Joan Burton (Dublin West, Labour)
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5. To ask the Minister for Public Expenditure and Reform the steps he has taken to ensure minimal disruption to existing PPPs being carried out by companies (details supplied); and if he will make a statement on the matter. [10866/18]

Joan Burton (Dublin West, Labour)
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What steps is the Minister taking to ensure there will be minimal disruption and loss to the State in respect of public private partnerships and a number of significant PPP companies, given that Carillion has collapsed and Capita has severe financial difficulties? How will he protect the State's and the public's interest in the context of the difficulties of these companies?

Paschal Donohoe (Dublin Central, Fine Gael)
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The public private partnership, PPP, model is an internationally recognised model to design, build, finance, operate and maintain public infrastructure. In accordance with international best practice, PPP contracts already typically include detailed provisions that apply in the event of the liquidation of a consortium member of the PPP company, or an entity under the contract, to protect the public interest and ensure that the project proceeds to completion.

Under the terms of such contracts, in the case of liquidation of a consortium member, or an entity under the contract, the PPP consortium’s funders and remaining shareholders are required to intervene and implement rectification measures to ensure that the project is completed to the satisfaction of the State. Liquidation of a company involved in delivering a public infrastructure project is an unfortunate development but would impact on any project where a supplier became insolvent during the delivery process, regardless of how the project is procured. The issue, therefore, is not PPP-specific, but where it arises in a PPP project the provisions of the contract ensure that the public interest is protected.

It is worth bearing in mind that this is not the first time a PPP in Ireland has experienced issues with its construction contractor, which is not uncommon given the risks inherent in the construction market. In all previous similar cases, the projects were completed successfully and are now fully operational. These examples demonstrate the resilience of the PPP contractual structure and underline the importance of adhering to the contractual documentation in resolving issues, which has previously been raised as a negative feature associated with PPPs.

Joan Burton (Dublin West, Labour)
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The Minister's party appears to have a strong preference for the PPP model over the traditional public service model of direct procurement or, indeed, the public service undertaking the actions itself. One of the companies concerned, the Capita group, has responsibility for a significant amount of housing to be brought forward in the Dublin area through three different projects. Given the absolutely tortuous failure of the Government in the current period to provide housing at a reasonable speed and cost, these projects are not delivering. The fact that the company is in difficulty means that assurance of delivery and so forth is even less reliable than it would have been at the outset.

Paschal Donohoe (Dublin Central, Fine Gael)
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The Deputy's party displayed an unbridled enthusiasm for PPPs when it was in government. In fact, the largest quantity of PPPs was implemented under the party's current leader. Whatever views the Deputy has now are very different from what was displayed when Deputy Howlin was Minister for Public Expenditure and Reform.

With regard to the Deputy's question on how we complete projects, difficulties with projects such as these are very unfortunate but they can occur regardless of the procurement process for the projects. Where difficulty occurs the payments the State is required to make to the people who are involved in delivering the project will not be made until the State is satisfied that the project is completed to the standard required.

As regards the schools, a number of meetings took place during February about the schools with the school principals. The National Development Finance Agency, NDFA, participated in all those meetings. The latest position on the contractual negotiations is that the Dutch Infrastructure Fund is now in the process of finalising its rectification plan, which I hope will deal with the matters the Deputy raised.

Joan Burton (Dublin West, Labour)
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I ask the Minister to give us more information, perhaps by way of a further written note. Both the Minister and I represent Dublin constituencies and we are both familiar with the housing situation. Having the provision of 1,500 houses in the Dublin area slowed down is basically holing the housing programme below the waterline with a huge hole. This is the difficulty.

The Minister implied, wrongly, that my colleague, Deputy Howlin, was avid for PPPs. The reason is that in that era, as the Minister knows well, the Government could not raise tuppence anywhere because we inherited a situation in 2011 where our credit had been destroyed and the Government was constrained by the troika, under an agreement with the previous Government, to very difficult terms and conditions. However, we are in a different era now. We have financial capacity. I do not understand why the Minister is not looking at both the good elements potentially of PPPs and particularly many of their disastrous features.

Jonathan O'Brien (Cork North Central, Sinn Fein)
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I have a technical question. The Minister said that if there is difficulty with one of the funders of a PPP there is no exposure to the State. Are there indirect costs that could accrue? For example, if there is a slow down in the construction of housing is there a cost to the State if it is paying housing supports and in the case of schools if it is renting prefabs? Is that an indirect cost that could accrue to the State or is that factored into the risk and the insurance policies?

Paschal Donohoe (Dublin Central, Fine Gael)
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I will reply to Deputy O'Brien's questions first. There is an indirect cost to the State if a project is being delivered through a PPP or another procurement strategy and the project does not happen and people are in alternative accommodation being paid for by the State. The Deputy is correct. That is the case whether it is a school or a house.

Regarding my approach to PPPs, I agree with Deputy Burton that the context in which we have to evaluate PPPs has now changed. It has changed because the rate at which the State can borrow money is very different and, most fundamentally, we can borrow money in a way we could not between 2011 and 2014. That is why my approach to PPPs is very much on a case-by-case basis. I will evaluate them against the traditional approach of the State building the project directly.

We will decide if it is the right approach to take on a project-by-project and case-by-case basis because these are also fundamentally negotiations. In the next couple of weeks I will make available my overall review of PPP policy, which will develop the point I have just made.