Rose Conway-Walsh (Mayo, Sinn Fein)
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46. To ask the Minister for Public Expenditure and Reform the types of services that typically make up the costs, other than construction and financing, in public private partnership contracts; and if he will make a statement on the matter. [17725/24]

Rose Conway-Walsh (Mayo, Sinn Fein)
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Under this Government we have seen the expanded use of controversial public private partnership, PPP, contracts in housing, in health, education and other areas. I have previously raised my concern about value for money on these contracts. Today I will focus on the privatisation of services that comes with such contracts. Will the Minister outline the typical services that are privatised or delivered by a private company for 25 years under these contracts?

Paschal Donohoe (Dublin Central, Fine Gael)
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My Department's primary role in regard to PPP contracts is to facilitate the PPP process centrally by developing the general policy framework, including where necessary the legal framework and the capital investment policy framework, within which PPPs operate and by providing central guidance to Departments and other State authorities in that context. PPPs are partnerships between the public and private sectors for the purpose of delivering a project or service. Some of the advantages associated with them are that they allow the public sector to avail of private sector expertise and innovation and that the private partner assumes responsibility for a considerable portion of the risk.

PPP contracts tend to be long-term arrangements, typically spanning 25 years or more after construction. They can be design, build, finance and maintain, DBFM, projects; design, build, finance, operate and maintain, DBFOM, projects; or concession projects. DBFM projects require the PPP company to provide and maintain the asset or infrastructure but not to operate it. This is likely to be used to provide schools and similar infrastructure. In such cases, the public sector will want to use the asset but will not require the private partner to provide the attendant service. In the case of a school, the public sector would employ the teaching staff. DBFOM projects effectively require the private sector to replace the public sector for the duration of the contract. These projects require the private sector to provide, operate and maintain the asset or infrastructure. In the case of a water treatment plant, for example, this would require the private sector to staff the plant to ensure service delivery on behalf of the public sector contractor. Unitary payments are made over the life of the PPP contract, typically 25 years after construction. Concession projects differ from other PPPs in how they provide a financial return to the financial sector. Unlike other PPPs, the private sector achieves its financial return in these cases by levying a user charge on the service.

Rose Conway-Walsh (Mayo, Sinn Fein)
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I thank the Minister. I know what PPPs are. The average PPP contract is procured by the National Development Finance Agency. One third of the cost of the contract is to pay for services that would normally be delivered by the public sector. That could be cleaners in schools, security in technological universities or maintenance of public housing that should be managed by the local authority. These services are privatised into the hands of a single company for 25 years. This is the real area of interest to the companies that bid for these contracts. Will the Government reconsider its approach to more PPP contracts and the privatisation of services? That is the real purpose of these contracts. I do not believe we are getting value for money. Contracting out a service for 25 years is a whole different ball game. We cannot ensure value for money.

Paschal Donohoe (Dublin Central, Fine Gael)
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The concept of privatisation implies that there is a public service being delivered in the first place that is then discharged out to the private sector. As the Deputy already knows, the reason I separated the different PPPs is that we tend to have the public service being delivered for a project that has been built by the private sector. A wastewater treatment plant is a good example. By delivering it via PPP, we got a new plant and we get the staff to manage it. When talking about privatisation, it is not the case that the plant existed in the first place and then the staff were moved from the public sector into the private sector. We are talking about something entirely new: a new asset with new staff to maintain the asset. I assure the Deputy that we always compare and contrast and evaluate whether it is right for the State to go ahead and directly build the project itself through the local authorities and through organisations such as Uisce Éireann, or whether it is better done through a PPP. In some cases there is merit in using the PPP because it allows the State to manage the cost over a longer time period.

Rose Conway-Walsh (Mayo, Sinn Fein)
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There is no transparency around these contracts, even long after the deals have been signed, so we have to ask where the oversight and accountability are. When the Minister had this portfolio in 2017, the IMF recommended Ireland reduce the sums Departments could spend on PPP contracts. Departments are not supposed to spend more than 10% of the capital budget, as the Minister knows, on annual PPP contract payments. This level has stayed the same and has not reduced. The IMF recommended the Minister restrict the areas for the use of these contracts, such as to traditionally social areas such as healthcare, education and housing, and the opposite has happened. Why, therefore, has the Minister chosen for the past seven years to ignore that recommendation from the IMF and why has the Government drastically increased the use of PPPs?

Paschal Donohoe (Dublin Central, Fine Gael)
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From the information I have to hand, it does not appear to me that there has been a drastic use, or increase in the number, of PPPs. In the case of, for example, the social housing PPPs, across two different bundles they relate to 1,000 homes nationwide, which is a relatively small share of the total level of social housing that is being delivered. The majority of it is being delivered either directly through local authorities or through approved housing bodies, AHBs. In various policy areas, it appears the use of PPPs, especially for housing, forms a relatively small share of the overall level of housing the State is involved in delivering.

As I said, the reason PPPs are used is that they allow the State, by spreading its payment over a longer period for building, for example, a group of houses, to build more and to achieve more in any given year. That is the only reason it is done.