Why is the Government taking such a risk on its €3bn Broadband Plan when top officials have advised against it, asks Political Editor Daniel McConnell.
Minister, please see our final departmental observations in relation to the National Broadband Plan. I strongly support these observations, Robert.”
Department of Public Expenditure secretary general Robert Watt’s last-minute plea to his minister, Paschal Donohoe, only last week to pull back from the €3bn broadband plan was unambiguous.
“We strongly recommend against approval of the appointment of the preferred bidder to the current NBP procurement process on the grounds of cost and affordability, impact on the National Development Plan, and on projects forgone as a result, value for money and specifically uncertain benefits, unprecedented risk for the exchequer and compatibility with Project Ireland 2040,” states Watt’s memo.
But as we know, despite his personal pleas, these strongly worded concerns were ignored by ministers with the green light given to the project.
The Government has published the concerns as well as a host of internal documents which clearly show the plan as agreed by ministers on Tuesday is a massive gamble.
Watt and his officials make clear that alternative, affordable, and sustainable options are feasible to achieve the same end, and crucially, they argue they would cost just €1bn, a third of the projected cost of the NBP.
In their memo, Donohoe’s officials say that the project would require an additional capital spend of €477m between 2019 and 2022 and over €1.5bn additional in total.
They argue this added funding is on top of the additional cost of the National Children’s Hospital and increased funding to tackle climate change.
“We do not consider that public capital investment should be expanded by more than the accelerated rate already envisaged in the NDP,” they warn.
The officials caution that the reallocation of funds for broadband “would have serious implications” for other planned investments, which would require the cancellation or delay of a wide range of projects.
To fund broadband, the officials warn that a reduction of €300m in the Department of Housing would be required, meaning the cancellation of the delivery of 1,500 social houses.
It will also mean a €200m reduction in Transport which equates to the entire budget last year for repairing regional roads.
In Health, it will mean the cancellation of eight primary-care centres and in Education it will mean a hit of €130m and the axing of 26 primary schools.
In terms of value for money, Watt and his officials say they have “major concerns in relation to the cost benefit analysis”, that the justification for the cost “has not been demonstrated satisfactorily”.
“This involves excessive costs and risks for the Irish taxpayer with questionable benefits, many of which are private benefits but to be funded at public cost,” warn the officials.
Watt and his officials also express concern that “the State will not own the asset, despite investing up to €3bn in it (as compared with a private sector investment of only [figure not given]... It is a challenge to conclude that this contract represents value for money or in the best interests of the taxpayer.”
The officials say the risk to the State is enormous. “The State is being asked to take on unprecedented risk associated with this project.
“Poor take-up of the service or emerging new technologies could leave the State having funded a stranded or potentially obsolete asset — an asset the State will not even own.”
And while Government has insisted there are no alternatives, Watt and his officials state in the advice to ministers that an “alternative, affordable approach” does exist and will only cost €1bn.
On Tuesday, at their six-hour Cabinet meeting when the NBP was approved, ministers heard of the concerns expressed by Watt and the other
Sources say they were not convinced by the alternative options proposed by the officials and that while they listened to the potential risks, they agreed the gamble was worth it.
The huge gamble places Donohoe in a very uncomfortable position. To be so at odds with your own officials and to reject their concerns so vehemently is remarkable.
But Leo Varadkar and Donohoe have staked their political reputation on this gamble in the hope the very parts of the country who have abandoned Fine Gael in 2016 will reward them at the next
general election, which is expected within the next 12 months.
The argument is that by standing up to the suited bureaucrats in Dublin, the Government is delivering for rural Ireland and will help its cause electorally.
Donohoe yesterday defended the decision notwithstanding the concerns expressed by his most senior official.
“As minister I have to receive advice, but I ultimately have to make a decision in relation to what to do.”
He said he believes there are safeguards within the contract for the project that “are capable of securing our needs as this project rolls out”.
The great significance of Watt’s complaints is that they cut to the heart of the Government’s competency. Why is it taking such a risk?