Wednesday, 8 May 2019
Ceisteanna ó Cheannairí - Leaders' Questions
We will now deal with Leaders' Questions, as agreed. I remind leaders and the Minister that we are running somewhat late and will be going to midnight. I ask all Members to observe the three-minute and one-minute rule. I call Deputy Martin.
I have in my hands the massive bundle of documentation sent to us at 1.55 p.m. today about the national broadband plan. That illustrates the sharp practice of Government in its management and handling of this project from the start and its attempts to spin its way out of any serious questions or accountability about the project itself. None of this was produced yesterday. Very little of the detail in this documentation was released yesterday. The Government was definitely endeavouring to get out of Leaders' Questions without the detail of this documentation being in the public domain. The wider issue is that if one looks at the correspondence from the Secretary General of the Department of Public Expenditure and Reform to the Government and the Minister, he states:
In terms of the long-term sustainability of the project, I believe that there are unprecedented risks to the Exchequer posed by this proposed project. The Government is being asked to commit up to €3 billion of Exchequer funding - up to €2.275 billion of which will be required by 2026 - in an area where technology is rapidly changing and where we face a number of significant risks to the successful completion of the project.
The correspondence continues:
As against this €3 billion Exchequer investment that is at risk, the private sector operator is only risking [REDACTED] of their own funds.
The correspondence continues:
I note that by 2028, the private operator is projected to have received [REDACTED] in dividends and interest, together with a repayment of [REDACTED] of the initial share capital, while the State will have spent up to €2.44 billion by that stage. In effect, the private operator will have all of their monies paid back while the Exchequer could have paid out almost [€2.5 billion]. And this is before significant connections have been made by service providers.
What is the upfront contribution of the remaining bidder to this project? Why will the Minister not be fully transparent and give us that figure now? Why is the State taking all of the risk? It is a very basic question because the Secretary General and his officials raised questions about the viability of the plan and the capacity of the bidder to deliver it. Having had many missed targets in the past seven years, we could be facing more missed targets. There is a complete lack of confidence in the documentation about the capacity of the remaining bidder to deliver.
Questions were raised about the lack of competition given that there was only one remaining bidder. Given that the Minister made an announcement yesterday about the preferred tenderer, will this contract ever be signed, considering the huge and enormous questions that have been raised by the Department of Public Expenditure and Reform and which have been poorly responded to in the correspondence from the line Department. Why is the Government so dismissive of the concerns of the Department of Public Expenditure and Reform? Why the absence of any robust counter response from the Minister for Public Expenditure and Reform who I listened to on RTÉ Radio 1 earlier? There is an absence of a robust response to the concerns of his Secretary General and the officials in his Department who clearly believe that the Government has handled the management of this tendering process very badly.
This is a major decision to ensure that rural Ireland, which includes 1.1 million people, has equal access to a technology that is going to transform our lives. It is already transforming our lives and it will make a huge impact on rural communities. We as a Government are not willing to see rural Ireland left behind and become second-class citizens-----
-----in respect of a technology that is crucial to its future.
Let me say clearly to Deputy Martin that we did not dismiss the evidence or information presented by the Department of Public Expenditure and Reform. We evaluated every one of those concerns very carefully and spent hours of evaluation on each one. I will take them in turn. In respect of costs, we have looked in detail at the cost of alternatives. Several alternatives were evaluated and none of them offered the opportunity of delivering these objectives at a lower cost; indeed, on the contrary, they would have taken more time and greater cost.
We considered the benefits available. This clearly provides more benefits than cost, and not only that, as the conservative basis on which cost-benefit analysis has to be done excluded most of the benefits of broadband, for example, opportunities in the future to access health services and education online, using cloud-based services and so on. These are the aspects that make it beneficial. We have carefully considered the risks and have managed them in a way that protects the State and we are using this model to ensure that at the end of this we are not left with an asset that could not be of value to the State. We are doing this, building off the existing network, using that model, renting rather than investing in creating a separate company and ensuring the company will be viable at the end, and this will continue to provide service not just for the 25 years during which we will deliver support but for another ten years beyond that.
In respect of the equity and dividends, of course an equity is being provided here.
