Thursday, 13 June 2019
Saincheisteanna Tráthúla - Topical Issue Debate
National Children's Hospital
In the absence of Deputy Kelly, we will take the item in the name of Deputy Wallace. I thank the Minister of State, Deputy Catherine Byrne, for being here for her normal Thursday evening slot.
This will probably be my last Topical Issue matter so I thank the Ceann Comhairle for allowing it and the Minister of State for taking it. I have said many times that I find it a bit unfair on the Minister of State that she is wheeled out on a Thursday evening to listen to all and sundry on different matters.
I have covered this topic so many times in recent months and struggled to get answers. The Minister of State has probably not brought them with her either. On the previous day with the Minister for Public Expenditure and Reform, Deputy Donohoe, I asked 25 questions and he answered two of them poorly, leaving 23 unanswered. I did not get any answers to them since. The Government's handling of the children's hospital issue is one of the most disappointing things I have seen in my eight years in here, and it would probably only be beaten by the tolerance of what went on in the National Asset Management Agency in that time.
The PricewaterhouseCoopers report indicated it was not a good idea to retender but provided no evidence as to why that was the case. It was incredibly disappointing. The Tánaiste told me when I asked him about this that a gross underestimate that should have been flagged earlier was evident. Public benchmarking gives advance estimation of what the works would cost, but when I inquired about who decided not to do this public benchmarking, I was not told. I do not understand why people cannot answer questions. I have asked so many questions about the nature of the contract, and although I have received some written answers, there is still confusion about it. I realise at this stage that a bespoke contract was used rather than the black and white construction works management framework, which is a disaster. For the life of me I still do not understand why the Government has not abandoned it.
I have heard politicians and the media discussing what we heard at yesterday's committee meeting and it is making me pull out my hair.
It is being said that because construction inflation may have exceeded 4%, the contractor will be allowed to charge so much extra. Why was inflation removed from being the contractor's risk? That does not make sense. Why was the 4% figure used? Who made this decision, which means if there is inflation above 4%, the contractor is entitled to more money. The FIDIC contract template was recommended as best international practice, and if this had been used we could have attracted European contractors rather than the couple of fish in a bowl in Ireland.
However, FIDIC set the benchmark at 12% or 13% before the problems of construction inflation would kick in. For the life of me can someone in Government tell me who made the call that the benchmark would be 4%?
The talk yesterday was that construction inflation is the big problem and so on. That is rubbish. It is part of the problem. We are not talking about a cost of €1.7 billion. The cost will not stop at €2 billion. The Government does not have a clue where it will stop because of the nature of the arrangements it has made. The nature of the contract is so poor it cannot know where the price will stop. How can that be a satisfactory arrangement for the Government? It is beyond me. I do not understand how the Government can possibly stand over it.
I am taking this matter on behalf of the Minister, Deputy Harris. I begin by congratulating Deputy Wallace on his election as an MEP to the European Parliament. I wish him well. I am sure we will still hear his voice loud and clear from across the waters.
I want to remind the House of the significant progress that has been made on this project. After false starts and failures to build this hospital over many years, difficult issues such as planning, completing the enabling and underground works and contract negotiations have been dealt with and this project is now in the major construction phase.
Considerable work has already been undertaken on the project with Phase B, above ground works, well under way at the St. James’s site. Works at the paediatric outpatients and urgent care centre at Connolly Hospital are complete and the centre is on target for a phased opening from the end of July. Works at Tallaght outpatient department, OPD, urgent care centre are also under way with a target hand over date of July 2020.
The contract in place to build the hospital has allowed early phases of work to start while the detail on later phases was finalised and agreed, resulting in a saving in total delivery time. Another advantage of the contract approach is that it has brought issues on cost to the fore much earlier in the life of the project than is the case where traditional procurement approaches are deployed.
The contractors are now required to take all risk for quantities thereafter and their recovery of additional costs is limited to clearly defined scope changes and, post July 2019, inflation in excess of 4%. Given the cost escalation of this project over that originally committed to by Government in 2017, three options were considered in December 2018 for completing Phase B: carry on with the current contractor, retender in the hope of getting a lower quote, or break up the contract into smaller parts and retender.
The realistic and least risky option available to the Government in order to avoid long delay and, potentially, the non-delivery of a children’s hospital was to carry on with the current contractor for Phase B. Any change now would definitely create delay, very likely cost increases and significant contractual difficulties. All of these presuppose that other contractors would want to take on this project, which is not at all certain in the current construction environment.
As Deputies will be aware, the PwC report of the independent review into the escalation in the cost of the new children’s hospital was considered by Government on Tuesday, 9 April, and published that same day.
