Feargal Quinn (Independent)

I welcome the Bill and the Minister for Finance, Deputy Cowen. I was particularly impressed at his ability to handle TLAs and FLAs. I am sure that he has no idea what I am talking about. A TLA is a three-letter acronym, examples of which include the PAC, the Public Accounts Committee, PSB, the public sector benchmark, and PPPs, public private partnerships. Now, however, there are the NDFA, the National Development Finance Agency, and the NTMA, the National Treasury Management Agency. I congratulate the Minister on being able to deal with them, since they are quite a handful. I am engaged with TLAs but find that I must now remember FLAs.

I thank the Minister for his words and congratulate him on this Bill. Senator Mansergh said that if one wants guarantees on anything before making an investment, it is unlikely that one will ever be able to follow through. The National Development Finance Agency has been a great success. Members who heard me speak last month on the annual report of the NDFA will know that I am an admirer of that body, and of its approach to public spending. The establishment of the agency and the extension of its remit last year, to which the Bill gives a statutory basis, are an acknowledgment that the raising of development finance is a matter for experts and not for amateurs. Some might say that the acknowledgment in question is belated, but it is welcome nonetheless.

Development funding is a field ploughed by people with some of the cleverest minds, and certainly some of whom are the highest paid in the financial world. To set that brainpower on one side and have a team of non-experts with no particular training in that highly specialised field attempt to compete with it on equal terms, was to guarantee that the State would lose from the start. Now we at least have a level playing field with a balance of expertise on the two sides. The off-loading of this responsibility to the NDFA is a continuation of the trend that created the National Treasury Management Agency over ten years ago and led to the steady expansion of its remit since. The NTMA is a monument to a principle that I would like to see extended to the whole of public spending, namely, that spending public money is a very serious matter to which we must bring the highest standards of professional management. It is certainly not a game for amateurs.

In a way, I am amazed that I should have to state that principle at all, since it is surely self-evident. Be that as it may, we have not acted on it across the board in public spending. However, it is certainly true that we now manage the national debt highly professionally. As Senator Mansergh said, it has been reduced considerably. It is also true, thanks to the NDFA, that we are now taking the same approach to raising development capital, which we had not done over the years. The evidence from the first few years of the NDFA's existence is that it has brought about a substantial increase in the value for money that the State secures as a result of its activities in raising development finance. On that basis, I have no doubt that it will make the same improvements to PPPs.

Such partnerships may have much to offer in delivering the type of infrastructure projects that are needed in a faster and more efficient manner than is the case with direct State involvement. The jury is still out, however, on the extent of any such benefits. It remains to be seen whether the additional costs involved are worthwhile. It is an inescapable fact that public private partnerships are inevitably a more expensive way of funding a project because they must allow for an element of profit to cover the risk the private sector partner is taking by getting involved.

As Senator Mansergh observed, too many private sector operators have been unwilling to take on board that risk in the past. There never can be an investment that comes with a guarantee of success. Nobody in business can ever expect such a guarantee. An investor who succeeds in four out of five ventures does extremely well. In many cases, an investor will succeed in only one venture in five but that is sufficient to his or her long-term success.

Two questions should be asked in regard to every proposal for a public private partnership. The first is whether the additional cost is worthwhile. At an earlier stage in the development of the State, public private partnerships gave us access to funding that was otherwise unavailable. This was the original justification for the concept. Our national financial resources were so constrained in the past that we were unable to carry out some of the investments that were needed. In those circumstances, paying slightly over the odds was necessary if the project was to go ahead. This was a sensible approach.

Those circumstances no longer apply in these affluent times, however, when it seems that no matter how much a project costs, the resources are available to fund it. There must, therefore, be another justification for taking the more expensive route. Whenever I raise this issue, I am overwhelmed by neither the quantity nor quality of the replies. I suspect for many people, the justification is ideological. It is rooted in a belief that the private sector always produces the best and the most cost-efficient result. As Members might expect, I am a great champion of the private sector, but even I find it difficult to accept that proposition without any firm evidence to support it in particular cases.

The second question that must be asked about each proposed public private partnership project relates to the extent of the risk being carried by the private sector partner. The NDFA can play an important role by evaluating and quantifying the private sector risk. Few will deny that our early experience with public private partnerships showed that private sector partners were often successful in negotiating their way out of any real risk. In such cases, this route proved expensive for the State.

I emphasise that I am not opposed to public private partnerships in principle. I contend, however, that the jury is still out on their value to the public purse. I have no doubt that if we must have such partnerships, the way to manage them that is proposed in this Bill is the correct approach. I commend the Government on taking this worthwhile step. We should recognise that this Bill represents an effort to achieve something we all support.