National broadband plan costs
Micheál Martin challenged the escalating cost estimates and apparent complacency around the national broadband plan, citing documents and Eir’s Oireachtas evidence. The Taoiseach defended the project’s objective, noted Eir’s earlier higher bid and withdrawal, and the exchange drifted into an argument over the health service dispute and its cost.
I return today to the national broadband plan and yesterday's submission by Carolan Lennon, the chief executive officer, CEO, of Eir, to the Oireachtas Joint Committee on Communications, Climate Action and Environment. This is against the background of the documents released under a freedom of information request to TheJournal.ie, which reveal an almost cavalier approach to the ballooning costs of the project on a monthly basis. The Eir submission points out that in April 2017, for example, €787 million was the KPMG estimate of the subsidy that would be required, and that is after 300,000 customers had been taken out of the intervention area.
The Eir submission raises a number of important issues and deserves analysis. Fundamentally, it is no secret that Eir says it could complete the national broadband plan project based on its approach, and with a roll-out to the extra 300,000 customers, for less than €1 billion. The Government is committed to €3 billion. This is in the context of documents that were revealed about a meeting held on 27 September last year. The Taoiseach was too dismissive of Eir's submission yesterday and he made comments that Eir has rejected, in that Eir would not pass houses and would cover the maintenance use, which is the opposite of what the Taoiseach said yesterday.
On 27 September last year, it was revealed that the cost went up by €300 million in one month. The Secretary General of the Department of Public Expenditure and Reform said at that meeting that there was cause to pause and review the project. That was dismissed by the Minister, Deputy Naughten. We subsequently learned of the meetings between the Minister and David McCourt of Granahan McCourt, which led to Deputy Naughten's resignation. The trajectory of the project did not change after the Minister's resignation, despite what we were told. I think the Minister got too close to the Granahan McCourt consortium; the political and electoral imperative took over and the issue of cost in the Government's requirements went out the window.
Given that the costs have ballooned even from the estimates of 2017, never mind the original estimate of €500-odd million, the Taoiseach has been too dismissive of those who have raised legitimate questions about this and of yesterday's Eir submission, which deserves further analysis. Alternatives should be considered.
The Taoiseach might have felt the need to make a big political announcement before the local elections but I return to the words of the Secretary General of the Department of Public Expenditure and Reform, Mr. Robert Watt, who said there was cause to pause and review. I ask the Government to do that now.
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We should always recall that the objective is to provide high-speed broadband to more than half a million homes, farms and businesses in rural Ireland at the same speed and cost as for people in urban Ireland. That is an objective that all of us in this House share.
We should not forget that Eir took part in the process and made an initial bid for €2.7 billion, which was higher than the initial bid from Granahan McCourt, and then pulled out of the process, citing the fact that the risks were too high and the level of oversight too onerous, and refusing to make any commitment around the equity investment it would make. While the Deputy has been critical that the equity investment made by Granahan McCourt is too low, Eir was unwilling to commit to any equity investment whatsoever.
It is, therefore, a big turnaround that the company is now saying that it can do the project for €1 billion. If that is the case then I am all ears and we must listen to it. This morning, the Department of Communications, Climate Action and Environment issued a letter to Eir, seeking further details and clarification about what it has said. We need to know whether this offer is real and stacks up, and what kind of delay would be imposed on people in rural Ireland waiting for broadband if we went back to a new procurement process. Everyone understands that neither a private nor a State company can just be given a contract; there would have to be a new procurement process. We also need to know that anything done would be within state aid rules and EU procurement law. A letter was issued today by the Department to Eir seeking that information.
Having listened to the contributions at yesterday's committee meeting, I think that as many questions were raised as answers were given. One thing we want to find out is how there can be such a difference between the €2.7 billion bid from Eir and this new offer of €1 billion. My concern, and that of the Department, is that rather than Eir making up the difference, a big part of it would be met by imposing higher connection charges and fees on those 500,000 homes, farms and businesses in rural areas than are imposed on those in urban Ireland. That would be a serious problem for us and would go against the original objectives I mentioned at the start of my reply.
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I welcome the fact that the Government is at least going to look again at this. As the local elections are over, there might be a calmer climate in which to do that properly. The health service is at a standstill and while I suggest that €3 million or €4 million could have prevented today's strike, €3 billion was cavalierly announced for this project, which was much more than any of the estimates.
I am struck by the minutes of those meetings. It was casually reported at the meeting in September that the cost had gone up by €300 million from the previous month. No one batted an eyelid, including the Taoiseach, who was at the meeting. The then Minister, Deputy Naughten, said that we should plough ahead. He, of course, had had all sorts of dinners with Granahan McCourt, which I worry about. I am not casting any aspersions, good, bad or indifferent; that might have been a political and electoral imperative. However, the former Minister got too close to the remaining bidder. That does not look good in respect of public procurement and so on, and the taxpayer is now caught for €3 billion. Minutes of a meeting on 2 May 2018 show that other alternatives were looked at and no definitive conclusion was reached. That is also revealing and contrary to what we were originally told.
If what the Taoiseach is saying is the case, I welcome the fact that the Government is prepared to look at this to try to deliver the same objective but in a much more cost-effective way for the taxpayer.
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I welcome the Deputy's welcome to my earlier response. I think, as is often the case, he accuses me of things that he does himself. It was interesting to hear the Deputy say that the cost of resolving the health sector dispute today would be only €3 million or €4 million but, of course, that is not true.
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That would be the cost in year one, rising to €15 million or €16 million in year two. That is only phases one, two and three. There would then be phases four and five-----
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The Taoiseach committed to that.
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The Taoiseach was Minister for Health at the time.
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The truth really hurts. One of the accusations made by the Leader of the Opposition was that the Government is too willing to allow costs to escalate. I am demonstrating exactly how he would behave in the same way or worse. It is €3 million in year one, €15 million in year two, then phases three and four and all the knock-ons. One needs to take into account the full cost when making a decision about something, not just the initial cost of one part of one year.
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The Taoiseach should read what he said yesterday.