Wednesday, 23 October 2019
Public Ownership of the National Broadband Network: Motion [Private Members]
That Dáil Éireann: —notes the Report of the Oireachtas Joint Committee on Communications, Climate Action and Environment entitled ‘Report on an investigation to examine the National Broadband Plan process thus far and how best to proceed and the best means to roll out rural broadband’, which was laid before both Houses of the Oireachtas on the 27th August, 2019;
—endorses the view of the Oireachtas Joint Committee that:—high speed broadband is a vital piece of infrastructure for rural Ireland and should be provided as quickly as possible, to the same standard as is available commercially in other parts of the country, at the same cost to consumers as elsewhere and at best value to the taxpayer; and—resolves that public moneys should not be expended on any proposed broadband telecommunications network unless such a network is, or is to be, owned by a Minister of the Government or a public body on behalf of the people.
—the broadband network infrastructure should be under the ownership of the State, as it is strategically important; and
I am sharing time with my colleague, Deputy Howlin. The Labour Party believes that if the Government is to spend over €2.9 billion of public money on a broadband network over 25 years, such a network should be owned by the State. One would have to look long and hard to find anyone outside of the Government who would disagree with that.
The question of rural broadband is not about whether we should deliver it. Everyone agrees we should have comprehensive broadband for every home and business in this country. Everyone wants the benefits that it will bring and Labour desires equality of access to high-speed broadband across the country. However, this will be nearly €3 billion given to a private monopoly, which will own the network forever, and the proposed contract will last 25 years but what then? The private monopoly will then be in a strategic position to charge significantly more to users. We are not so much as selling the family silver as paying someone to take it off our hands. Generations to come will wonder at the ineptitude of handing over such a strategic asset to the private sector. Fine Gael will have to answer for this in a general election. Why is it committing to hand over a network we will pay for, where the risk has been all but removed, to a private operator?
The purpose of this motion is for the Dáil to make a clear statement on where we stand on ownership. In a Dáil where decision-making has become debased, this is an opportunity for a meaningful vote on Thursday. We will give due consideration to the Sinn Féin amendment. The Government's amendment neglects to mention the gap funding model would only work if there was strong competition between bidders, rather than the farce of a tender process we have had. The other possible ownership structure that was left on the table was discarded by this Fine Gael Government and is not mentioned in the Government amendment. That option was a full concession model where ownership would revert to the State. We know the choice was made by Fine Gael Ministers to pursue this flawed model where the price was trebled from €1 billion to €3 billion. In terms of public procurement seeking value for money on behalf of the public, what happened under this Government was not serious. It was a joke.
Let us remind ourselves of how we got to this point. There cannot be a competitive process with only one bidder. The argument that the remaining bidder is there simply because it outlasted its competitors is not true. First, Labour left two options on the table, namely, a commercial stimulus model and a concession type arrangement. Following a recommendation by the then Minister, Deputy Naughten, the Government chose the commercial stimulus model or the so called gap funding model. Under this model, the private sector would finance, design, build, own and operate the network under contract to the Department. In other words, the Government rejected the alternative full concession model in which the asset would be handed back to the State after 25 years. The then Minister, Deputy Naughten, said in his explanation at the time:
I am advised that under a Full Concession Model, the entire cost of the project would be placed on the Government’s Balance Sheet, with serious implications for the available capital funding over the next five to six years. Given that both models will deliver the same services and be governed by an almost identical contract(s), I cannot justify reducing the amount of money available to Government for other critical priorities such as Climate Change, Housing and Health, over the next six years.
His advice turned out to be completely wrong. The then Minister, Deputy Naughten, chose a model that surrendered a publicly funded asset to the private sector and yet the cost of the project is still on the public balance sheet and eats into the funding available for the rest of our capital programme.
Second, the then Minister, Deputy Naughten, decided to allow Eir to split out 300,000 profitable households from the rest of the population. Eir withdrew once it had secured this prize. The ESB-Vodafone bid, or SIRO as it was called, withdrew after that was allowed to happen. The truth is that the terms of the State’s offer were fundamentally changed once Eir was allowed to redraw the map. SIRO was more than entitled to leave at that stage. What was left was Granahan McCourt bidding for the 500,000 hardest-to-reach households. We saw this consortium reconfigure itself in various ways, including a State purchase of the remaining private shares in Enet from the consortium for an undisclosed price. Then we found out about a series of meetings and dinners. Now we are sleepwalking into confirming a disastrous deal, on no other justification than that we have started so we will finish. That deal pours public money into private pockets.
What the Minister needs to do, even at this 11th hour, is to take this service in-house. He should cancel the bid and instruct the officials in his Department to get on the phone and talk to the ESB about how the State can deliver broadband itself. As a former bidder, the ESB will know exactly what is required to deliver broadband to the remaining 500,000 households, and will have detailed knowledge of how it can use its own publicly-owned infrastructure of masts and other infrastructure to deliver this. We have every right to use the State’s own resources to deliver this plan.
No one doubts the importance of getting this plan delivered for households and businesses. Given the central importance of access to information and knowledge for social inclusion, personal development, equal access to goods and services, and a range of economic opportunities, the importance of providing broadband Internet to the whole population cannot be understated. The Government talks up the risk of an unacceptable delay if the national broadband plan collapses, but equally unacceptable would be a situation where private enterprises have so much monopoly power that the people end up paying far too much for the delivery of this vital service when State companies could have delivered it for a lower cost. I would also refer those interested in further reading on this issue to the work and expertise of Dr. Dónal Palcic and Professor Eoin Reeves from the University of Limerick.
In respect of our motion, I also want to put on the record that our preference was to bring a Bill to put in law our view, and that of the members of the Joint Committee on Communications, Climate Action and Environment, that a broadband network we will pay for must remain in public ownership. However that Bill was deemed not in keeping with Standing Orders. Standing Order 179(1) states "A Bill which involves the appropriation of revenue or other public moneys, other than incidental expenses, shall not be initiated by any member, save a member of the Government." We were not proposing to appropriate money. The Ceann Comhairle’s ruling on our Bill is based on an assumption that, if the contract is signed but is frustrated because of a change in the law, then the State becomes liable to pay compensation. However, if no contract was signed before the Bill became law, it would be in keeping with Standing Orders. I do not see how it is possible to say, as Standing Order 179(1) appears to require, that the Bill does involve the appropriation of public money unless and until we know as a fact whether such contracts have been signed. Incidentally, if no contracts had been signed by the date of introduction of the Bill, it would take a great deal of persuading that the actions of third parties subsequent to that date could make a Bill that complied with Standing Orders out of order. It seems to me it would lead to an impossible situation if private Members, in drafting legislation, and the Office of the Ceann Comhairle, in ruling on compliance, had to take into account not only the existing factual state of affairs, but what may be a future factual state of affairs at the time a Bill is passed, but without evidence any factual inquiry has been made to ascertain what the facts are or are likely to be.
A well-regulated market economy requires a strong regulator and a genuine competition among multiple enterprises.
When it comes to network infrastructure, whether an electricity grid or, in this case, a network of fibre optic cables, it is often not possible to have multiple competing firms. It is simply prohibitively expensive and patently inefficient to have two overlapping networks. There is a natural monopoly situation. Where network infrastructure is concerned, it makes sense for the State, that is, the people, to own and manage any given network. Networks are too strategically important to be under the control of private sector organisations. They have too much market power to limit the ability to charge high rates of access to the network. The EU has extensive rules to promote competition and limit state aid. From a Labour Party perspective, we are sometimes at odds with these rules, but when it comes to rural broadband there is no European impediment - we have checked this out - to State ownership. There are volumes of specific European reports and policies to promote and support the extension of broadband Internet into rural areas.
What Fine Gael has done with rural broadband is completely at odds with sensible economic decision-making. What was proposed by Labour Party Ministers at the beginning of the project was a competitive process with five bidders seeking to build a national broadband network to serve almost 1 million homes and businesses. The former Minister, Deputy Naughten, then collapsed the competitive aspect of the bidding process by unilaterally taking 300,000 premises out of the procurement process and giving them to Eir. This led to all of the bidders dropping out except for Enet, which formed and reformed new consortia that ended up being led by Granahan McCourt, with various other partners entering or exiting the bid.
We all know about the fiasco of the informal dinners between the former Minister, which led to his resignation from the Government. Not only did Fine Gael press on with a grievously flawed process that should have been halted, but then Fine Gael came to the conclusion that it was okay to pay €3 billion for the rural broadband network, far more, as my colleague has said, than the original estimate, to deliver a network to fewer homes and then give ownership of the network to an entirely private entity. To add insult to injury, the new entity is to be called National Broadband Ireland, even though it is not a publicly owned national company.
Fine Gael proposes to give €3 billion of the people's money to a private monopoly that will own the network forever. The proposed contract will last 25 years but at that stage the private monopoly will be in a strategic position to charge whatever it likes for access to it. This is a major strategic risk for the taxpayer. If the network becomes very expensive to maintain, the private operator can simply cut and run. If it is profitable, consumers will pay more than they need to access the Internet and it will hold back job growth throughout rural Ireland. It is clearly the best proposition to have the rural broadband network in public ownership.
