Michael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

86. To ask the Minister for Public Expenditure and Reform the planned review of the 10% rule that applies to public private partnerships; and if he will make a statement on the matter. [31973/17]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

PPPs offer an alternative model for delivering infrastructure, that can facilitate the delivery of additional capital projects and that can be effective in particular circumstances. However, the long-term nature of the financial commitments arising under PPPs require that the use of such arrangements must be carefully planned in order to ensure that they are used to address infrastructural needs that are not likely to change over a 25 year period, and do so in a manner that is sustainable in the long term and which the public finances can afford.

It was for this reason that the last Government introduced an Investment Policy Framework for PPPs, in 2015. The purpose of the framework was to set a limit on the extent to which the annual costs of PPPs would pre-commit capital funding available to future Governments for investment purposes, in terms of the overall aggregate Exchequer capital allocation projected to be available in any individual year.

The framework applies to the future cost of unitary payment charges in respect of both existing PPPs already in place and new PPPs currently in procurement or planning, together with the up-front Exchequer costs associated with procuring the planned new PPPs. The current requirement is that, taken together, such future costs in respect of PPPs should not pre-commit more than 10% of the overall aggregate capital funding projected to be available to future Governments in any individual year.

The Deputy will be aware that a mid-term review of the Capital Plan is currently underway, the findings of which will ultimately help Government to put in place a new long term Capital Plan which is consistent with the new National Planning Framework to be published later this year.

In that context, Government needs to formulate a strategic view on the extent to which PPPs should be used to assist in delivering additional infrastructure, to complement that provided directly with Exchequer funding.

With that in mind, I asked my Department to review our experience of using PPPs and to advise on the scope for further use of this procurement option in the context of the Government's capital investment plans.

A senior level group has been established to assist my Department in this regard, comprising relevant officials from the Departments with experience of procuring projects by PPP, together with the Department of Finance, the National Development Finance Agency and Transport Infrastructure Ireland. This group is reviewing past experience with PPPs and its report, once complete, will provide an evidence based analysis of the potential for further use of PPPs, and concessions, as a procurement option for the delivery of additional capital infrastructure as part of the new long term capital plan. Assessing the affordability, sustainability and value-for-money of PPP procurement will be key elements of the Group's work, while the Group will also have the opportunity to make recommendations in relation to other aspects of PPP policy and guidance, if appropriate.

The report of the Inter-departmental group will help inform a final decision on how to proceed in relation to off-balance sheet PPPs in the context of the new long-term capital plan to be published later this year.