Brian Cowen (Laois-Offaly, Fianna Fail)

I did not interrupt any Opposition speakers. Every time a Minister speaks, people have more to say. Opposition Deputies were listened to with respect and they should reciprocate.

The establishment of the cost estimation function and the expertise that has come with it are showing results. The committee further acknowledged that contracting procedures had improved since my predecessor announced different ways of contracting. Many road construction projects are being completed on or within schedule and within budget, but that was not mentioned in the motion. Recent examples include the N2 Carrickmacross bypass — three months ahead of schedule — the Monasterevin bypass — one year ahead of schedule — and the Cashel bypass — seven months ahead of schedule. We must also acknowledge that in the transport area in particular delays have arisen as a result of planning and environmental objections and legal challenges, many of them supported by those on the other side of the House.

The Government's investment programme, both under the NDP and the new multi-annual investment envelope, is making real progress in addressing our infrastructure deficits. Measured as a proportion of output, this is taking place at twice the rate in Europe generally. I will outline progress later in my address but the key point is that this investment, which will amount to in excess of €36 billion over the period 2005-09, must be made to ensure our future economic well-being.

We must, as a matter of course, strive at all times to do things better. The Government has been proactively addressing the issues of better management and implementation of capital programmes and projects and my Department is playing a central part in this process.

I will now outline for the House some of the initiatives the Government has put or is putting in place to enhance the management of capital programmes and projects. One of my key roles as Minister for Finance is to advise Government on prioritisation of resources for capital investment purposes and setting the framework within which capital programmes and projects must be appraised and implemented. On foot of this role I have, with Government approval, taken forward the work commenced by my predecessor on the following initiatives: the five-year rolling multi-annual capital envelopes framework incorporating a carry-over facility, guidelines for the appraisal and management of capital expenditure, rules relating to public procurement and public sector contracts.

Prior to the budget in 2004, the capital allocation for each year was decided in the budget for that year. This gave rise to considerable uncertainty and to a stop-go approach to capital spending. In addition, money not spent within the year had to be surrendered to the Exchequer, giving rise to further difficulties with managing projects.

We changed that by introducing across the board a major reform of the system of allocating capital investment resources. Five-year funding plans for each ministerial area were agreed. Provision was also made for the first time to allow for the carry-over to the next year of unspent allocations up to a maximum of 10% of these capital provisions. The objective of the new system is to introduce relative medium-term financial certainty for Ministers and implementing agencies so that they can better plan and execute their capital programmes. The benefit of that is there for all to see. That is particularly important given the scale and timeframe of many of our modem infrastructural projects. The carry-over system allows agencies to get away from the tendency to rush end-year expenditure under the old system.

The multi-annual framework is underpinned by requirements designed to ensure that the substantial financial commitments in the envelopes are complemented by a commitment by Departments and agencies to implement all the guidance laid down by the Department of Finance on the appraisal, procurement and management of capital projects. The arrangements also now require that each Department furnish an annual report to my Department detailing progress on the rolling five-year programme. Departments are also required to carry out selective checks at project level on compliance with the capital appraisal guidelines and to report on this in their annual report.

In essence the new system is promoting better management of capital expenditure by providing relative financial certainty and by underpinning as a complement to this best practice in the management of programmes and projects. The response to the new system has been uniformly positive. The Government introduced that fundamental change and those criticising us now worked in the past on a year-on-year capital programme which, in many cases because of the level of resources, was a maintenance programme to keep the show on the road. Those are the facts.

The Government recently approved my proposals for revised guidelines for the appraisal and management of capital expenditure proposals in the public sector. These are testament to the Government's commitment to maximising value for money from capital expenditure. They will complement the multi-annual capital envelopes.

The new guidelines are designed to encourage a better approach to appraisal and management of capital programmes and projects and to reflect best practice. Key features of the new guidelines are that all projects over €50 million must undergo a full cost benefit analysis and all capital programmes with an annual value in excess of €50 million and of five years duration or more will, for the first time, be required to be evaluated over the course of each five-year cycle.

The new capital appraisal guidelines contain all that is necessary to assist proper costing, appraisal and efficient execution of projects. The guidelines explicitly state as part of the appraisal process that "the cost of the project should be the expected outturn cost, including construction costs, property acquisition, risk and contingency" and that "the cost of possible future price increases and variations in project outputs should be factored into the calculation of project costs". That had not been happening until now, giving people the opportunity to claim that the processes were faulty. They have not been. The methodology needed to be comprehensively overseen and the Government has done so. The new guidelines also provide——

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