The purpose of this motion is to be very clear in our statement as a House that we want rural broadband but we want it in public ownership. We want people in businesses in small towns and rural areas, such as my county, to have access to fast Internet connections for all of the many positive reasons, from education to commerce and health purposes to entertainment, that we can all recite. Rural broadband deserves to have the infrastructure and the Labour Party has no issue with the need to make a major public investment for this to be delivered. However, let us not set up something that will cost more money in the long term. Let us not give €3 billion of public money to a private operator. It is not as if that operator will provide broadband free of charge. It will thank the taxpayers very much for the €3 billion and then charge for the use of the network. The only way to keep control of the cost for rural homes and businesses is for it to be State-owned. The view of the Labour Party is the State can create a marketplace using the broadband network. Internet service providers can compete to offer people connection to the Internet using this network and they can compete through different television station offerings or pricing. In that model, the State would keep control of the network and would provide certainty that the market can be kept well regulated and focused on the need to serve the public good.
Fine Gael can argue all it likes about the commitment of those proposing a private monopoly on rural broadband but the private venture capital company involved in the Government plan will be able to sell its shares in nine years' time. This means the Government has no idea who will ultimately own the network beyond nine years' time. The proposed contract will only allow the Minister to block the sale of shares in the first nine years. We know the sole bidder in the national broadband plan is a venture capital company and not a telecoms company. It seems obvious it sought and was given the option of selling on Ireland's broadband network at some point in future because that is what venture capitalists do. This is why ownership of the network is so important. We saw what happened when Eircom was bought by vulture funds. They stripped the assets from the company and sold it on. There is no doubt that vulture funds could buy up National Broadband Ireland, squeeze what money it could out of it and then sell it on. It would be an entirely different matter if the public was to own the network rather than it be a private monopoly.
What exactly are these venture capitalists bringing to the project? What is their stake in it that could not be provided by a publicly owned company? From the perspective of the Labour Party, we must restore the confidence and ability that Ireland had in earlier times when the country was only beginning to develop economically. There is no reason we cannot set up a national broadband company as a commercial semi-State body. It is how we delivered water to every home. It is how we delivered electrification. It is how we delivered natural gas. It is how we first delivered television and telephones.
After 2008, we rescued the public finances so that Ireland can borrow once more at competitive rates on the international markets. National debt is under control, meaning we can now afford to build and own our own vital infrastructure such as broadband. Given the private investor is paying significantly less than 50% of the cost, as seems to be the case and nobody denies this, and the State is paying more than 50%, the project, therefore, will be on the State's books regardless of who owns the network at the end of the day. The Minister might confirm this point in his response. As my colleague has said, this negates the argument to keep it off the public books and in competition with schools, health expenditure and climate expenditure.
Why on earth, after 25 years, would the people not own the network for which they paid? Almost all previous public-private contracts involved the public ownership of the asset at the end of a set period. Why is this project different? This is a purely Fine Gael Government decision taken in July 2016, two months after the Labour Party left government. I believe it is an ideological decision that flies in the face of good economics and sound management of the public finances. We have seen Fine Gael mismanage the national children's hospital, the funding for the metro and other projects. It has mismanaged several mid-level capital investments and it certainly has mismanaged investment in the national broadband plan. It is not just the Labour Party saying this represents very poor value for money. Senior officials in the Department of Public Expenditure and Reform have said so too. The Secretary General of that Department, a man known to be clear in his thoughts, has described the level of profit to the investors as very high for the level of risk they are taking. They are getting a great deal.
We established that Department to safeguard the public's money and we thought we had moved into an era of greater political responsibility with the public finances, having learned from some of the disastrous mistakes of the past. The Labour Party wants to see high-speed rural broadband delivered as soon as possible and we are committed to ensuring the State ponies up the necessary costs to achieve this, as long as the network that is built with public money remains in public ownership. In 25 years' time, access to broadband will be even more essential than it is now.
All of us, in our daily lives, will be more dependent for all services on fast, effective broadband access.
We delivered the rural electrification scheme through a public enterprise that has served the country well and faithfully for generations as a quality employer and profitable company that has paid €1.5 billion in dividends to the State since the 2008 crash. Modelled on the rural electrification scheme, we should have an ESB-style national broadband company to retain control over prices into perpetuity and eliminate the possibility of ruthless investors taking over rural broadband services. The Minister can give no guarantees after nine years.
The motion simply states public moneys should not be expended on any proposed broadband network until it is to be owned by a Minister or a public body on behalf of the people. I hope Deputies across all sections of the Dáil will support this important motion in order that we can deliver rural broadband services without trapping future generations in unseen costs.
I move amendment No. 2:
To delete all words after “Dáil Éireann” and substitute the following: agrees that:
- without high speed broadband, 1.1 million people, mostly living in rural Ireland, will not have access to high speed broadband, and will be left behind;
- without high speed broadband it will be significantly more difficult to attract new jobs to rural areas and develop new enterprise opportunities and it will be more difficult to retain the jobs that currently exist in these areas;
- you cannot sustain a healthy democracy if there are major groups of people who feel they are being left behind;
- without high speed broadband, it will be impossible for rural Ireland to take advantage of the opportunities that are presented by the digital economy, from healthcare to farming, and from education to agriculture, rural development and tourism; and
- without high speed broadband, remote working, which would allow people to have more flexible working arrangements, and to reduce their carbon footprint and urban sprawl by reducing the numbers commuting to large cities, will not be possible;
- the Minister for Communications, Climate Action and Environment is considering the recent report of the Joint Oireachtas Committee on Communications, Climate Action and the Environment in relation to the National Broadband Plan (NBP) and will revert
to the Government shortly in relation to the recommendations in the Committee report;
- the advice of the Attorney General is that it is not legally possible to change the 2016 ownership decision within the current procurement process;
- cancelling the current procurement process, starting again and getting to the point at which contracts can be signed could take at a minimum three years and up to five years, with no guarantee of a successful outcome, in which case the roll-out of high
speed broadband may not commence until 2026 and may not be completed until 2032, which would only serve to deepen the digital divide that exists in this country;
- in appointing a preferred bidder, the Government considered a number of alternative options to delivering the NBP, including changing the ownership model, and that from that work, it was clear that the analysis showed that all of the alternative options
identified would take longer to reach 100 per cent of the Intervention Area premises compared to the current plan (or in some cases 100 per cent would never be achieved), and that:
- it may be more costly;
- in most cases would require a consultation on a new strategy as well as a new procurement process and State-aid application; and
- it may not provide the level of future proofing required under the European Commission’s strategy, Connectivity for a European Gigabit Society;
- the then Minister for Communications, Energy and Natural Resources, commenced a public consultation in July 2015 on the Intervention Strategy for the NBP, which included consideration of five alternative ownership options, and that the then
Minister in December 2015 recommended to the Government two possible ownership options, one of which was the gap-funded model, and then established an interdepartmental group to recommend the best way to proceed;
- an inter-departmental group reviewed the appropriate ownership model and based on this review the Department recommended the gap-funded model, and that it was then adopted by the Government in July 2016; and
- the State can receive 40 per cent of the value of the National Broadband Network at the end of the contract, without any of the risk associated with owning 146,000 kilometres of fibre wire that have been hanging on rented infrastructure for 25 or 35
calls on the Government to proceed to sign the National Broadband Plan Contract as soon as possible, as the 1.1 million people mostly living in rural Ireland have waited long enough to get connected to a service which is, or will be, freely available to virtually every person in towns and cities across Ireland.
The reason we are implementing this plan is that there are more than 1.1 million people who would be left behind if we did not make a decision to deliver broadband. They would include 100,000 businesses, 540,000 premises and nearly 25% of the population. The process in which we have engaged has been open. Any company, public or private, could have entered that process. They had equal opportunity to do so. The implication of the Labour Party's motion and Sinn Féin's amendment is that we scrap this process and start all over again. It has been made clear by the Attorney General that it is not open to the Government to pick the ESB, or any other public utility, and gift it with the opportunity to implement the plan. Starting again would mean having a new procurement process.
We face a choice. I see no scenario in which rural Ireland will prosper without access to high speed broadband. The motion and Sinn Féin's amendment state rural Ireland must wait another three to five years before it can have access to this technology. The reality, as Deputy Howlin admits, is that it is a transformative technology that will change the face of health delivery and education. The Deputies who are advocating that we start the process all over again are advocating for people who live in rural Ireland to be second-class citizens who must wait in line when the technology is moving so fast.
I will go back over a little of the history of this project. In July 2015 the former Minister for Communications, Energy and Natural Resources, Alex White, engaged in a consultative process on what the model should be. He considered a number of options, including a public utility, as Deputy Howlin is advocating today. He also considered an option in which the State would own the asset throughout and there would only be a concession for five years. A commercial stimulus, gap-funded model was also considered, as was a concessionaire agreement, under which ownership would revert to the State after 25 years. The then Minister ruled out a public utility, a State-owned asset which would be owned throughout the process, and narrowed down the options to either the commercial stimulus model or the model under which there would be a reversion to the State after 25 years. That, in turn, was referred to an ownership sub-group which consisted of the National Treasury Management Agency, NTMA; NewERA; the Department of Finance and the Department of Public Expenditure and Reform, with which Deputy Howlin is very familiar. KPMG Group was adviser to the group. A very detailed evaluation followed the public consultation that had occurred on the model that was to be picked. In 2016 the then Minister for Communications, Climate Action and Environment, Deputy Naughten, came back to the Government and recommended that we follow the commercial stimulus model. The reason was that it would be better on cost and non-cost grounds and because of how the capacity of the add-on to the existing privately owned network could best be delivered to the advantage of those who would use it with the least risk to the State. As the reports have been published, people can view how the decision was taken.
