Seanad debates

Thursday, 30 November 2006

National Development Finance Agency (Amendment) Bill 2006: Second Stage

 

2:00 pm

Derek McDowell (Labour)

We will debate that another time. The decision in principle to commission a building project is made by the Government. The NDFA decides the funding mechanism for the project. This is technical advice that calls on the agency's expertise on funding and putting together contracts. It does not proof against a bad decision by Government. It ensures that once a decision on a project is made, it is implemented in the most cost effective way.

The purpose of this amending legislation is to transfer PPPs to this centre of expertise. I do not want to be harsh on those who have been working in this area heretofore. It is obvious the legislation is a commentary on recalcitrant Departments that did not like PPPs or were nervous of them, as Senator Mansergh claimed. It is clear some Departments did not want to use PPPs to fund their projects. It will inevitably be seen as a commentary on the capacity of the central unit in the Department of Finance to perform much of the work which the NDFA is now doing. I appreciate this was novel territory to us and we were expecting too much in generating the expertise within the Civil Service. The establishment on a statutory basis of the agency is a commentary on our inability to get it right.

We have had a chequered experience of PPPs. This is largely because we did not know what we wanted from them. I am not sure if we still know what we want from them. Senator Quinn's interesting contribution set out questions that need to be asked. I do not believe PPPs offer a great deal in schools building projects. Will the Minister of State outline the advantages that accrue to the Exchequer or the Department of Education and Science in building schools through PPPs? He may claim it will provide a model for a 450 pupil school that can be built across the State, similar to the regional technical college project some years ago. However, why can this not be done in the current school building structure? Perhaps the Minister means that because there will be a unit or company managing the schools in future, we benefit because the teachers and principals who were responsible previously do not have to look after maintenance. That may be the case but the record is not persuasive. I cite that as one of the three examples the Minister gave in his contribution.

PPPs have been quite successful in getting roads built fairly quickly and reasonably inexpensively. That, however, does not cover all roads and the operation of the National Roads Authority, NRA, will not fall under the NDFA. We need to be sure what we want from this agency. We will not get work done more cheaply. We may be able to postpone payments but that does not apply when we have enough money up front for most of the work we want to do. We may be able to benefit from the expertise of particular companies which we do not have within the State service but that requires serious critical analysis and I would need to be persuaded that we cannot buy it into the Civil Service in many cases which might be a better idea.

Risk is transferred only if the private company has greater expertise in the first case, and in some cases it will. We did not have much experience in building large-scale motorways until relatively recently but that does not apply, for example, to schools. I am not against PPPs in principle. In fact I helped to persuade my party that there were benefits in choosing that option on occasion and undoubtedly there still are, but it requires careful analysis case by case.

Senator John Paul Phelan has already mentioned the expansion of the board to seven members. As I expect that we will take all Stages of this Bill today, will the Minister of State explain who will be the additional members? The Minister mentioned two in his contribution.

In respect of Senator Leyden's one serious point, about the National Pensions Reserve Fund, I am at a loss to understand why this has not progressed. The present Minister, his predecessor, Mr. McCreevy, and the Government stated they did not see any reason in principle the €17 billion in the fund could not be used for investment in Ireland as part of PPP provision. This would be done on a commercial basis, not on the basis of giving money away or being spendthrift. Taking Senator Leyden's example, the fund has invested in a raft of airlines, apart from Aer Lingus. The list includes most of the major European airlines. They are not large holdings but they are significant.

The fund has also invested in projects around the world, in virtually every European country and in most developed countries yet there is virtually no investment in Ireland. Nobody is suggesting that the fund invest €17 billion in Ireland or that it be done in a way that would distort the market or compete with the private sector in any serious way. There are however, occasions when the pensions reserve of the people of Ireland can be best used for the people by investing in Ireland. While the Government has paid lip-service to this notion, it has singularly failed or refused to do this.

In support of the Green Party, there is no reason in principle a section of the reserve could not be set aside for ethical investments. Commercial insurance companies and pension funds find that it is possible to do so and that there is a demand for it. Senator Leyden knows and we would all agree that the people demand to use some of the reserve fund in an ethical fashion. I cannot see why there should be any objection to that.

I do not have a problem in principle with the Bill inasmuch as we have PPPs, although not as many as we once thought we would. It is right that we should get the best value for money or use the best and most professional procurement policies in doing so. In that respect I support the Bill.

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