Monday 19 August 2019

Government should be able to walk away from big State infrastructure projects, says senior civil servant

Robert Watt from the Department of Public Expenditure and Reform. Photo: Gareth Chaney, Collins
Robert Watt from the Department of Public Expenditure and Reform. Photo: Gareth Chaney, Collins
Economist Colm McCarthy. Picture: Damien Eagers
The cost of building the new national children’s hospital in Dublin increased by 450 million euros, health chiefs said (Brian Lawless/PA)
Hugh O'Connell

Hugh O'Connell

The government should be able to walk away from big State infrastructure projects that are costing too much, a senior civil servant has said.

Robert Watt, the secretary general of the Department of Public Expenditure, made the comments in the wake of the spiralling cost overruns with the National Children’s Hospital (NCH) and the up to €3bn outlay on the National Broadband Plan (NBP).

Mr Watt strongly criticised the NBP prior to the Government deciding to proceed with it in May. The outspoken civil servant warned Finance Minister Paschal Donohoe earlier this year that the plan for rural broadband represented an “unprecedented risk” to the state’s finances.

Mr Watt told the MacGill Summer School in Glenties, Co Donegal that he had nothing to add to what he said previously, before joking: “Unless it’s in the bar, privately.”

Mr Watt said that there needs to be a “culture of challenge” in the civil service and said it was “critical” for governments to be able to walk away from some big spending projects.

“Critically, this is where the politics gets very difficult, it’s critical for this Government and for future governments to be able to walk away from projects to which they’re committed when they see that ultimately the cost is greater than they initially expected,” he said.

Mr Watt added: “It’s ok sometimes to change your mind.”

He also said there are some projects in the National Development Plan “that aren’t set in stone” and the Government needs to make decisions on them.

He said that in order to avoid cost overruns in the future there needs to be more time and money spent on project specification and a “thorough independent reviews” before “a decision on whether it represents value for money or not”.

He said there is an “optimism bias” with some State projects that sees the government proceed with them before there is a fully costed business case. He said that Mr Donohoe will bring proposals to government in September that will set out a series of measures to avoid overruns in the wake of the children’s hospital debacle.

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Economist Colm McCarthy. Picture: Damien Eagers

Speaking on the same panel, DCU economist Colm McCarthy said too many big State spending projects do not receive an objective economic evaluation. He called for a Public Investment Act which would forbid government from proceeding with large projects that do not have any economic appraisal and a certificate that says it is in compliance with the public spending code.

Mr McCarthy said that the NCH cost overruns was “such an egregious scandal” that the government should ask a retired judge, under the Commissions of Investigation Act, to “spend a few years” examining why it ran over budget and why was the St James’s site chosen for the hospital.

Technology expert and journalist Karlin Lillington told the audience at the Highlands Hotel that the government was wrong to “plough ahead” with the broadband plan when there was only one remaining bidder.

“We need to get the national broadband plan right, not get it fast,” she said, before later adding: “I think the plan that is put forward right now is just full of insanity.”

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The cost of building the new national children’s hospital in Dublin increased by 450 million euros, health chiefs said (Brian Lawless/PA)

Speaking to reporters on the fringes of the MacGill summer school, Mr Watt said that he stood over his views on the National Broadband Plan, but said that he was now working to deliver the plan following the government decision.

“The views are on the record. Those are the views of myself and my colleagues. It is our job to give our views. It is not our job to hide our views. But it is government policy, the government have decided they are going to proceed and that is what they are going to do," he said.

During previous visits to Glenties, Mr Watt has spoken about making it easier to sack underperforming civil servants. Asked if that should be the case in the health service, Mr Watt said: “We are focusing all of the time on having more of a performance culture where we try to improve performance.

“Obviously Paul Reid is now the CEO of the health system and he is grappling with those challenges and the Minister has made new announcements now in relation to the structure.”

READ MORE: State's approach to infrastructure projects criticised by CEO of construction giant behind National Children's Hospital

On the National Children’s Hospital, Mr Watt admitted that it is being built on a “challenging site” but said the co-location alongside St James’s Hospital was the reason for this.

“There’s a lot of ground works that had to be finished, enabling works before the hospital was actually built and it’s a challenging site where it is clearly,” he said.

“But there are good reasons why it is there because it’s co-located beside a large hospital and that was the advice from the health side that they needed the children’s hospital to be located beside a general hospital.”

Mr Watt also rejected that contention that the overrun with the hospital had been “a disaster” and said the government was now trying to learn from its mistakes with the project.

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