Simon Coveney (Cork South Central, Fine Gael)
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Question 8: To ask the Minister for Finance if he is satisfied with the effectiveness of the process whereby different funding options are being assessed for capital projects; and if he will make a statement on the matter. [7134/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The responsibility for capital project selection and choosing the optimal means of funding such projects rests with the agencies sponsoring and sanctioning such projects. Normally the sanctioning authority will be a Department. I am determined to ensure that value for money for the taxpayer is maximised in the exercise of this responsibility. Accordingly, Departments and implementing agencies, in deciding projects and funding, must operate within the financial framework of the five-year multi-annual capital envelopes as approved by the Government in the context of the annual budget and within the appraisal and procurement framework as set out in my Department's capital appraisal guidelines, interim PPP guidance and procurement guidance.

Under the general conditions of sanction for the multi-annual capital envelopes introduced in budget 2004, Departments are required to comply in all cases with my Department's guidelines for the appraisal and management of capital projects, the interim PPP guidance from my Department and observe the rules on procurement. Revised Department of Finance guidelines for the appraisal and management of capital expenditure proposals in the public sector were published in February and circulated to Departments and agencies for implementation.

To assist State authorities in determining the optimal means of financing public investment projects, the Government established the National Development Finance Agency, NDFA, on 1 January 2003. Its role includes advising on the financing and risk evaluation of Ireland's public private partnership procurement projects and raising or arranging finance for appropriate capital projects. In this respect it provides a centralised expert service to Departments and certain other State authorities. The PPP procurement option should be available to Departments and State authorities for application to appropriate projects where there is the right scale, risk and operational profile to harness the benefits of this approach.

As the Deputy will be aware, there are also reforms planned in the area of public sector contracts for construction and construction related services. The reforms will involve the amendment and introduction of new standard forms of construction contracts which will transfer appropriate risks to contractors where they are best placed to manage them. These initiatives seek to reduce the potential for project cost overruns and provide better value for money for the State. Consultation with the construction industry on the contract-related material will commence shortly.

Richard Bruton (Dublin North Central, Fine Gael)
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The Minister stated that the Departments sponsoring these projects follow his Department's guidelines. The Comptroller and Auditor General has indicated, in the case of the roads programme, that an overrun of €4 billion was due to underestimates of items that should have been correctly estimated when projects were originally put forward. He also indicated that there was an additional overrun of €2 billion on the programme as a result of altered works. Is the Minister stating that in the case of the projects which generated such a massive overrun, the sponsoring Departments applied the guidelines set down by his Department? The Comptroller and Auditor General strongly criticised those involved for not applying the guidelines. He also indicated that proper reassessments were not carried out when changes were made and that items which should have been costed were not properly costed.

Is the Minister living in cloud cuckoo land? He is failing to recognise what Accounting Officers are telling us, namely, that the rules to which he refers are not being applied. That is why there have been so many overruns and why so many projects have not been delivered on time. The Government needs to get to grips with the situation. If the Minister continues to read replies of the sort he has just read into the record of the House, he will not get to grips with it.

Brian Cowen (Laois-Offaly, Fianna Fail)
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There has been a great improvement in this area and major projects are now coming in not only on time but before time and on budget. The learning curve relating to this process was not sufficiently steep and we did not come to grips quickly enough with certain problems that arose. Some of these problems came about as a result of judicial reviews which arose on foot of people exercising their right under the existing system to delay matters. As a result of the opposition that was organised by people who had difficulties with particular issues — many of these have been well publicised — huge costs were incurred on behalf of the taxpayer. Perhaps that matter should be highlighted, particularly to those who state that we have the luxury to wait two, three or four years for judicial reviews etc. to be completed.

Delays do not always occur as a result of what the Deputy would portray as internal institutional incompetence but are rather caused by actions taken by people. We are trying to roll out a capital programme of a greater magnitude than any seen in the past. In that context, we must ensure that the statutory and legislative framework is such that it compares favourably with those that apply in other countries on the Continent which do not appear to experience the same level of problems as Ireland in this area.

We have updated the guidelines — which were originally drafted in 1994 — to take account of the factors to which I refer. It is not, as the Deputy suggested, all down to internal incompetence. As he is aware, a number of delays occurred which were outside the control of those managing the projects. Perhaps everyone would be better served if the costs involved in dealing with such delays were highlighted rather than suggesting that they are a luxury we can afford and a price worth paying.

Richard Bruton (Dublin North Central, Fine Gael)
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What sanctions are imposed if a Department does not meet the guidelines? Let us move away from roads and consider the position vis-À-vis hospital projects. In some instances, Ministers have approved projects, investments have been made and then the new facilities could not be opened. Deputy Burton will be aware of a notable example of such a project in her constituency. Surely someone must take the rap for not properly planning a project and ensuring that it could be opened when taxpayers money has been spent. What sanctions does the Department apply where the guidelines are manifestly not having an effect in terms of the way projects are planned?

Brian Cowen (Laois-Offaly, Fianna Fail)
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I previously served as Minister for Health and Children and am aware it can be the case that when a capital project — for which there have been many calls and in respect of which everyone is agreed — is proceeded with, industrial relations issues begin to arise on the current side in terms of staffing levels etc. People seek leverage and this can cause problems in respect of attempts to open a facility. This happened in my constituency on one occasion during an election campaign. When else would it happen? It did not have the desired result for some of those involved, however, because Fine Gael, not Fianna Fáil, lost a seat.

One may be providing much better facilities, both in terms of work and care environments — I refer here, in particular, to geriatric and other care environments — and one may discover that further negotiations need to be undertaken because those facilities have been improved.

Richard Bruton (Dublin North Central, Fine Gael)
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Is the Minister saying that these problems are always caused by someone who is exploiting the situation?

Brian Cowen (Laois-Offaly, Fianna Fail)
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No. I am saying that there are reasons other than those to which the Deputy referred. There are real problems that arise.

Richard Bruton (Dublin North Central, Fine Gael)
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There have been breaches of the guidelines with which the Minister has failed to come to grips.

Brian Cowen (Laois-Offaly, Fianna Fail)
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I have brought forward new guidelines. I have circulated these and I want them to be implemented. That is where I stand and I will be accountable for what I do.

Richard Bruton (Dublin North Central, Fine Gael)
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The Minister said that he was preparing guidelines.

Brian Cowen (Laois-Offaly, Fianna Fail)
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I have circulated guidelines relating to contracts for implementation. I will also be engaging in detailed discussions with the construction industry in respect of other aspects of this matter.

There has been an improvement in the way the system operates. Deputy Bruton, in his position as an Opposition spokesperson, is trying to suggest that nothing has been done and that they money has been wasted or has disappeared into thin air. That is not the case and there have been improvements.

Richard Bruton (Dublin North Central, Fine Gael)
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I am not pretending that it is the case.

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Deputy never made that clear.