National broadband plan costs and delivery
Deputy Micheál Martin challenges the rising cost and changing scope of the national broadband plan, accusing the Taoiseach of political management and drip-feeding information. The Taoiseach defends the scheme, says Cabinet has not yet decided, insists the project is for full network build, operation and maintenance, and disputes the idea of a €500 million cap or a single bid.
For many years, parts of rural Ireland, businesses and homes have been without any broadband connectivity. Back in 2012 when the then Minister, Pat Rabbitte, announced the national broadband plan, he was very clear that there would be a minimum of 30 megabits per second for every remaining home and business in the country, no matter how rural or remote. Every year since, Ministers have consistently repeated that. From 2011, 2012, 2016, 2017 and 2018, the language used in different announcements was one of the near future - within weeks and so on. We were told there would be a broadband announcement within weeks last November and that has been repeated subsequently.
Yesterday, the Taoiseach announced in the House that the cost of the investment in the broadband contract to the taxpayer would be €3 billion. Last week the Minister for Communications, Climate Action and Environment said he could not talk about it at all because the matter had not been finalised. We had been told for months that it had not been finalised yet out of the blue yesterday the Taoiseach was in a position to announce formally the cost to the taxpayer would be €3 billion.
From the start, the bidders in this process were led to believe that the maximum taxpayer subvention was €500 million. That has now ballooned to €3 billion. The Taoiseach needs to explain how we have gone so dramatically from €500 million to €3 billion in the cost to the taxpayer. Has the Minister for Public Expenditure and Reform analysed this? What is his role and that of the Department in analysing this process? We on this side of the House have not been presented with comprehensive information.
Will the Taoiseach also confirm that at the end of the process, the asset will not be owned by the State, notwithstanding the expenditure of €3 billion?
Will the Taoiseach comment on the capacity of the Granahan McCourt Capital consortium to manage a project of this scale and size? Is the Government satisfied that it has the necessary experience and expertise to deliver a project of this magnitude?
Taking the Taoiseach's comments yesterday as confirmation of the award, is the Government satisfied that the consortium is the same consortium which originally bid? Have the legal issues in relation to the competitive tendering process been sorted out?
The fundamental question relates to the Taoiseach's announcement that the plan would cost taxpayers €3 billion when all along people were led to believe the cost to the taxpayer would be €500 million.
Comment on this
I thank the Deputy for raising this important issue again. Back in 2012 when the national broadband plan was announced, only about 20% of homes, businesses and farms in Ireland had access to high-speed broadband. By the time this Fine Gael-Independent Government came to office that was at 50%. It is now up to 75%.
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That is nothing to do with the Government. The Taoiseach will take credit for the weather next.
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The national broadband plan as a policy driven by private investment has brought about a situation where the number of-----
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I again thank the Deputy for raising this important issue which is of huge interest to people in rural Ireland and all parts of Ireland. Back in 2012 when the national broadband plan was announced, only about 20% of homes, businesses and farms in Ireland had access to high-speed broadband. By the time this Fine Gael-Independent Government came to office that was at 50%. It is now up around 75%, driven by private investment and Government policy.
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Many people are opposed to private investment in communications but it has delivered 75% coverage already at no cost to the taxpayer. Now is the point when the Government needs to intervene to ensure that the next 25%, 540,000 homes, farms and businesses across Ireland, over 1 million people, are connected to high-speed broadband.
I am happy to confirm and clarify one or two things that were said in the last couple of days. I can confirm that in 2014 the memorandum brought to Cabinet by the Minister at the time, Pat Rabbitte, estimated that the cost of bringing high-speed broadband to 1,100 villages in Ireland would be up to €512 million. That was never the cost for connecting every home, farm and business in the country.
The State subvention was never capped at €500 million. That is not correct either.
In terms of bids, the only bid received is not only from Granahan McCourt. Before others withdrew, they also put in bids and the figures were similar in those bids.
In terms of the ownership model which the Deputy asked about, under the proposed contract terms, the contract is to build the network, to operate the network, to maintain the network and to manage the network for 25 years, at which point ownership stays with the consortium. However, at that point, Government has the option to buy. As this is not a commercial piece of infrastructure, one would expect that to be a relatively inexpensive proposition. At any point, if the contractor fails to deliver, the Government can step in and take over. Those have been the terms of the proposition since very early on.
Obviously, some more work needs to be done. This matter is being analysed by Government, by my own Department, by the Department of Public Expenditure and Reform and, of course, by the Department of Communications, Energy and Climate Action, which is the lead Department on this issue.
The next step will be for the Government to make a decision on whether to accept the bid and designate a preferred bidder. That has not yet been done. I anticipate that can be done in the next couple of weeks. It will then take a number of months for contracts to be drawn up and signed. After that, the work will commence in terms of roll-out on the ground.
