landowners on how the weed can be treated. The treatment has proved to be very effective. If one drives along the network, one will see signs posted by the local authorities prohibiting cutting along the sections of the roadway that are under treatment for the invasive species.
Catherine Murphy (Kildare North, Social Democrats)
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In one of the TII's PPP projects there was a dispute with an underbidder and significant legal costs were incurred. In terms of the procurement process, what lessons have been learned from that? Were lessons learned in terms of the procurement process itself and dispute resolution mechanisms so that such situations can be avoided in the future? Those legal costs would probably not have been incurred if the procurement process was different.
Mr. Nigel O'Neill:
TII carries out procurements under public procurement law. Bidders have an entitlement under procurement law to have tender evaluations and the procurement process reviewed under the judicial review process. The reality is that the only way for contracting authorities to mitigate the risk of procurement challenges is to carry out well resourced and properly run procurement, in a very sound and deliberative process. Having said that, whether a procurement is challenged is something that is outside of our control. It is up to the bidders and they have an entitlement to challenge. Unfortunately for TII and other contracting authorities, even where there have been challenges which have concluded successfully from the contracting authorities' perspective, significant delays have been inevitable.
Catherine Murphy (Kildare North, Social Democrats)
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I understand that people have an entitlement to a judicial review. Mr. O'Neill made reference to the need for a very well-run public procurement process that is transparent. Were any lessons learned from the procurements that did result in a challenge? Did TII learn any lessons with regard to spending at the beginning of the public procurement process to mitigate against possible challenge? I accept that it can never be avoided completely but what can be done to mitigate against it?
Catherine Murphy (Kildare North, Social Democrats)
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I am trying to find out if TII learned any specific lessons from the aforementioned experience?
Mr. Nigel O'Neill:
Our procurement pipeline is very thin, so it is difficult to apply lessons to new procurements. If we had more projects to procure, it would be easier. Would we do things differently? Yes, I think any time one is subject to an extensive judicial review process, there are always lessons to come out of that. That is just life.
Catherine Murphy (Kildare North, Social Democrats)
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Can Mr. O'Neill specify some of those? Is there anything that-----
Mr. Nigel O'Neill:
Basically, the main lesson I have taken out of it is that our processes have, by and large, been validated. Could there be some streamlining? Perhaps there could be but by and large, we have done things correctly. Where other contracting authorities procuring difficult and complex procurements have been challenged, they have generally been vindicated too.
Seán Fleming (Laois, Fianna Fail)
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Yes but two years were lost. Mr. Nolan cannot just shrug his shoulders because that affects the public.
Seán Fleming (Laois, Fianna Fail)
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I know it was a service area but it is a very busy road and in the interests of safety, people need a pull-in point. Road safety was compromised when those rest areas were not in place. I would just make the point that it is fine to be right but in the meantime, people were negatively affected. Is there anything that TII can do to shorten that process? I know the courts are outside its jurisdiction but-----
Seán Fleming (Laois, Fianna Fail)
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People are entitled to take a case if they choose to do so. I understand that too but it is unfortunate. Deputy Cullinane is next.
David Cullinane (Waterford, Sinn Fein)
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I welcome Mr. Nolan and his team to the meeting and commend them on the first-class job that their organisation does. I will start with PPPs. How many are under the remit of TII?
David Cullinane (Waterford, Sinn Fein)
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There are eight toll roads. Is that correct?
David Cullinane (Waterford, Sinn Fein)
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I ask Mr. Nolan to explain the rationale for using PPPs.
Mr. Michael Nolan:
The rationale for that model of procurement goes back to the policy of previous Governments. Various different national development plans, NDPs, from the early 2000s until 2010 included €2 billion in private sector finance for the development of the major inter-urban network. The original rationale was based on stated Government policy. It is also an alternative way of raising project finance, rather than going directly to the Exchequer. It has its place in terms of providing an alternative means of raising finance.
David Cullinane (Waterford, Sinn Fein)
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What I am hearing from Mr. Nolan is that the main logic behind PPPs is that they are an alternative way of raising revenue to pay for infrastructure. That was the main logic behind the use of PPPs.
Mr. Michael Nolan:
Yes and particularly in the last few years, with the Government's PPP stimulus package, three schemes benefited from that. It was anti-cyclical financing of projects and without PPP finance, the N17/N18, the New Ross bypass and the Gorey/Enniscorthy bypass would not be open today or even at construction at this time.
David Cullinane (Waterford, Sinn Fein)
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A lot of the PPPs were in play and we used them long before there was any downturn or difficulty in raising revenue. What processes are in place to evaluate the cost effectiveness or cost benefit of using PPPs, at both project conception and following delivery, in terms of look back? I ask the representatives to enlighten me as to how that process works from the perspective of TII in terms of ensuring that we get value for money.
Mr. Michael Kennedy:
A PPP project starts off like any other project. It has to satisfy a cost-benefit analysis first. It goes through the same process that any traditionally procured project would go through. It has the same gateways and whatnot. Thereafter, when it is confirmed as a PPP project, a public sector benchmark is prepared on the scheme and the objective then is at various stages in the tender process, one compares what the tendering outcome will be vis-à-visthe benchmark. A better value than the benchmark must be achieved to go forward with a PPP.
David Cullinane (Waterford, Sinn Fein)
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Okay. Has the Comptroller and Auditor General's office examined the processes the State uses to evaluate the cost effectiveness or the benefit of using PPPs, including the conception stage of a project, the public sector benchmark and look-back exercises afterwards? Has the office conducted analysis of international comparisons? Do countries do this differently or better than we do?
Mr. Seamus McCarthy:
We have looked in the past at a number of PPP projects but not in the roads area. We have looked at them in education, the convention centre and the courts. One of the points we have made in the past is that the evaluations that are done around the decision-making to choose to use PPP as the vehicle for delivery are not published so there is little information in the public domain for people to understand why it is, or how it is, that PPPs deliver value for money. I have always argued that this is something that would be useful in adding to the public debate and in gaining community support for choosing PPP as a vehicle. I have also pointed out that there is an obligation under the public spending code that there be post-implementation evaluations of capital projects. It applies to all capital projects but that also applies to PPPs. Other than in the roads area, there has been little of that done. In fairness to TII, including when it was National Roads Authority, it carries out the evaluations but they are not published. There is an opportunity there to contribute to public debate around that by publishing at least some information in respect of it and I have made a recommendation to that effect, which the Department of Public Expenditure and Reform supports but, obviously, the Department is not the commissioning authority for PPPs. It relies on TII, the Department of Education and Skills and so on to do those exercises.
We have not done an international comparison piece around that. Different issues will come up in each area and, therefore, the Deputy should look in the first instance to TII to demonstrate that here, as elsewhere, PPPs deliver good value for money and similarly for other organisations.
David Cullinane (Waterford, Sinn Fein)
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I thank Mr. McCarthy for that.
I refer to the non-publication of the analysis. Mr. Kennedy said the TII carries out an cost-benefit analysis but if this committee or another sectoral committee cannot probe it and cannot see the evidence and the information, it is difficult for us to truly understand whether we are getting value for money. The Comptroller and Auditor General said he has conducted analysis in other sectors and not necessarily roads. Is it the case that the TII does not publish the information or make it available to committees to analyse it? What is the reason for that?
Mr. Michael Nolan:
As the Comptroller and Auditor General mentioned, we do post-project reviews. We lead in the area of doing such reviews for all our major projects a few years after they open or come into operation. I note the intention of the Department of Public Expenditure and Reform to bring in a revised public spending code, which will stipulate the publication of post-project reviews and, at that stage, we will have no problem publishing.
David Cullinane (Waterford, Sinn Fein)
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I am talking about the here and now. I asked earlier how Mr. Nolan can convince me that we get good value for money. I raised two areas with the Comptroller and Auditor General, namely, the pre-construction or concept stage and look-back exercises. When a project is at concept stage, a cost-benefit analysis is done but the information is not shared or published. Why is that the case? I am struggling to understand why it is the case, given the Comptroller and Auditor General has made recommendations that it should be done. With regard to look-back exercises and the public spending code, the Comptroller and Auditor General's response that they should be done but very little is done. Why is very little done? I do not want to hear about what might happen in the future. I am trying to understand what happened in the past and what is happening now. Why is more work not done on compliance with the public spending code? Why is more reporting not done afterwards in respect of cost analysis and, more particularly, when a project is at a stage when a decision has to be made? How can we evaluate whether the right course of action was taken if the information is not provided to us?
Mr. Michael Nolan:
As Mr. Kennedy mentioned, during the development of the PPP scheme and during procurement, we use the public sector cost comparator at various stages to make sure we are getting value for money at each stage. We do not do this in isolation; we do this in consultation with the NDFA. The public sector cost comparator has to be signed off before we go to financial close on projects.
We conduct post-project reviews. They all have to demonstrate we are getting value for money, as initially set out, and we have no problem publishing even before-----
David Cullinane (Waterford, Sinn Fein)
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I am stuck for time. We have 15-minute slots and we try to get distinct answers. With respect, Mr. Nolan has not answered the question regarding the cost analysis when a project is at concept stage or before it goes to tender. I am not talking about commercially sensitive information; I am talking about the bones of a project and whether it is viable to do it directly using State borrowings or using the PPP model. The Comptroller and Auditor General has outlined his analysis of his work in this regard. He feels it would be better if there was more public discourse and public scrutiny of projects. I agree and I am trying to understand the process. Mr. Nolan has not answered the question.
Mr. Michael Nolan:
Going back to the value for money concept, at the time of doing the environmental impact statement, EIS, and preliminary design on our schemes, we publish the cost-benefit analysis to determine that the scheme demonstrates value for money, that is, that the benefits will exceed the cost by a factor.
David Cullinane (Waterford, Sinn Fein)
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Is that information published?
David Cullinane (Waterford, Sinn Fein)
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When?
Mr. Michael Nolan:
At the time of the EIS. It is part of the EIS, which goes to An Bord Pleanála. That is one of the various contributions that are available at that time. The public sector cost comparator, which builds on the cost-benefit analysis, is conducted at various points during the procurement stage of a PPP. That must demonstrate at all stages continuing value for money as we progress through to financial close. Rolling on from that, when a scheme comes into operation, two to five years afterwards, we do the post-project review and we are happy to publish those findings in the next short period.
David Cullinane (Waterford, Sinn Fein)
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I thank Mr. Nolan for his response. Hopefully, we will see improvements.
In two PPPs relating to tolls - the M3 Clonee-Kells scheme and the M18 Limerick tunnel - there was a shared risk.
David Cullinane (Waterford, Sinn Fein)
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Why was the decision taken to share the risk?
Mr. Michael Nolan:
I will give a broad response and I will hand over to Mr. Kennedy. As he said, the decision at the time of the first tranche of six PPPs was that all the traffic risk and management risk would be taken on by the PPP concessionaire. In the next few schemes, because of the complexity and the risk regarding traffic diversion rates - the M3 because of its size and scale and the M18 where the risk was contingent on traffic measures within Limerick city - it was decided that rather than the State taking on all the risk relating to traffic that there would be risk sharing. The choice was sharing some risk of the demand with the PPP concessionaire or the State taking all the risk and locking in that risk for the duration of the contract.
David Cullinane (Waterford, Sinn Fein)
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Is it not the case that part of the logic in using PPPs is that the private sector would take on some of the risk? That is what we are told and I suppose it is part of the attraction for the State also. If we are sharing the risk, we are making it easier as we are lightening the load of the private sector. PPP projects seem to be in areas where there is not much risk at all, but that is another day's work. I am trying to understand, bad enough as it is that that is the case, why it is that we share the risk with the private sector in areas where there might be the potential for some risk for the private sector. If the witnesses understand the question, I am trying to understand their logic. If part of the logic behind PPP projects is that the private sector can get involved and provide money but also share some of the risk, I am trying to understand where the risk is, as all I can see is that at times we help them and share the risk.
Mr. Michael Kennedy:
There is a construction risk. In the case of the Limerick city tunnel project, it was very high risk. The M3 Clonee-Kells project was significantly sized and our concern was to ensure we had a sufficiently competitive tendering process. If one takes the Limerick city tunnel project, not every contractor will participate in a tunnel project, to which there is a very high risk attached. They typically overrun, if one looks at the experience abroad; therefore, we wanted to mitigate some of the risk. There is certainly a risk transfer and as such, one does have to pay for the risk transferred in a contract. We also look after the State in terms of the upside. Members will see in their briefing packs that we do share some of the revenue. As it turns out, from here on, the revenue-share on a number of the contracts will be greater than what we are paying in respect of traffic guarantees.
