How the government wasted €Billions

The recent controversy over the computer systems in the Health sector relates to a mere fraction of the wastage of public funds. Here we catalogue some of the more glaring instances of massive wastages, taken in the main from reports of the Comptroller and Auditor General, John Purcell. By Vincent Browne

PPARS computer system in Health: was to cost €8.8m, has cost €116m to date, and still not operational

Initially thought up by Health Board chief executives in the mid-1990s as a means of centralising pay roll processes. But from the outset there were problems. Forty million paid to Deloitte and Touche in consultancy costs but so far at best it processes wages of only 36,000 of a total of 140,000 staff in the health sector. Its sister system, FISP, also not yet operational, has cost €30 million to date, with €18.2 million going to Deloitte and Touche, and is expected to cost €176 million in total, if completed. Further embarrassment with the revelation on Tuesday (11 October) that a Department of Health and Children web site, costing €3m, has never been operational.

Roads: over €10 billion down the drain

The National Development Plan launched in November 1999 proposed an investment of €5.6 billion on national road improvements over the period 2000 to 2006. By the end of 2003 it was estimated that the cost of delivering this roads programme would be €16.4 billion. The Comptroller and Auditor General (C&AG) found that it was only after the programme started that the National Roads Authority, which had responsibility for the programme, sought to obtain costing expertise – up to then they had nobody specialising in estimating the costs of such projects.

A year after the programme started, in 2000, it was realised the road improvements would not all be completed by 2006 but it was thought 80 per cent of them would be completed by then and the whole lot would be completed by 2008. Since then it has been acknowledged that not even half the programme will be completed by the original deadline of 2006 and nearly a third will still have to be completed after 2008 (C&AG special report April 2004).

Luas: three lines were to cost €329m, we end up with two lines costing €778, five years late

In April 1994, a Dublin Transport Initiative report recommended the establishment of a three-line light-rail system for Dublin. One line was to go from Tallaght, via Naas Road, Inchicore and Heuston Station, to the city centre. A second was to go from Ballymun, via Whitehall and Drumcondra, to the city centre. A third was to be from Cabinteely, via Dundrum and the old Harcourt Street railway line, to the city centre. The total cost of this three-line system was estimated at £259 million (€329 million). The plan was to construct this over the period 1994 to 1999 and all three lines were to join up.

We have ended up, more than five years late, not with the three lines originally envisaged to cost €329 million, but with just two lines costing €778 million – and the two lines do not join up. (This information is taken from a special study commissioned by the consultancy firm DKM.)

Dublin Port Tunnel: was to cost €222.5 million, now likely to cost four times that. Also late

Original estimates in 2000 had suggested that the Dublin Port Tunnel would cost €222.5 million (£175 million). It is now certain that the costs will be no less than €750 million, but some argue the final cost will be in excess of €1 billion.

There was an immediate escalation in the costs to €448 million (£353 million) when the contract for the design and construction was awarded.

Now, five years later, Dublin City Council are in negotiations with the builders of the port tunnel to determine who will pay for additional costs amounting to €200 million.

Earlier this year, Fred Berry, chief executive of the National Roads Authority, said the cost of the project had risen to €750 million.

Deputy Finian McGrath in Dublin North Central claims that the figure for additional costs has increased to €335 million in recent weeks and that the final construction cost will be over €1 billion.

To date, 214 households in the area of Marino have made complaints of damage to their property caused by work on the tunnel and over 80 households are thought to have agreed to confidential settlements, according to Deputy McGrath.

A spokesperson for Dublin City Council stated that they had processed over half of residents' claims and were paying for decorative repairs in houses at a general cost of €5,000 per household.

The project manager of Dublin Port tunnel, Tim Brick, says the tunnel will open in March or April of 2006. Finian McGrath says the tunnel won't be finished until 2007. (Reporting by Aine Kerr)

The Irish Genealogical Project: after 17 years, now realised it may never be completed

This was established in 1988, 17 years ago. The objective was to compile a comprehensive computerised database for all the major genealogical records available in Ireland. Directly and indirectly it has received about €35m from the exchequer. The recording of data has been slow and has virtually stagnated over the last six years. While the business plan of the project envisaged one set of records (Church records) would be inputted by 2007, it is now estimated it may take a further 20 years. The Irish Family History Foundation has stated that the project may never be completed. (C&AG report 2004)

MediaLab Europe: €36 million down the drain

This was a project driven primarily by Bertie Ahern. It was established in May 2001 as a university-level research and education centre specialising in telecommunications and information technology. It was a collaborative venture with the renowned Massachusetts Institute of Technology (MIT). The government provided in excess of €36 million to the venture. It was almost a complete failure from the outset. It failed to raise anything like the sponsorship funding it promised. It undertook only a fraction of the research it promised. It played no role in attracting foreign investment into Ireland (this was allegedly one of its major attractions). Four different chief executives were given huge severance packages, salaries were enormous and it went into voluntary liquidation in February 2005. (C&AG 2004)

National Treatment Purchase Fund: £141 million provided, 80 per cent questionable

At the initiative of the Progressive Democrats, the National Treatment Purchase Fund was instituted in 2002 to help cut hospital waiting lists. €141 million has been provided for this fund in the years 2002 to 2005. 23,379 patients were funded for treatment up to the end of 2004. The plan was to divert patients primarily to private hospitals and to hospitals outside the State. In the event, 80 per cent of patients treated were treated in public hospitals in the State, with over a third (36 per cent) being treated in the same hospitals that referred them to the fund.