That is confidential within the contracts and that will be a matter we will have to nail down at the contract stage to show the documentation for the equity that is being put in. The equity is commensurate with the sort of revenue that this project will generate. This equity is entirely at risk. Many on the benches opposite and in the media have asked what would happen if the take-up was not as high as might be projected. The truth is that any failure in respect of the take-up will fall on that equity investor. It will be at its risk if that fails to transpire. This will be an important investment in rural Ireland. We have considered all the alternatives. This is the best technology delivered at the cheapest cost with the minimum risk to the State and it is an investment that we believe rural Ireland deserves.
Rural Ireland has been waiting for a long time for high-speed connectivity. Fine Gael promised it in 2012. Every single promise it made was delayed and not honoured.
There was an alternative in the document. The Minister is wrong to say he considered every alternative. The Department of Public Expenditure and Reform said very clearly that plan B would be:
(ii) Establishing a State entity (whether new or within an existing body) charged with responsibility for managing any alternative State intervention/s - which would ultimately take over the management of the short-term intervention/s and establish more long-term solution/s to address all premises.
That is a paragraph in the Department of Public Expenditure and Reform memorandum. The Department knows all about EU state aid rules so the Minister should not pull the spin on us that his Department got some advice somewhere-----
The Department of Public Expenditure and Reform knows all about state aid rules and it is saying that there is an established mechanism by which the State could have done this differently and more effectively for the people in rural Ireland and for the taxpayer.
How much equity is the remaining consortium putting up? There is no other bidder.
It is not commercially sensitive material. Why is the Secretary General going out of his way to say the State is taking all the risk and that the remaining bidder is only putting up so much? How much is that so much?
Is there a problem with the financial standing of the company? Has the company the wherewithal to take sufficient risk upfront in the early stages of this project? Why is the State taking almost 90% of it?
The capacity of the company has been carefully vetted at every stage and will continue to be vetted as we finalise the contracts and it will have to show the delivery of the equity to which it has committed.
It has always been clear that we could set up an independent State body and roll out an alternative but if Deputy Martin reads the detail of what the Department of Public Expenditure and Reform was proposing, it is to provide 1,800 premises with wireless broadband.
While the Department of Public Expenditure and Reform has a huge duty to challenge and that is its job, the Deputy and I know, as former Ministers for Education, that the Department of Finance challenged and opposed the idea of free second level education but few now would say that was a bad decision.
After decades of neglect of rural Ireland, having asset-stripped rural Ireland and having delivered one broken promise after another now on the eve of an election, the Government pulls what I can only describe as a cynical political stunt - a confidence trick. The documentation, which is voluminous and which it will take some to read in its totality, reflects that there is a fundamental question mark around the ability of the preferred bidder to deliver the rural broadband that we all seek.
It sets out the best case scenario, which is that the Minister's very expensive plan goes ahead, expenditure will be re-profiled and local authority social housing, the Tralee wastewater network, Kilkenny regional water supply scheme, the Sligo western distributor road, the Killaloe bypass, the Dunkettle interchange, 18 primary schools, new ambulance bases, and so on and so forth will be taken off the table.
Even in the best case scenario, should this proceed, the Government will give with one hand to rural Ireland and take away with the other. There is a worst case scenario wherein billions of euro in taxpayers' money gets poured down a black hole, we are left with what amounts to a very expensive white elephant and rural Ireland is still left without the broadband it needs. I said many times to the Taoiseach - and it is unfortunate that he is not here - that the State was in a very weak position because of the shambles that the Government has overseen and that it was Granahan McCourt that held all of the cards. It seems now, through this documentation, that my position has been vindicated.
I invite the Minister to please tell us the figures We know that the taxpayer is to have skin in the game to the tune of €3 billion. What is the figure for Granahan McCourt? What is the liability for that private equity firm? How is it that the documentation, although redacted, insinuates that the sum involved is a fraction of the €3 billion that the taxpayer will have to cough up? I do not accept that the Minister cannot name the figure. I would be more alarmed, were that possible, if he was proposing, notwithstanding the very clear advice given by the Department, to advance while not knowing or maybe not even caring, what stake the private equity investor proposes to provide. The Minister should name the figure and tell us. It is €3 billion of taxpayer's money but how much private money is going into this venture?
-----has rolled out 24 national telecommunication infrastructure projects. It has experienced executives who held senior positions in both Irish and international telecommunications companies. It will use the very same subcontractors that each of the other providers rolling out broadband services use.