David Cullinane (Waterford, Sinn Fein)
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We will stick with tolls and PPP projects for the moment. I imagine at concept stage that targets are set for volumes of road users who would pay tolls.
David Cullinane (Waterford, Sinn Fein)
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Is there an analysis the witnesses can share with the committee of targets set before a road was constructed, for example, X number of vehicles paying a toll over X number of years and cases where the targets were not met? Will Mr. Nolan or Mr. Kennedy point me to any part of the country where targets were set prior to construction and where those targets are not being met?
David Cullinane (Waterford, Sinn Fein)
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I asked a specific question. I will be pulled up on time.
Mr. Michael Kennedy:
I will try to get this right. The issue is that they are long-term contracts. One does not look at traffic volumes on a road on a year-to-year basis but over a 30-year horizon. On whether targets are being met, in most cases, given the recession, there was an underperformance for several years.
David Cullinane (Waterford, Sinn Fein)
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Perhaps I might be more helpful. I am thinking specifically about the toll road in Waterford, the Waterford to Cork road that was built as part of the Waterford to Dublin motorway project. Obviously, clear targets were set at concept stage pre-construction. Have they been met year-on-year? I appreciate that the witnesses carry out a long-term analysis, but have the targets been met for traffic volumes?
David Cullinane (Waterford, Sinn Fein)
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They have not.
David Cullinane (Waterford, Sinn Fein)
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If that is the case, has a possible buy-out been looked at? Is that something that could be examined if the targets are not been met?
David Cullinane (Waterford, Sinn Fein)
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I understand that, but I am asking whether it has been examined.
Mr. Michael Nolan:
In the case of the Waterford city bypass, all of the risk is owned by the private sector. The State is not going to jump in to take on any of the risk. The traffic volume targets set by the PPP company have not been met and the State is insulated from the lower than expected demand. We see no reason to jump in on the State side and expose taxpayers' money to buy something that has been constructed entirely at the risk of the private sector.
David Cullinane (Waterford, Sinn Fein)
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Is this one example where the private sector got it wrong?
David Cullinane (Waterford, Sinn Fein)
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It got it wrong.
Mr. Seamus McCarthy:
I think there is another consideration. At the beginning Mr. Kennedy mentioned that one had to make a cost-benefit analysis of a project. It has to be worth building in the first place. If there was to be a very serious shortfall in traffic levels, it could overturn the economics in undertaking the project. I do not think it is right to just dismiss it as the private sector partner has lost out as there may be a loss to the State also.
David Cullinane (Waterford, Sinn Fein)
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I certainly do not want to make that argument in the case of the Waterford bypass.
David Cullinane (Waterford, Sinn Fein)
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Notwithstanding that, I thank the Comptroller and Auditor General for his response. I will focus on roads and depreciation. It has been said there is a figure of €1 billion every year for depreciation. What correlation is there between the figure for the depreciation of roads and the cost of maintenance and upkeep of roads?
Seán Fleming (Laois, Fianna Fail)
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The Deputy's time is nearly up.
David Cullinane (Waterford, Sinn Fein)
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I just have one more question. For example, if we do not improve roads and do not spend enough on maintenance, will that increase the figure for depreciation? I am being put under pressure, but I have a number of questions about roads. There are two road projects that are very close to my heart. One is the upgrading of the Waterford to Cork road, while the other is the Waterford to Limerick road, which is a big issue in the south east. Are they projects that will be considered? I invite Mr. Nolan to comment very quickly on them. I have one more question about light rail.
Mr. Michael Nolan:
To respond to the first question about the correlation between the figure for depreciation and what we spend, if we do not spend on steady State interventions to maintain the condition of the asset, we will face a depreciation figure in the order of €1 billion per year. As I said, without that intervention, it might cost us a multiple of what we spend now per year in future years.
We would like to do a lot more on the Waterford to Cork road scheme. We have two projects that have been suspended. We would like to upgrade the Midleton to Carrigtwohill scheme, while the section of road from Waterford to Glenmore is one on which would show good returns with regard to the benefits exceeding costs. They are two infill pieces of work on which we would like to move if the funding was available.
David Cullinane (Waterford, Sinn Fein)
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My last question is about light rail. When I ask this question I am conscious of the episode of "The Simpsons" in which a monorail was built in Springfield. I am not in that territory, but I am trying to imagine for one second the new national planning framework which looks at the concept of regional cities and refers to the building of cities and doubling populations. In that context, what is the relationship between Transport Infrastructure Ireland, TII, and, for example, the national planning framework? Is TII looking at light rail solutions in any area outside Dublin? Is it a possibility, not in the short term but in the medium to long term? Is it something that is being examined or at least considered in the context of the new national planning framework? How has TII interacted with the national planning framework process up to now?
Mr. Michael Nolan:
The vision for public transport infrastructure is determined by the National Transport Authority rather than TII. We execute its vision, as required.
We have been working very closely with the executive team which is developing the national planning framework. We have had a number of consultations with it and provided it with data, as requested. We look forward to the finalisation of the framework which will inform TII and the Department of the pipeline of projects with which we will need to run towards planning in the coming years. It is worth mentioning that we have a very thin pipeline of schemes to be included in the ten-year plan or any plan subsequent to the current one. A total of 13 schemes are mentioned in the current capital investment plan. That hollows out all of the schemes we have ready with An Bord Pleanála approval. The schemes in planning are high-risk. They are major and very complex projects which will take some time to wind their way through the planning consent stages. We have made submissions to the Department to run more major schemes through to planning. We await finalisation of the national planning framework to see which of these schemes meet the company's objectives as set out.
Shane Cassells (Meath West, Fianna Fail)
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I welcome the witnesses. I will start with PPP projects, tolls and specifically one piece of infrastructure mentioned by the Comptroller and Auditor General mentioned in his opening, namely, the M3. It was the biggest, most expensive and most controversial scheme in Europe at the time of its planning and construction. The contract was awarded to the EuroLink consortium.
This is most controversial and it certainly was not helped when we had people going down into human rabbit holes for infrastructure that was going to be 2.5 km away from the current old road, even further away from the Hill of Tara. National journalists, such as Pat Kenny, were coming down and broadcasting live shows from the Mound of the Hostages, giving people the impression that the road 2.5 km away from the current road was somehow going to go through the Hill of Tara. I wonder whether any of these people had ever been to Meath before or have been since. They are very welcome to come down now to enjoy the ancient east.
I will get back to this road. It is 47 km in length from Kells, north of Carnaross, in my constituency, to Clonee and up to Blanchardstown. It is tolled twice - the only scheme that is tolled twice. When was the first time that fees were paid? This road was opened in the summer of 2010. When was the first time fees were paid to the concessionary company for failure to meet traffic targets? How much has been paid in total since then?
Shane Cassells (Meath West, Fianna Fail)
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That was the year after the first year of operation. Is that right?
Shane Cassells (Meath West, Fianna Fail)
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A total of €12 million has been paid to the end of last year. It has never actually reached the targets set. Is that correct?
Shane Cassells (Meath West, Fianna Fail)
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The total paid is €12 million.
Mr. Michael Kennedy:
I would add that, as mentioned earlier by the Comptroller and Auditor General, traffic is growing strongly in that corridor - the Deputy will be aware of this. Traffic is approaching the level where it exceeds the traffic threshold. It is a long-term concession. I believe that in future years we will be talking about the revenue share that is being paid back to the State from that road.
Shane Cassells (Meath West, Fianna Fail)
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The traffic levels were set. Mr. Kennedy referred to the road earlier as underperforming. When the deal was done was it premised on potential lands that were zoned in Meath for future development or on the population at the time planning commenced? This was probably in the early 2000s, perhaps 2005 or thereabouts. I intend to refer later to page 36 of the TII report, where reference is made to land use planning and of being cognisant of future development in counties. The deal was struck with a concessionary company. Was it struck on the basis of what TII believed would be future developments and housing estates in Meath?
Shane Cassells (Meath West, Fianna Fail)
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Was that what was in mind on behalf of the State? TII believed the levels would be reached. Was that in the thinking? Were future housing developments struck at the time?
Shane Cassells (Meath West, Fianna Fail)
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Nothing was taken into account in terms of the potential for a slowdown in the economy at that time or the apocalypse that hit us with the crash. Is that the case?
Shane Cassells (Meath West, Fianna Fail)
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It is not the first time that was said.
Why was the risk cost higher? In answering Deputy Cullinane earlier, Mr. Kennedy referred to the risks associated with the Limerick project and the Meath project. The Limerick project had technical aspects to it. Why were the risks associated with the M3 project considerably higher in Mr. Kennedy's view? Specifically, what aspects were deemed to be considerably higher?
Mr. Michael Kennedy:
In the first instance, in Limerick the construction project itself was a tunnel. The second point relates to the demand for the scheme in an urban environment, such as in Limerick. It was far more challenging to forecast traffic demand. The urban setting makes it far more difficult and complex in terms of traffic planning.
Shane Cassells (Meath West, Fianna Fail)
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What about the M3?
Mr. Michael Kennedy:
The issue with the M3 was merely its scale, as Deputy Cassells mentioned earlier on. It was a sizable project and required a great deal of private funding. Numerous banks were involved in putting a great deal of money into the scheme to provide the funding to build. It was more a scale factor in the case of Clonee-Kells scheme.
Shane Cassells (Meath West, Fianna Fail)
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Remind me again of the total project costs of the M3.
Mr. Seamus McCarthy:
In the chapter on public private partnerships we took the most recent information, to the end of 2016, from the Department of Public Expenditure and Reform website, where the Department publishes costs. It is projected that the total costs of all the PPP payments involved in M3 Clonee will be of the order of €706 million. That does not include any further traffic guarantee payments - they have not been built into the projection.
Shane Cassells (Meath West, Fianna Fail)
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The figure of €706 million includes the €12 million that Mr. Kennedy has referred to in the payment costs so far. Is that correct?
Shane Cassells (Meath West, Fianna Fail)
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Mr. McCarthy referred to how the guarantee payments for the M3 are projected to end in 2019 under a medium traffic growth scenario. The Comptroller and Auditor General has obviously garnered that information from TII. Is that so?
Shane Cassells (Meath West, Fianna Fail)
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Does the Comptroller and Auditor General believe that next year will be the last year in which payments are going to be made?
Mr. Michael Kennedy:
We gave our interim projections. We said that under the current growth scenario. Growth is going at about 8% or 9% at the moment. If that were to materialise, payments would conclude next year. However, if that traffic growth were to slow down - we have to account for that - it could drift for a couple of years yet. In a very low traffic growth scenario of the order of 1% per annum over the coming years the arrangement could drift to 2023 or 2024.
Shane Cassells (Meath West, Fianna Fail)
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This is what I am trying to probe. Clearly the M3 is critical and welcome infrastructure but it has a major flaw in that when it gets to Blanchardstown it becomes effectively a car park. There is no infrastructure to feed in to in terms of the access. Let us consider the growth figures. Let us suppose the figures were to grow at the levels that Mr. Kennedy is suggesting. Will the congestion levels grow? There is correlation between them and the growth levels. Congestion is equally going to grow and it will become undesirable to use that infrastructure. It is welcome to hear that we could have an end of payments by the Exchequer to the concessionary company by the end of next year, but it is premised on the fact that growth figures are going to go to a certain level. The corollary is that it will lead to a far more undesirable traffic experience for commuters and they will seek alternatives. Has that been taken into the reckoning?
Mr. Michael Nolan:
I will come back to the question on capacity. The M3 is a motorway with controlled junctions. The capacity is well in excess of the traffic levels currently expected. In factoring in the growth rates mentioned for the coming years we do not envisage any problems with congestion on the motorway.
Shane Cassells (Meath West, Fianna Fail)
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Maybe I was not clear, I am sorry, Chairman. I agree absolutely. I use it every day. There is no problem with the capacity of the motorway. The problem is when the motorway ends at Blanchardstown Shopping Centre. We do not have "Back to the Future" cars. No one here is Michael J. Fox - we cannot fly across Blanchardstown. When we hit it, bar finding Dr. Scott, we are getting nowhere from Blanchardstown. The capacity of the motorway is fine. The problem is the point at which it ends. It becomes an undesirable route for people and they end up on the rat runs, just as they did in the 1990s. I completely accept that the projections are strong, but the M3 may become an undesirable source or choice for people. The irony is if that growth continues, it will become undesirable because the traffic has to stop somewhere, and it is going to stop at Blanchardstown.
