Seanad debates

Tuesday, 3 October 2006

National Development Finance Agency Annual Report 2005: Statements

 

6:00 pm

Photo of Tony KilleenTony Killeen (Clare, Fianna Fail)

Clearly, I did not have the benefit of hearing all that Senators have said about the report. However, I commend those that have taken the trouble of reading the report and going through what they would see as the positives. I was in my office to hear some of the negative responses.

Member of both Houses, perhaps because they are inundated with paperwork of one kind or another, sometimes miss out on the opportunity to examine the kind of work that is done by the National Development Finance Agency, and the plethora of other agencies that benefit from public funds. In some instances those agencies believe they would benefit from significantly more public funds being made available to them.

The nature of the projects undertaken is diverse. There is an enormous number of possibilities and a level of challenge which could be addressed by the agency in a favourable condition. The Minister of State, Deputy Batt O'Keeffe, in his opening remarks spoke in particular about the PPP issues and the challenges involved. As the Minister for Finance has said in the House, the Government is committed to the use of public private partnerships in delivering public investment projects where they are appropriate.

We must be aware of difficulties which have arisen in other jurisdictions regarding PPPs, particularly in the context of partnerships which involve relatively long-term support of the initial building project. There have been instances in the United Kingdom and elsewhere of financial difficulties besetting the company subsequently which undermined somewhat the efficacy, particularly in fiscal terms, of the particular project.

The use of PPPs can have benefits when used for projects of the right scale, risk and operational profile. I am not sure we have always managed to get all those factors right. It is recognised that the PPP process places new demands on both the public and the private sectors. It requires more effort up-front in scoping, procuring and negotiating projects because PPP is a form of procurement that integrates a number of components and not just construction. The contracts are typically long-term ones and sometimes the long-term and the support elements are of enormous importance.

PPPs also face the same challenges as other large projects. Given that there are so few of them in western Europe in particular, people tend to direct a huge level of attention on negative experiences such as those that have occurred, particularly in the United Kingdom. The Government must demonstrate a willingness and the capacity to innovate, apply lessons learned from innovation with PPPs currently and, perhaps more importantly, benefit from the experiences in other jurisdictions.

PPPs are not the major part of the capital investment programme. It is important to highlight the extensive work the National Development Finance Agency is doing in advising State authorities on major capital projects which are not privately financed PPPs. There are significant public transport investments by the Rail Procurement Agency, RPA, and Iarnród Éireann among others.

There are clear fundamental issues regarding, for example, value for money. There are issues regarding the quality of the construction in the provision of projects of this nature and it is important that we would not lose sight of issues of that magnitude. Some Members raised concerns they had in that regard. It is vital that there be rigorous appraisal and best practice management in regard to projects of this nature. It is fair to say that has been the experience heretofore in respect of Ireland.

The Minister for Finance has already identified enhanced value for money measures to be applied such as the revised capital and appraisal guidelines, public procurement reforms, measures in regard to ICT and major consultancies, and value for money in policy reviews. In the PPP area these are backed up by specific guidelines and PPPs based on the general capital appraisal guidelines. Within that broader context the specific expertise of the NDFA is an invaluable support and, in the context of developing public procurement and public investment projects, will continue to be a hugely important component. It is fair to acknowledge that in the relatively short period since 2003 good quality advice has been given.

It is also clear from the current annual report that the NDFA is meeting its responsibility regarding its role in advising State authorities on public investment projects generally and its new role in procuring PPP projects. That is not to ignore the primary role of Departments and other State authorities in selecting, appraising and scoping projects. The Government has embarked on an ambitious programme of capital investment and has put in place rigorous procedures and institutional support to deliver value for money in public expenditure.

We want to deliver the first class economic and social infrastructure Ireland needs. I compliment the NDFA on its performance to date and I am confident that the agency will continue to play its part in the delivery of the Government investment programme.

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