Mick Barry (Cork North Central, Solidarity)

We need to talk about private procurement, phone pouches, security huts and bike sheds. The bike shed is actually illustrative of what goes on. A total of €336,000 of public money was spent on a shed for 18 bikes. There has been much media commentary to the effect that this is what happens when the State is in charge of a project or when the public sector is involved with one. The OPW did not build the bike shed, however. It does not do direct labour in that way. It contracted out for the bike shed; it outsourced the work. The contract was given to a private company, Sensori Facilities Management. This is an example of a private company profiting from public moneys. I would be interested in knowing the value of the contracts Sensori has had with the OPW in recent years and the value of contracts it has had across the public sector. I would also be interested in knowing who in the OPW signed off on the bike shed project.

Let me stand back from that example and try to look at the bigger picture. The 1990s and the first 20 years of the 21st century were the age of neoliberalism, privatisation and deregulation. Throughout the OECD area, it is reckoned that between 15% and 45% of public expenditure – it varies from country to country – now goes on private procurement or contracting out to private companies. Invariably, costs overrun because these companies are for-profit outfits. I could list examples for quite some time but will just mention metro north, the Cork event centre, modular homes, the National Treatment Purchase Fund, the public moneys paid to private nursing homes, and the way councils outsource their works on parks, roads and housing maintenance.

The example of all examples in this State in recent times is what has happened with the national children’s hospital. The current estimate for this is €2.2 billion. The committee in charge of overseeing the work on the children’s hospital on behalf of the State made a complaint that the private contractor, BAM, was attempting to extract every penny from the State, the taxpayer, on this project. It is right but it is wrong to be surprised. That is what big corporations do and what they exist for. We need to move from private procurement so the public sector can provide public services on a not-for-profit basis. In this instance, we need to establish a State construction company, not just to build major public projects like the national children’s hospital but also to have a laser focus on the delivery of social and affordable housing on a not-for-profit basis.

I will give an example from Cork. People might think the example I am about to give is that of the Cork events centre, in which BAM is also involved, with Live Nation also being part of the picture. The estimated cost for the State originally was €20 million. I was actually at the meeting of Cork City Council when it supported the proposal with €20 million in public funds. I raised issues on the night, saying it would be far cheaper and faster if the work were done as a public project. The public cost is now expected to rise to close to €100 million. We are still awaiting information from the Government on the latest news on this.

The example from Cork I wish to give is the giving of the design, build and operate contract for the new Lee Road waterworks to a private company. The moneys handed to that company for the contract amounted to €40 million. People might think that would be money well spent if it resulted in an improvement in water services in the city, but it has achieved anything but. The chemicals that were put into the water are put into water in many countries and cities around the world, but when they interacted with pipes below the ground, which in some cases were 100 years old, it resulted in the stripping of sediment from the inside of those pipes and in brown and orange water, discoloured water, coming from people's taps. This is an example of private procurement and the allocation of a large sum of money to a private company that resulted not in a better water service but a far worse one and a real social problem in Cork city, with people having to deal with the situation. I have spoken about this here many times and will not go into further detail tonight.

The Nevin Economic Research Institute, NERI, has studied the experience of outsourcing in the State and has found that there are real costs for the public. There are higher costs than if it were done by the public sector in terms of the profit margins that are built in. There are environmental costs when corners are cut in the interest of profit. There are legal costs when the State has to go legal to enforce contracts, as is looming at the national children's hospital. There are also social costs in terms of the treatment of employees. In general, there are lower wages, less job security, worse conditions in terms of pensions, maternity leave, sick pay, holiday arrangements and so on. The report, entitled "The decision to contract out: understanding the full social and economic impacts", points to 8% of these contracts going to pure profit, 20% going to higher management expenditure costs than would be the case in public sector contracts and wages accounting for 40%, as opposed to 60% on public jobs. There is a real social cost there, as I said, in terms of lowers wages, less job security and worse conditions.

Privatisation and the outsourcing of State contracts, which is happening internationally and in this country on a grand scale, is not good for society. It does not deliver better services or benefit the public purse. In many cases, it results in services that are less than otherwise could and should be the case, and worse conditions, both for employees and for society. We need a reversal of that process and have public investment for the public good in the public interest, rather than the State and society being ripped off by private procurement.

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