Shane Cassells (Meath West, Fianna Fail)
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I am glad Mr. Nolan said that because I want to touch on that as well. I know rail is not it, but I will touch on that.
In 2013 the then Minister for Transport, Tourism and Sport and now Taoiseach, Deputy Leo Varadkar, said that the money spend on the traffic guarantee payments would go a long way in terms of road maintenance and upkeep. How right he was. Let us continue in that vein. Can Mr. Nolan explore that? Mr. Nolan has been very honest and frank. He gave an honest and frank interview to the Irish Independentin November last year in respect of the money required. He said that we were under-investing in our roads by €120 million per year. I wish to refer to one thing in particular that Mr. Nolan touched on.
He has said TII does not have enough in the preparation pool and that it should be running schemes through the planning process now. He has said the danger is that unless TII begins planning now, it will not be able to get work done when money does become available. We are looking at a scenario in which money could become available again. Where is the preparation, given that there are, as Mr. Nolan said, thousands of kilometres of roads to be maintained? Another report around the same time, at Christmas time, by Mr. Paul Melia of the Irish Independent, following Mr. Nolan's interview, indicated that 10,000 km of roads were falling apart. Where are we in terms of the preparation pool to which Mr. Nolan referred?
Mr. Michael Nolan:
We have a number of schemes and our briefing paper gives a good flavour of the ones that are in the preparation pool. There is a broad range of schemes, but our view is that we do not have enough. With the Department, we are working closely to develop the wherewithal to commence work on preparation of a number of schemes in 2018. We are informed by Government policy which will be set out in the national planning framework which, in turn, will give us the impetus to push a number of schemes. We have a broad portfolio of schemes that were suspended in 2008, 2009 and 2010. We will reactivate a number of schemes in the next year. We have reactivated some already. We have asked Monaghan County Council to reactivate the suspended N2 project from Monaghan to the Border. We are looking at a broad range of other schemes to reactivate-----
Shane Cassells (Meath West, Fianna Fail)
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Does the Slane bypass come under TII's auspices in respect of work on the N2 project?
Seán Fleming (Laois, Fianna Fail)
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We are tight on time. The Deputy will be able to come back in.
Shane Cassells (Meath West, Fianna Fail)
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On land use planning, on which I touched earlier, it is stated in TII's report that it has significant responsibilities in terms of its input into development plans and strategic development zone, SDZ, local area plans. In that respect - things are picking up again - projects involving a lot of land in different parts of the country cannot be progressed through planning stage because the planners and An Bord Pleanála have shot down plans owing to a lack of infrastructure. I am not talking about infrastructure under the auspices of the activation scheme which the Government has introduced for individual private sites, rather I am talking about actual physical parts of towns. My town is one of a few in the country that have an SDZ, but no work on adjoining zoned sites can take place owing to the lack of traffic capacity in that part of the town. I am sure that is the case in many other towns also. Where is TII's forward-planning section in trying to progress these plans? This ties in completely with the challenge with which the Minister, Deputy Eoghan Murphy, is faced in delivering housing units and that is often lost in the debate in the Dáil Chamber. People say we need housing now and so on, but a lot of these things will never be progressed without the actual infrastructure, whether bridges or anything else. In the case of my area, unless a bridge is constructed across the River Blackwater, projects in the entire north Navan area that has been zoned for development will not progress.
Shane Cassells (Meath West, Fianna Fail)
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Where is the forward-planning section of TII in liaising with the Department of Housing, Planning and Local Government in fast-tracking what is submitted by county councils across the country in the context of strategic infrastructure requests?
Mr. Michael Nolan:
It is important to say TII is a prescribed consultee in respect of land use. It is not a planning authority. We take into account zoned lands in towns, cities and villages in developing projects and estimating demand, including future demand. When we are designing junctions, including controlled junctions, we take into account capacity arrangements, the contiguous planning aspirations of local authorities and what is in an SDZ and county or town development plan. However, TII is not a planning authority per se. We agree that good infrastructure, including good junctions and controlled junctions, provides capacity and for safe turning movements to access these areas.
Shane Cassells (Meath West, Fianna Fail)
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That forward-planning is key for us. Mr. Nolan answered me earlier when I talked about congestion. We have growth figures for the M3 which could relieve pressure on the Exchequer. TII is obviously hoping traffic volumes will continue to grow as it will relieve the pressure on the public purse. Equally, does TII have a vested interest in making sure rail projects in the area will not continue to be developed? There seems to be a reticence in allowing finalisation of the second phase of the Navan rail line. A reference was made earlier to "The Simpsons" and construction of the Springfield monorail. The difference is that the monorail was actually built; it was just that Homer was at the wheels and brought it to a fiery death. We do not have anyone in Navan town to try to bring the Navan rail line to completion past the point at which the Dunboyne junction ceased in the first phase. Is there a reticence on the part of TII or the Department to see the project completed because they see the growth figures for the M3?
Seán Fleming (Laois, Fianna Fail)
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We are going to move to the next-----
Catherine Connolly (Galway West, Independent)
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The witnesses are most welcome. I say, "Well done," on TII's clear audit opinion. I have a few general and then a few specific questions about the situation in Galway. Generally, TII is the agent for the Department of Transport, Tourism and Sport. It acts as an agent for it.
Catherine Connolly (Galway West, Independent)
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Yes. TII also receives some funding from tolls and various concession arrangements. In policy terms, I am a little confused. TII has a role in land use planning and liaises with the Department on a regular basis. In that regard, what input does it have into policy?
Catherine Connolly (Galway West, Independent)
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I am just trying to clarify something. When it comes to climate change policy - there is an onerous responsibility on every Department - what engagement has Mr. Nolan's section had with the Department?
Catherine Connolly (Galway West, Independent)
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What are those views?
Mr. Michael Nolan:
We are in agreement with the Department on its inputs plan. The only thing on which we have an alternative view is the proposal to reduce the speed limit on motorways from 120 km/h to 110 km/h in the future. We think that would actually be counterproductive. It would undermine the business case for a lot of the major inter-urban network, reduce connectivity between towns and perhaps even force more people to go back to using the roads through villages and towns, increasing emissions along these routes.
Catherine Connolly (Galway West, Independent)
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TII is, therefore, in disagreement with the Department on the proposed reduction of the speed limit.
Catherine Connolly (Galway West, Independent)
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In respect of climate change and to reduce emissions.
Catherine Connolly (Galway West, Independent)
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Are there other specific things TII has suggested or learned? I know that it has only been in existence for two years in its amalgamated state.
Mr. Michael Nolan:
One thing in which we are investing is a tool with which we would be in a position, as the pipeline of projects ramps up, to measure the carbon emissions for each of our route options. When we are looking at solutions to certain problems, we look at carbon loads. We have commissioned consultants, a body of experts, to develop a tool we could use in predicting the amount of carbon generated in the case of any particular route option we-----
Catherine Connolly (Galway West, Independent)
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When were the consultants employed?
Catherine Connolly (Galway West, Independent)
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I beg Mr. Nolan's pardon. Will they report in the middle of next year or will they-----
Catherine Connolly (Galway West, Independent)
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I could be wrong, but I get the feeling that there is no serious analysis of the effects of climate change and the need for urgent action in implementing policies across all Departments.
It could be that Mr. Nolan does not have a specific role in this regard. It might be the Department. Does Transport Infrastructure Ireland, TII, have regular meetings on climate and change in its policy as a result of what we are facing and the action we have to take?
Catherine Connolly (Galway West, Independent)
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That is fine. I will come back to the graph, which is extraordinary, and obviously the TII has learned from that, but when a policy is built in to an increase, we are in serious trouble, are we not? If there is a policy that depends on increasing traffic on our roads all of the time and it is built in to public private partnerships, PPPs, is that not difficult?
Mr. Michael Nolan:
The capacity of a motorway is quite a high figure. There is no connection between our desire to see us reaching a place where the traffic variable operation payments will reach zero, wearing one hat on the finance side, and then seeing traffic levels increase. We work closely with the National Transport Authority, NTA, in developing transport strategies for the various cities. Even in the development of the metro, we are looking at park and ride to try to hoover up traffic off the M1 and the M50.
Catherine Connolly (Galway West, Independent)
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I am delighted to hear that, and I will come to it, but-----
Mr. Michael Nolan:
The Deputy said she is not hearing anything about our concern with regard to emissions. We have many common strategies with the NTA and the national mitigation plan. It is not in our interest to have a huge amount of traffic on some of the network because that is a stress. Deputy Cassells mentioned the N3 between Blanchardstown and the M50. That will reach saturation point at some stage. The next solution is not to go another four or five lanes in each direction. The solution is in integrated transport.
Catherine Connolly (Galway West, Independent)
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Absolutely, and I am delighted to hear that.
Catherine Connolly (Galway West, Independent)
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I will come to that, and I wish I had a few hours to deal with it. If we look at the figure for the Limerick tunnel and the guaranteed level, it is way beyond both the medium and low growth of traffic. It is an extraordinary graph, and that is what was bought into. When does that contract come to an end?
Catherine Connolly (Galway West, Independent)
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That is some-----
Catherine Connolly (Galway West, Independent)
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Hopefully, we will never reach the guaranteed level because it is way above both the medium and low growth. How could that have happened?
Catherine Connolly (Galway West, Independent)
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I have many specific questions, and I know I will be caught for time. Regarding goodwill payments to farmers, is that part of the TII's remit? The Minister signed off last year on farmers receiving so much money in goodwill payments over and above the price of the land. That has nothing to do with the TII. Where farmers do not go through the compulsory purchase order process but go along with the TII and sell the land, there are goodwill payments to reward them for doing that. How extensive is that practice?
Mr. Michael Nolan:
The TII, through the local authorities, would fund many land acquisitions. The goodwill payment is not tied in to a landowner agreeing to sell land outside the compulsory purchase order, CPO, system. Almost all lands are bought through the compulsory purchase order system. The goodwill payment is for the co-operation of the landowners, not just post the CPO. A landowner has to open the gate, move cattle, move sheep, provide the lands and do investigations.
Catherine Connolly (Galway West, Independent)
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That is okay.
Catherine Connolly (Galway West, Independent)
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It is reported in one of the newspapers that the so-called goodwill payments are to be paid to farmers and other landowners for not obstructing the CPO process. That entails payments. How extensive is that? Where do I see that in the reports? What will be the total payment per year and is it made throughout the country?
Catherine Connolly (Galway West, Independent)
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Would it be an extensive practice?
Catherine Connolly (Galway West, Independent)
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Would it have happened in Galway with the recently opened scheme, on which I congratulate the TII because it was opened ahead of schedule? I would have liked to have attended the opening but it took place in the middle of the week, which begs other questions.
Catherine Connolly (Galway West, Independent)
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That must be somewhere in the accounts, is it?
Catherine Connolly (Galway West, Independent)
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From where does that money come?
Catherine Connolly (Galway West, Independent)
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There is a capital budget for the construction of roads-----
Catherine Connolly (Galway West, Independent)
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-----and the purchase of land.
Catherine Connolly (Galway West, Independent)
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Under that capital budget, the TII would give out money for goodwill.
Catherine Connolly (Galway West, Independent)
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What criteria are used? Who makes that decision?
Catherine Connolly (Galway West, Independent)
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What would it amount to annually?
Catherine Connolly (Galway West, Independent)
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Will Mr. Nolan revert to the committee on that?
Seán Fleming (Laois, Fianna Fail)
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Will the Deputy excuse me for a minute? I will allow her to come back in.
Catherine Connolly (Galway West, Independent)
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I will, as long as the Chairman does not take my time.
Seán Fleming (Laois, Fianna Fail)
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I will not. Is Mr. Nolan saying that, as part of land acquisition, this goodwill payment of €5,000 an acre, which was generally the figure paid to farmers to allow early access, is not included in the land acquisition costs in the TII's accounts?
Seán Fleming (Laois, Fianna Fail)
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Mr. Nolan told us it was paid through the local authority. Does the TII not pay for that?
Seán Fleming (Laois, Fianna Fail)
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Yes, so that goodwill payment is included in the TII's accounts. Of course it is.
Seán Fleming (Laois, Fianna Fail)
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I ask Deputy Connolly to bear with me on this. For some of the projects the TII is the contracting body, not the local authorities.
Seán Fleming (Laois, Fianna Fail)
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In those situations, would the local authority have been involved in a land acquisition if the TII is the contracting body? The local authorities are the contracting bodies for some motorway projects.