In terms of the white elephant allegation, we have built in very careful contract terms. There will be very close governance of this company. There will be clawbacks should it be more profitable than expected. Some people fear it will be more profitable than is projected and if that occurs, there will be clawbacks to protect the taxpayer. If the take-up is less than anticipated, the company will carry the risk. That is why its equity is at stake in this.
In terms of the sum of the equity involved, I am not going to prejudice the final signing off on a contract for a project for which we have waited a very considerable time by revealing a figure that, as Deputies can see from the redacted documents, is confidential.
This is a project for which people in rural Ireland have waited a long time. We have evaluated it extremely carefully, with 800 hours spent by officials in my Department with the various bidders to ensure that we are getting best value in this project. The goal of this project is to provide access for 1.1 million people, comprising 68% of the farms in this country, 100,000 small businesses and 600 schools. We want to ensure that this valuable part of our community, amounting to almost 25%, gets access to the same high-speed broadband that is being provided now by private investment in our urban and suburban areas. The truth is that when we privatised Telecom Éireann-----
-----we left broadband provision up to the commercial world but it is not happening for a quarter of our people. That is why the State must intervene and provide substantial State support for it to happen. The idea of comparing our level of support for a service that is not economic to provide by commercial operators with the equity being put in is a false comparison. We have to put in this support so that this community will be included. That is why there is a substantial sum involved, albeit spread over 25 years, to secure this valuable infrastructure and to deliver to people around rural Ireland.
The Minister is very coy but he does not display the same reticence in naming the figure for the taxpayer, with €3 billion rolling off his tongue. He does not have to convince anyone in this Chamber or beyond of the need for rural broadband; far from it. I remind him that officials in the Department of Public Expenditure and Reform - and I understand their concerns were also held by other officials - said that there is a question mark around the deliverability of the project. Let us just say that out loud. The Minister is speaking as though this is a certainty but the history of this debacle is that there is anything but certainty around the delivery of rural broadband, bar the certainty that, as he said, 25% of our people do not have access to it.
I do not doubt for a second that the preferred bidder has considerable expertise. I am not questioning that. I am not questioning the fact that it has been involved in very big projects; no doubt it has been but this is the first occasion on which it will acquire €3 billion of taxpayers' money. On that basis, if this is to have any credibility at all, particularly given that its credibility has been deemed highly questionable by very informed persons, the Minister needs to state on the public record the quantum of money involved. How much? What fraction of €3 billion is going to be advanced by way of private money?
-----the roll-out of fibre which will be placed on rented poles, by and large. It will be built on the existing network. That is designed to minimise the cost to the Exchequer. That will provide a resource, which the company will sell on, as a wholesaler, to retailers to provide service to those who connect to it. This is the State deciding that it needs an infrastructure to include rural Ireland. We are providing the money but it will only be provided as the company builds it out. The company will not get paid until it shows that the 146,000 km is rolled out. We have ensured that we are capping our risk. We believe that we will not have to pay all of the €3 billion because we have various elements where we can get clawbacks or not have to incur a cost, and they are built into the programme. Of course, for transparency reasons, we have shown the full cost of the potential exposure. We believe that this is crucial if we want to ensure that there is equal opportunity.
Let me say one last thing. The Deputy appears to favour the concession model, whereby this would revert to the State at the end of the period. In terms of the assessment of the deliverability of this project, that was assessed as being a far greater risk than the model we are now delivering.
There are many serious and important issues to be raised here today and I want to raise again the issue of workers' rights. This is the first opportunity to do so since May Day or International Workers' Day last Wednesday. I contacted the Minister for Employment Affairs and Social Protection in advance to make her aware that I would ask this question and seek clarity. On 7 March last when I raised the issue of the theft of workers' tips by management in the Ivy restaurant down the road from this House, on Dawson Street, the Tánaiste told the Dáil that this practice is "illegal". He said clearly:
Any employer that calculates salary and includes tips in that figure is acting illegally. This cannot be done ... Tips are separate to salary and if there are issues that the Government needs to act on there, then we will look at that closely.
We now know that it is not illegal. The Minister has clarified that, as has Unite the Union. I ask that the Dáil record be corrected in this regard, although I accept that the Tánaiste gave his view in good faith, based on his and my dismay that such a practice could happen and was happening.