Far from it being an ideological view of Fine Gael, as the Labour Party seeks to portray it, it was an iterative process in which various options were considered. They included the wholly-owned public utility model, the gap-funded model, the concessionaire agreement and so on and a decision was made that the best option was to go with the so-called gap-funded model which would seek to stimulate the commercial sector to do something that it was not otherwise going to do.
Deputy Howlin said the then Minister unilaterally removed 300,000 premises from the process. The reality is that, if one is to go the State aid route, it must be on the basis that the commercial sector is not willing to deliver.
We were always going to have to provide State aid if rural Ireland was to have access to high speed broadband. An absolute condition of delivering State aid was that there had to be an opportunity for private companies to put up their hands and offer to deliver it commercially.
That is why the then Minister took the decision. It was not a decision on which he had an option or a unilateral decision he plucked from the back of his head. It was a decision taken because State aid was needed to deliver the process. It is important to bear in mind why this option was chosen. What the State is seeking to secure is not a public utility of the sort we could have considered many years ago before Telecom Éireann was sold. The telecoms network is not a publicly owned asset, it is privately owned. That was a decision taken many years ago and many would say it was a bad decision.
There is a good case to be made that it was a bad decision. The reality is that the State needs to provide, with State support, access to high speed broadband in the most cost effective way possible. We have to rent 1.5 million poles and 15,000 km of duct. We need a company to string fibre along that private network in order to reach those who would otherwise not be reached. That is the reality. The asset being developed by National Broadband Ireland is to deliver fibre to areas that would not have it otherwise and, naturally, the State has to substantially subsidise it. The technology for use in the exchanges in the metropolitan area network, MAN, must also be provided privately through National Broadband Ireland putting in its technology to light up the system. That is what National Broadband Ireland is delivering.
We must be honest. The Deputy is suggesting National Broadband Ireland can charge what it likes, but that is not the case. It is bound by a contract and a regulator. The contract we have put in place has checks and balances built in because National Broadband Ireland is privately owned. That is why we have very strong governance arrangements in place, with key performance indicators, stringent penalties and a claw-back of 40% of the value of the asset if it has value at the end of the process. Members who attended the hearings of the Joint Committee on Communications, Climate Action and Environment on this matter will know that ComReg presented the case that the 25 year old fibre and electronic equipment used by National Broadband Ireland would not have a high depreciation value. The only value will be in the business that will have been built. That is why ComReg was always of the view that there should not be an asset reverting to the State that had been run into the ground, as will be the case. What is needed is an asset that will be kept up to a standard because the company will have a continuing interest in delivering a service to rural Ireland and maintaining it to the highest quality, future proofing it, adding new technology and pushing it from the figure of 30 Mbps that we sought initially when Deputy Howlin and I were in government together and looking for this to 50 Mbps. We are offering and delivering a future-proofed approach with this initiative.
It is simply not true that there were cheaper alternatives. At every hand's turn, we looked at the alternatives the Deputies are now advocating. They were looked at after Eir exited the process. We looked at having a universal service obligation and utilities such as the ESB. We looked at all of the options and one would have had to scrap the process and start again. There would then have been another procurement process of three to five years in going down those routes.
There was no expectation that other options would deliver at a lower cost. The ESB was in the process but dropped out of it because it did not believe it would be as competitive in delivering with its network as could be delivered using the rented Eir network. It had every opportunity. People were not excluded. The Deputy is correct that the EU does not preclude a public utility from delivering broadband. Any utility can do so but this approach was taken.
I strongly recommend to the House that we continue with the process. We have gone through a competitive dialogue. We sought the best technology and we got it. We sought the best approach and are building the infrastructure on an existing network to keep down the cost. We have integrated it into the existing telecommunications network. Rural Ireland will grow with the technology and will have full access to a national technology, which is why this is a national programme. At every hand's turn, we re-evaluated the process, in accordance with public expenditure rules. None of the options for which Deputies now advocate was better but instead they had the added disadvantage that they would push the whole process back to the start.
That is the choice we have today. Either we decide we will provide national broadband and give rural Ireland access to this asset or we say there will be another report, another assessment and start from scratch all over again.
There are people who would love to watch the debate online at home, at their business or on their computer today but they cannot because their Internet speed cannot support streaming. That is the reality in 2019 but it is entirely unacceptable. It is despite all the lofty rhetoric, cast-iron promises, the debates going back to 2011 and the long-held concerns about costs, bidders and tendering processes. The Minister spoke about not being able simply to gift the tender to a State utility but the irony is that under Fine Gael, a suspicious gift that is shrouded in concern has been given to a venture capitalist in New York, which all the reports have underpinned, even though it could have given it to a public utility. Hundreds of thousands of homes throughout the country have nothing but there have been dozens of consultants’ reports, even more unminuted meetings, a ministerial resignation, countless missed deadlines and overspending on a level matched only by the national children’s hospital. The net result is no proper broadband service and a deeply held distrust that the Government will finally deliver for rural Ireland. Fianna Fáil will support the Labour Party's motion.
The report by the Oireachtas Joint Committee on Communications, Climate Action and Environment is important work that clearly highlights the utter failure of the Government and its predecessor to deliver on broadband. In addition to the motion, which emanated from the committee’s report, it is important to note some of the other important findings not mentioned. They include an external independent review on whether the current proposals and the costs of the national broadband plan are the only viable option at this stage; the need for a new cost-benefit analysis; and an update on the Smyth review, which examined a raft of issues with the national broadband plan. Considerable information has come to light since the review. The committee’s report also called for the update to be given within a month of its publication in August. Like the people in rural Ireland, still we wait. Likewise, we are still waiting for action from the Minister following motions tabled by Fianna Fáil regarding the plan .
We have all lost count of the number of promises we have heard in respect of broadband. In 2011, we were told high-speed connectivity would be rolled out to 90% of homes and businesses by 2015 but a year later, it was to be 100% of homes and businesses by 2020. In 2016, there was another commitment, this time that 85% of the country would be covered by 2018. Most recently, we have been told a contract will be signed by Christmas. After so many promises, it seems the people of rural Ireland are not the only ones who are sceptical and running out of patience. The private sector, too, no longer believes the Government. Imagine has announced plans to cover 234,000 of the 540,000 premises in the intervention area, while Eir has announced plans for 80,000 premises. The Government intends to allow National Broadband Ireland, NBI, to lay fibre in the same spots, which means the Government will pay Granahan McCourt to overbuild past 300,000 homes where fibre already has been laid by commercial operators. Whatever about the inherent lack of wisdom of that decision, it will have clear state aid consequences the Government has ignored and that it contradicted in its argument in response to the motion. As it stands, NBI will provide just €220 million, comprising €175 million in equity and €45 million in working capital, for a project that will cost €3 billion to deliver. Despite claims to the contrary, the State holds all the risk. NBI can afford to walk away within a decade and will recoup its money within seven or eight years, carry little risk thereafter and retain full ownership.
As the communications committee found, there is no justification for the resulting network to be owned by the minority investor instead of the majority investor. When the Government has previously spoken about ownership of the network, it stated it was merely a wire on somebody else’s pole and some brackets. It is far more than that. The Oireachtas committee indicated it would be worth approximately €500 million to the consortium. It concerns potentially 400,000 wholesale customers, jobs in rural Ireland and is the result of massive investment on the part of the State. Fianna Fáil recognises the strategic value of broadband in areas commercial operators will never cover and that the network should be retained.
I will conclude with the stark warnings from the Department of Public Expenditure and Reform, which must be heeded. I implore the Minister, Deputy Bruton, to have a word with his colleague, the Minister for Public Expenditure and Reform, Deputy Donohoe, whose Department is worried about a raft of aspects of the plan, including cost, affordability, value for money and risk. Officials from that Department have labelled the cost-benefit analysis on which the Government has based its decision as “not credible". The protracted history of the national broadband plan is a case study of the Government ignoring clear warning signs. It appears the warnings of the Department of Public Expenditure and Reform, too, have been ignored.
Perhaps the best indicator of how likely it is the Government will deliver the national broadband plan is the funds that have been made available, and how much are needed. To date, the funds required to deliver the national broadband plan have not been set aside. An additional €1.3 billion must be found in the coming years, over and above the €800 million allocated for the plan. Despite the promises, the Government has not done that. It is bizarre that it claims that the roll-out will soon begin, given that the necessary funds have not even been put aside. The Minister, Deputy Bruton, must urgently clarify the Government’s plans to fund the contract he intends to sign.
There is a sense of déjà vuabout the debate. In the short time during which I have been a Deputy, we have had numerous discussions on the matter. Since 2011, when the previous Fine Gael-led Government assumed office, the first promise was made, and here we are almost in 2020. Two themes have emerged. The bill keeps multiplying but not a scrap of fibre has been laid under the contract, which is not yet even in place. I, along with many colleagues on this side of the House, have highlighted the wastefulness, the dogged delays, the obfuscation, as well as the failure to grasp the nettle in respect of the issue and to examine the ways the process could be completed without having recourse to the current arrangements.