Seán Fleming (Laois, Fianna Fail)
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Almost 99% of land acquisition was done through the CPO process.
Seán Fleming (Laois, Fianna Fail)
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When Mr. Nolan is looking at the figure, did people whose land was not acquired get any of these goodwill payments? Would the goodwill payment have been part of the overall negotiation of the figure for land acquisition? It included co-operation for early entry, so it was part of the land acquisition.
Seán Fleming (Laois, Fianna Fail)
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It would have been based on acreage or whatever.
Seán Fleming (Laois, Fianna Fail)
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I have had a few motorway projects through my constituency. I understand €5,000 was the ballpark figure for the goodwill payment. Is that reasonable or unreasonable?
Seán Fleming (Laois, Fianna Fail)
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Okay. It is all there. We have to give Mr. Nolan the answer before we ask the question. I am finding that a little frustrating.
Seán Fleming (Laois, Fianna Fail)
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Okay. We understand where we are at. Mr. Nolan will send us on some information on it.
Alan Kelly (Tipperary, Labour)
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Can we have those figures broken down by project and by year?
Seán Fleming (Laois, Fianna Fail)
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Especially by project. Let us say it is the Portlaoise bypass. the Nenagh to Limerick bypass or whatever. The TII does these jobs on a project basis.
Seán Fleming (Laois, Fianna Fail)
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For some of them I understand the witnesses will have to go back a number of years.
Catherine Murphy (Kildare North, Social Democrats)
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On that point, I presume land is sometimes sold back. Does the TII discount that?
Seán Fleming (Laois, Fianna Fail)
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When the TII has no further use for it.
Seán Fleming (Laois, Fianna Fail)
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It must be advertised publicly.
Seán Fleming (Laois, Fianna Fail)
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The TII cannot do a sweetheart deal with one landowner.
Seán Fleming (Laois, Fianna Fail)
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It has to be advertised publicly.
Catherine Connolly (Galway West, Independent)
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On the post-project reviews, is it TII's decision to publish those or is it the Department's? Can we have tomorrow the ones that have been published after five or six years?
Catherine Connolly (Galway West, Independent)
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I have a difficulty with that, not with Mr. Nolan. I appreciate his answer. There is ongoing privatisation ongoing of everything. We had a budget. With housing, millions of euro are going into the HAP payment and then everything becomes commercially sensitive. We are left in a position where we have got rid of one God that knew everything and we have a new god of the market who now that says, "We know best and we will redact all the commercially sensitive information". Mr. Nolan will appreciate it is difficult.
The amount per year that is going to PPP is extraordinary. I understand there is a limit being set now of 10%. The Comptroller and Auditor General might correct me if I am wrong. Is it 10% of gross national product per year?
Catherine Connolly (Galway West, Independent)
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If we go back, Mr. Nolan is here in a group of gentlemen and one woman, who is very welcome, telling us that this is all good value for money. We see there are some that were not value for money, the two that have been mentioned, the Limerick tunnel and the other one. There are many questions that I will not get to, such as, who checks the traffic. Is there an independent person looking at that? Then, most importantly, we cannot have the post-project reviews. Is it TII or is it the Department that makes this decision? Let me outline my questions. That is one important one.
The next refers to grant refunds. Why are grants being refunded? Am I missing something? There is a grant refund. Is it from the local authorities? Mr. Nolan might clarify that. He might also clarify the successful VAT judgment which allows TII more money. Does that apply retrospectively? Has TII checked that? What is the status of it?
Finally, there is the Moycullen bypass. Maybe I will come back to that. In summary, there is the publication of the reports, the grants-----
Mr. Michael Nolan:
On the publication of reports, we will have to redact commercially sensitive information from those post-project reviews.
Second, on the refunds from local authorities, from year to year, if local authorities sell lands as was mentioned earlier, that money gets remitted back to TII because the money would have been provided by the State in the first place. If some expenditure does not accrue or the local authority's commitments in some way do not appear to be as large as originally envisaged, the money comes back to ourselves. We make provision, say, for something, and when we do the final settlement we find that there is money due back from the allocations. That money gets remitted back to ourselves. In the main, most of the land refunds have got to do with land acquisition and land disposal.
Catherine Connolly (Galway West, Independent)
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What of the VAT?
Catherine Connolly (Galway West, Independent)
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Retrospectively?
Catherine Connolly (Galway West, Independent)
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What period of time will be involved?
Catherine Connolly (Galway West, Independent)
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Is TII in talks about that?
Catherine Connolly (Galway West, Independent)
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When will that be completed?
Catherine Connolly (Galway West, Independent)
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I thank Mr. Nolan.
Alan Kelly (Tipperary, Labour)
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Mr. Nolan will be glad to know many of my questions have been asked. In regard to the legal costs, has TII made provision for those in its accounts for the coming year? There could be significant variance, depending on how well TII gets on.
Alan Kelly (Tipperary, Labour)
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It goes up and down, I presume. With legal challenges, which are part of the run of the mill, are there any ancillary costs that impact on TII's bottom line because projects get delayed?
Alan Kelly (Tipperary, Labour)
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I am trying to get a sense of the scale.
Mr. Michael Nolan:
I suppose there are costs of opportunity lost, not only for ourselves but also for the State sector, in projects being delayed because of procurement challenges or judicial reviews with regard to outcomes of An Bord Pleanála decisions. When we factor in the benefits of a scheme, that is based on benefits per annum going forward. If one is not getting those benefits in the early years when now one is stuck in the High Court rather than delivering on a project and realising those benefits, there are costs in those delays.
Alan Kelly (Tipperary, Labour)
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What I am trying to get to is how TII quantifies these.
Alan Kelly (Tipperary, Labour)
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I know that. Mr. Nolan need not worry about it.
Mr. Michael Nolan:
As an example of a direct cost, we face the challenge on development of the service areas. We have the Gorey service area that has been constructed for two years at this stage. We have to secure that. We have to ensure the security of that building. That is a direct cost outside of the whole area of legal costs.
Alan Kelly (Tipperary, Labour)
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I am trying to get a feel for the ancillary costs that build up for TII, and how these hit us and the taxpayer, to quantify the amounts that are almost lost as a result of all these multiple challenges, but Mr. Nolan cannot really quantify them.
Alan Kelly (Tipperary, Labour)
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Is that how TII does the calculation?
Alan Kelly (Tipperary, Labour)
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I have an exercise for Mr. Nolan. Would he submit to the committee a table containing a breakdown of those costs, by year and by project, since TII's inception up until this year so that we can have a look at them? This is for public record. I would presume that those figures are quite high. There is no issue. TII has to go through a legal process. I understand all of that. I merely want to get an estimate of how much the lost benefit is costing across each project.
The issue here is this. We have this in other organisations as well. I would like the public to be aware of the volumes we are talking about. I am not saying there is anything wrong. We understand people have issues. There may be some cases which are vexatious. I am not saying there are any of them here or with this organisation. I would merely like to get across to the public the volume and scale of the figures we are talking about when it comes to TII.
With regard to the capital plans, would Mr. Nolan talk me through the process. I was a member of the Government that brought in the plan which Mr. Nolan has in front of us, and on which he has updated us. Are all the projects that were on the 2011-16 plan listed in this presentation?
Alan Kelly (Tipperary, Labour)
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Sorry, the 2016-21 plan.
Alan Kelly (Tipperary, Labour)
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Are all the projects that were identified as part of that national road plan? There is no project that was listed as part of the Government plan missing off that.
Alan Kelly (Tipperary, Labour)
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So there is not.
Seán Fleming (Laois, Fianna Fail)
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I have a question for the Department. I have seen somewhere in the accounts that some projects are funded directly by the Department.
Seán Fleming (Laois, Fianna Fail)
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How does that tie in? Will Mr. Mullaney explain? I am not taking out of Deputy Kelly's time.
Alan Kelly (Tipperary, Labour)
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The Chairman is actually taking my next sentence.
Seán Fleming (Laois, Fianna Fail)
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I am sorry, Deputy. Please continue.
Alan Kelly (Tipperary, Labour)
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The Chairman is after doing it for me. Mr. Mullaney might elaborate there.
Seán Fleming (Laois, Fianna Fail)
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What is the Athy project?
Seán Fleming (Laois, Fianna Fail)
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That has not been completed. It has been ongoing for decades.
Alan Kelly (Tipperary, Labour)
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I was in Athy yesterday. The relief road is needed.
Seán Fleming (Laois, Fianna Fail)
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Will Mr. Mullaney forward a list of these projects to the committee? Perhaps he has it with him. There is a gap in the information.
Alan Kelly (Tipperary, Labour)
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For clarity, I presume these projects are all at different stages of progress.
Alan Kelly (Tipperary, Labour)
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Some will be progressing well, while others will still be at the planning stage, etc. The reason I asked Mr. Nolan the question was that there was a schedule of projects and some of them are not listed here because they are funded directly by the Department. To be straight about this, I have taken a particular interest in the Shannon crossing at Killaloe throughout my 42 years on this earth because the project is desperately needed.
Alan Kelly (Tipperary, Labour)
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I saw that list. As Mr. Mullaney outlined, there are other projects being progressed that are not part of the process - they are separate. That clarifies the matter.
The capital plans are currently under review and will be announced in the next month or thereabouts. I presume TII does a large amount of work on the prioritisation of projects and shares this work with the Government.
Alan Kelly (Tipperary, Labour)
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It is shared with the Department and Government.
Alan Kelly (Tipperary, Labour)
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The full list of projects in progress is provided here. We now know there is a smaller list of different projects with the Department, which is fine. With regard to the capital plan, which will be announced in one month's time, I presume TII has done a cost-benefit analysis, like those we have discussed previously in respect of past projects, and a list of projects, in tabular form, has been provided to the Department and, by extension, the Government, setting out those that TII believes are most necessary based on its often cited cost-benefit analysis.
Mr. Michael Nolan:
There is a range of projects that we have submitted to the Department. We do not just look at the benefit-costs ratios or BCRs. We have a national transport model and we predict congestion levels over the coming years based on that model. This would be an indicator of what schemes we would choose. There are also severe bottlenecks on the network that we try to address. Another thing that we look at carefully is completing the missing links or connections on the network to maximise the return on existing investment.
Alan Kelly (Tipperary, Labour)
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I understand that and that is all good. I ask Mr. Nolan to do the following for the committee. The capital plan will be launched in one month's time - November is the date we have been given. Clearly TII receives sensitive information and I am not asking it to provide information it gives the Government. Will Mr. Nolan provide the committee with the criteria and weightings used for these criteria in its decisions on what will be its priorities? I refer to cost-benefit analyses and issues related to bottlenecks. I would like to see the weightings. There has to be a science behind this and I want to be assured the Department is taking this science seriously. I ask Mr. Nolan to provide this information to the committee. Once the capital plan is announced, members of the committee and other Members of the Oireachtas would like to ensure this matches up.
On the timeframe for doing this, I presume discussions have been ongoing for a considerable period.
Alan Kelly (Tipperary, Labour)
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Have they concluded?
Alan Kelly (Tipperary, Labour)
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I understand.
Alan Kelly (Tipperary, Labour)
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I launched the national planning framework so I understand the position. The framework presents all of us with an opportunity to try to get this right because the previous spatial plan was a joke. By coincidence, I also introduced climate change legislation which includes mitigation for transport and the Department. I am looking forward to the national planning framework because I see very little in the budget to deal with the climate requirements for transport. I presume that TII will, as part of this process, consider the requirements on us, not only under the national planning framework and for roads, but also by weighing up roads versus whether alternative methods of transport would be best suited for the country under the planning framework. This includes the use of rail as opposed to road, the linking up of our ports, funding opportunities under the TEN-T programme and so forth. One example would be the linking of Waterford Port with Foynes and Limerick ports and the process for doing this. I want to ensure that in addition to doing cost-benefit analyses, using the other weightings and addressing bottlenecks and other requirements, there is a guarantee that the national planning framework, our commitment to the climate change legislation and everything else are also part of the decision making process.
Alan Kelly (Tipperary, Labour)
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That is 100% the case.
Mr. Michael Nolan:
Yes. We are obliged under the Department's capital appraisal framework, the public spending code provisions and our own project appraisal guidelines to sift through options with regard to addressing problems that have been identified or objectives to be delivered. We do not start with roads as being the solution. We have a look at other issues and that is written into the capital appraisal framework. I do not know if Mr. Mullaney or anyone from the Department wishes to address that point.