When will the Government enact emergency legislation to close the loophole and to make this disgraceful practice unlawful, as the Tánaiste believed it was and as it certainly should be? On the weekend of 6 April, The Ivy restaurant, possibly on legal advice, changed its policy of applying a service charge to tables or five or more to include all tables. It also removed the option to pay a tip via credit card from the payment machine. Customers believe that this service charge goes to waiting staff and back-room staff but it does not. Service charges are discretionary. If customers are happy with their server, they should always pay him or her in cash. This area has to be legislated for immediately.
In recent days another large employer, Peter Mark, imposed a new training fee on its trainees. It did this explicitly to recoup from trainees the benefits lost due to the abolition of training rates to low-paid workers following the Government's much trumpeted and very welcome enactment of the Employment (Miscellaneous Provisions) Act 2018. This matter has been highlighted by Unite the Union, which has written to the Minister for Employment Affairs and Social Protection. Will the Minister, Deputy Bruton, make a statement on this matter? Can we be told what steps will be taken to ensure that legislation will be passed to the benefit of these low-paid workers?
I have asked three questions. When does the Government and the Minister intend to bring in emergency legislation to close the loophole with regard to low-paid workers not receiving service charges and tips from customers? Has Revenue or the Workplace Relations Commission, WRC, investigated The Ivy restaurant or other restaurants whose actions have recently been highlighted in the media, such as the Hard Rock Cafe? On the matter of trainee hairdressers in Peter Mark, what legislative steps will be taken to prohibit employers from such behaviour?
I may not be able to answer all of the questions the Deputy has asked. It is my understanding that the Low Pay Commission, which is an independent body, has been asked to look at this issue. It produced a report on the matter of tips and gratuities. It met representatives of the adjudication and inspection divisions of the Workplace Relations Commission last year. The WRC has stated that, in its view, a better approach than the proposed legislation would be to introduce a code of practice on tipping. Such a code could set out the principles underpinning such legislation and enshrine the proposal that an establishment display to its customers how tips are distributed. The Low Pay Commission considered all of that evidence and it is its belief that there are not sufficient reliable data to prove that the issue of employers withholding employee tips is a significant problem. The commission does not believe that legislation or regulation should be introduced in this area as the administrative and compliance costs involved would not be justified. The commission is also concerned that there could be unintended negative consequences. It considers that legislation in this area may not be enforceable.
An evaluation has been done. The Minister will have to explore the issue further if the Deputy submits further evidence, but she remains of the view that the Low Pay Commission's report and its findings should inform the debate on this issue and provide guidance as to possible solutions. The Minister is present but she is not in a position to answer additional questions at this point. She will listen to the Deputy's comments and, should additional responses be required, we will make them available to the Deputy.
A survey on this issue has been carried out on restaurants in Galway and it has been proven that this practice goes on quite regularly. Senator Gavan produced that survey. Information is also available in respect of The Ivy restaurant; the Minister will have seen the payslips. There have also been reports in the media in respect of the Hard Rock Cafe and other restaurants and retailers who engage in this practice. This is a very low practice involving employers being very greedy and taking money from the hands of their workers who are trying to make a living. They are low-paid workers who get up early every single morning, who work late every single night, and who stand on their feet all day. This House and the Government should be protecting these workers as best we can.
The Minister spoke about a code of practice. Is he looking at bringing in a statutory instrument with regard to tips? Businesses could also be banned from adding a service charge or forced to make it clear that the charge is discretionary. The Minister should look at those angles. He did not answer the question regarding Peter Mark.
To take up the Deputy's point, there is no doubt that if the Minister can secure a sectoral agreement it will have the force of law. Under law, if such an agreement can be put together it will be enforceable. That would be the ideal outcome. The Minister is working to secure such an agreement. She has also indicated that she is writing to companies, including that which the Deputy mentioned, in which practices which are not in accord with a proper approach to this issue may be in place. It is to be hoped that by alerting companies to their obligations and securing an agreement which can become a sectoral norm which would be enforceable, we can deal with this issue. That would be the ideal outcome, rather than specifying in primary legislation individual practices which evolve and change. An instrument that has the involvement of all sides in industry and which is capable of being kept up to date as circumstances change is required. That is the goal the Minister seeks to achieve.
