Some €16 billion is tied up in public-private partnerships with little or no scrutiny of the money by elected representatives, writes ELAINE BYRNE.
PPP OR Public Private Partnership just rolls off the tongue. As acronyms go it is easy to remember and simple to say. You know you have made it as an acronym when you get into the Oxford English Dictionary. No doubt the PPP is very disappointed that this is not yet the case, particularly given how much it is part of our everyday lives. The campaign for PPP inclusion in the Oxford English Dictionary begins here.
About €3 billion has been invested on PPP projects since 2003. The Government has committed to spend a further €13 billion on PPPs before 2013 under the National Development Plan. Relative to our GDP, Ireland is ranked as the third most active user of PPPs in Europe.
That's €16 billion in 10 years on PPPs.
A PPP is the partnership between the public and private sectors to provide finance and operate public services and infrastructure projects. There is a range of different ways in which the private sector recoups its investment.
The €900 million housing regeneration scheme (2,000 homes) between Dublin City Council and developer Bernard McNamara collapsed this week because of "current economic climate and the substantial changes" in the housing sector.
It was originally envisaged that in return for council sites, the developer would build a specified number of social housing units. The developer would then make a profit by building private apartments on the rest of the site. The Government will now review rules governing PPP housing deals with developers.
The McNamara group is part of the Leargas consortium which won the PPP tender to build the Thornton Hall prison complex in North County Dublin. In return for their investment, Leargas will in effect receive annual repayments by renting the prison back to the State over a 25-year period.
The PPP model is also used to develop private hospitals on the grounds of public hospitals (co-location), provide radiotherapy services for cancer patients, build schools, construct the proposed Atlantic road corridor linking Donegal to Cork and create the Metro North. It will also redevelop the Abbey Theatre and the National Concert Hall.
PPPs are a policy phenomenon. They have mushroomed without a thorough public debate on the perceived influence of privatisation, the quality of service delivery and value for money for the taxpayer.
The recently retired comptroller and auditor general (CAG), John Purcell, has urged caution on the over reliance on PPPs. Speaking on RTÉ's The Week In Politics: "I think it is wrong to see them as the panacea for all our ills and the absolutely number one solution to all the difficulties we might encounter."
The former chair of the Public Accounts Committee (PAC), Michael Noonan, shared these concerns, but went further. Speaking on Morning IrelandNoonan said there "is not full accountability" within the PPP process.
Sixteen billion euro in taxpayers' money not fully accountable!
Noonan said: "To put it bluntly, we rely on John Purcell and his successor to tell us that everything is absolutely correct and that their financial audits have shown no discrepancies. It is hard to assess the value for money because the elected members do not have full information."
The private sector is not compelled to come before the PAC, while the accounting officers of government departments are. The pretext of commercial sensitive confidentiality precludes PPPs from the same measure of scrutiny as is undertaken within the public sector. Parliamentary oversight is exercised only through the CAG who has access to this data.
In order to promote confidence in the integrity of this process, there is a case for making such information subject to the Freedom of Information Act after a specified length of time. Full disclosure would allow ongoing project assessment, such as the now collapsed McNamara regeneration scheme. It would also provide reassurance to the public that their interest was being monitored.
The Ombudsman (Amendment) Bill, first promised in the 1994 programme for government, is on the Government's legislative programme for this Dáil session. The proposed Bill will seek to widen the remit of the Ombudsman to cover a range of additional bodies. This is an opportunity to allay the concerns of the CAG's office, the PAC and the public at large.
These concerns were first raised by PAC to the Department of Finance in 2005. The PAC published a critical report of the PPP process in 2007. The Access to the Private Element of Public Private Partnerships Report recommended that "value for money should remain the sole justification for the consideration of PPPs in Ireland." Just 10 per cent of the CAG's audits are value for money audits.
As it stands, the democratically elected members of Dáil Éireann are prohibited from fully scrutinising €16 billion in public expenditure. A democratic accountability deficit exists in the public sector while stakeholders and investors do not have the full picture relating to private sector companies. Does this represent good governance principles in either the public or private sectors?
This is not small change. How many other acronyms are worth €16 billion?