Alan Kelly (Tipperary, Labour)
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I am sure the Minister for Transport, Tourism and Sport, Deputy Ross, will not close any rail lines.
We have to move a certain amount of freight off road. This is a serious issue which is not being addressed. It means we must upgrade and extend our rail network. Foynes is a classic example. I want to ensure the decision making process takes in all of this weight. Our ports are not linked by the rail network or, for that matter, the road network, particularly those located in the southern part of the country. This is a critical issue that needs to be addressed and I encourage the witnesses to think about it in broad terms.
When TII is making decisions and carrying out weighting exercises on road projects, what consultation does it have with the Road Safety Authority?
Alan Kelly (Tipperary, Labour)
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No, with regard to projects. I am sure road safety is part of the decision making process.
Mr. Michael Nolan:
Absolutely. We maintain a database of the rates of fatalities, serious injuries and minor injuries on all of our road network.
We share the database with the Road Safety Authority, RSA. It influences our decision with regard to prioritising some projects. We see accident clusters on some projects, which are a multiple of what one would expect for a road of that type or cross section nationally. We identify where the fatality rate is above the national rate. We share a great deal of data with the RSA in respect of the safety of each of the unapproved links on the network.
Alan Kelly (Tipperary, Labour)
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I am delighted these data are maintained. How are the data weighted in TII's decision-making? There are parts of the road network, which the RSA says is often related to bottlenecks etc., where unfortunately there have been many fatalities. Surely this is weighted for significantly in decision-making on small or medium-sized projects. How that does work?
Mr. Michael Nolan:
When we do the cost-benefit analysis for road schemes and develop the benefits-to-cost ratios, two of the prime factors influencing the benefits are time savings and the savings in accidents. A value is put on fatal accidents, serious injuries and minor injuries and these are all factored in. Not many social benefits are factored in.
Alan Kelly (Tipperary, Labour)
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That is what I am getting at.
Alan Kelly (Tipperary, Labour)
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When Mr. Nolan forwards the table I asked for at the beginning of my contribution, I am sure we will see a heavy weighting on that. When did the TII last sit down with the RSA to discuss these issues?
Alan Kelly (Tipperary, Labour)
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I am sorry. I am running out of time and I was interrupted. I asked a direct question.
Alan Kelly (Tipperary, Labour)
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I am sorry. When was the last time Mr. Nolan sat down with the RSA?
Alan Kelly (Tipperary, Labour)
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Last year is at least 12 months. Was that early last year?
Alan Kelly (Tipperary, Labour)
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Mr. Nolan might come back to the committee with that. It is probably more like a year and a half ago. What I am trying to get to is it is strange that there are criteria for capital projects planning and there is a heavy weighting for safety but it is a year and a half since he sat down with RSA officials.
Mr. Michael Nolan:
We have the data all the time we require to develop our schemes on the safety front. Our safety teams meet on a regular basis - quarterly and even more frequently - with their counterparts in the RSA. Just in case the Deputy thinks that we do not interact with the authority, the people who manage our projects and develop our road safety initiatives work closely with the authority's officials. We work closely with the authority on the road safety strategy. A total of 11 of the 150 objectives in the Government's strategy relate to TII. We have delivered on seven of them, and two are at risk because of lack of funding. I am meeting the chief executive officer of the RSA on Monday morning-----
Alan Kelly (Tipperary, Labour)
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What two recommendations are at risk because of lack of funding?
Alan Kelly (Tipperary, Labour)
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That is not TII's fault but is it not seriously worrying for the organisation? How many have not been delivered on?
Alan Kelly (Tipperary, Labour)
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So 90 road safety schemes which have been identified as part of the RSA seven-year strategy will not be delivered. People will die on these roads and Mr. Nolan is saying they will die because the TII has not been given the funding for them.
Alan Kelly (Tipperary, Labour)
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That is extraordinary.
Alan Kelly (Tipperary, Labour)
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That is one of the most extraordinary revelations the committee has heard and we have heard many.
Alan Kelly (Tipperary, Labour)
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The TII's national roads maintenance budget is €37 million. I presume that is only a fraction of what the organisation needs.
Alan Kelly (Tipperary, Labour)
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I acknowledge that. It is just about keeping the assets at the level required.
Alan Kelly (Tipperary, Labour)
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The TII is basically at half of what it requires in funding. The budget was €80 million once.
Alan Kelly (Tipperary, Labour)
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I was Minister of State in that Department. The money that goes to local authorities for national roads maintenance comes from the Department. Does it not go through the TII's project reporting system, PRS?
Alan Kelly (Tipperary, Labour)
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It is a pass-through cost. What role has TII regarding the funding?
Alan Kelly (Tipperary, Labour)
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The TII just makes the payments. It does not analyse the funding or anything like that. It goes to local authorities for regional and local roads.
Alan Kelly (Tipperary, Labour)
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Why? I used to be a Minister of State in that Department and I know what it does. This is not a departmental question. These roads connect on the network with the roads managed by TII. Should TII not keep an eye as regards continuity on how that money is being spent and whether it is being used as effectively as it should?
Alan Kelly (Tipperary, Labour)
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I understand that.
Alan Kelly (Tipperary, Labour)
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I know the TII does not have a remit but surely in the context of its decision-making on the projects that it puts forward, it is a little pointless if the connecting roads have not been brought up to a certain standard before they begin. This is a hypothetical scenario. Is this a factor in TII decision-making? Many local authorities do not have enough money and, therefore, this has been a failure of many Governments.
Seán Fleming (Laois, Fianna Fail)
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There is no issue about saying that if the question does not relate to TII's remit.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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I welcome the TII officials and I compliment them on all their ongoing work on modernising the road network. Their predecessors in the NRA did fantastic work on the main arteries to our cities. Funding is the main problem and if we had enough money, there would be roads everywhere.
I would like to go back to PPPs. Is it true that where traffic volume predictions are not achieved such as on the Waterford bypass, as Deputy Cullinane mentioned, the taxpayer or TII have to compensate the PPP partner? If traffic volume is below the target set, the taxpayer must subsidise the investment by the private sector partner.
Mr. Michael Kennedy:
There is no direct cost to TII or to the taxpayer in that regard. That only arises on two schemes - the Limerick tunnel and the Clonee-Kells scheme. However, in six of the other schemes, which includes the Waterford bypass project, the traffic risk lies solely with the PPP company.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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So they carry the can.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Why was the traffic volume predicted by TII on the Waterford bypass, for example, feeding New Ross, Rosslare and Kilkenny, not achieved? Are people not using the bypass but are still driving through Waterford city? What are the reasons for the failure to reach the target?
Mr. Michael Kennedy:
The Deputy mentioned our predictions but the private sector also made predictions. It put its money behind the scheme and it did its own traffic predictions. We have found that internationally, traffic prediction on toll schemes is not up there in the 95th percentile in terms of accuracy.
There have been many examples in Australia, Spain and elsewhere of toll schemes which have not performed as expected. Over the past decade or so, one of the lessons that has been learned is that traffic forecasting in a tolled environment is very difficult and that is particularly true in an urban context. I mentioned Limerick earlier, and Waterford would be similar in terms of the cities making forecasting a little harder to do. That is what is coming to bear on these schemes.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Does the actual cost of going through the toll have a bearing? I know that in the case of Waterford, the whole quay has been changed to make it unfriendly for juggernauts and lorries to go through. Has that helped?
Mr. Michael Kennedy:
I think that was always the plan, that they would try to make Waterford more pedestrian friendly. I do not have exact figures but I would suggest that it has helped. I am aware that the truck traffic on the toll road has increased. The Deputy made reference to the level of the toll. Any toll level is going to cause diversion, there is no doubt about that. If the toll is reduced, one gets more traffic but revenue goes down. When the toll is increased, revenue increases even if traffic volumes are lower.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Can local companies in the south east that use the tolled road on a major scale get a special deal with the toll company to get a reduced rate? Can any business do that?
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Could it be done? Would it be possible to make it more friendly for people who use it continually?
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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There is a lot of congestion in our cities. I know that Dublin has a park and ride system in place but what about places like Waterford, Limerick, Cork and so on? Does the TII play any role in the promotion of park and ride? Does it have any funding for the development of park and ride facilities? Does it even have a say in such matters or are park and ride facilities solely a matter for local authorities?
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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They are all in Dublin, though.
Mr. Michael Nolan:
Yes, they are all in Dublin, that is correct. It is not a space that we are in just yet. It may be something for ourselves and the NTA to look at in future years. There are opportunities around the network. In the development of the new metro, we are looking at a park and ride facility at the northern end of the metro system. There is also the potential to develop a park and ride facility at the point at which the metro crosses the M50. Again, that is Dublin based. There are places along the network, such as the point at which the Ardee link road intersects with the Dublin-Belfast motorway, where there is evidence of car sharing or car pooling on a daily basis. There are opportunities there and we are probably going to initiate some conversations with Louth County Council on that one in particular, mainly because we need to make that location safer.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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That leads me on to something that has been mentioned already, namely, excessive parking at junctions. One sees this problem along the motorway. I come up to Dublin from Kilkenny every day and I see it all the way up, with excessive parking at the junctions coming off the N9. That is going to cause trouble eventually. At the moment it is manageable but in future, should it be part of the planning process to ensure that parking spaces are made available at such junctions to facilitate car sharing and car pooling? Certain areas are beginning to get very congested. Is the TII concerned, from a safety point of view, about cars parked along the side roads coming off the motorways? Should something be done in terms of planning in the future in order that car parking is provided at motorway junctions? Should that be done when land is being compulsorily purchased for road projects?
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Can anything be done with the existing sites because the situation is only going to get worse?
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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There is land available at some of the junctions that could be utilised for parking. It is not necessarily the case that land would have to be purchased.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Would that be under the remit of the TII?
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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It something that the TII will look at for the future. As I am from the south east, I am going to go local and ask about the New Ross bypass. It is progressing well, with a timescale of 31 January 2019 for the bypass to be opened to traffic. Is that on schedule?
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Are there any hiccups? It is badly needed.
Mr. Michael Nolan:
We had 20 years of hiccups in terms of getting the New Ross bypass to construction so I am hoping that all of the hiccups are behind us. Current indications are, based on the current rate of progress, that the Bam-Dragados joint venture will bring that into operation by the date set out in the contract.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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I want to ask about extensions. We have the Waterford bypass and will have the New Ross bypass but there are about eight or ten kilometres of dual carriageway in the middle. That will not be very conducive to safe driving, especially for foreign drivers, given that they will be on a motorway, come off it onto a dual carriageway and then go back onto a motorway. Are there any plans for the in-between section, in Kilkenny in particular? Are there any plans for the part that lies between the two bypasses?
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Yes, the part between the New Ross and Waterford bypasses.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Yes, exactly.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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It is infill, yes.
Mr. Michael Nolan:
It is infill. We have a discontinuity in a cross-section and variable behaviour will be a factor there. That is something of which we are very conscious. If we had the funding, we would go to construction on that but we do not have it. That said, we need to bring it through planning and it is something about which we will be talking to the Department in the next few months.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Will it be a problem, especially for foreign motorists? Does Mr. Nolan think it is dangerous to have this small section of dual carriageway in the middle of two stretches of motorway? It is potentially very confusing for drivers.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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On the other side, what are the plans for connection with Gorey or Rosslare?
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Is Mr. Nolan talking about the Enniscorthy bypass? That would join them up.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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I am going to stay local and raise the N24 Piltown bypass. As has been highlighted, there have been ten deaths on that small stretch of road. It is a two plus one scheme, with which I never agreed. I objected to it at the time, as a councillor in Kilkenny. We argued that the scheme would not work and we were proved right. It is a two plus one scheme that has been problematic from the very start. The Minister for Transport, Tourism and Sport came to see the road this year and to meet local people. What are the plans for that road now? I know that in the longer term it will be part of the Limerick, Waterford connection but what are the plans for the short term?
Mr. Michael Nolan:
I know there are short term measures that we are funding at the moment which are ongoing. They are only interim measures. We have asked the local authority to progress the procurement of consultants to commence work on an upgrade of a 1.3 km section. That is to close the Ink Bottle junction-----
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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There are two junctions-----
Mr. Michael Nolan:
Yes, Ink Bottle and Tower Road. There will be a grade separation at Tower Road and a roundabout linking the link road into the village and the main road junction. There will be a two plus two scheme over that 1.3 km section. Basically, we are grade separating and moving that conflict of traffic coming out of that junction. That scheme has a decent benefits to costs ratio. Subject to getting planning consent through the Part 8 process with the local authority and acquiring the lands from three or four landowners-----
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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I think there are three landowners involved.
