Seán Crowe (Dublin South West, Sinn Fein)

Sinn Féin will oppose this legislation which places the centre of expertise for public private partnership procurement, already established in the National Development Finance Agency, on a statutory footing and which seeks to improve the capacity of Departments or agencies to undertake public private partnerships. Sinn Féin is fundamentally opposed to the use of PPP, which has an atrocious track record to date. We therefore cannot support any legislation which is designed to promote its increased use.

It is surprising that the Government is pressing ahead at this time with the increased use of PPP despite the problems associated with this method of financing public infrastructure and the complex process of procurement referred to by the Minister in his contribution on Second Stage in the Seanad. For example, the use of PPPs is recognised as a key factor in delaying the roll out of the cancer strategy. It is accepted that the aim of the Minister for Health and Children to improve radiotherapy services throughout the State by 2011 by way of public private partnership cannot be met. It has emerged that a HSE board meeting was told in December that the plan would not be in place until 2013 or 2014 if delivered by PPP.

A progress report on the delivery of the State plan for radiation oncology sent by the Health Service Executive to the Minister for Health and Children, Deputy Harney, in July 2006 stated that even the Minister's plans to make interim improvements to radiotherapy services by 2008 could not happen by way of PPP until 2012. It advised that interim improvements could be made by 2009 if radiotherapy machines were provided outside the PPP model. The Minister had to accept this and two extra radiotherapy machines for St. James's and Beaumont hospitals in Dublin are being sourced at a cost of €45 million.

Is the Government blind to the fundamental faults of PPPs, to international experience and to our own experience to date? While the Government has sought to stress that lessons have been learnt and improvements have been incorporated into the PPP procurement process, there is little evidence of this. Those who have examined the PPP process have found that the economic case for PPP is highly questionable. This makes sense when one considers that private finance is more expensive than Government debt.

There is a considerable body of international evidence that demonstrates the difficulties in executing successful procurement under PPP. Experts such as Dr. Eoin Reeves, director of privatisation and PPP research group at the University of Limerick, has noted, "It is quite astonishing that the PPP programme is expanding so rapidly given that the experience with PPP in Ireland has been either unfavourable or untested." Dr. Reeves went on to advise, correctly in Sinn Féin's view, "Given the widespread concern about poor value for money from Government expenditure, the Government would be well advised to conduct rigorous ex post analysis of other PPP projects before committing to what is still an unproven model of procurement."

Notorious examples of PPPs include the case of the Cork School of Music and the grouped schools project. In 2004 the Comptroller and Auditor General published a value for money report into the use of public private partnership for the construction of five second level schools and for the maintenance and running of the school buildings over a 25-year contract period. That report raised concerns in regard to the ultimate costs of those PPPs to the State and suggested that the costs and benefits of adopting the PPP approach should be assessed relative to the performance of a comparable group of schools procured conventionally. It estimated that the projected cost of the PPP deal was 8% to 13% higher than the projected cost of procuring and running the schools using the conventional approach. The Government is telling us that education is one of the main areas where the State will use PPPs in the future. Given the experience to date of PPPs for schools, this is totally unacceptable.

It has been stated by the Minister for Education and Science that one of the advantages of the PPP model is that payment for schools would be phased over the contract period, approximately 25 years. What this actually means is that PPP is more attractive to Government because it has a lesser impact on annual Exchequer balances compared to conventional procurement where the bulk of the capital investment is accounted for in one year. Let us make no mistake about it — PPPs are being adopted because they are useful in terms of the optics of the public finances. The Government is taking a short-term view, primarily for its own selfish electoral reasons, that ignores the fact that the assets and services must still be paid for.

Sinn Féin was particularly disappointed that the recently published national development plan proposed to continue and expand the use of the discredited system of PPPs. This is despite the fact that the ESRI mid-term review of the previous National Development Plan 2000-2006 stated that public private partnerships should only be used where they bring efficiency gains. They are likely to be an expensive means of financing new investment. Yet under the new plan 39% of the spending on public transport is to be by way of public private partnerships.

Sinn Féin has called for the Comptroller and Auditor General to take a comprehensive look at the use of PPPs across all Departments. I reiterate that demand. In 2004 the Comptroller and Auditor General published a value for money report into the use of public private partnerships for the construction of five second level schools and for the maintenance and running of the school buildings over a 25-year contract period. That report raised many concerns in regard to the ultimate costs of those PPPs to the State and suggested that the costs and benefits of adopting the PPP approach should be assessed relative to the performance of a comparable group of schools procured conventionally. There is a need before the Government takes us any further down the PPP road to carry out a thorough evaluation of the true costs to the State of the range of PPPs embarked upon to date. From the experience in other states there is every reason to suspect that PPPs will prove the biggest misuse and waste of public money.

The Government has argued that the PPP approach can provide value for money and the timely delivery of infrastructure. That is the opposite of our experience to date. Projects have ended up more expensive and have not been completed within the envisaged timeframes. PPPs are never the optimal means of financing public capital investment projects within the State sector. It is time to call a halt to this madness.

Sinn Féin will oppose this legislation. It is not in the public interest. It is a case of knowing the cost of everything but the value of nothing.

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