Shay Brennan questions minister on infrastructure division and costs

I want to focus my questions, and I only have three or four of these, around the new infrastructure division within your department, a move which I very much welcome. So firstly, in light of ongoing, or recent anyway, value for money concerns, what measures is the department and the division taking to ensure public spending remains within the agreed ceilings, and I'm thinking particularly for capital projects, and what steps are you going to take to ensure that lessons learned from previous infrastructure delivery challenges? And again, I'm thinking the likes of the Children's Hospital here, that they're systematically integrated into the division's approach. Yeah, so first of all, we've set up an infrastructure division to centrally drive delivery, but also to really examine forensically the project life cycle which exists, which takes too long. The decisions are nearly double in some projects than they were many years ago, and that's impeding progress on delivery of capital. We have new infrastructure guidelines which were introduced in the last government, and that followed some of the learnings around the National Children's Hospital and other major capital projects. And they set out the checks and balances around major capital projects, and we have a major projects advisory group who advise me, and indeed the respective project sponsor around cost control, value for money, and independently assess the business case that's involved. But the infrastructure division is also seeking to really, you know, we know that in many instances that the project life cycle, the cost that it's embedding due to the sheer length of time that it's taking is actually costing a significant amount when a project is completed. So really accelerating delivery should truncate the actual cost themselves. But separately, we are reviewing the public financial procedures which underpin current and capital expenditure within the state to better support fiscal discipline and budgetary decision-making. Minister, you mentioned the industry experts that are being seconded to the division. What's the selection process, what mechanism is in place to ensure that they have the correct expertise for this role? I'm sorry, to who? The individuals that have been selected, seconded to the infrastructural division. My understanding is they're coming from the likes of state agencies, Iskaren, etc. What mechanism is in place to ensure that their expertise is effectively integrated into the department? But also, how were these individuals selected in the first place? Are they headhunted? Is there an application process? Is there a list of skills that exist prior to seeking out an individual? So, our new infrastructure division engaged with the respective commercial state bodies on who would provide the appropriate expertise around their secondment or redeployment into my own department. And if you look at the individuals involved from Transport Infrastructure Ireland, Airgrid, Board Planala, and some of the other individuals around ESB networks, I think their experience over decades speaks to, you know, at a senior level within their respective sectors, they've had a very positive impact so far, and are centrally involved in the broader infrastructure reforms which are taking place. And separately, if you look at the external members on the infrastructure task force, all of whom have a significant background in project delivery, and their names have been published from Sean O'Driscoll, Michelle Connolly, and I can list out their names. And I think the mix of both is really supporting the capability in the department to drive delivery. And it was a collaborative effort between my department and each commercial state body on them identifying someone within their organization who brought and could bring that capacity to support the infrastructure ambition we have in the economy. Okay, thank you for that. Just going back to value for money, and I might draw on a project in my own constituency to illustrate this, but it's more a broader point that I'm making here. And I've referred to this in the infrastructure committee also. So if we look at something like the Lewis Green Line, and it's been much debated over the last decade that this needs to be upgraded to a full metro. The infrastructure is there to do with the underlying system that was built to take an upgrade to a full metro. And that further, this will have to happen within the next maximum 10 years, given the amount of development of the area and the projected usage. So the economics would suggest that if this is done at the same time as the Dublin Metro, that it will come in at a fraction of the cost than if the two projects are done independently, i.e. the Dublin Metro goes ahead, and we have to come back then in five to 10 years and start work on the Green Line Metro upgrade. So I'm just wondering how will the department make the decision to either proceed or to defer the Green Line upgrade on the basis of what I just outlined? Yeah, so what we're doing is, first of all, you know that the transport is a key priority in the context of the National Development Plan review that we're establishing. It's going to receive a significant uplift in its overall allocation. And it's then working, it's for us to work with Minister O'Brien on how we sequence that capital allocation over a series of years. There won't be an endless amount available. So we need to see what projects can be delivered over a period of years and sequence it accordingly. So that's the work we're doing collaboratively with Minister O'Brien. And clearly, you know, public transport infrastructure is a key priority around the broader National Development Plan. The project-specific piece is a matter, I suppose, that we'll be able to provide greater detail in the aftermath of the National Development Plan review itself and what the allocations will be. But for now, it's about really identifying the key strategic areas and allocating accordingly and then trying to sequence delivery. There's been situations in previous National Development Plans where we've had capital tied to projects that were in endless delays. And then there weren't trade-offs and choices made around prioritising other projects which could have moved quicker. And so we do need to see what's deliverable and when and prioritise capital allocations accordingly. And that kind of informs the broader allocation of how capital will work through the new National Development Plan. Thank you. Final question. And it actually relates to capital. So given Ireland's comparatively low debt-to-GDP ratio, even the adjusted one, we have plenty of headroom to borrow to front load infrastructure. And, you know, that is a pretty thing to do, given one, we need the infrastructure now to close up the deficit. And secondly, if correctly applied, this infrastructure should more than repay the Exchequer over time. And I'm wondering, is there an appetite for this? And the reason I put this to you is I've asked in this committee, I've asked the Minister of Finance, I got one answer. In the Dáil I asked the Tánaiste, I got an opposite answer. So I'm just wondering what the department, what your department's appetite is for this. Well, as you know, the 20 billion euro that we've set aside for the new National Development Plan, so to reach in excess of 97 billion euro, building on the existing plan, that consists of three separate funds. One, the Apple escrow, which we've received in the main, the AIB share sales and the infrastructure, climate and nature fund. And really, you know, that's a big increase in capital over our existing baseline over the next five years. And we are in a position where we're continuing to run budgetary surpluses in previous years, and even on an in-year basis, the Exchequer returns are positive and we're in a surplus. But we're at a point of significant economic risk domestically, and the global position is uncertain. So what we've said in the program for government is that we will seek to protect capital in the context of any change to the global environment to really build and give certainty to infrastructure delivery over the next number of years. And we have obviously the capital set aside to do that. So I think right now it isn't, we also have to be cognizant of, you know, if we allocate an additional 20 billion euro into the existing baseline, we'll be in and around 5% GNI star in terms of our capital spend overall, which is more than most European economies. And what we have to be cognizant of as well, it's not the amount that's being placed in terms of capital allocations. There's also the management of the labour market and the construction sector and how we manage that context around how we play, just how we spend on capital over the next number of years. And that's important as well, because the labour market dynamics are an important piece in how we manage capital. So I think your question is, you know, in a very significant disruptive economic environment, which you've hypothesised there in an event that we had to have some borrowing, you know, we're not in that position right now. And what we need to do is just to have discipline on how we allocate it and ensure that it's focused on the growth enabling areas of infrastructure, which we know contribute to growth, economic growth overall. But I think we need to be cautious around our overall expenditure framework in the context of the broader uncertainty that's there. Thank you.