I am the Vice Chairman of the Joint Committee on Communications, Climate Action and Environment and during the summer, we scrutinised and studied the proposal in detail. Without outlining all the recommendations of the committee, it made more than a dozen recommendations for direct action that arose from detailed scrutiny of the proposal. None of the recommendations was to endorse the tender or the Government's plan, and in fact, endorsement was rejected by a majority vote of the dedicated Oireachtas committee tasked with scrutinising the tender. To give a flavour of the findings of the committee, we noted that the State proposes to throw €3 billion at a consortium, or what appears to be a finance house with a couple of subcontractors hanging off it, with no proven track record of delivery of broadband or other infrastructure. While I carry the flag for no particular bidder, this is at a time when Eir has appeared before the committee to tell us it could have delivered the project for less than €1 billion. If nothing else, therefore, we are paying treble for a project when there has not yet been a line of fibre or even a duct yet dug. The entire project has been obfuscated, misapplied and mismanaged from the outset, yet nine years later we are no closer to a decision.
All the while the interminable negotiations and the unseemly tender business have been progressing, the technology has been advancing. The very purpose of the tender has now been called into question. While these interminable negotiations have been ongoing, the private sector has been penetrating those areas of its own accord with different technology mixes. Firms have rolled up their sleeves and got on with it. A few moments ago the Minister talked about the 540,000 houses still to be connected. A previous Minister would have talked about 800,000 homes to be connected. Perhaps the next Minister will tell us about 300,000 houses, and so on ad infinitum. I am not sure what the final number will be but it is clear that the number of homes to be targeted by State intervention is decreasing at exactly the same time that the cost of that intervention is multiplying exponentially. On the matter of cost, we know the views of the Department of Public Expenditure and Reform, as my colleagues have already mentioned. Mr. Robert Watt has done the State some service by putting those views on record. I have commended him in the committee and I commend him again tonight on stating on record that the cost-benefit analysis does not stack up. This project could break the bank, especially when added to the children's hospital and all the other wasteful and wanton projects commissioned by this Government.
Regarding the raw figures, I note that Imagine Communications Group is now posing a challenge. That group has now rolled out 5G solutions through alternative technologies. It is well documented that Eir took 300,000 homes out of the group of 800,000 because it could do so. Every step of the way, a new provider with a new system and a new technology comes into the intervention area and offers to do it commercially, saying there is no need to throw hard-earned State money at the problem when other solutions exist.
We have missed the opportunity to take positive practical steps along the way. There have been many different initiatives and the Minister's predecessors and the Department have formed multiple task forces. There have been three different task forces on the delivery of rural broadband and mobile telephony, which is a related concern. There have been many practical recommendations, very few of which have actually been enacted. Each Minister seems to come along and reheat them as if in a microwave, take the report out again a year later and announce it to great fanfare without actually doing anything about it. I have drafted legislation which tackles many practical aspects of these issues, such as planning permission requiring fibre to the doorstep rather than the roadside. Ducting is so expensive to lease from the likes of Transport Infrastructure Ireland that it is actually cheaper for homeowners to dig up the road themselves than to hire ducting, even within two State agencies. I refer to absurd anomalies, conflicting local area plans, arcane planning processes and the lack of a streamlined fast track for this kind of infrastructure. These factors all combine to make it more difficult for the private sector to get into the market yet it is doing so anyway, more quickly and more cheaply than the State infrastructure, which has yet to pass "Go".
I will make one final point before I conclude and yield to my colleagues. My party passed a motion on this 18 months ago and I introduced legislation on this two years ago. There have been multiple attempts to tackle these issues on this side of the House, through legislation, Private Members' motions and other methods. We have all heard sorry sagas from all sides of the House about voting in the last few days. However, it is beyond doubt that the Government has debased the voting system. It has done a disservice to democracy by ignoring every motion, vote and Private Members' bill that has been introduced from any other side of the House. That is a disservice to democracy.
Delivery of rural broadband will be one of the major failures of the Government. The overspend could be as high as €3 billion, and what the State will own at the end is extremely questionable. This will match the huge overrun on the national children's hospital and it will cause many capital projects around the country to be delayed, with some ultimately abandoned. My own constituents in Tipperary are concerned that the project at St. Patrick's Hospital, Cashel will be seriously delayed because of these overruns. It must be asked if the delay in providing acute mental health beds in Tipperary, which were promised by the Minister on numerous occasions, was caused by the massive project overspend I have outlined.
Last month the Taoiseach announced yet another delay to the broadband plan as it emerged that commercial operators rolling out products in the intervention area had queried the State subsidising a competitor. Even if the contract is signed by Christmas, not a single metre of fibre will be rolled out in 2019. This stands in stark contrast to the Government's previous commitment that 85% of premises would be covered by 2018.
Our position on the roll-out of broadband is clear and simple. High-speed broadband should be provided to the intervention area as quickly as possible, to the same standard as is commercially available in other parts of the country, at the same cost to consumers as elsewhere and at best value to the taxpayer. The Government cannot deny that rural Ireland is not benefiting from any perceived growth in the economy. On the contrary, this Government has introduced policies that have actively damaged economic growth in rural communities. That is why access to broadband in rural areas will determine if the trend of rural stagnation overseen by this Government can at last be reversed. The provision of high-speed broadband in rural communities is no longer a luxury. It is necessary for the survival of rural Ireland.
The failure to deliver the national broadband plan is solely a failure of Fine Gael Governments. It dates back to 2011, when Fine Gael was in government and promised to deliver fibre optic broadband to 90% of homes and businesses by 2015. In 2012 Fine Gael promised to deliver high-speed broadband to 100% of homes by 2020. In 2016 Fine Gael again committed to delivery by 2020 and in May of this year, it opportunistically made a further announcement before the local elections. As yet, a contract has not even been signed.
I have some questions for the Minister and I would appreciate straight answers. When will this contract be signed? When will the roll-out of this infrastructure commence? When can we tell the people of rural Ireland they will have their long-awaited high-speed broadband, which Fine Gael started promising when it came into government in 2011 though nine years later not one single metre of fibre has been rolled out? It is not acceptable. We are asking for very simple answers. Rather than kick the can down the road, I ask the Minister to give me a straight answer. When will the contract be signed or will it ever be signed? Is it just another case of sending the fool a little further? That is what it feels like on my side of the House.
Broadband is an essential tool for everyday life but many rural communities are without access to adequate broadband in 2019. This is despite Fine Gael's promise to deliver broadband to everyone by 2015, the first of many broken promises. That was four years ago. The national broadband plan has failed utterly. A contract has not even been signed with a provider. Once again, Fine Gael is hoping to announce, announce and reannounce while failing to deliver. The deadline keeps moving. Some 85% of homes were supposed to be connected by 2018. That commitment has not been delivered. We know now that not a single metre of fibre will be rolled out in 2019 but nobody is surprised. There is yet another delay. Why is rural Ireland left at the back of the queue by this Government time and time again?
People can see the lack of local services and investment and the impact this has on their lives and for themselves. It might come as a surprise to the Minister that the north-west region has been downgraded to a region in development by the European Commission while the rest of the country is considered developed. We are now officially a developing region in a First World country in 2019. There was no alarm on the part of the Government, no sense of urgency and no reaction whatsoever. Where is the Minister's sense of urgency in addressing the infrastructure deficit in Mayo and the north west? How much longer are we supposed to wait for the Government to get its act together?
The plan was initially intended to cost €800 million, which for everybody outside of Fine Gael is a lot of money. However, as with every other major capital project managed by Fine Gael in government, there have been massive overruns and the Government has spent and spent. Fine Gael has basically lost millions of euro of taxpayers' money because it simply cannot stick to budgets or properly plan capital projects. We now need an additional €1.3 billion to roll out a project that was supposed to cost €800 million. That is more than double the initial cost, and more than the entirety of the fiscal space available to this country in 2020.
It is a colossal overspend that Fine Gael considered to be nothing. Is there no alarm in the Government benches at this massive reckless overspending once again on a major capital project? The Taoiseach told the House that this will not impact on services and will have no budget implications. How is that possible? How can the Government overspend by €1.3 in the coming years without having any implication on services? Is it planning on pulling the extra €1.3 billion out of a sock somewhere?
We get the same line with the national children's hospital, another major capital project that has gone millions of euro over budget. Initially supposed to cost approximately €650 million, we now know the cost is €1.7 billion and rising. That is an overspend of €1.1 billion. It will be the most expensive hospital build anywhere in the country. It speaks to the fairy-tale economics practised by Fine Gael, the massive overspends and telling the country, "It's okay. It's not our money. We'll spend it anyway."
We can see the impact of this overspend in services throughout the country. The Minister needs to do what he needs to do to ensure this project gets signed and comes in on time.
Thank you a Cheann Comhairle; you are very kind, not to mention my colleague.
We support the main thrust of the motion and thank the Labour Party for tabling it. My question relates to the commitment made earlier this year with an eye on the electorate when a local election was in the offing. The Government conferred preferred bidder status to Granahan McCourt and in doing so gave it almost carte blancheto provide a contract to be signed by both parties. The Taoiseach, as is constant during this whole saga over recent years, made a commitment that it would be signed in September. We are now in October and we are told we are not near signing stage.
I have asked this question of the Minister for Public Expenditure and Reform and have yet to get an answer. In the event of the Government not being in a position to commit to a contract, what cost will accrue to the State for having conferred preferred bidder status to one party?