Mr. Michael Nolan:
-----we could be in a position to open that scheme in late 2019 or early 2020 if we had the funding for it. However, we still need to go through the planning process. The planning process is not very expensive to go through. Kilkenny County Council will have the consultants on board by December and we should be able to get the Part 8 approval next year.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Could Mr. Nolan clarify whether he is talking about closing the two junctions, building an overhead bridge and having a means of driving onto the road system, as with motorways?
Mr. Michael Nolan:
Exactly, a left-in, left-out. There would be grade separation. It is a standard junction arrangement but it will also tidy up the conflict with the Ink Bottle junction further down the road, and the junction directly at the village. The plans are in train. Our solution at all times was to close off both junctions and grade-separate one of them, tying them all in together. We are of the same mind on that and hence we are procuring consultants.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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What timescale are we talking about?
Mr. Michael Nolan:
The timescale we are looking at is that the consultants would commence work in December and January. They are being procured at this stage. I would say it will take the best part of all next year to get the design and Part 8 through the local authority. The outcome of discussions with the landowners will determine whether we need to go to An Bord Pleanála. I do not believe there are any big environmental issues so I do not believe an environmental impact statement, EIS, is required. As the contract period for a scheme of that scale is 12 to 15 months, subject to a positive outcome regarding Part 8, planning approval, getting land, design and procurement, one is looking at two to two and a half years from now.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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I come up from Naas to Dublin every day. Why is there a 100 km/h speed limit from Naas to Dublin where there is a three-lane road? I acknowledge it is a busy road. There is a motorway straight to Naas with a speed limit of 120 km/h but, all of a sudden, it drops to 100 km/h. It is 100 km/h to the M50 although it is a wider road with more lanes. With a view to having continuity for motorists, why is it not 120 km/h the whole way in? Most people do 120 km/h on it anyway.
Mr. Michael Nolan:
The main reason for that is that from Maudlins in Naas to Newlands Cross, there is much uncontrolled access. There are garages and bus stops, and commercial business vehicles accessing and egressing the dual carriageway. On a motorway, there are controlled access points. They do not have petrol stations, quarries or bus stops. That is essentially the difference. A safety factor is coming into play with regard to the speed limit being 100 km/h rather than 120 km/h.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Is there no intention to change that?
Mr. Michael Nolan:
Under the TEN-T directive, that scheme - the M7 - is a core route. Under the directives, that scheme should be at a certain standard by the year 2030. To upgrade that road to motorway level would be really expensive. In the scheme of things, having regard to the backlog associated with other bottlenecks around the country and other pressing demands, it is unlikely we will hit the 2030 target on upgrading the road to motorway.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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The M50 was a great project when it started but at the moment it is nearly choked every morning and evening. Are there any plans to go further out? I read on the paper lately that there are plans to have connections from the likes of Naas, out from the M50. Since the M50 is overheated with traffic, are there plans to go out further with roads around Dublin? What are the long and short-term plans?
Mr. Michael Nolan:
On the long-term or really long-term plans, there was a proposal in 2000. We were asked by the Department to carry out a feasibility study on a Dublin outer orbital route, or a Leinster outer orbital route that would connect Drogheda, Navan, perhaps the area around Kilcock and Enfield, and Naas, thus creating another corridor that would give some relief to long-distance traffic and perhaps connect to some of the radial routes coming out of Dublin. That would be a hugely expensive project. It could be between 70 km and 100 km in length, to motorway standard. It is just not on our radar at the moment. We submitted the feasibility report to the Department about ten years ago. It would bring some relief to the M50, but on the M50 over the next few years we are to implement a lot of short and medium-term measures, basically to sweat the asset without any significant land acquisition along the length of the road. We actually have measures. Ultimately, the main solution will be demand management in the form of multi-point tolling on the M50.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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My last question is on a local issue. It is about customer signage. I have been toing and froing over this for two years with Transport Infrastructure Ireland, my local authority, Kilkenny County Council, and even the tourist board. It is about signage for a hotel, whose name I will not mention. When the bypass of Waterford was developed, there was customer signage erected, with the bed symbol, for Waterford. There is a hotel just on the left, on the way to New Ross. The proprietor has come to me on numerous occasions and asked whether customer signage could be put up showing his hotel. I have gone back and forth. Kilkenny County Council is agreeing to it. I went so far as to write to the tourist board, and it agreed, yet I cannot get Transport Infrastructure Ireland to agree to put up the sign. There is even a sign produced by Kilkenny County Council. Not erecting it is excluding a man who is running a hotel and catering business. His case should be heard. He is willing to pay for the sign himself. I am sorry for bringing up a personal matter but am taking the opportunity because I do not meet Mr. Nolan that often.
Seán Fleming (Laois, Fianna Fail)
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Mr. Nolan will liaise directly with the Deputy on that.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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He knows about it. Obviously, the letters are working.
Seán Fleming (Laois, Fianna Fail)
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I ask Mr. Nolan to liaise with the Deputy. I want to ask a few questions myself.
On page 35 of the accounts, reference is made to toll income. There was a certain amount outstanding at the end of the year, which is fine. In respect of the Dublin tunnel and the M50 eFlow figures, included are amounts that will be paid to Transport Infrastructure Ireland by toll operators. It excludes toll charges for eFlow for €5.2 million. In the previous year, the figure was €4.9 million. These are the moneys that the toll operator deems uncollectible. Why has Transport Infrastructure Ireland agreed to write off €10 million in tolls? Is this primarily related to the M50?
Seán Fleming (Laois, Fianna Fail)
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We will proceed to that but I ask Mr. O'Neill to start at the beginning. Why has Transport Infrastructure Ireland written off €5.2 million?
Mr. Nigel O'Neill:
Essentially, it is freeflow, as the Chairman will know, so there is no barrier. If one wants to use that road, one can use it. It is not quite like a utility whereby, if one does not pay, one eventually loses the use of one's utility. People can continue to use the road whether they are paying or not, even though it is ultimately an offence.
Seán Fleming (Laois, Fianna Fail)
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A civil or criminal offence?
Seán Fleming (Laois, Fianna Fail)
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I am going to give a figure. The eFlow figures on page 20 of the accounts show income of €118 million. Some €5 million is being written off so, for every 22 vehicles on the road, one gets off scot free. That is a mile different from what Mr. O'Neill said. It is a simple analysis of the figures in the accounts.
Seán Fleming (Laois, Fianna Fail)
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For how many years has Transport Infrastructure Ireland been operating this toll?
Seán Fleming (Laois, Fianna Fail)
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And now there are plans, nine years on. Could Mr. O'Neill explain that?
Seán Fleming (Laois, Fianna Fail)
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Is that when the agency went to court?
Seán Fleming (Laois, Fianna Fail)
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From the over 2,000 judgments, how much was collected and who collected it? Was it a private company or the sheriff?
Seán Fleming (Laois, Fianna Fail)
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The agency gets the proceeds.
Seán Fleming (Laois, Fianna Fail)
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There were 63 cars seized last year and sold.
Seán Fleming (Laois, Fianna Fail)
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They would not be included in the write-offs as the agency is getting the money.
Seán Fleming (Laois, Fianna Fail)
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After all of that, there was still €5 million written off.
Mr. Nigel O'Neill:
There is still an amount written off, for which there are numerous reasons. Some of the debt could have been owed by a company that was insolvent and wound up. Some people have emigrated and got away. A problem for us is the particular segment of users who use the road frequently but make no payments whatsoever.
Seán Fleming (Laois, Fianna Fail)
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What is the worst case of a vehicle making a large number of trips without the user paying?
Seán Fleming (Laois, Fianna Fail)
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Some car users have made hundreds of trips and never paid.
Seán Fleming (Laois, Fianna Fail)
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What other mechanisms are available?
Seán Fleming (Laois, Fianna Fail)
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Does Mr. O'Neill mind me asking if the agency is a sitting duck?
Seán Fleming (Laois, Fianna Fail)
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There were 63 cars taken.
Seán Fleming (Laois, Fianna Fail)
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How many journeys does the sum of €5.2 million represent? Is it 1.5 million journeys? It is over 1 million journeys, as some may have been vans.
Seán Fleming (Laois, Fianna Fail)
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Does it mean that 1 million journeys on the M50 in 2016 were not paid for?
Seán Fleming (Laois, Fianna Fail)
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I had worked it out as one in 22 trips, but it is not quite that ratio. It is certainly over 1 million trips each year. Is there anything Transport Infrastructure Ireland can do to improve the position? People may be the problem, but if they hear that, effectively, they can get off scot free, I would be worried that it would lead to more users wanting to do the same.
Mr. Nigel O'Neill:
We have a similar concern, which is why we maintain a focus on this issue. If we could get the toll evasion rate to zero, it would be fantastic. The system is open and there are other open systems operated by the State throughout the country. There are things like standard fare notices, etc. issued to people, of which a certain amount are paid. It is an inescapable part of a mass operation.
Seán Fleming (Laois, Fianna Fail)
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There may be tourists who do not pay.
Seán Fleming (Laois, Fianna Fail)
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What is the largest amount written off per vehicle? Mr. O'Neill has stated some people had hundreds of fines. What is the single biggest amount written off? It might apply to a truck.
Seán Fleming (Laois, Fianna Fail)
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Does Mr. O'Neill have an idea? There is a figure for bad debts. It would aggravate me on an ongoing basis if there were 1 million trips each year not being paid for. Is there some indication of the worst cases?
Seán Fleming (Laois, Fianna Fail)
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There are fines.
Seán Fleming (Laois, Fianna Fail)
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Will Mr. O'Neill take us through how the process escalates?
Mr. Nigel O'Neill:
A person has until 8 p.m. the following day to pay a toll which for an unregistered car is €3.10. If the person does not pay by that time, he or she will be required to pay an additional €3. We write to him or her and say we are owed €3.10 and the additional €3. After 14 days we issue an unpaid toll notice, amounting to an additional €41.
Seán Fleming (Laois, Fianna Fail)
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To what figure are we up now?
Seán Fleming (Laois, Fianna Fail)
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That is after 14 days. What happens next?
Seán Fleming (Laois, Fianna Fail)
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What is the bill at that stage?
Seán Fleming (Laois, Fianna Fail)
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We are now up to €150.
Seán Fleming (Laois, Fianna Fail)
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It is over two months on.
Seán Fleming (Laois, Fianna Fail)
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Where does it go? Is it the Small Claims Court or the District Court?
Seán Fleming (Laois, Fianna Fail)
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The District Court.
Seán Fleming (Laois, Fianna Fail)
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How many cases were heard in the court last year? There were 2,648 judgments.
Seán Fleming (Laois, Fianna Fail)
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That equates to approximately 6,000 court notices per annum.
Seán Fleming (Laois, Fianna Fail)
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Approximately 50% worked their way through the system. Would some people pay at that stage?
Seán Fleming (Laois, Fianna Fail)
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Would the company settle for less than the €150 at that point?
Seán Fleming (Laois, Fianna Fail)
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The company does not want to go to court.
Seán Fleming (Laois, Fianna Fail)
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Discipline must be maintained. I speak in Mr. O'Neill's favour in saying that.
Seán Fleming (Laois, Fianna Fail)
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A big figure mentioned by Deputy Catherine Connolly as noted on pages 35, 45 and 46 is for VAT. There is a figure of €45 million. It is the item on the last page of the accounts. Over a period €100 million in VAT has been paid to the Revenue Commissioners.
Seán Fleming (Laois, Fianna Fail)
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It is at the top of page 46. Last January the European Court of Justice ruled that this money should not have had to be paid.
Seán Fleming (Laois, Fianna Fail)
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Why is it taking so long to get the money back from the Revenue Commissioners? They are a very efficient outfit.
Seán Fleming (Laois, Fianna Fail)
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I am asking Mr. O'Neill why it is taking so long. What contacts have been made on his side? Is it going somewhere else?
Seán Fleming (Laois, Fianna Fail)
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There are calculations to be worked out for inputs.
Seán Fleming (Laois, Fianna Fail)
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What is the €45 million I mentioned? In addition to the €100 million that the court indicated should not have been paid, is there another €45 million provided for also? Who will explain the two figures?
Seán Fleming (Laois, Fianna Fail)
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Why is that?
Seán Fleming (Laois, Fianna Fail)
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Could the reverse charge of VAT be explained for the ordinary viewer in non-technical language?
