A persistent feature of public financial management in Ireland has been the extreme year-to-year gyrations in the volume of State investment.

The aftermath of the State insolvency of 2010 and resort to International Monetary Fund (IMF) and European Union (EU) lenders when the Irish Government could no longer finance itself saw a sudden halt to new capital projects.

During the Troika years, the volume of State capital spending halved, and has only recently begun to recover. A Meath county councillor, around 2013, complained that ‘there’s not a bag of cement in the council yard’.

The feast-or-famine continues, in the opposite direction: the recent surge in capital spending is accelerating with loosened purse-strings across the public sector and cheerleaders in politics and the media calling for an ever-expanding capital programme.

Unstable year-to-year capital allocations deliver double trouble. Construction firms face uncertainty, higher costs and the risk of going under when bust follows boom, while the expansion phase tempts politicians into rash promises and carelessness about value-for-money.

Recent examples

Two recent examples will suffice.

The bill for the National Children’s Hospital (NCH), first approved by Government at a cost of €800m, is headed for almost treble that figure, the biggest overshoot in the history of the State and not fully provisioned in future budget allocations.

Meanwhile the UK’s secretary of state for Northern Ireland, Hilary Benn, was noticeably reluctant last week to commit Treasury money to the €350m cost of a new stadium in west Belfast for the Antrim county board of the GAA.

There has yet to be a thorough after-the-fact inquiry into the more egregious capital cost over-shoots, not even the €1,450 million extra incurred in the children’s hospital fiasco

Not so his counterparts in the Republic, who cheerfully volunteered to go beyond their earlier €48m promise to help with the emerging cost over-run.

There are to be 35,000 seats in the new stadium to host five matches during the 2026 European soccer finals. A business plan for a stadium project in the real world would feature 30 or 40 matches per annum for a 30 or 40 year lifespan, as Benn appears to appreciate.

RTÉ’s Prime Time last Thursday revealed a fresh example. There is a children’s science museum at Sandyford in south Dublin called Explorium which has reopened recently after the COVID-19 interruption.

Already built and paid for by private business, it is attracting adequate patronage to cover the running costs according to its owners. But it is now threatened by a second, also in Dublin, in the inner south city beside the National Concert Hall, to be paid for to the tune of €70m by the ever-bountiful Exchequer.

Proprietors of the Sandyford centre, interviewed on RTÉ, claim that their facility is more extensive than the proposal for the National Concert Hall and that it could cease to be viable if the State picks up the tab for a nearby competitor.

Public spending code

The Kildare TD Catherine Murphy has expressed alarm at the potential cost but also at the apparent absence of a business case for this second science museum for kids in Dublin.

There has, according to Deputy Murphy, been a failure by the Office of Public Works to conduct a cost-benefit appraisal of the scheme as required by the Public Spending Code.

The private charity behind the scheme claims to have legal advice supporting a claim for the full reimbursement of the capital cost from the State.

State capital projects

Economic evaluations of State capital projects in Ireland are routinely delegated to the project promoters or to consultants, often accountancy firms, who commissioned them.

State agencies are permitted to mark their own homework and invariably conclude that their schemes are just fine.

Projects need to have a champion of course but the project champion should not be invited to do the evaluation, and no such procedure was envisaged when the Public Spending Code was introduced.

The officials at the Department of Public Expenditure and at the Department of Finance are understandably sceptical about the independence of these promoter-financed economic ‘evaluations’ and have even expressed disquiet in public with the in-house assessment of the National Broadband Plan.

There has yet to be a thorough after-the-fact inquiry into the more egregious capital cost over-shoots, not even the €1,450 million extra incurred in the children’s hospital fiasco.

Over the last 12 months, two Oireachtas committees and all of the mainstream media have devoted daily attention to the modest €4m or €5m which has apparently gone astray in RTÉ.

Public Investment Act

The best defence against waste in the capital programme would be a Public Investment Act placing the public spending code on a statutory basis.

This would prohibit the commissioning of economic evaluations by the agencies promoting projects and would require automatic, and fully independent, assessments post completion, and on the public record.

Capital cost overshoots exceeding pre-set limits beyond the sanction initially sought from Government would trigger a full public inquiry.

Responsibility for the €1,450 million overshoot on the children’s hospital remains a mystery.