The Government noted the recommendations of the report and agreed that the Minister for Public Expenditure and Reform and the Minister for Health would revert to Government to outline an implementation plan for the recommendations contained in the report. Work in regard to this implementation plan is ongoing.
Any consideration of retendering at this stage ignores the contractual position, the substantial work done to date and runs the risk of delaying if not outright derailing this much-needed facility.
The focus now is on the enhancement of the delivery and oversight arrangements to reduce the risk of future cost increases to the greatest extent possible. This is a vital and much-needed project that will have a transformative effect on the provision of paediatric care in Ireland. I will respond to Deputy Wallace's questions.
The Minister of State said that the realistic and least risky option available to the Government to avoid long delay and potentially the non-delivery of a children's hospital was to carry on regardless. I do not accept that. The notion that the hospital will not be built is untrue. It will be built by somebody and if the Government improved the contract, it would save a lot of money. That is a fact.
Given that so many mistakes have been made, and the Government has accepted it has made many mistakes, how come nobody is being held responsible? Why are the legal team, Cantor Fitzgerald, not being held to account? Do they not have insurance? I do not understand that. There is no sense to it. If the Government is not going to hold consultants to account when they fuck up, it should stop hiring them. The idea of hiring consultants is to ensure they will take responsibility for their decisions. We are hiring consultants and paying them crazy amounts of money but not asking them to be accountable for what they did. We are not calling in the professional indemnity. Why were they hired in the first place? The Government says it will learn from these mistakes. I do not believe it will. If it cannot hold private consultants to account I suggest it stops hiring them. I suggest the Government should hire people of quality to work in Departments who have the know-how to be able to deal with these problems.
I refer to the people who oversaw what went on with the children's hospital - the contract and the way the board worked. It is nonsense. The Government is putting up with it, and it is losing this country hundreds of millions of euro. If it retendered it could change that but it does not want to retender because it would not look good and the project might be stalled while the Government parties are running in the next election. That is nonsense and it is not the way to run a country. I am being serious.
I cannot get over the fact that the Government has managed this project so poorly. There are so many questions that have not been answered. I would say I have asked 50 questions in this House that were not answered. There is so much confusion about everything. The Government is now hiding behind consultants who gave bad advice and a board that is not accountable. How laughable is it that a guy who was involved with an illegal board - with McCann Fitzgerald - and who was on the hospital board is now moving over to the Land Development Agency? How many mistakes does someone have to make in these bodies before the Government stops offering them work in other bodies? I predict that the Land Development Agency will be another part of the problem. It will be another quango that will not deliver for the people in the same way this hospital board has not delivered. The consultants who were hired and paid crazy amounts of money in terms of the children's hospital have not been held to account and have not come up with goodies. When will things change? This is absolute rubbish.
I thank Deputy Wallace. I am sorry that I cannot answer some of the detailed questions he has asked but I will relay them to the Minister.
I fundamentally disagree with the Deputy on the way the project has been run from the outset. We are not just talking about a building. It is about having a facility for all the children of Ireland. It is about having a facility in a community that I know personally has changed the lives of people who are working in the construction industry now. There are many tentacles, so to speak, to this project besides building the new national children's hospital. It is about a community being revitalised as well. I have no other opinion on that.
The independent review of the cost of the new national children's hospital undertaken by PwC pointed out that a project of the complexity of the hospital can never be fully de-risked. The report states that a number of risk areas remain that have the potential to place further cost pressures on the budget, some of which are outside the control of the National Paediatric Hospital Development Board. One risk related to construction inflation and further likely costs arising from the impact of excessive inflation post July 2019, that is, in excess of 4%, as provided in the contract and measured using the average of the published tender price index. The primary focus of the National Paediatric Hospital Development Board is to manage risk with a view to preventing further cost escalations.
The establishment of the new children's hospital provides a unique opportunity to introduce the new model of care for all paediatric services to help tackle current and future challenges in child health and deliver the huge advantages that are possible in children's healthcare.
As someone who lives quite close to the new national children's hospital, I note the impact it will have, not only on the lives of many children from across the country, but also on those of the community in an area which has been left behind over many years.
I do not know of any project in the time of this Government or the last, or the one before that, that did not exceed some of its costs. The Government and the Minister for Health have given a commitment that every precaution will be taken to reduce the risk of inflation. Ultimately, when this is completed we will have an excellent hospital, probably one of the best in Europe if not the world. I welcome that on the Government's behalf and the many children who will use it. As a mother and grandparent who has spent many days in and out of Crumlin hospital, the opportunity that awaits the children and the staff of this new hospital will overcome any overspend.
I welcome that Deputy Wallace has come to the House this afternoon for what might be the last time. I wish him every success as a member of the European Parliament. There are many things which he and his colleagues of every party and none can advance for Ireland, including in health. I wish him all the best.