Mr. Michael Kennedy:
Ordinarily, the company involved would send an invoice to Transport Infrastructure Ireland.
The public private partnership contractor sends an invoice to TII, which we pay each month, with the full amount of the VAT on the construction value of the scheme. In relation to a construction contract such as we have with the public private partnership schemes, the Revenue rules are that one pays a reverse charge. That means that we pay that money directly to the Revenue Commissioners, it does not go to the public private partnership contractor to give to the Revenue Commissioners.
Seán Fleming (Laois, Fianna Fail)
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Will the Comptroller and Auditor General speak about the VAT?
Mr. Seamus McCarthy:
As I understand it, the reason for this is that if it was not done this way by arrangement with the Revenue Commissioners, it would be factored in and effectively make the public private partnership bigger. The public private partnership contractor would end up paying the money but then they would borrow the €45 million to pay to the Revenue Commissioners so it is a cost saving measure.
Seán Fleming (Laois, Fianna Fail)
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When we look at the public private partnership motorway projects listed here, including all the liabilities outstanding in the various big schemes, the costs which are quoted to the committee for a motorway project does not include the VAT which TII pays directly.
Seán Fleming (Laois, Fianna Fail)
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I know that.
Seán Fleming (Laois, Fianna Fail)
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And when TII tells the committee that a scheme costs €248 million, that includes the VAT that it paid.
Seán Fleming (Laois, Fianna Fail)
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I understand. Will the Comptroller and Auditor General advise the committee on this VAT issue? It would have crossed his desk as part of the audit. He is saying that this figure of €100 million is a non-adjusting event. Is that the big figure? This €100 million came in after the year end, but it relates to last year. Why would that be? It is a very large figure to say that the accounts were not worth adjusting for.
Seán Fleming (Laois, Fianna Fail)
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That is why I ask. How soon does TII expect to have its figures completed? Most of the information regarding VAT inputs and so on has to be in Mr. Wylde's organisation. I am sorry, this may be a bit boring but it exercises the public mind when people hear we have been paying VAT and we should not have been. Mr. Wylde will understand that this resonates with the public. Now, nine months on, we hear that TII has not even finalised the figure.
Seán Fleming (Laois, Fianna Fail)
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It is complicated but the TII can send the committee a note to explain. I know that every project is different, but can the witnesses give the committee a round figure for the average cost of a kilometre of motorway? There might be X number of bridges and interchanges, but can the witnesses give an idea of the cost involved?
Seán Fleming (Laois, Fianna Fail)
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Does that vary significantly depending on whether it is a public private partnership scheme?
Mr. Michael Nolan:
That €8 million to €10 million includes land, archaeology, supervision, construction costs, other costs, advanced works contracts costs, and residual network which is where we engage in improvements on local roads as the work is under way and afterwards, if there has been any damage to local roads. The €8 million to €10 million includes all those costs. In a public private partnership scheme, those costs would not be included in the package. The local authority would still have all those costs but they would be borne outside the public private partnership.
Seán Fleming (Laois, Fianna Fail)
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In that case, how does one benchmark if a public private partnership is value for money or one should go that route if all these extra costs are worked into a scheme which is done directly, but not for public private partnership scheme? There must be a formula to exclude this.
Mr. Michael Nolan:
The cost per kilometre for public private partnership and normal non-public private partnership procurement is still in the region of €8 million to €10 million. All I am saying is that the figure of €8 million to €10 million includes a broad range of costs under certain cost centres, not just construction.
Seán Fleming (Laois, Fianna Fail)
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Are there many projects where the non-construction costs would exceed the construction costs?
Seán Fleming (Laois, Fianna Fail)
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Maybe in part of the M50 it might be more.
Seán Fleming (Laois, Fianna Fail)
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Was the expensive land acquisition of such projects the only area where non-construction costs exceeded construction costs?
Seán Fleming (Laois, Fianna Fail)
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On public private partnerships, the TII has had its reviews. It is an issue to which we will return as it is in the Comptroller and Auditor General's report. It is very well for TII to say it had value for money, but the committee cannot endorse that view if we do not have the information from which it derived that conclusion. That is only an assertion from my perspective as Chairman of the Committee on Public Accounts. TII speaks of commercial sensitivity; when does commercially sensitive information become no longer commercially sensitive? What is the TII's rule of thumb for that? If TII did something 20 years ago, would it still tell me it is commercially sensitive? What is TII's guiding principle? Is it for as long as the contract is in existence? What are the witnesses' views on this? When, after the passage of time, does something cease to be commercially sensitive?
Seán Fleming (Laois, Fianna Fail)
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Thirty years.
Seán Fleming (Laois, Fianna Fail)
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From what Mr. Nolan is saying, the national Parliament will not get access to this information until 2050, that is, we will not have sight of the information on matters which Mr. Nolan says are commercially sensitive until the contract expires in 30 years time. Mr. Nolan must accept from the point of view of the Committee of Public Accounts that we do not accept that this is how it should be. It is an issue we will return to. We may have to come to some arrangement whereby Parliament has some mechanism where, on a very confidential basis, it can review the documentation. It would not be in public, but at least we could say as Members of the Oireachtas, we had examined it and come to a conclusion, yay or nay. As it stands, we cannot give any approval. It gives me difficulty in signing off these accounts when we have unanswered questions. Large proportions of the payments going through the accounts are public private partnerships and we have no concept as to whether they are value for money. I hope they are but we need evidence on our side. The Comptroller and Auditor General can sign off his audit report because he has had access to it but we, as members of the Committee of Public Accounts, are not in that position. Mr. Nolan will understand that this committee may have to take that as a policy position, across all public private partnership, because we cannot be expected -----
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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The Comptroller and Auditor General is satisfied.
Seán Fleming (Laois, Fianna Fail)
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It is correct that he has signed the accounts, but the question is on the value for money. Will the Comptroller and Auditor General comment on this?
Mr. Seamus McCarthy:
I am satisfied with the accounting for the payments but that is not the same as saying that I have examined the value for money of each individual roads project, and satisfied myself that it has first, been analysed properly and second, that the conclusions arrived at demonstrate that there is value for money. I cannot give that assurance to the committee as it stands.
Seán Fleming (Laois, Fianna Fail)
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This is an issue. There is a chapter in the Comptroller and Auditor General's report specifically on this matter. It does not relate to roads public private partnerships alone, but also other public private partnerships such as schools. We will return to this topic.
On service stations -----
Shane Cassells (Meath West, Fianna Fail)
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In what manner? The Chairman is 100% correct.
Seán Fleming (Laois, Fianna Fail)
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We will put it on our work programme.
Shane Cassells (Meath West, Fianna Fail)
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Mr. Kenny was very frank and honest, but when he responded to Deputy Aylward he remarked that toll schemes had not performed as expected, not only in this jurisdiction but in also in other countries. The M3 has cost the taxpayers €12 million since it opened. I am not satisfied. I accept that the Comptroller and Auditor General says that based on the information he received from the TII, that there could be a situation where there is a net contribution back but we do not know if there is capacity to take it beyond the M3. The Chairman's remarks regarding the value for money of public private partnerships is very pertinent.
Seán Fleming (Laois, Fianna Fail)
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I will try conclude because I know some Deputies wish to come back a second time. The point is that this committee is not in a position to conclude on this matter because we do not have the information.
I find it intriguing that the TII appears to invest taxpayers' money in some service stations on some motorways.
There are other motorways where service stations of no significant difference are built, provided and fully operated by the private sector without the involvement of the Department. The service station I pass at junction 14, at Monasterevin, is privately run. I presume Transport Infrastructure Ireland, TII, was involved with the one on the M1.
In the interests of road safety there should be service stations where people can pull in every 30 km or 50 km etc. Why did TII not let the private sector put them in and not involve taxpayers' money in them, given that the record proves the private sector has put in good, successful ones at no cost to the Exchequer?
Mr. Michael Nolan:
In the early days of 2005 when we were opening up significant sections of the major inter-urban motorways we had envisaged that the private sector would step in and fill the space by providing adequate service areas. Unfortunately, it did not step in. We took the initiative, with direction from the Minister. The legislation was changed to allow us provide service areas. We stepped in and provided the service areas at two locations on the M1, Lusk and Castlebellingham, as well as on the M4 at Enfield. After that, the private sector began to see there was a business opportunity and began to deliver service areas, some of poor quality, some of good quality, such as the one at junction 14. There are others along the network that almost meet our standard.
The Government's road safety strategy also has a target for TII to develop several of these online service areas.
Seán Fleming (Laois, Fianna Fail)
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It is Government policy, not TII's policy.
Mr. Michael Nolan:
That is Government policy. Separately the European directive on the trans-European transport network, TEN-T, states that service areas have to be provided on the TEN-T. We also have our own TII service area policy. We will not compete with ones like that at junction 14. We are not in the business of competing with the private sector. Where the private sector does not jump in or we feel that the standard in an area is not up to the expected quality, we step in.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Does the Department get its money back?
Seán Fleming (Laois, Fianna Fail)
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Is that Kilcullen?
Seán Fleming (Laois, Fianna Fail)
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TII gets something out of it.
Seán Fleming (Laois, Fianna Fail)
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I note there is a very big increase in the 2016 accounts in the payment for the PPP for maintenance of the motorway and protecting the infrastructure over the previous year. Maybe it was because the M17 or M18 was coming on track. Mr. Nolan said funding from the Exchequer is very tight and TII does not have enough money to maintain the motorways at the level it would like to; that it could do with double the €30 million it gets. One often gets the impression that the level of maintenance is higher on the parts of the motorway network that are built under PPP. Do they have the same restrictions, did they get their costs right or is TII obliged, because of legal contractual arrangements, to pay the private operator for a top-quality maintenance of the road surface in a PPP project and if there is a shortfall, it affects the ones not covered by a PPP? Can Mr. Nolan comment on that observation? I do not know whether it is right or wrong.
Mr. Michael Nolan:
Yes. We have over 300 km of motorway under the management and operation of the PPP companies. We have another 750 km under management by our three regional contracts. The private sector is managing a section of motorway on behalf of TII and it is maintained to the same standard as a PPP section. We have 1,100 km.
Seán Fleming (Laois, Fianna Fail)
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Mr. Nolan said TII has only half the funding to do this.
Seán Fleming (Laois, Fianna Fail)
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Right. I know Deputy Catherine Murphy will be very interested in this question. This morning, at 6.28 a.m., while coming from Portlaoise I came to a full stop on the junction after the M7 and M9 met between there and junction 10, south Naas. I see the Department has signed a contract for the Naas to Newbridge upgrade. When will the contractor be on site? It goes without saying that there will have to be at least two lanes of traffic open constantly during construction. The Department did a good job at Newlands Cross and we would like the same sort of procedure to operate here. When will the job be finished?
Seán Fleming (Laois, Fianna Fail)
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There is also the Osberstown interchange.
Seán Fleming (Laois, Fianna Fail)
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TII gave us a great information note. It refers to the M7 Naas-Newbridge upgrade and says the scope of the design and build contract includes the Sallins bypass, the Osberstown interchange and the M7 and that these works will be funded separately by the Department. Why is the Department coming in with part of the funding for one big project? It is great and I can understand that when this was originally thought about ,with 1,000 cars going in and out of the Kerry Co-op office, there was a need. Why is the Department coming in with funding now when it was not part of the original scheme?
Mr. Dominic Mullaney:
TII has listed the projects for which it is getting money in the capital plan. Equally, there is a list for regional and local roads. The Sallins bypass and Osberstown interchange are on that list. For the purposes of doing the jobs it made sense to combine them in one contract. We took the opportunity to liaise with TII so that the whole lot could be done as one job.
Seán Fleming (Laois, Fianna Fail)
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Did the Department put out the tender for all of it?
Seán Fleming (Laois, Fianna Fail)
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If Mr. Mullaney knows the answer to this last local question he can tell me now, if not he can send me a detailed note on the Portlaoise-southern bypass route. I think the compulsory purchase order, CPO, process is in place. When does the Department expect work to commence? Is that being funded by the Department?
Mr. Dominic Mullaney:
Yes, the Portlaoise-southern relief road is being funded by us. The CPO has been confirmed. The next stage is to complete the detailed design. Then it is a question of getting contract documents drawn up, going out to procurement and appointing a consultant. We are funding it. We will match the funding as quickly as the council can get through these stages.
Seán Fleming (Laois, Fianna Fail)
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It will be 12 months at least before construction begins, from tendering and detailed design.
