2. Deputy Jonathan O’Brien asked the Minister for Public Expenditure and Reform if his attention has been drawn to a report from the IMF (details supplied) that makes a range of recommendations regarding PPPs, including that the State begin using a cost benefit analysis of them. (Question 53507/17 asked on 14 Dec 2017)
Minister for Public Expenditure and Reform (Deputy Paschal Donohoe): I should first explain that Public Private Partnerships are already subject to a strong public investment management methodology, which includes appraisal. The Deputy may be referring to a recommendation made as part of the recent IMF PIMA report, to the effect that appraisals should be published on a more systematic basis.
The National Development Finance Agency was established in 2003 under the National Development Finance Agency Act 2002. The role of the NDFA is to advise State Authorities on the optimum means of financing public investment projects in order to achieve value for money and to provide advice in relation to all aspects of financing, refinancing and insurance, including risk analysis, of public investment projects. All PPP projects involving the use of private finance must be referred to the NDFA. In addition, all projects valued at €20 million or above, whether traditional or PPP, must be referred to the NDFA for advice.
The Public Investment Management Assessment (PIMA) mission to Ireland was undertaken by the IMF in July this year. The final report was published on my Department’s website (www.per.gov.ie) on 10 November 2017.
The report and its recommendations are the work of an expert team from the IMF who were invited to assess our public investment institutions to evaluate the design and effectiveness of the institutions that shape decision-making at the three key stages of the public investment cycle:
- planning investment;
- allocating investment to the right sectors; and
- implementing investment.
The PIMA report concluded that, overall, Ireland manages its public infrastructure relatively well. It highlights both strengths and weaknesses and contains a number of recommendations to improve future performance in terms of the efficiency of public capital investment.
One of the recommendations in the PIMA report is for the publication of the results of cost-benefit analysis on Public Private Partnership (PPP) projects, and the criteria used to select them.
As the Deputy will be aware, PPPs are subjected to the same robust and rigorous project appraisal process as traditionally procured projects. In ensuring Departments obtain the best value-for-money from public capital investment PPPs, just as traditionally procured projects, are subject to the requirements contained in the Public Spending Code.
The Public Spending Code encompasses guidance on a variety of issues related to the management of expenditure at each stage of the expenditure lifecycle. This includes central guidance on the application of appraisal and evaluation methodologies including cost benefit analysis. This methodological guidance aims to enhance consistency across sectors through common approaches and the use of key technical parameter values needed for quantifying costs and conducting economic appraisals.
While there is already significant guidance and data published on PPPs I acknowledge that the publication of cost-benefit analysis on PPP projects would provide greater transparency in reporting on PPP projects. However, in assessing the implementation of the PIMA recommendation, it would be important to take into account the commercial sensitivity of specific data included in the appraisal of PPPs.
An inter-Departmental and Agency Group was established earlier this year to make recommendations on the future role of PPPs, in the context of the new 10 year capital plan. The group comprises relevant officials from the Departments and agencies with experience of procuring projects by PPP. As part of its work, the group is considering the recommendations made in the PIMA report that relate to PPPs, including the recommendation in relation to publication of CBAs for PPP projects, to inform future decision-making on these matters. I expect the Group’s deliberations to be completed alongside the finalisation of the new 10-year capital plan, which is currently being developed by my Department to support the implementation of the Ireland 2040 Plan detailing the new National Planning Framework.