Brian Stanley (Laois-Offaly, Sinn Fein) | Oireachtas source

I move:

That Dáil Éireann shall take note of the Report of the Standing Committee of Public Accounts, entitled "Examination of the National Paediatric Hospital Development Board 2019 Financial Statements and Related Financial Matters", copies of which were laid before Dáil Éireann on 8th March, 2022.

I thank the House for the opportunity to debate this report, which follows the committee's examination of the national paediatric hospital development board's 2019 financial statements. By way of introduction, the committee's remit as delegated by Dáil Éireann is to examine accounts and statements audited by the Comptroller and Auditor General as well as reports of the Comptroller and Auditor General which have been laid before the Houses of the Oireachtas. This is the tenth report that the Committee of Public Accounts of the Thirty-third Dáil has completed and laid before the Houses of the Oireachtas.

The introduction to the report gives an overview of the board's 2019 financial statements and outlines the board's two meetings with the committee prior to the publication of this report. The committee undertook a site visit to the hospital in July 2021 and met the board again last month to examine its 2020 financial statements. Given the scale of public expenditure on this project, the committee will continue to closely examine expenditure on it. We have since met the hospital board again in recent weeks so there is a high level of interest in this from all committee members.

The board’s 2019 statements show that it received just shy of €200 million in funding through State grants provided by the Health Service Executive, funded by the capital allocation it received from the Department of Health. Total accumulated costs for the project at the end of 2019 amounted to €459 million, which excludes €35.5 million of capital expenditure that was written off in 2013 following the Government’s decision to relocate the site from the Mater Misericordiae University Hospital. There are lessons to be learned from that, apart from the project we are dealing with now. Some €35 million was spent before we even got to talk about the site or before there was any progress made on development plans for the current site of the children's hospital beside St. James's Hospital. We cannot keep doing this kind of thing and keep just spending €35 million with nothing to show for it; no bricks, mortar or anything else. The construction costs to the Exchequer as of 2019 were expected to be approximately €1.4 billion. The total cost of the hospital, including fit-outs, is expected to exceed €1.7 billion. As of 16 December 2021, overall expenditure in the project was approximately €873 million.

The report makes three major recommendations, which correspond to three of the key and significant issues identified by the committee in the first two engagements we had with the board. All three recommendations have been accepted by the board and by the Department of Health, which is welcome, but they must also be acted on. I will briefly go through these three issues and recommendations.

The first issue concerns the report submitted by the board to the Department of Health, which relates to the board's analysis of the national paediatric hospital development project. The report includes the determination of the potential updates to the timeline and costs for completion of the project. The board advised that once this report was submitted to the Minister an update could be provided to the committee. However, each of the committee's requests to obtain a copy of the report has been refused on the basis that the information is deemed to be "commercially sensitive". This impedes the oversight of the spending of public money, which is taxpayers' money, not ours. The committee finds it unacceptable that none of the entities with responsibility for the national paediatric hospital can give a reasonable and accurate estimate, or estimates allowing for qualifications of the expected final cost, of the completion of the project. I mentioned the figure of €1.7 billion and that includes €300 million for the fit-out but that budget was made in 2014 and it would be wise not to assume that this might not have doubled. The Secretary General could not give me a commitment that the overall costs would not exceed €2 billion. The committee recommended that a detailed report outlining the timelines and estimated costs for completion of the national paediatric hospital be published as a matter of urgency.

The second issue pertains to the project costs in addition to the guaranteed maximum price established in the tender process. These additional costs include such items as construction inflation, design variation and a huge number of claims. The employer representative has been notified of 1,139 claims by the end of January. My understanding is that those claims continue to roll in. Some 1,023 of these claims were substantiated, bringing with them a combined value of €554 million. Determinations were made on 862 of 1,023 claims, crediting €14.4 million to the contractor and €5.5 million to the board. The committee is concerned about the level of claims and is also aware that claims are being disputed in the High Court. This could bring significant legal costs and it increases the overall financial burden on the taxpayer. The committee also notes that in total, by the end of 2022 the increase in the costs arising from construction inflation could have added another €18.1 million to the overall costs. In a subsequent engagement with the board this month the committee, in its examination of the board's 2020 financial statements, heard that the inflationary impact of the project to date from 2019 to 2022, could be as high as €51 million.