Seán Fleming (Laois, Fianna Fail)
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Is the Department sending us a list of the projects it is funding separately? We got very comprehensive documents from TII with all the road projects. Mr. Mullaney might send us a list of the ones the Department is dealing with directly.
Seán Fleming (Laois, Fianna Fail)
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When the Vote came up, but because the witnesses are here we will try to deal with all the roads today.
Seán Fleming (Laois, Fianna Fail)
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I am sorry for taking so much of the witnesses' time.
Catherine Murphy (Kildare North, Social Democrats)
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I am glad the Chairman raised Sallins and Osberstown and the N7. I remember a county engineer in Kildare calculating that approximately 80% of all the traffic that comes to or goes from Dublin comes through Kildare. When people avoid those roads there is additional traffic on minor roads in Kildare, which adds to the maintenance costs. There is a local as well as a national element.
It is very welcome that it will get going soon. To go back to the VAT issues, what is the percentage of VAT on tolls? What is the VAT on the €1.90 on the M50? Is it 23%?
Catherine Murphy (Kildare North, Social Democrats)
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The judgment obviously impacted on that. It is collected from the individuals who pay the tolls. It would not be possible to repay everyone the 23% even if TII was to go that way because somebody might have gone through it only once. Who decided there was not going to be a reduction for people? Who decided it would be a 23% increase on tolls? That is how it was read by some people. Who decided that?
Catherine Murphy (Kildare North, Social Democrats)
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I ask Mr. O'Neill to stop just there for a second. Is it absorbed into the amount people pay or is it on some other element of this?
Mr. Nigel O'Neill:
It was paid out of TII's toll receipts. TII could have increased the tolls. Revenue came back in 2010 to state it had changed its mind. We had confirmed with Revenue in 2006 and 2008 that TII toll roads, the Dublin Port tunnel and the M50 would not be subject to VAT on the tolls and the toll rates were set then.
Catherine Murphy (Kildare North, Social Democrats)
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Right.
Catherine Murphy (Kildare North, Social Democrats)
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So TII did not increase the tolls.
Catherine Murphy (Kildare North, Social Democrats)
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Mr. Nolan mentioned that multipoint tolling is a demand management measure. There is no doubt there is a significant issue with congestion and that obviously would require other expenditure. I would favour a big investment in public transport as a demand management measure. Does Mr. Nolan plan for additional tolls on the M50 as a demand management measure?
Catherine Murphy (Kildare North, Social Democrats)
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With regard to congestion, TII has stated it modelled its priorities and looked at congestion. Obviously it looked at accident rates. Twenty years ago a figure was arrived at on how much a fatality would cost so something could be put in as a cost benefit. It is a terrible way to do these things, but it has to be measured in some way. What figure is used? I know TII does not look at material damage because it is not captured anymore by the Road Safety Authority, but how are injuries and fatalities calculated?
Catherine Murphy (Kildare North, Social Democrats)
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I know that.
Catherine Murphy (Kildare North, Social Democrats)
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And a serious injury?
Catherine Murphy (Kildare North, Social Democrats)
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That would be useful, if Mr. Nolan would not mind. Who incurs the costs on the M1 and the M4? Is it the operator or TII? I am talking about the actual means of collection of costs.
Catherine Murphy (Kildare North, Social Democrats)
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How many toll arrangements are in place for which TII does not receive any benefit? Is it regarded as a benefit or a liability?
Catherine Murphy (Kildare North, Social Democrats)
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I presume they discount the cost of collecting the toll.
Catherine Murphy (Kildare North, Social Democrats)
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Does TII own the roads? Technically who owns the roads that TII maintains?
Catherine Murphy (Kildare North, Social Democrats)
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Who are TII's internal auditors?
Catherine Murphy (Kildare North, Social Democrats)
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Have there been any disclosures to TII since the merger of the NRA and the Railway Procurement Agency?
Catherine Murphy (Kildare North, Social Democrats)
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Yes.
Catherine Murphy (Kildare North, Social Democrats)
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We know about the legal fees regarding the dispute over service stations. There are other consultancy fees. What are they for? There was almost €200,000 in 2015 and €160,000 in 2016.
Mr. Declan Wylde:
They are a combination of different professional services the entity needs to do its business. We have actuarial costs for our pension schemes, three defined benefit pension schemes and a defined contribution scheme. The employer pays the actuarial and audit costs of these schemes. We also have tax advice from time to time on the business of the entity. We have had advice on the human resources aspects of the merger and ongoing human resources aspects. We have other advice on efficiencies or particular issues for which we do not have internal expertise. We can provide the Deputy with a list if she wishes.
Catherine Murphy (Kildare North, Social Democrats)
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No, that is fine. It is just to get an idea of what was entailed.
Catherine Connolly (Galway West, Independent)
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To come back to the public transport element, I was delighted to hear Mr. Nolan state solutions other than roads are an integral part of the solution. To go back to Galway, a benchmark of €10 million per kilometre was given for a motorway.
Catherine Connolly (Galway West, Independent)
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What would it be for urban areas?
Catherine Connolly (Galway West, Independent)
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What might the figure be?
Catherine Connolly (Galway West, Independent)
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Is this for the N6?
Seán Fleming (Laois, Fianna Fail)
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I thought Mr. Nolan said it was between €8 million and €10 million.
Seán Fleming (Laois, Fianna Fail)
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What is the national average?
Catherine Connolly (Galway West, Independent)
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Mr. Nolan mentioned park and ride and other solutions such as light rail. He said the cost of the city ring road would be between €40 million and €50 million per kilometre.
Catherine Connolly (Galway West, Independent)
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For a 16.5 km road at between €35 million and €50 million per kilometre the minimum figure, which we have been given locally, is €500 million.
Catherine Connolly (Galway West, Independent)
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That is the starting point.
Catherine Connolly (Galway West, Independent)
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The solution proposed for Galway is colossal. It is €30 million per kilometre for a 16.5 km stretch of road which I believe will not sort out the traffic problems, though I am in a minority on this. Has the TII or the Department looked at park and ride in Galway or are they leaving it up to the local authority? The local authority has failed to provide it despite the fact it has been in the city development plan, for both sides of the city, since 2005. Has the TII or the Department had a role in this?
Mr. Michael Nolan:
We started to look at the Galway city ring road with a blank piece of paper. We worked very closely with the National Transport Authority, Galway City Council and Galway County Council to work out a transport strategy for Galway. Part of the solution was a Galway outer ring road, though there are myriad other measures. I am not too au fait with them but I am sure park and ride is part of the picture. The road solution is only one element of the Galway transport strategy. Without taking traffic out of the city centre, most of the other initiatives cannot be delivered on.
Catherine Connolly (Galway West, Independent)
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There was not a strategy. That came afterwards. The proposal was for another road because the outer ring road had not gone ahead, following a European case.
Catherine Connolly (Galway West, Independent)
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They went back to the drawing board. We had to go through a tortuous process in the city council to remove the reference to outer bypass in every part of the city development plan. The next thing that came before us was an inner ring road - nothing else. I might appear parochial but I am making a general point on sustainable transport, climate change and sustainable solutions to traffic problems. In Galway we got a road and, as a result of an outcry from people, the public transport part was added on. I was there and I followed the process. Park and ride has been in the Galway city development plan since 2005. Does it concern the TII that it has never been rolled out, east or west of the city, other than at Christmas?
Catherine Connolly (Galway West, Independent)
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Who might answer it?
Catherine Connolly (Galway West, Independent)
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Who has the proposal?
Catherine Connolly (Galway West, Independent)
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Is it from the city council?
Mr. Dominic Mullaney:
My understanding is that a series of measures were drawn up to relieve the difficulties at Parkmore. Some involved changes to junctions, but most are short-term measures and are not concerned with building new roads. Some of them are bus measures and my understanding is that park and ride is part of it.
Catherine Connolly (Galway West, Independent)
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Park and ride has been an objective of the city development plan since 2005 but has never been rolled out. No Government has ever insisted it be rolled out as part of a sustainable solution. Everything is reactive and the simpler solutions should be tried before we spend a minimum of €30 million per kilometre for a 16.5 km route that will add huge congestion to the roads. Is there any way to hold the system to account in Galway and to ask why park and ride has not been rolled out? Has the TII looked at light rail as a solution?
Catherine Connolly (Galway West, Independent)
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I understand that the TII has a major role in light rail.
Catherine Connolly (Galway West, Independent)
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I asked earlier if the TII was an agent or had any role in policy.
Catherine Connolly (Galway West, Independent)
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If the NTA said light rail was a sustainable solution for Galway, the TII would execute that. It would be a golden opportunity for business in Galway.
Seán Fleming (Laois, Fianna Fail)
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If it would be of any help, we could write to the National Transport Authority on its policy relating to the issue the Deputy raised.
Catherine Connolly (Galway West, Independent)
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I thank the Chairman.
Seán Fleming (Laois, Fianna Fail)
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We can also ask what proposals are under consideration. Have we already done that?
Catherine Connolly (Galway West, Independent)
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We have already done that. According to the briefing paper, planning permission was give some time ago for the N59 Moycullen bypass. It states that improvements on the line are complete and the design and tender documents for the bypass were completed some time ago. What is the difficulty with it?
Mr. Michael Nolan:
This is done in the context of the funding profile we get in the Government's capital investment plan. It is a seven-year plan and 90% of funding is in the last three years of the plan, which are the years mentioned here, namely, 2020-2022. That dictates when we can roll such a scheme out. The first scheme under this heading is the widening of the Naas Road, followed by Dunkettle and so on until they can all be constructed.
Catherine Connolly (Galway West, Independent)
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Thank you.
Seán Fleming (Laois, Fianna Fail)
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The financial statements are on page 31. The top paragraph refers to M7-M8 Portlaoise bypass.
TII's note reads:
The project, which provides bypasses of Abbeyleix, Durrow, Cullahill, Mountrath, Castletown and Borris-in-Ossory, involved the construction of a tolled motorway of approximately 41km total length. There are grade separated junctions at Portlaoise, Borris-in-Ossory and Rathdowney as well as a motorway to motorway interchange at Aghaboe.
Will Mr. Nolan comment on this? It does not exist.
Seán Fleming (Laois, Fianna Fail)
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I am reading from TII's financial statement. I am not saying anything. TII speaks in its statement about a motorway to motorway interchange at Aghaboe.
Seán Fleming (Laois, Fianna Fail)
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Does any of TII's representatives know that interchange?
Seán Fleming (Laois, Fianna Fail)
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Exactly. Where is the motorway to motorway interchange?
Seán Fleming (Laois, Fianna Fail)
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When one is coming back, what happens?
Seán Fleming (Laois, Fianna Fail)
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One cannot go from the M7 to the M8.
Seán Fleming (Laois, Fianna Fail)
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But not at Aghaboe. One can do so in Portlaoise. I think Mr. Nolan understands my point.
Seán Fleming (Laois, Fianna Fail)
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I know that.
Seán Fleming (Laois, Fianna Fail)
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Exactly. In fact, TII did not include it in its submission to An Bord Pleanála. A certain gentleman, to whom Mr. Nolan is listening, made a recommendation at the oral hearing to the effect that the interchange should be included. The inspector from An Bord Pleanála agreed, as did the board, but the interchange was never built by TII. It is a small point, but when I read notes and they do not gel fully with my understanding, I like to note it.
At this stage, I am not in a position to recommend that we dispose of the 2016 financial statement primarily because we have work to do on the issue of PPP projects, on which there is a chapter in the Comptroller and Auditor General's annual report which affects Mr. Nolan's Department, schools and the Department of Education and Skills, as well as others. I am not saying there is an issue as the Comptroller and Auditor General has given a clear audit opinion, but from the point of view of the Committee of Public Accounts, we are not in a position to give an opinion on whether the income and expenditure related to PPP projects represent value for money for the taxpayers. That is one of our functions and the committee is not in a position to sign off on the statement because we do not have the information we need that would allow us to make a judgement on the matter and we will not be in a position to sign off on it until we have examined the matter of PPP projects specifically, on which the Comptroller and Auditor General has a chapter in his annual report. As I said, I am not suggesting there is an issue with the accounts, but TII will understand the committee has yet to revisit the matter of PPP projects.
On behalf of the Committee of Public Accounts, I thank the witnesses from Transport Infrastructure Ireland, the Department of Transport, Tourism and Sport and the Office of the Comptroller and Auditor General for attending and the information and material they supplied. If there are issues on which either the Department or TII was asked to supply information, it may send it to the committee secretariat in due course.