Tom Parlon (Laois-Offaly, Progressive Democrats)

I thank Senators for their welcome for this legislation and their contributions to the debate. In particular, I thank Senator Leyden for his appreciation of my efforts. He was most generous and warm in his praise.

While the Bill is essentially a technical measure extending the functions of the National Development Finance Agency to permit it to procure PPPs for State authorities, I am not surprised at the variety of issues which Senators have raised. Public private partnerships can cover arrangements in a wide range of areas and, by their nature, require consideration of all matters arising over the contract terms of up to 30 years. It is in that context the Government recognised the need for a centre of expertise where specialised PPP procurement skills and expertise could be concentrated in conjunction with the existing financial skills in the NDFA. The centre of expertise, with its specialised PPP procurement expertise, complements the specialised sectoral knowledge of Departments and agencies and, working together, they can help ensure the ongoing delivery of PPPs to be paid for in unitary payments by Departments and agencies.

Senator John Paul Phelan, who spoke first, raised the issue of value for money for projects generally. There can be no doubt about the Government's focus on value for money. The Minister for Finance introduced several measures in the past two years to improve the attainment of value for money, including reforms to public service construction contracts, value for money measures on capital and ICT projects and consultancies, the establishment of the central expenditure evaluation unit, and a requirement on Departments to focus on the evaluation of projects and on project management.

As for what was learned from early PPP projects, I assure the House that the lessons learned have been incorporated into central guidance on the process issued by the Department of Finance. A number of projects referred to were not part of the current PPP programme which was initiated in 1999 with a pilot programme of projects.

Senator Quinn inquired what value can be gained by involving private finance in a deal. I agree that the additional costs associated with private finance must be justified by the risks transferred to the private sector or otherwise offset through innovative proposals to address the sponsoring agencies needs. This is tested in the value for money assessment of projects. The availability of the National Development Finance Agency as adviser on PPP deals is an important part of the process.

Senator Leyden raised some issues about the National Pensions Reserve Fund. I wish to clarify that under its legislation, the commission is required to adopt a standard commercial investment policy. The National Pensions Reserve Fund commission controls and manages the National Pensions Reserve Fund with discretionary authority to determine and implement the fund's investment strategy in accordance with the fund investment policy set out in the National Pensions Reserve Fund Act 2000. This investment policy is based on a commercial investment mandate with the objective of securing the optimal return over the long term, subject to prudent risk management.

With regard to commercial investment in public sector projects, the commission has stated that it will make equity and-or debt finance available to the winning bidder in the tender process for public private partnership projects, provided it is satisfied with the prospective rate of return. I understand that, to date, no moneys have been invested by the commission in any such projects.

Senator McDowell inquired about the appointments made to the board. The Minister referred to these in his speech. They are: Mr. Fred Barry, chief executive officer of the National Roads Authority, Mr. Stewart Harrington, chartered surveyor, director of Killeen Properties, and Mr. Liam Berney, industrial officer with the Irish Congress of Trade Unions. The other members of the board are, Mr. Michael J. Somers, chief executive of the National Treasury Management Agency, Ms Anne Counihan, chief executive and head of legal and corporate affairs, National Treasury Management Agency, Ms Ann Fitzgerald, executive chairperson, National Consumer Agency, Mr. Terry Jones, business consultant, and Mr. Peter McManamon, chairman, CEVA Incorporated.

Senator Paddy Burke referred to the UK approach which was originally focused on the balance sheet treatment of projects. Our focus has always been on value for money and project delivery. The role of stakeholders has also been reflected from the start, through the PPP framework agreed with the social partners. The NDFA provides a source of professional financial and risk advice, independent of Departments, in regard to PPP projects under development and negotiation.

Building on experience here and elsewhere, a number of safeguards have been built into Irish PPPs. These include, sharing any refinancing benefits, generally post-construction, gain sharing — toll revenue, for example — regulation of maximum toll revenues, and inclusion of prepayment rights in certain contracts, that is, a right to buy out some or all of the private debt finance after a specified time.

Senator Paddy Burke also referred to water pricing. That is a matter for the Department of the Environment, Heritage and Local Government. It is a separate issue to PPPs.

I thank all Senators who contributed to the debate for the many interesting points they made and for their support generally for the legislation. I look forward to their ongoing support in passing the Bill.