I am sharing time with Deputies Stanley and Fitzmaurice.
The Minister was disingenuous in his opening remarks when responding to the Labour Deputies. He said my party and other Opposition parties were treating people in rural areas of Ireland as second-class citizens; nothing could be further from the truth. Everybody in this House wants people in rural areas to have proper broadband. I remind him that it was not my party that closed post offices, Garda stations or community services in villages. That was down to his party.
He also claimed the Opposition was being irresponsible, but it is the Minister who is being irresponsible. Essentially, he is saying that an expensive, flawed and compromised process should proceed regardless of the outcome and regardless of the cost. He is saying that because we have gone so far despite the concerns of the Opposition, come what may and regardless of how much it will cost the taxpayer, the Government is going ahead with this. That is not responsible; it is highly irresponsible.
The Minister also claimed, as the Government always does, that there is no alternative. Any number of alternatives have been debated in this House and in the Oireachtas Joint Committee on Communications, Climate Action and Environment which published a report citing many of the options the Minister could consider.
In the end the Government came up with a design, build, operate and own model that has been completely discredited by numerous experts and by the Oireachtas Joint Committee on Communications, Climate Action and Environment. In his contribution, Deputy Howlin quoted the analysis of the plan by the Secretary General of the Department of Public Expenditure and Reform. I also want to quote from a letter he sent to his counterpart at the Department of Communications, Climate Action and Environment. In a letter he wrote in April 2019, he stated:
Having expressed our concerns on a number of occasions at this stage in relation to the affordability and value for money of the proposed contract for the National Broadband Plan, I wish to re-emphasise one further time this Department's fundamental concerns in relation to the unprecedented risk that the State is being asked to bear in the event that the current NBP contract is recommended for approval by Government.
In this letter the Secretary General of the Department of Public Expenditure and Reform - not the Labour Party, Sinn Féin or anybody else - is saying there is a risk to the taxpayer and it is not the best model. That has happened on the Minister's watch; it is his decision. I also agree with Deputy Howlin who has said this is ideological. The Government had a number of options and decided not to choose them.
Many of the providers who had been in the bidding process appeared before the Committee of Public Accounts. They also talked about the origins of this process and its failures which led to some of them dropping out of the process and led to others not entering the process in the first place. This was an inherently flawed model that was always going to fail. It was always going to lumber the taxpayer with an enormous cost while not owning the infrastructure at the end of it. That is on the Minister's watch. We will not continue to support this simply because Fine Gael made a mess of it. That is not a good enough reason to throw good money after bad.
I welcome the opportunity to speak on the motion. More than seven years ago the Government went down this cul-de-sac with the national broadband plan and we are no further on. The Government has spent €26 million on one tranche of consultants' fees alone without even a metre of cable being laid. It is a farcical situation and reckless in the extreme. We have wasted public money. Any progress made by the private companies, Eir, Vodafone or Imagine has been in spite of Government's plans and actions. The Government has failed rural areas with this national broadband plan.
In Laois, 12,720 homes are still waiting for broadband and the number for Offaly is similar. Some 11,500 people commute from Laois every day to go to work. Some of them could work from home if they had broadband and the same is true for those in Offaly. For the sake of job creation, carbon reduction, better community and family life, we ask the Minister to consider taking a step back from the plan and realise that it is a reckless squandering of taxpayers' money.
I remind the House that the plan is to give €3 billion of taxpayers' money to an American investor with little or no experience in broadband or telecommunications. It is economic madness. The Government needs to recognise that its plan has been banjaxed for a long time. It is obvious to everyone that the plan is on the road to nowhere.
The Department of Public Expenditure and Reform sounded warning bells in the strongest terms possible. I served on the Oireachtas Joint Committee on Communications, Climate Action and Environment for three years. That committee went through this painstakingly and recommended clearly that the Government halt the process it is going through and change tack to doing a public model. There is only one beneficiary of this so far and that is the consultants. If the plan proceeds the beneficiary will be the private entity with which it finished up.
Our amendment proposes that the Government approaches the ESB, a State-owned utility company with a proven track record. It has the infrastructure connected to every home in the State. It is a utility that is already in the broadband game. It is in a position to start rolling out this. We need Government to re-engage with it.
The issue of the state aid rules and the 300,000 picked out by Eir damaged this process as I said on the day it was announced. I asked and I again ask for a copy of the European Commission ruling on state aid at that meeting. I asked for the minutes of that meeting involving Government officials. I still have not received those minutes. Allowing any one party to cherry-pick part of a public project can make it economical for it and that is what happened here. There was a clear case for not allowing that to happen.
Since 2011 we have been hearing about broadband, seen programmes on television and still it is no different. The Government has failed the people of rural Ireland to put it very bluntly. Now it must do one thing or the other, for the simple reason that people are fed up hearing about broadband and I commend Deputy Sherlock and the Labour Party on bringing this motion in. It is approximately our 20th motion. We will all vote tomorrow and what will happen, damn all. We will not have broadband this Christmas or probably next Christmas because the will does not seem to be there.
Whoever wrote this contract or started agreeing it would want to go to a mart with a farmer because anyone who ever got paid to do something he or she did not do is very unusual. If Eir goes down the road and puts in broadband where the other company is supposed to do it, the other company will get paid for doing it, even though it never went near it. In any economics, that does not stack up. We can keep on about broadband. We should own the infrastructure, we should not be giving an open cheque to somebody. It is going around in circles and we are getting nowhere.
We need to do one thing or the other because it is now heading into 2020. For nine years, the Government has presided over this mess of promises to the people, no more than many other things, and never delivered. The people of rural Ireland have lost faith in the Government in the line of broadband so it should do one thing or the other and be honest with people. If it is going to sign a contract it should get on and do it and if not, it should come out and say so and let us go to the polls and face the people.
The national broadband plan has been so well and often discussed in the House that it is very interesting. For a long time I had been happy to go along with the Government thinking that at least we would get broadband at some stage to the people of rural Ireland. I am beginning to doubt that will happen, especially when I see Eircom going about rolling out this so-called expansion to meet the customers it was given by the previous Minister at a late stage in negotiations. We get calls from members of the public asking why is it not being extended. It is because of the fiasco at the hands of the Government. Eircom will deliver so far down the road then stop and say that it is for the national broadband plan from that point on. The calls move around from place to place as Eircom rolls out its process. It is a fiasco and while I imagine it is hard for the Minister to stand over it, sometimes I wonder.
This fiasco started in 2000 or whenever it was that Fianna Fáil privatised Telecom Éireann. That is the crux of the problem. We have been dealing with that privatisation ever since. We know that ordinary members of the public got shafted then because they were encouraged to buy shares that collapsed in price. Then we come to this Government's national broadband plan. The Government put it out to tender and got a response from private bodies, Eircom, the ESB and Vodafone came together as SIRO, and the third project came in as well. The Minister then turned around and gave the cream of the crop to Eircom. These are the places Eircom should have been connecting but did not bother its arse because it knew nobody was going to come after it. When it became obvious through this tendering process that it might not get those places, it said they were within its sphere and that it would supply them anyway. Therefore the Government rolled over and gave them to Eircom. Then the ESB and everybody else pulled out and the whole project collapsed again. That led to the situation we are in today and to this motion.
The Labour Party motion probably makes sense but at this stage we will obviously have to stop the whole process, cancel it and throw it out, retender and do it in such a way that it remains in public ownership. That may be fair enough. I welcome the Labour Party's bringing this forward but I wonder if Labour were in government would it do this. I doubt that very much, unfortunately. It is the way we should be going because it is too late at this stage.
The Minister said the EU would not stop a public utility from getting this but that is not the road we have gone down. The Government has gone so far in this process that it is not going to change. That is wrong and the people of rural Ireland would be better served by stopping the process and restarting it. That would make a bigger difference. Maybe we should buy back Eircom because that would be cheaper than the tender that the Government is awarding now to add to the tail of the process. It should just bite the bullet and say the mess was made when Telecom Éireann was sold and buy it back. Then we could deliver broadband that would be of benefit to everybody and we the people would gain from that in the future. It is an ideological problem and question and it certainly would not be in Fine Gael's remit to decide to do something like that, which is the problem. That is probably the only solution to deliver broadband for everybody and keep it in the ownership of the people. Fine Gael will not go down that road but that is the only viable option left.
If it is retendered it will go through public procurement and there will be some weird anomaly of Eircom owning it to a certain stage and the public owning it from another stage and it will be a fiasco. The Government will probably spend the next couple of years working on that, putting together a contract and tendering it for a cost of €5 billion when we should buy Eircom. The owners of Eircom would probably take €3 billion for it. That would deal with the issue.
When will this contract really be signed? People in rural Ireland are asking that question repeatedly. What will the total price of that contract be? How much is the consumer going to pay? They are the three things people in rural Ireland want to know.
While the procurement process has been very complex, during the negotiations for partnership Government in April 2016, we were shocked to find that a contract would not be signed until the end of 2017. Here we are at the end of 2019 and a contract has not been signed. I believe the procurement process has been too complex and flawed and that has been articulated by many speakers this evening. Outsourcing to the private sector with loss of control and ownership is a very serious mistake. That has already been discussed this evening. How long is this going to take? When will the last house in rural Ireland be connected? It could be my house, in six years' time.