I wish to raise the issue of community employment schemes. These schemes may not be as controversial as the introduction of broadband to rural Ireland, but they are equally important to the communities they serve. As we approach full employment, I ask the Government and the Minister for Employment Affairs and Social Protection to change the eligibility criteria for entry to community employment schemes. I ask that the rules be relaxed in respect of the duration for which people can remain on these schemes, with particular regard to people aged over 55, participants with social and other limitations and participants who lack transport and other supports. I ask the Government to introduce some flexibility regarding the maximum amount of time for which participants can remain on these schemes. This would enable schemes to maintain their staffing levels, as many are now having difficulty doing so. It would allow them to continue with the excellent work they do for their local communities and to play an important part in social inclusion, particularly in rural Ireland.
The Minister has set up an interdepartmental group to look at this issue, which was to report at the end of March. Did this group produce such a report and what were its recommendations, particularly with respect to altering the criteria for entry and length of stay on these schemes?
Is the Department of Employment Affairs and Social Protection the best Department to be involved in the social inclusion arm of this scheme? As we approach full employment, the emphasis should be on community enhancement and social protection. The schemes were introduced at a time when there were high levels of unemployment but that is no longer the case, which creates great difficulties for these schemes in recruiting and maintaining people on the schemes. This is detrimental to the communities they serve. The Minister is aware of the social inclusion value of these schemes. The rules were set out at a different time and in a different era and they need to be changed.
The schemes are critically important for communities because they have taken on the work county councils formerly carried out in maintaining the infrastructure of villages and towns, providing many services formerly provided by the county council, looking after community projects and sheltered housing schemes, and looking after the landscape and streetscape of these towns and villages through their participation in Tidy Towns and other community projects.
Even with almost full employment, there will always be a small cohort of people who find the norms of conventional jobs challenging. A placement on a community employment scheme gives these people a great sense of purpose, allows them to contribute to their communities, gives them sheltered and protected work and allows them to achieve their full potential.
I thank the Deputy for raising this issue. If I am not mistaken, these schemes were introduced by Ruairí Quinn during the early part of my time in this House. Their value and importance has been immense. There is no doubt that they have been primarily seen as labour market interventions to activate and keep people close to the labour market at times of high unemployment. The Minister is right to have established an interdepartmental group to look at the future role of the schemes.
Clearly, it changes as the labour market changes. They have played an invaluable role. I am very aware of the pressures the Deputy describes in rural communities because there is equal pressure on maintaining community employment schemes in urban areas. The interdepartmental group was only established by the Minister in March. It has had its first meetings but has not reported at this point. It will examine the full range of issues as to the role of this. There will no doubt continue to be an important role in labour market activation. People can get displaced and do need a period of employment experience of the sort that can be provided by community employment schemes but there is an acknowledgement that there are also longer term elements. The purpose of this evaluation is to find the correct balance between them. I would tender a view that the Department of Employment Affairs and Social Protection is the correct Department to do this work but of course it has to work very closely with the Department of the Minister, Deputy Ring, where there are community, rural and urban affairs to be developed. I hope the interdepartmental group can develop something that is truly valuable to the communities and to the individuals who take these placements up. It has a very strong record of performance and has delivered some immensely valuable work within our communities. The Government wants to ensure it can continue to contribute to and support communities in the way the Deputy rightly identifies as being of priority.
There needs to be a distinction between employment reactivation and social inclusion. The problem that arises in rural Ireland is that there are many groups who for various reasons cannot engage in full-time employment. They may not be able to participate in the training schemes that are sponsored by the employment schemes. The issue really is how we develop the self-esteem of people who are on schemes and then have to leave the schemes, although we know in our heart and soul they are not going to be able to get full-time employment. That may be for many reasons, either age or some limitation in their social skills or mental health. Being involved in a scheme allows these people to become part of the community, to contribute to it and to be a valuable member of it. Rather than be passive within the community, it allows them to be active. Once the schemes begin to lose their employment numbers, they gradually dwindle. That is the issue that is really facing rural employment schemes because they cannot recruit people. They have people on the schemes who can participate and want to continue but because of the rigidity of the criteria they have to leave the schemes. That is the issue.
I assure the Deputy that this is not a problem confined to rural areas. The same problems are affecting valuable community schemes across all of our constituencies which are running into difficulties. There are other employment opportunities for people. It is hard to get supervisors to support these schemes.
It is harder to get participants and they need these valuable programmes to be continued. The Government has recognised the need to adapt this scheme for the circumstances we now face. That is the purpose of the interdepartmental committee that the Minister has established. I have every confidence that we can work out something that will deliver a better balance for communities and for those who are participating and to ensure that people can contribute even if they are not in a position to hold down a full-time job in the private sector.