Private prosperity, public loss

Getting the language right is always the key to convincing people that common sense need not apply. What, for example, could possibly be wrong with "compassionate conservatism", the slogan that George Bush used to delude people into believing that they were not electing one of the most aggressively right-wing governments in American history? Or with public-private partnership. It's a nice, cuddly phrase.

The alliteration, especially in the acronym PPP, gives it a punch of go-getting energy. Partnership is warm and cosy. So zippy and kindly, all in one go. What's not to like?

Unless, that is, you happen to cling to the outmoded notion that you live in a democracy where the public gets to know how its money is being spent.

One of the reasons why governments like PPPs is precisely because they give misleading impressions. PPPs can be used to keep spending off the balance sheet. You pay a private company to build and run a piece of infrastructure. You guarantee them large profits over the life of the contract. But you only have to account on an annual basis for the payments made that year. Real liabilities can be disguised.

The government is happy. The private company, with its long-term guaranteed returns, is happy. And best of all, when anyone asks whether the PPP represents good value for public money, there is a lovely answer - none of your business. Because we are now dealing with private companies, commercial confidentiality can be invoked.

Last week, in a report that got too little attention, the Dáil's Public Accounts Committee (PAC) drew attention to its frustration, when doing its job of scrutinising public spending through PPPs, at "either not having appropriate access to information relating to these projects, or being publicly unable to refer to information deemed to be commercially sensitive". The PAC asked the Minister for Finance almost two years ago to "consider how effective parliamentary oversight of PPPs can best be secured".

Brian Cowen wrote back to say that he is "satisfied that [ current] arrangements are adequate to facilitate parliamentary oversight of PPPs". So the body entrusted by our elected representatives to scrutinise public spending can't get information on PPPs, or is barred from telling us about some of the information it does manage to get. And the Government is perfectly satisfied with this arrangement.

Why wouldn't it be? It has never made a good case for its current PPP mania. As the PAC pointed out, even the usual consideration that attracts most European governments doesn't apply here. The level of public debt is very low here, so we don't actually need to practise the PPP sleight-of-hand. But it's the fashion, and God forbid we should fail to adopt any idea that helps to make rich people richer by giving public money to private companies.

Ireland is proportionally the third highest user of PPPs in the EU. In 2005, PPPs accounted for 3 per cent of public investment. In 2009, the figure will be 15 per cent - €3.6 billion in real money. There are currently 73 PPP projects on the go, including roads, courts, school building and refurbishment, sewage treatment plants, prisons, light rail, residential re-development and drainage.

This huge increase in PPPs is happening in spite of substantial evidence that they often represent lousy value for public money.

The Comptroller and Auditor General's reports have highlighted a few of the PPPs that we do know about. There's the car park at Beaumont Hospital in Dublin. It ended up costing the public between €9 and €13 million more than if it had simply been built by the State. There's the Cork School of Music, which had an estimated cost of €12.7 million. It was sent for a PPP and the company involved agreed a deal with the Department of Education under which it would get 25 annual payments of €8.5 million each to design, build and maintain the building - a total cost of €212.5 million.

There's the project to build and maintain five new secondary schools, a PPP awarded to the British firm Jarvis. The department claimed that the deal would work out 6 per cent cheaper than building and maintaining the schools in the normal way. In fact, when the comptroller analysed the deal, he found that it was actually between 13 and 19 per cent more expensive.

Even if there were not these concrete cases to remind us of the need for scrutiny, we know from bitter experience that the best guarantor of inefficiency is secrecy. It is axiomatic that deals done behind a screen of confidentiality will not be done in the public interest. We are still struggling to ensure basic accountability in the public sector. So what do we do? License a whole new level of unaccountable behaviour in the name of "commercial confidentiality".

We now have the ludicrous situation where the PAC can put the screws on Ministers, departmental secretary generals and the heads of State bodies, but can't dare to question corporate bosses about their use of public money. Makes you wonder who's really in charge, doesn't it?