Comparison has been made with rural electrification and it is quite different from that. Rural electrification was very important but it required a wire to get into every house. We have the possibility of delivering broadband in a wireless fashion, particularly in remote and rural areas. Undoubtedly, cheaper new technology will come on stream in the next few years. Has that been taken into account in respect of delivering fibre to every house? There are many unoccupied houses in rural Ireland that people do not realise are unoccupied. There are many more that will be unoccupied in years to come, yet this programme is going to deliver wireless broadband to phantom houses. Has the Minister taken that into account? There will be new technologies and new ways to deliver broadband that will be a lot cheaper.
I welcome the opportunity to speak to this motion. As the House will be aware, the importance of the online economy cannot be underestimated. Broadband is a vital resource for business. It provides significant growth opportunities for businesses that trade online and a global market for rural tourism and small artisan producers. It is also an important resource for schools, private homes and organisations.
The Ludgate Hub in Skibbereen is a fantastic facility, with 1 GB of super-fast broadband and state-of-the-art facilities. Outside of this, towns and rural areas in west Cork, including Schull, Goleen, Durrus and as far away as Inis Orga in Bandon are struggling with no, or subpar, broadband. We are told the NBP will take seven years to roll out and will cost €3 billion, but we can take that estimated cost with a grain of salt. Without broadband, expensive electronic equipment such as whiteboards purchased by primary schools and efforts by Age Action to promote computer literacy among the elderly in rural areas, are undermined.
The Irish Farmers' Association has said that broadband is an essential tool for the business of farming but many farmers are still struggling with dial-up connection speeds, never mind fibre broadband. In our cities, we have world-class Internet speeds, but rural areas rank among the worst served regions of Europe. Rural broadband is no longer a luxury; it is a social and economic necessity. With adequate broadband, rural Ireland would become sustainable into the future. It would provide entrepreneurs with an opportunity to remain, providing much-needed jobs and strengthening local economies.
According to the Central Statistics Office, CSO, 11% of the population have no broadband and 89% have some broadband but the majority of them use their smartphones for Internet access. People who built homes in west Cork are being quoted extortionate amounts to connect to the wired grid. There is a universal service fund in America. Congress created a mandatory charge for carriers of voice service and Internet providers. It requires a contribution of a percentage of their revenues for providing these services. This was first implemented in 1988 to ensure affordable access to telecommunications services to help provide Internet access for rural healthcare facilities.
The Government has failed the people in broadband service provision. It also failed the people in regard to mobile telephony service provision. Two successive Governments have failed the people continually on these issues.
People the length and breadth of this country are extremely upset at the failure of Government in regard to the delivery of the NBP. It is important that people who put effort into their work are recognised. In this regard, I refer to former Minister for Communications, Climate Action and Environment, Deputy Denis Naughten, who was a diligent worker and genuinely did everything he could. The people are disappointed because this infrastructure is of vital importance to young, middle aged and older people. It is as important as the electricity, sewerage and water services connected to buildings, be they schools, factories or private homes. Everybody knows the current value and importance of people working from home. The people's arms are tied behind their backs. They are being hindered by the non-delivery of the NBP and the uncertainty that is creating.
To be honest, the Government has made a mess of it time and again. I appeal to the Government to get its act together and do everything it can to ensure broadband service provision for every household. If it was possible long ago to bring electricity to every building and home in Ireland, surely in this modern era, with all the technology and resources we have available to us, broadband can be provided, and on time, to every home and business in the country, particularly in rural Ireland.
It appears it is a case of Dublin has it and to hell with the rest of the country. All this Government cares about is Dublin and the eastern side of the country. Once everyone in these areas has broadband, there is no hurry with the rest of the country; people can wait.
In rural Ireland, landlines are a rarity and mobile coverage is virtually non-existent. There is no coverage on the three roads leading to and from Farranfore airport. Several places around south Kerry, including Cahirciveen, which previously had coverage now have only minimal coverage and households that previously had coverage do not have it anymore.
This Government is rolling out so much that if it was doing anything, every field in Ireland would be covered, but it is not. New technology is coming on stream all of the time. Is the Government up-to-date in that regard? Maybe we could get broadband via satellite or another way quicker, easier and cheaper. Is the Government looking into that? I have previously called in this Chamber for the Government to buy-back Eir because it is critical to the provision of this service. At the rate at which parts of Eir are being sold off, there will be nothing left. Now is the time to make a move and buy back Eir.
I welcome the opportunity to contribute to the debate. In addition to the work of the Joint Committee on Communications, Climate Action and Environment, the Committee of Public Accounts also did work on the NBP and its forerunner the metropolitan area network, MAN, contracts. The main concern is how the State will fund the system and if, when complete, it will be handed over to a private entity. While we initially were told that the cost would be approximately €500 million, the cost has escalated to in the region of €3 billion, which is a small fortune.
As a country, we are, or could be, heavily subsidising the construction of a network that the private sector will own. I refer to an observation by the Department of Public Expenditure and Reform on the draft memorandum to Government on the national broadband plan. It refers to a contingent subsidy for encroachment, but the figures are redacted. I have been told that this is likely to mean that where the provider in place is tasked with providing broadband to an area that later becomes part of the intervention area, the provider will be entitled to a subsidy because of encroachment. The Minister might address that point. If that is the case, we need to know the amount set aside for such a subsidy.
Even though there was always only one bidder, the make-up of that bidder has changed substantially and it is difficult to figure out who exactly is involved. Enet was involved, as was Granahan McCourt. It is worth noting that when Enet managed the MANs contract, several complaints were made about the lack of transparency in pricing. During that time, we had some of the most expensive broadband in Europe, as set out in the Analysys Mason report. Can the State afford to heavily subsidise infrastructure only to hand it over to a private entity, the sole concern of which will be profit margins? What will be the cost of broadband to the people who want to take it up? It is worth noting that the Secretary General of the Department of Public Expenditure and Reform, Mr. Robert Watt, described this as an unprecedented risk for the State given the amount of public funding being tossed around, with no guarantees in regard to value for money. He said he found it difficult to believe that a convincing case could be made for this project. He went on to list a number of key infrastructure projects that would not be delivered as a result of proceeding with the NBP in its current format. This may well impact on rural Ireland. It may be that some projects will not be delivered on foot of the delivery of a service that is way more expensive than it needs to be and that we may not own. We have to look at this in the round. It is unusual for somebody in Mr. Watt's position to be so forthcoming with his views. It is essential we do not ignore that.
Potentially, we are being bounced into something that now looks as though it will cost billions rather than hundreds of millions because we are supposedly too far into a flawed process. The Department has to question itself about how we could have ended up in a situation where there is only one bidder. That does not lead to an optimum outcome. The Social Democrats brought a motion to the House, which was passed, that the national development plan be reviewed. There have been massive overruns on the national children's hospital. The amount projected for the national broadband plan was not anything like the amount it is being projected to cost now. We have also declared a climate emergency and we really need to reconfigure our priorities in that context. We can only spend money once. If this is the amount it will cost, we need to look at the national broadband plan and be honest about what cannot be done if we go ahead with it as proposed.
We got a number of assurances about the amount of information that would be given to the Dáil in advance of signing any contract. What we are hearing now seems to be deviating from that. Can the Minister give us an assurance about what we are going to see? Will there be a Dáil vote in advance of the signing of any proposed contract? I also have a concern about how much due diligence has been done in respect of the entities involved. Should this proceed, we certainly do not want to be back here doing an inquiry and saying we were told this and it did not work out. We have to be given absolute assurances. I hope this motion will pass and that we will have a publicly-owned network. We need to be absolutely assured about the due diligence in respect of the entities involved.
I am from the heart of rural Ireland, Ballynacargy, and I am acutely aware of the vital importance of the delivery of broadband to many hundreds of people who reside in areas like Rathowen, Legan, Ballymore, Drumraney, Carrickboy, Abbeyshrule, Milltown and so many other rural areas. Many in those areas could set up telecottage-type industries and work productively from their homes. I acknowledge the importance of this online infrastructure in sustaining and revitalising rural Ireland. Although it seems it is too late to control the scandalous cost overrun of the national children's hospital, when built, the hospital will at least belong to the people of Ireland. This project for the provision of a rural broadband network is costed at €3 billion despite being originally estimated at €500 million. There is only one company remaining, Granahan McCourt, which is willing to implement the national broadband plan. The deal that this single, monopoly bidder is being offered is incredible. The preferred rural broadband bidder will get its money back within seven or eight years and will carry very little risk thereafter, while the State, which has invested €3 billion, will have no ownership rights. To ensure maximum control and maximum profit for Granahan McCourt, the State has agreed to nominate only one member of the national broadband board that will oversee the delivery of the project. In the light of these figures, it is hardly surprising that the Joint Committee on Communications, Climate Action and Environment recommended that the network when completed should remain in public ownership.