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One gets the sense the Taoiseach is managing this from a public opinion perspective and from a political perspective.
By the way, two of the original bidders did not actually bid in the end; they gave outline indication. It was asserted all along it would be €500 million. Industry sources are saying the cost to build out the network is approximately €1.5 billion. The Government is proposing that the consortium concerned will get €3 billion of taxpayers' money to build and to manage, and to own the entire network at the very end, making profits along the way. I have no difficulty with people making profits, but for the taxpayer to spend €3 billion and not own, or having any prospect of owning at the end, is something that needs to be fully explained. I find it difficult to comprehend.
The drip-feeding of information around this is not satisfactory. Given that the Taoiseach has now announced the crucial element of this which is the pricing, he has an obligation to place the full proposition in the public domain.
I got the sense, because of the PwC report on the children's hospital, that there may have been an attempt to create distance between that last week and the announcement on broadband. I do not know why all of the secrecy is still there. The Minister for Communications, Energy and Climate Action, Deputy Bruton, stated he could not comment last week on this when parliamentary questions were tabled, yet the Taoiseach had no difficulty in announcing the price of €3 billion yesterday.
There is an onus and an obligation on the Taoiseach to give the full cost. What is the overall cost of the project estimated to be? The subvention from the State will be €3 billion. Are there any additional costs, over and above that, to the bidder?
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Not to my knowledge, but the decision has yet to be made by Cabinet. The decision that will be made by Cabinet in the next couple of weeks is whether to accept the bid and to designate this bidder as the preferred bidder, at which point contracts will have to be drawn up and signed, and that will take a few more months after that.
The contract is not only to build this network; the contract is to build the network, to operate it, to manage it, to maintain it, and also to rent the infrastructure from Eir, which will be necessary to rent for the reasons that people will understand. The cost of building it is only a proportion of the entire cost of a network that has to be built, managed and maintained and, of course, infrastructure rented from the incumbent.
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In terms of investment in infrastructure, we should bear the following in mind: in the past 20 years in Ireland, we have invested €40 billion in our roads connecting our cities by motorways, bypasses, local, regional and national roads all over the country; in the past 20 years in Ireland, we have invested €10 billion in our sewerage and water network - perhaps we should have done more; and in the past 20 years, Government has invested very little in our communications infrastructure. That has all been done by the private sector. We need to see this kind of investment in that context.
This is not a small project. This is a huge project serving more than 500,000 homes, farms and businesses all over the country. Over 1 million people will potentially benefit - people who will be able to access education, healthcare and public services online and do the kind of things into the future that everyone should be able to do.
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With every day that passes, the process surrounding the national broadband plan becomes ever more reminiscent of the debacle that now surrounds the cost of the national children's hospital. When I pressed the Taoiseach on this here yesterday, he admitted and confirmed for the first time that the cost of the broadband plan could reach €3 billion, despite the original cost estimate being in the region of €500 million. Despite the Taoiseach's attempt to skate around this yesterday by arguing that the plan had changed, the fact is that in 2012 the commitment made by the then Minister, Mr. Pat Rabbitte, as part of the Fine Gael-Labour coalition was to ensure the roll-out of high-speed broadband to every home and business throughout the State. That was the commitment - plain and simple.
We can argue the toss around semantics. The fact is that the aim of the national broadband plan has not changed, but what has changed, incredibly, is its cost. According to the Taoiseach yesterday, it will now cost six times what was expected. The overspend could run into billions of euro. To top it all, the Taoiseach advises that the infrastructure will be in the ownership of the consortium but that the State could, 25 years on, spend more public money to buy that infrastructure back. One could not make this up. It is utterly ludicrous.
The unfortunate reality of all of this mess is that, as the Taoiseach said, more than 500,000 homes, businesses and farms right across rural areas are left still without broadband, despite repeated assurances and repeated announcements. It beggars belief that this is still an issue. We have no date still for a decision to be taken. We have no date for commencement. The commitment to deliver high-speed broadband by 2020 will undoubtedly be broken. That is the reality. This process has been utterly chaotic.
The Taoiseach stated last October, in the aftermath of the resignation of the then Minister, Deputy Denis Naughten, that he would make this national broadband plan a "personal crusade". He also said, "I promised I will make it happen". He told the Dáil in November that he received two reports on this matter from the Department at least every fortnight. When exactly will the rest of us get a proper report? When will we get clarity? We were supposed to have an announcement before Easter. That is now not going to happen, despite the Taoiseach's assurances that it would.