The question arises, how is it that public hospitals can treat patients under the National Treatment Purchase Fund and do not have the capacity to treat them in the normal way in the same timeframe? Or how is it that the State is paying twice for the treatment of these people? The answer: consultants may be self-referring public patients in some instances (that is, referring their own public patients for treatment by themselves under the Fund, thereby making more money for themselves), or the capacity in public hospitals is curiously under-utilised, for reasons unknown. (C&AG report 2004)

Medical cards for the over-70s: forecasted cost €19m, actual cost €55m

In his 2001 budget speech in December 2000, Charlie McCreevy announced the extension of the medical card scheme to cover all persons over 70 years, irrespective of means, with effect from 1 July 2001. The forecasted cost of the extension of eligibility was €19m.

The Government went ahead with this scheme even though they were warned by civil servants that the scheme might cost considerably more because it would require the agreement of the Irish Medical Organisation (IMO) and the Irish Pharmaceutical Union (IPU) and their negotiating position would be very much strengthened by the announcement of the scheme before agreement was reached with them. Nevertheless, the Government went ahead.

As a consequence, an extraordinary arrangement was eventually entered into with the doctors. A capitation rate of €438 per annum was agreed for newly-eligible persons aged 70 and over under this new scheme. This was nearly four times the capitation fee for persons previously eligible for the scheme (that capitation fee ranged from €95 to €160, with the average being around €110).

The new estimated additional cost of the scheme was €54.8 million, as against the original estimated additional cost of €19 million. And, aside from the cost, the new arrangements incentivised GPs to prioritise relatively well-off patients aged 70-plus over those who had been eligible for medical cards all along (C&AG report 2001).

GPs and 'ghost patients': GPs overpaid by €8.9m

In 2001 the Comptroller and Auditor General drew attention to potential overpayments to GPs. It transpired that 1,780 GPs had been overpaid a total of almost €8.5 million because there were over 100,000 names on the GMS (medical card) register which should not have been on it. Two years later, the Comptroller and Auditor General reported "nothing had been recovered by July 2004" of this money. Among the reasons why this was so was because there "was no provision in the existing contracts (with GPs) that would allow for the automatic deduction of an identified overpayment". (C&AG reports 2001, 2003)

Public-private partnership in school building: costing 8 to 13 per cent more

In line with the ideology of this Government and, particularly, the Progressive Democrats, a pilot scheme was devised to involve a private company in the construction and maintenance of three second- level schools. The deal agreed with the private company, Jarvis Projects Ltd, required Jarvis to finance, build and equip the schools on State-owned green-field sites, and then to manage and maintain the school facilities over a 25-year period. In return, the Department of Education and Science was committed to making payments totalling an estimated €283 million over the period, or €150 million in present day net-value terms. The Comptroller and Auditor General found that the project was between 8 and 13 per cent more expensive than it would have been, had the schools been built and maintained in the normal way. So a waste of between €12 million and €20 million. (C&AG report 2004)

Farmleigh House: was on sale for £13m; the State bought it for £25m

In 1999, the sale of Farmleigh House, owned by the Guinness family, was advertised in the national newspapers. The guide price was said to be in excess of £10 million. The Guinness family were expecting to sell the house for £13 million. The Government authorised the then Minister for State at the Office of Public Works, Martin Cullen, to pay up to £25 million for the property and this was the price paid. A further £20 million was spent by the State in renovating the house.

It was said at the time of the purchase that the house would be used as an alternative venue to Dublin Castle for State receptions. It has never been used for State receptions in the six years since its purchase. It was also stated it would be used to accommodate visiting Heads of State. Only two dignitaries are known to have stayed there in the six years, the President of the People's Republic of China and the Secretary General of the United Nations.

Residential Institutions Redress Board: the State ends up with a cost of over €700m, while the religious congregations got away for €178m

In June 2002, the Government entered into an agreement with 18 religious congregations whereby the State indemnified these congregations against claims by persons abused in institutions run by them, on payment of €128 million. This €128 million included a property transfer of €76.86 million, and a provision of €10m for counseling and support.

The deal was done on an assumption that the State and the congregations would be deemed equally liable for the damage done to the former residents in the institutions concerned and the view at the time was that the total cost of the redress scheme would be in the region of €250 million. In fact, the total cost of the scheme is likely to be in the range of €800 million to €1,000 million, which means that the State will end up paying by far the greater amount. No considered estimation of the cost of the redress scheme appears to have been undertaken at the time the deal with the congregations was entered into.

In addition, there are doubts about the legality of the €78 million property scheme, for most such properties are or were held in trust by the religious congregations, trusts established for educational or religious purposes, purposes far removed from the compensation of persons abused in institutions. (Based on the C&AG report 2003 and other sources)

Automated Passport System: was to cost around €5 million, ended up costing €28 million plus

The initial cost was projected at between €2.8 million and €6.47 million. Consultants were engaged and they recommended a system costing €13.6 million. Eventually a contract was signed for a system costing €22 million. The final outrun was almost €28 million. The original tender costed support and maintenance at less than €2m per annum but this has now increased by 50 per cent. It was estimated that a minimum of 40 days external project-management assistance would be required, costing between €480 and €1,450 per day. The actual number of support and maintenance days turned out to be at least 290 days and that on the basis of the maximum cost per day. (C&AG report 2004).