The rural broadband strategy has been dogged by confusion and underestimation of costs since its inception. Providing broadband to low-density rural households is inevitably costly but technology has moved on dramatically since the national broadband plan was formulated. Since Granahan McCourt submitted its tender, two companies, Eir and Imagine, have announced their willingness to provide high-speed broadband to many of the households and businesses that do not have it. Of the 540,000 premises which do not have high-speed broadband, Eir is offering to connect 80,000, while Imagine is offering to connect 320,000. If Imagine can deliver on its promise, only 140,000 premises will remain to be connected by Granahan McCourt, which would result in an exorbitant cost per premises connected and would be unlikely to be commercially viable. The connection costs for these remaining houses would then be so high that few would be willing to pay for the cost of connection. While the Eir and Imagine proposals are based on existing technology, by the time the broadband network is built an emerging technology which does not require a wired network, low Earth orbit, LEO, satellites, may be delivering broadband at gigabit speed globally. They could also play a role in Ireland's national broadband plan. LEO satellites are an emerging disrupter in global Internet communications, which is now progressing rapidly. If it goes ahead with the present broadband plan, the State may be committing €3 billion to invest in technology that will soon be outdated and surpassed.
At the communications committee debate in August last, Fine Gael tried to put through a motion calling for immediate implementation of the €3 billion plan. There is clearly an ideological commitment by the Government that wherever possible, the private sector should be allowed to reap the benefits of public investment. We have seen this with Deputy Noonan encouraging vulture funds to acquire NAMA properties and ensuring that they pay no tax on the profits they are reaping. Fine Gael is an enthusiastic supporter of public private partnerships, PPPs, where the Government bears all the risk and the private company gets all the profit. We have seen this in the case of the Shannon tunnel and the last section of the M3, where the taxpayer must make up the revenues of private companies running these facilities if tolls do not reach a target level. We seem to have learned nothing from the negative consequences of previous privatisations and PPPs. The privatisation of Eircom is now largely blamed for the losses incurred by people who bought shares in the company. A much more serious consequence was the loss of control of the network. Eircom was asset-stripped, sold and resold and today its successor, Eir, owns a network of poles and ducts outside towns. If the national broadband plan goes ahead, the State will have to pay Eir for access to them. This will add hundreds of millions in additional costs to the rural broadband provision, which would not be incurred if the network was still State-owned. Fianna Fáil bears responsibility for that. If the network was State-owned, it could have been expanded as part of the State's strategic infrastructure but Eir and its predecessor, Eircom, were interested only in maximising profits by increasing charges to existing customers and invested very little in the network.
A large part of the cost of this project will be profit for the venture capitalists who are providing some of the capital. When built, the network can be sold to private equity companies and control of vital infrastructure will be lost. As happened when Eircom was privatised, the broadband network can be managed so as to extract the maximum profit from those depending on it. With no alternative supplier, the ball is at their foot. When the M50 was being built, it was known from the outset that it would have to include a bridge across the Liffey valley. I go home that way every evening. The Government of the day decided that a motorway built at taxpayers' expense would have a toll bridge and the tolls on this bridge, instead of being used to fund the motorway, would be assigned to a private company that would fund the bridge. National Toll Roads had recouped its investment in the West Link bridge within ten years and by 2007, it was earning more than the €43 million it had invested in a single year. The State was eventually forced to buy the bridge back at a cost of €1.15 billion from National Toll Roads, which had built the bridge for €58 million. One could not make it up. We are heading the same way with this. The State will eventually have to buy back the rural broadband network from Granahan McCourt for a huge multiple of what the company has invested in it. It is vital that we learn from the mistakes made in privatising Eircom and the fiasco of the West Link bridge. We must retain the rural broadband network in public ownership.
The argument I heard the Minister make that revisiting the Granahan McCourt plan would set back provision is specious. If it had been known ten years ago that the cost of building the national children's hospital would eventually be ten times the original estimate, nobody would have accepted the argument that building should commence at once regardless of the escalation of cost. The current proposal for rural broadband should be subject to a rigorous cost-benefit analysis and whatever scheme is implemented, ownership of the network should remain in the hands of the taxpayers who will bear all of the risk and a substantial part of the funding. I am strongly fortified in my viewpoint, which no doubt is that of my party, that while PPPs were once the way to go, especially in the context of a severe economic downturn when Exchequers worldwide were empty, this no longer holds true. There has been a significant turn back from PPPs as people and governments realise that they are a way of having the taxpayer carry all of the load and all of the risk while the developers are the non-risk takers scooping all of the profits. If governments across Europe are shying away from PPPs, we should wake up, smell the coffee and join the band.
There has been great frustration expressed in the context of this debate. I welcome the support that we have been offered from colleagues around the Chamber. There is very strong support for the Labour Party motion, which is very welcome. The history of the whole thing has been outlined. We now have €3 billion of infrastructure which will be in the private ownership of a venture capitalist organisation that does not have expertise in the area, a contract not yet signed and approximately 1.1 million people in Ireland who are suffering from an inequality because they do not have access to broadband. A number of questions have been already asked. I will reiterate some of them and ask some more myself. There is a serious lack of public information on everything that has happened. Why was the full concession model rejected by the Government?
The Government has never actually explained why it just went for the gap-funding model and did not accept the full concession model which was on the table in 2016.
We have not received a proper explanation as to why 300,000 homes were allowed to be squandered to Eir - that may not be the right word to use-----
-----whereby it was allowed to cherry pick them. Essentially it meant that servicing the critical mass remaining of what the State had left to divvy out would not be cost-effective. There has also not been an adequate response to the advice of the Department of Public Expenditure and Reform. Deputy Catherine Murphy has referred to the fact that some of this advice was blacked out, thus preventing access to public information, although we really know why the view of the Oireachtas committee was rejected, which seems to happen all the time with the Government. The majority view here no longer seems to matter. We have not received a proper answer to the question as to why the Government continued to proceed at a time when there was only one bidder left. Essentially, it was not a competitive process, with bidder being a venture capitalist organisation. We have not received adequate answers and are left with valuable State infrastructure in private hands.
Various speakers have referred to the Eircom debacle, from which we should surely have learned some lessons, and also from overspending in many other areas. I certainly want to refer to the overspend on the national children's hospital project, as a vital project in my constituency will obviously be affected by it, the 96-bed unit at University Hospital Limerick, the most overcrowded hospital in the country. It matter when there is an overspend because other projects suffer. That is just one example that we cannot afford to allow linger any longer. No adequate explanation has been offered as to why the Government continued to proceed down this road and why this vital piece of infrastructure will not remain in State hands. As Deputy Penrose said, we may well end up having to buy it back, but we surely cannot go down that road now. The Government has to consider the fact that we need this vital infrastructure in public ownership.
On ideology, the same is happening in housing provision. We have public land being given over to private companies. That clearly is Government policy when what we should have is the retention of public land in public ownership to build affordable and social housing, but that is not happening either. Ideology is clearly at work.
Gabhaim buíochas leis an gCathaoirleach Gníomhach.
I am struck by the irony as I listen to the debate, given that for the last couple of years Opposition parties have continuously accused the Government of being against, not in favour of, rural Ireland, yet it is the Government that is pushing for the delivery of high speed broadband to every house in the country. The Government just does not understand is a comment I hear regularly. The comment in my head is that it does not want to understand because Opposition parties want to set a certain narrative for political purposes. Fine Gael plans to deliver high speed fibre broadband to every home, farm, business and school in rural Ireland. It wants to do so for very good reasons as it does not believe we can afford to allow the digital divide to continue and there is no cheaper or quicker way to do it. If we were to do as the Opposition asks and change approach, it would be people in rural Ireland who would be left behind without high speed fibre broadband. The Government does not want to do that. Historically, there was a legacy of under-investment in broadband provision by the State since a Fianna Fáil-led Government sold Telecom Éireann in 1999, for which we are still paying the price.
There is no question that the cost of the national broadband plan is high, but the cost and impact on rural Ireland of not implementing it would be even higher and bigger. We need to put the cost of the plan in context. Between 2002 and 2016 the State invested €400 million in the roll-out of high speed broadband. We will have invested €36.9 billion in roads and €10.8 billion in water infrastructure between 2002 and 2021. It is vital that we now act to counteract the historical under-investment, even throughout the biggest boom the country has ever seen in the Celtic Tiger era. The Government of the day decided to sell Telecom Éireann, leaving it to the private sector to roll out high speed fibre broadband, but what did that sector do? In order to make a profit, the companies involved cherry-picked the most populated areas. They went for the towns and cities, leaving rural dwellers behind. There are 540,000 premises, with 1.1 million people living in them. We have the maps on which the 540,000 premises are clearly marked by the private sector, to which it will not deliver a service.
There is a very good reason we need the national broadband plan. We need to progress the conversation. Broadband provision is not about Netflix but about having a decent quality of life. Because there are comparisons, people talk about broadband provision in the context of the rural electrification scheme. People initially thought the purpose of the rural electrification scheme was to bring light to their houses. They never envisaged the myriad uses to which electricity could be put, with sockets all around our houses to power an array of electronic devices. They simply thought the purpose was to bring light to their houses and yards. Similarly in the case of broadband, we cannot identify all of the uses to which it will be put in the future, but in respect of the rural electrification scheme, nobody in the country would dream of living in a house without electricity. Similarly, we are not far from the time when no one will dream of living in a house without high-speed fibre broadband which is needed for online shopping, remote working and e-health services. We will very quickly move into a space where it will become a necessity, not a luxury. If we do not invest to ensure every home in rural Ireland has access to high-speed broadband, we will see the abandonment of rural Ireland, something about which many in this House are genuinely concerned. That is why we have Project Ireland 2040, the biggest investment by the State in rural Ireland, through the town and village renewal and urban and rural regeneration schemes, of which broadband provision is a key part. We do not want people to move from small rural communities to live in villages and bigger towns because they are the only places in which they can have the quality of life in their home that they seek.
