Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance) | Oireachtas source

People Before Profit is opposed to PPPs as a means to deliver services and infrastructure. Is that ideological? No, that contention essentially arises from logic. Any logical examination of PPPs would suggest they have to be more expensive in terms of delivering services and infrastructure than the traditional method of the State doing it directly, as it has done in the past and used to do exclusively.

The issue of outsourcing, in one shape or form, the delivery of public services and public infrastructure is a feature of the past 30 years. The neoliberal economic orthodoxy really started with Margaret Thatcher and it has been a disaster. To take housing as an example, Margaret Thatcher's belief that one should do away with directly provided social housing and privatise the housing market is the reason we have a housing crisis. At the most basic level, that is a fact.

When we say the State should provide public housing, the Government always comes back and says that the public sector does not have the capacity to do it any more. There is a very good reason the public sector does not have the capacity to do it any more and it is helpfully pointed out by the Parliamentary Budget Office's assessment of PPPs, a very good document for which I commend the office. It points out that, among other things, what it does is embed the capacity and expertise to deliver infrastructure and services in the private sector. Over time, this guarantees that the State loses the capacity because the skills are run down as it is outsourcing them to the private sector. In fact, the document points out that the danger is that the private sector will then end up in a monopolistic position over those capacities and will then have a gun to the head of the State. If the State wants anything, it no longer has the capacity to deliver it so the private sector's big players, like Carillion, literally have a gun to the head of the State in terms of their ability or inability to deliver key services and infrastructure. When we are talking about big infrastructure projects, it is not small or medium enterprises or construction firms which are involved, but big players.

Of course, because these private sector players are profit-driven, they are, as we saw with Carillion, subject to the vagaries of the market. Essentially, greed caused the collapse of Carillion, with massive salaries for its executives and massive over-borrowing that it was completely unable to sustain. It was a little like the way the banks operate when, driven by profit and the greed of top executives, the thing goes over the cliff and the public is left to pick up the bill. We see this with the impact of the Carillion collapse on the five school projects which have been affected, namely, those at Coláiste Ráithín, St. Philomena’s, Eureka secondary school, Tyndall college and the Carlow Institute of Further Education, and which are left not knowing when they are going to get their schools or colleges.

The subcontractors working for the contractors employed by Carillion have been left high and dry. I received a letter yesterday from one of the subcontractors. It states:

I am a subcontractor left unpaid due to the collapse of Sammon [the company contracted by Carillion]. We had a meeting with our local TD, Helen McEntee, last night about our plight. She did not seem to realise that among the eight men that were there last night, there was €1 million of debt. We were told the Minister for Education can't help and the examiner will pay a pittance. The anxiety and despair among these men was unreal. Nobody wants to know. If you could get the opportunity to bring this to the attention of someone who would further the cause, I would appreciate the airing.

These are ordinary working people, who, by the way, are not in my constituency but in the constituency of the Minister of State at the Department of Foreign Affairs and Trade, Deputy McEntee, and they have been hung out to dry, along with the parents and the children who need those schools, because of these PPPs. I was talking to the mother of a child due to go to Coláiste Ráithín next week and she told me that they have no idea what is happening. As a result of the fact that Sammon is out of the picture, the project has gone to tender and they do not know when that tender process will be completed. Clearly, those school students, who desperately need this and who have been looking to get out of totally unsuitable school premises at Coláiste Ráithín, do not know if they will get out of them this year. The school has employed teachers but does not have the space for those teachers to do their work and deliver the curriculum. That is just one example. There is also the example of the Bernard McNamara-Dublin City Council PPP that banjaxed the planned delivery of new social housing and social housing regeneration in Dominick Street, St. Michael's Estate and so on. That means more people who are counting the cost.

It was obvious this would be the case and, as I said, it is not particularly ideological. Why? It is because these private firms need to make profits. The State, when it delivers public infrastructure or public services, just needs the thing to wash its own face but these guys have to make a profit and that inevitably inflates the cost. As Deputy Michael McGrath mentioned, there are also tax reliefs, so we are paying on the double in many cases because these same private firms making big profits from public infrastructure projects also get these very significant tax reliefs. In addition, the cost of their finance is more expensive than the cost of finance for the State. Inevitably, there is also a pressure for PPPs to have user charges for services and infrastructure that previously would not have had them, so it creates a pressure to move to user charges, as against the older model of public services being provided on the basis of need and paid for in a progressive way through central taxation. The Comptroller and Auditor General points out there are very likely to be significantly increased legal costs, as the lawyers have to get their cut, as well as transaction and process costs because of the complicated process involved in PPPs. This is a labyrinthine process about which we know - and are able to know - little because of commercial sensitivity, which means we cannot properly examine the contracts that are given out in respect of these PPPs.

Deputy O'Reilly made a point about the efficiencies and cost savings that are supposed to be delivered, although there is no evidence for them, a point I will come onto in a minute. How do firms deliver these so-called efficiencies and cost savings? There is really only a couple of ways they can do it. One is to drive down the costs of production by attacking the wages and conditions of the workers they employ, and the evidence that they do that is legion. The other approach is to cut corners, the cost of which we only discover later. The State then has to pick up the bill somewhere further down the line.

I find it quite startling to examine the figures provided by the Parliamentary Budget Office, PBO, on the estimated cost of the payments of these PPPs. The estimated cost of the annual unitary payments made by the State up to 2027 in respect of the five pilot schools that are now delayed because of the Carillion collapse is €290 million. For five schools, that works out at a cost of €58 million per school. Now, I do not know the exact breakdown of what it costs to build a school-----

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