I was shocked when I saw how the two-stage tendering process was structured. It has been left wide open, leaving the taxpayer completely exposed. That tender process does not provide an effective ceiling or limit on the overall costs and, therefore, there is huge exposure to the taxpayer and the State. This is the most troubling aspect of this project for the committee and for me. The committee recommends that the board include a note in its financial statements detailing costs paid and not included in the approved budget of €1.4 billion. It should include a note in the accounts indicating the overall claims received by the employer's representative and the current stage in the dispute process. It should also attach a value to the resolved claims to show any impact on the overall costs and provide a quarterly report to the committee on the number of claims, by stage, in the dispute process and the potential costs, by category, for the settled and open claims.

The third issue sets out the committee's position on the design and complexity of the project. Having visited the hospital site in July 2021, spent a good bit of time there and had full attendance from the committee, we believe the scale and ambition of the project is clear and we need the children's hospital. There is no argument about that. However, the committee is not convinced this was the appropriate project through which to pursue a design statement of this complexity and cost. It is an architect's showcase. It is nice on an architect's portfolio but I am not sure about the functionality part of it. The committee recommends that future capital projects of this scale where the primary aim is functionality should prioritise value for money for the taxpayer. The committee also recommends a comprehensive review is carried out following completion of this project to ensure lessons are learned for future capital projects.

This review will be particularly important as there will be learnings from it in terms of procurement process and bespoke contractual provisions. I highlight that there has been very little information as to maintenance costs. It is a wow project to look at but what about the maintenance costs? The Minister of State is a Minister and I am not, but when we sign off on what is put down in front of us to sign at local or national government level, sometimes we need to be careful what we are signing. We can be signing something, the long-term costs and functionality of which may not be the best. I unfortunately suspect, having met the contractors on site, as well as members of the board and officials, that there will be a high maintenance cost on this project. Window cleaners will be busy.

One of the things that struck me on site was when I asked an official and somebody from the contractor where the solar panels were. I was told there was no room for them. We were on top of the building looking down on the streets around us. I cannot remember how many, but that building covers several hectares. The Acting Chairman, Deputy Verona Murphy, can confirm this because she played a great role in it. They are small terraced houses and, in some streets, up to half of them have solar panels. There we were, standing on top of the biggest project undertaken by the State and nothing is being captured there. It puzzled me.

I have been giving out in this Chamber for the past nine or ten years about schools not having solar panels on them when we build them. We should put them on them and hopefully from now on will do so. This project was started in the past three or four years. It is a tall building up in the skyline and is ideally placed. I am not a solar expert but I think it would tick all the boxes. I am at a loss as to why it was not done and have never got a clear explanation. It did not fit in with, obviously, the final design of the architects.

The Committee of Public Accounts welcomes the board's acceptance of the recommendations put forward and is committed to ensuring the recommendations are acted upon. It is a concise report. I encourage Members of the House to read its recommendations in full. The committee is not producing reports for the fun of it or just to be put on a shelf. It is important that the Minister and officials in the Department of Health and other Departments read what is in them. We had long engagements with the hospital board. The Acting Chairman and every other member of the committee was active on it. We have over the past two years had a huge exchange of correspondence with the Department, not just in the hearings. There have been three hearings and we have had a huge exchange of correspondence back and forward. We have sought further information and questioned it. We really have tried to keep on top of this. I assure the Minister of State that we will continue to so do as it is important.

I thank everyone who contributed to the report, including members of the committee, the witnesses who engaged with the committee during its consideration of these matters, the staff of the secretariat and the Office of the Comptroller and Auditor General. I look forward to this debate on a report that has examined one of the most significant and expensive capital projects in the history of the State.

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