Cost of Children’s Hospital

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Dáil Issues, Finance, Health, National, Parliamentary Questions

To ask the Minister for Finance if the National Surplus Reserve Fund will be used to fund cost overruns at the national children’s hospital.

REPLY

The “National Surplus (Exceptional Contingencies) Reserve Fund” which is also referred to as the Rainy Day Fund, is intended to be an economic buffer available for drawdown in the event of a sharp economic downturn. It is intended to allow the Government of the day to mitigate the effects of such a downturn.

The aim in establishing the Fund is that in the event of a future shock, we can maintain expenditure programmes, and capital programmes in particular. Maintaining capital investment will have demand and supply side benefits by supporting employment and future productive capacity, and it will also help us escape the self-perpetuating recessionary cycle of a sudden economic shock.

The National Surplus (Reserve Fund for Exceptional Contingencies) Bill passed 2nd Stage recently Thursday, 31 January. Section 9 of the Bill sets out the criteria for drawdown of the Fund.

The first element of the criteria for drawdown is that the Minister for Finance of the day must be satisfied on reasonable grounds that drawdown is necessary to:

  •                remedy or mitigate exceptional circumstances, or;
  •                prevent potential serious damage to the financial system in the State, or;
  •                support major structural reforms with long-term positive budgetary      effects.

Indicators to establish whether “exceptional circumstances” exist could include factors such as a sharp and significant increase in unemployment, or a dramatic fall-off in tax receipts.

The Bill proposes a clear role for the Oireachtas in that money will not be paid out other than pursuant to a Dáil resolution passed on foot of a proposal from the Minister for Finance. The Minister for Finance must also consult with the Minister for Public Expenditure and Reform before deciding whether to make the proposal.

Unfortunately, we cannot predict with any great certainty what will trigger a future economic shock. What is certain is that there are external risks and challenges.  The issue of cost overruns in the building of the National Children’s Hospital, while a matter of grave concern, and one which must be addressed, would not be considered “exceptional circumstances” under the criteria proposed for the “National Surplus (Exceptional Contingencies) Reserve Fund”.

QUESTION

To ask the Minister for Health the position regarding the review of the national children’s hospital process; if the option of investigating alternatives to the continuation of the project at St. James’s will be included; and if he will make a statement on the matter.

REPLY

The independent review commissioned to understand the reasons for the cost escalation associated with the new children’s hospital construction project is underway.  As per its terms of reference, the primary focus of the review is on the governance and management arrangements in place within and between the National Paediatric Hospital Development Board (NPHDB) and Executive, Design Team, relevant consultants, user groups and contractors. The review will deal with the accountability of the relevant key parties, functions and roles.

The terms of reference of the review also require it to develop any further recommendations, if possible, which may identify any areas of potential costs savings or reductions, which are consistent with the applicable contractual undertakings and the delivery of the project, in light of its current status.  The review will be completed by the end of March subject to availability of relevant documentation and personnel, and will inform appropriate next steps by decision makers, including Government.

In December 2018, Government approved the construction investment to allow Phase B of the hospital to be instructed.  The building of the new children’s hospital on the St James’s campus is underway, Phase B works commenced on site at the end of last month. The review does not include the option of investigating alternatives to constructing the hospital on the St James’s Hospital campus.