What is contained in the motion would set us back a mile, drive the digital divide and leave those living in rural Ireland behind. The opportunities are in having flexible remote working arrangements and smart health programmes, with online GP, nursing and medical monitoring services, particularly for older people who live in isolated areas. The opportunities are also in having cloud-based and connected devices, smart farming programmes for those involved in the agriculture sector, digital learning programmes, reliable electronic payment and booking services, as well as online shopping which could be seen as a luxury but which in many ways is a necessity for so many. The point is that for too long we have had a muddying of the waters, with the Opposition trying to state this is an awful thing to do, but this is the right investment for rural Ireland. The biggest mistake would be not driving on with it. I cannot stress enough that at its special meeting in September the Fine Gael Parliamentary Party unanimously passed motion stating we needed to see delivery of the national broadband plan as soon as possible. As chairman of the party, I back that motion and want to see the plan delivered as soon as possible.
Having listened to the debate it is clear that there is support on all sides of the House for delivering high speed broadband to the 1.1 million people living in the national broadband plan intervention area. My fellow Clare man, Deputy Harty, asked three questions. He asked when the contract would be signed? I hope it will be signed before the end of the year. He asked what the cost would be? It will be €2.14 billion, plus VAT, with a contingency figure of €480 million. He asked what the cost to the consumer would be? It will be the same as that of the retail offering in the commercial area, with a €100 connection fee for retailers.
Access to a high speed broadband service is important tor everyone in Ireland, no matter where he or she lives. High quality, reliable connectivity allows us to harness the economic and social benefits of participating in a digitally-enabled society. When it comes to the availability of high speed broadband in Ireland, there is a growing urban-rural digital divide. The national broadband plan aims to eliminate that digital divide and ensure it will not re-emerge in the decades ahead. The clear commitment of this and the previous Government is that everyone in Ireland should have access to high speed broadband. The Government has encouraged investment by the telecommunications sector.
Commercial operators have invested more than €2.75 billion in upgrading, expanding and modernising their networks in the past five years. In 2012 fewer than one third of premises had access to high speed broadband. The investment made since by commercial operators has resulted in three quarters of the population having access to high speed broadband, which is very welcome. It makes it all the more important that we move ahead without delay with the national broadband plan to make sure those in rural areas will not be left further behind. Without the national broadband plan, many homes, schools and businesses will be left behind in a two-tier digital society.
While there has been a lot of focus on the ownership question, the reality is that the decision to divest the State of its telecommunications infrastructure was taken 20 years ago. Against that reality, the national broadband plan cannot result in a new State-owned network emerging. Instead, connectivity will be achieved by leveraging existing infrastructure to the greatest degree possible. That is the most efficient and cost-effective way of bridging the connectivity gap. Connectivity will be delivered by deploying fibre on poles and in ducts owned by Eir or the ESB and by locating equipment in exchanges owned by Eir or the MANs. NBI will own fibre cable and electronic equipment deployed on rented infrastructure. There will not be a single network owned by a private company or the State.
The value in the national broadband plan to the State is that it guarantees the provision of a future-proofed, high speed broadband service for 1.1 million people who would otherwise be left behind. The gap-funded model will achieve this, while incentivising NBI to invest continually to improve the service. There are 1.1 million people, 56,000 farms, 44,000 businesses and 674 schools waiting on the plan which will ensure those living and working in the intervention area will be able to avail of the many and varied benefits of high speed broadband. It will enable the creation of new enterprises and businesses to expand. New remote working opportunities will increase the talent pool available to employers. High speed connectivity will create new opportunities for education, smart farming, tourism and health. It will also be critical in promoting more balanced regional development and achieving the goals of the climate action plan. High speed connectivity for all is a goal we share. Delaying the national broadband plan, or steering it off course, would serve only to delay achieving this objective. It would disadvantage those living and working in predominantly rural areas covered by the State intervention area. We have spent the time necessary to consider the strategy and develop the plan. This is the time to move forward to the delivery phase. It is time to tell the 1.1 million people living and working in the intervention area that we will not accept a digitally divided Ireland. I urge the Members of this House to send a clear signal to them that the national broadband plan should proceed to the deployment phase without delay, bringing much needed connectivity to rural Ireland. The time for talking is over. The time for implementation is now.
I thank my colleague Deputy Sherlock for bringing forward this important motion and allowing us once again to debate the pros and cons of this vital national resource. I thank all of the speakers who contributed, particularly those from rural areas, who said, as we all agree, that broadband was totally necessary to be able to lead a modern life, run a modern business or farm, have a modern family home and allow children to use the resource. There is no disagreement on either side of the House on the necessity to have broadband in every community, including, insofar as possible, homes in very remote areas. Obviously, the technology will improve and change. However, it is arrogant in the extreme for Fine Gael Members to stand up with their Independent partners and say they will not review the costing or learn from all of the committee discussions, other discussions and television debates. Who is the man who really says, when he hears costs that he regards as amazing, that he will not review them on the grounds that the money is not his own but that of the public? This is not a sound economic decision.
In modern accounting there is a process called zero-based budgeting, whereby one feeds in all of the data in reviewing the budget to look at everything again. Fine Gael's form of zero-based budgeting is actually zero budgeting because it is stating, with a degree of arrogance, that it does not need to look at the figures and does not care about them. I find this absolutely astonishing.
A really famous quotation from Hamlet reads: "Something is rotten in the state of Denmark." It screams to the high heavens that there is something wrong with this contract. The very respected and careful man with the money, the Secretary General of the Department of Public Expenditure and Reform, has seriously questioned its value. As a senior public servant, he is required to call it out. In the past, somebody such as Deputy Richard Bruton, now the Minister, would have defended a public servant who would have called something out in all honesty as he or she saw it. It is not pleasant for politicians holding office to be told such a thing by civil servants, but it means that, at the least, a serious, detailed examination is required of all that has happened since the figures were first worked out. Changes in technology and the fact that further changes are coming should be considered. It is also a matter of examining the history of assets that are not publicly owned but that are vital to the public for their lives, businesses, schools and community centres. This is a valid and sensible approach. The Government should not be so arrogant as to state it will not go there.
We know from the recent discussions between the Taoiseach and the UK Prime Minister, Boris Johnson, that the Taoiseach has been testing to great effect some of his knowledge of the classics on Mr. Johnson who is a bit of a Greek scholar. There is one statement in the classics that every politician should know, that is, that after hubris, or arrogance, comes nemesis. That is actually what the Government is facing, except by the time it happens it is unlikely to be picking up the pieces. Once again, it will be the taxpayer who will do so. As the taxpayer pays, rural areas will pay on the double for a project that clearly requires re-examination, recasting entry budgeting. I question proceeding given all of what we now know.
In the context of this argument, there has been a lot of discussion about the benefit of public private partnerships. It is an important discussion in Ireland. I have never been a fan of public private partnerships because they are costly and expensive. Very often they cost more than a public investment held in public ownership, as the motion demands. They cost an awful lot more. That is because Governments, including in small countries like Ireland, are very large institutions. They can borrow at a very low rate by comparison with the private sector. With a public private partnership, however, there is a private sector investment vehicle. Essentially, the private sector has to offer a significant return to the investors in the private financial model which costs way above what it costs most governments on the planet. That is the basic problem with public private partnerships.
With public private partnerships comes the ownership model.
The problem with that is that, when the 25 years of ownership under the contract finish, or perhaps even beforehand, a project can be sold off to someone else. We are living in a highly financialised world where the financial model counts enormously in terms of security. The Government has chosen a financialised model. Against all the rules, we know that there were contacts from the final bidders in the project. Initially, there were a number of bidders. For various reasons that I will not recite, they fell away until we were left with just one. We then heard about wining and dining, dinners and contacts, a series of events that led many people to feel that the relationship between the bidder and the contractor - the Government - was too intimate and deeply inappropriate, so much so that one Minister resigned as a consequence. We accept the bona fides of everyone in the House, but there are serious questions about the way in which the contract proceeded. We do not want to commit another couple of million euro to some judge down the road to offer us a detailed evaluation of why this contract was over the top.
Deputy Heydon spoke about the need for broadband in rural Ireland. There is not a person in the country, and certainly not in the Houses, who does not accept that need or does not want it happen. Today, I read the announcement in respect of Strokestown Park House and the further development of the National Famine Museum there by making the most up-to-date interactive technology available for use by adult visitors and, in particular, schoolchildren.
The Fine Gael line is that one should essentially throw caution to the wind, ignore all of the economic evaluations of the project that raise significant questions and just go with it because it is only €3 billion. One way or another, by the time this gets under way-----
The Government should re-evaluate it, reprice it and, above all else and in line with the motion, ensure that this collective investment by the people ends up being owned on their behalf. That is the least that could be expected from a competent Government. I am told that there are further problems with the costing of the children's hospital that we have not heard about in detail yet.
I understood the announcement was to be made in October. We have now been told that it will be made by the end of the year. When we eventually get the final figures, are we just be supposed to lap them up? What the Government is doing is wrong. The Labour motion is a genuine attempt to help the Government to rescue and finance this important project properly.