Micheál Martin (Cork South Central, Fianna Fail)
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322. To ask the Minister for Public Expenditure and Reform the status of his recent correspondence to the President of the European Commission regarding European Union rules posing a significant threat to the ability to fund major projects in housing. [16952/16]

Paschal Donohoe (Dublin Central, Fine Gael)
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Replies have not yet been received to either the letter sent by the Taoiseach to President Juncker or the letter sent by my predecessor to Commissioner Thyssen, regarding the Government's concerns at the changing approach being taken by Eurostat to interpreting the agreed ESA 2010 rules governing the balance sheet classifications of PPPs.

However, I understand from informal contacts at official level with the Commission that a draft reply to An Taoiseach is now with President Juncker and should issue in due course, while the reply to the letter from my predecessor is also expected to issue shortly.

Notwithstanding this position, there has been significant engagement in Brussels on this important matter in recent weeks. Minister Noonan raised the point at the May Eurogroup meeting and received support on the issue, while it was also raised at the Economic and Financial Committee in June as well as at meetings of Coreper and of Financial Counsellors, in addition to also being discussed informally on the margins of meetings.    

A meeting between Member States and Eurostat representatives, under the auspices of the European PPP Expertise Centre (EPEC), is scheduled for 6th July to discuss the matter. That meeting will review the latest changes to PPP statistical rules in the Eurostat Manual on Government Deficit and Debt, issued in March, and will also enable Member States to receive an update on the work that is currently underway between EPEC and Eurostat to produce a guidance paper, to be issued jointly by the two organisations, with a view to providing clarity on the statistical classification issue, in view of the confusion that was created by the latest guidance note issued in March.

Micheál Martin (Cork South Central, Fianna Fail)
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323. To ask the Minister for Public Expenditure and Reform to clarify his concerns regarding Eurostat's interpretation on public private partnerships in his correspondence to the President of the European Commission. [16953/16]

Paschal Donohoe (Dublin Central, Fine Gael)
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The concerns which were referenced in the letters from the Taoiseach and my predecessor to the European Commission relate to the approach being taken by Eurostat in interpreting the agreed ESA 2010 rules governing the balance sheet classifications of PPPs, which appears to be progressively shifting away from the established and well understood analysis of risk, and how this is shared between the public and private partners, to a new and overly rigorous approach to how rewards are allocated under a PPP contract.

The ESA 2010 rules provide that the majority of risks and rewards are the relevant indicators for balance sheet treatment. However, the latest guidance issued by Eurostat in March 2016 has now fundamentally changed the position insofar as rewards are concerned, such that "any part of the profit" accruing to the government unit now appears to be sufficient to result in a PPP being classified as on-balance sheet.

The latest guidance also appears to have changed the ground rules in relation to existing approved projects. Until now, any such existing approved projects only required to be reviewed in the event of a "substantial" change to the contract. However, under the latest guidance, only contract changes which are "not negligible" are permitted without requiring the contract to be reviewed under the new guidance in force at that time, but it is unclear what type of change would meet this "not negligible" test and therefore potentially trigger a requirement for a review of the entire contract under the new rules.

The changes introduced in the latest guidance may also require a trade-off between value for money and achieving off-balance sheet status for new PPPs, insofar as changes may have to be made to the manner in which future rewards, for example arising from windfall gains that may accrue to a project in the future, can be shared between the public and private sectors. 

This changing position of Eurostat has therefore created considerable confusion and uncertainty in relation how PPPs are to be classified in future, which poses a significant threat to the ability of European Governments to continue to pursue PPPs as a means of complementing direct Exchequer investment in much needed infrastructural projects. To this extent, it appears manifestly at odds with the primary objective behind the Juncker Plan, which is to facilitate, and indeed stimulate, increased investment in infrastructure projects across the Union.

A meeting between Member States and Eurostat representatives, under the auspices of the European PPP Expertise Centre (EPEC), is scheduled for 6th July to discuss the matter. That meeting will review the latest changes to PPP statistical rules in the Eurostat Manual on Government Deficit and Debt, issued in March, and will also enable Member States to receive an update on the work that is currently underway between EPEC and Eurostat to produce a guidance paper, to be issued jointly by the two organisations, with a view to providing clarity on the statistical classification issue, in view of the confusion that was created by the latest guidance note issued in March.