We do not now know whether this plan is going ahead or not. The 500,000 homes, businesses and farms, it seems, are to be left in the lurch for a considerable period. The Taoiseach has no notion of any cost or budget for this plan. Above all, people in rural areas are left with no clarity as to what is happening. We can all agree that is utterly unacceptable. When will we have an announcement? When will be have the real figures? When will be have access to that? Above all, when will people in rural areas know that there will, in fact, be a national broadband plan roll-out?
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At the time, I stated bluntly and explicitly that one of the reasons we were not in a position to make a decision is because we did not know whether there would be a crash-out Brexit last week and the Government could not make major financial decisions with the risk of that hanging over us in the past couple of weeks.
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Repeating an untruth does not make it the case.
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Second, Deputy McDonald did not hear the answer that I gave Deputy Micheál Martin and I will give it again. I have looked at the memorandums. I have confirmed that the memorandum that was brought to Cabinet by the then Minister, Mr. Rabbitte, in 2014 gave an estimate of this project costing up to €512 million, specifically. That was for extending high-speed broadband to 1,100 villages in Ireland-----
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There was a subsequent memorandum by the former Minister, Mr. Alex White, mapping out all the intervention area.
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It is important for the record that there was a subsequent memorandum.
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It is not the case that there was ever a €500 million cap on the subsidy and it is not the case that there was only one indicative bid put in. I want to put those facts out on the table-----
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We will bring the bidders to the committee and we will establish those facts.
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-----because we constantly heard otherwise.
We should not forget what is involved. This programme is about extending high-speed broadband to over 500,000 homes, farms and businesses. It is a major project, possibly the biggest investment ever made in rural Ireland and possibly as important as rural electrification. It is not going to be done cheaply and quickly. As already stated, we need to bear in mind that €40 billion and €10 billion, respectively, were invested in roads and water in the past 20 years. Building infrastructure like this and connecting homes, farms and businesses all over the country will be expensive.
Comment on this
It will be expensive doing it the way the Government is doing it.
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The Government has not yet made a decision to accept a bid or to appoint a preferred bidder. If and when it comes to the point of being able to do that, there will be several months-----
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The Taoiseach is drip-feeding information.
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-----while contracts are drawn up and, during that period, I have no doubt that the committee and Parliament will want to scrutinise the matter in detail.
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It is a small mercy that we were not reliant on the Taoiseach and his Government for rural electrification because there would still be debate about Ardnacrusha power plant. We would still be in the dark, lighting candles and hoping for the best.
The Government used the wrong procurement process. The process was supposed to generate a dynamic of competitiveness and yet there is a sole bidder left. By definition, that leaves the Government vulnerable in terms of cost. The Cabinet and Government sources consistently briefed that the cost of this scheme would be €500 million. The Taoiseach quoted a memo brought to Cabinet in 2014 but I am advised by Deputy Howlin that a subsequent memo was brought by the then Minister of State and former Deputy, Alex White. The Taoiseach is being selective in his quotation of memos.
We are now left in a situation that is utterly farcical. The Taoiseach states that he is not sure whether he is going to accept this bid from the sole bidder, the cost of which will be six times that of the original estimate. The Taoiseach still protests, with a straight face, that he is the Taoiseach and that this is the Government that will deliver broadband to rural Ireland. Quite frankly, nobody believes that at this stage and I suspect he does not believe it either.
I ask for more clarity in the Taoiseach's answers. Can he give us a precise date on which the Cabinet will make its decision? Can he give us access to these memos and all of the information and data that he possesses?
Comment on this
I cannot give the Deputy a precise date, nor have I ever. Due diligence has to be undergone, Cabinet Ministers have to be briefed, the Cabinet has to meet, a decision has to be made and a preferred bidder has to be appointed, or not.
Deputy McDonald questioned my beliefs. I am of the view that Sinn Féin would probably have opposed rural electrification if it had been around during that period. Sinn Féin representatives would have stated that it would cost too much, that it was not necessary and that people in rural Ireland did not need electricity. That would have been the Sinn Féin view. We have seen Sinn Féin's approach to infrastructure in Northern Ireland, the renewable heating scandal and everything it has done there. We have seen how, in this State, infrastructure has come on in leaps and bounds and overtaken infrastructure in Northern Ireland. I have no doubt that Sinn Féin would have opposed rural electrification and it is very likely that Sinn Féin will oppose rural broadband as well.
Comment on this
Will Sinn Féin put forward an alternative? It has tried to by proposing that the ESB do it and the ESB pulled out. Sinn Féin proposed that a public company be designated to do it. That is contrary to European state aid law, under which tendering is required. I have no doubt that Sinn Féin is opposed to rural broadband and that it would try to stop the project if it got into government.
Comment on this
No one is opposed to it, it is about how it is done.