“How Could They Get It So Cheap?”

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From top: David McCourt with Taoiseach Leo Varadkar at a Science Foundation of Ireland event in new York, March 2018; Economist and associate professor at University of Limerick Stephen Kinsella

This morning.

Economist, associate professor at University of Limerick and Sunday Business Post columnist Stephen Kinsella spoke to RTÉ Radio One’s Seán O’Rourke.

It followed Fine Gael Minister for Agriculture Michael Creed saying Granahan McCourt will be putting less than €200million into the National Broadband Project, compared with €3billion from Irish taxpayers.

Mr Creed’s comments were made on Clare FM last Wednesday and reported by Justine McCarthy in The Sunday Times yesterday.

Mr O’Rourke asked Mr Kinsella for his thoughts on a ministerial press statement saying that Granahan McCourt is “responsible for €2.4billion towards costs” in relation to the project.

Mr Kinsella said:

“They have to run the network but they’re not being paid to actually install it. We’re paying them to install it. So the State fronts up the money first, builds up the network and they then operate the network.

“And in operating the network they recoup fees from the operators that they’re going to contract out to – to sell you your broadband: Vodafone and so forth.

“So while they will have to invest that money, they’ll be getting it in, in revenue as they do so. So the actual amount of the money that they front up, as the minister said, will be in the region of  €180million.

“This time last week, we conservatively estimated, my colleagues Eoin Reeves and Donal Palcic, estimated it [the €180million figures] to be around €300million-€400million. And we assumed that we were very conservative when we assumed that.”

Asked if he thinks it’s a good deal for the State, Mr Kinsella said:

“…The negatives are that the advice from the Department of Public Expenditure has been ignored and the public spending code hasn’t been adhered to. And we don’t really have full confidence that the private sector is bearing enough of the risk to justify the amount of investment that the State is putting into it.”

Given Mr Kinsella’s earlier estimate of €300million to €400million now being confirmed as €180million, Mr O’Rourke asked Mr Kinsella: “how could they get it so cheap?”

Mr Kinsella replied:

This is the question. It would be a very low-ball figure in the history of public-private partnerships like this and again my colleagues at the University of Limerick, Eoin Reeves, and and Donal Palcic are very well published on this, and around €300million-€400million would have been a conservative estimate. €180million seems quite low.”

“But again we are where we are now. The Cabinet has decided to award preferential bidder status to this company. If they decided to cancel it tomorrow there could well be very serious legal implications for the State.

“So the question is, right now: What aspect within the contract structure exists, to make sure that three or four years down the line, this company can’t just flip and asset strip it, extract the public value that is already put in there – that’s the key question for me at least.”

Listen back in full here

Earlier: Bryan Wall: Your Money And Your Broadband

Previously: “Seán, You’re Sounding Like A Member Of Fine Gael’s Frontbench”

23 thoughts on ““How Could They Get It So Cheap?”

  1. Johnny

    He’s not really an economist is he,stop haha.
    So if I’m a shareholder in the Holding Co and I decide sell my shares,your going stop me how now exactly :)
    What a dope.

    1. Johnny

      People on here take the piss regularly out of SF’s funky economics,this guy omg !
      Is it going be like a hybrid deal or something…

      1. johnny

        -this is one reasons, why i have a big problem with Steve,he has a PHD in MAS (male answer syndrome).
        “…. If they decided to cancel it tomorrow there could well be very serious legal implications for the State”
        A-is he now a lawyer on top ALL his other areas expertise
        B-has he reviewed the contract and the breakup/cancellation clauses

        Given its fair assume NO to A + B then,WTF is he actually talking about, like why is he scaremongering and giving half baked BS ‘opinions’ blind-he’s just a cheap hack.
        -this is the FG narrative that this dope is puking up on RTE,that OMG NO NO the contact can NOT no matter what,no no it just can’t be cancelled-why ?
        -contracts are canceled all the time for a variety reasons, thats why they have ALL those clauses dealing with it, that he has not read nor is qualified to opine on.
        -now if the sate negotiated a really awful breakup clause then the AG needs explain why and release it for review.

        1. eoin

          Not one, but two PHDs.

          “What aspect within the contract structure exists, to make sure that three or four years down the line, this company can’t just flip and asset strip it, extract the public value that is already put in there – that’s the key question for me at least”

          Yeah, Stephen, it’s the flipping that’s key, not the €40,000 per household cost to the State (at 20% take-up), not the competition with Eir and Imagine who are already targetting some of the 540,000 households, not the fact there’s only one bidder, not the shenanigans around the procurement. The flipping, that’s the key question alright.

          Spoofer.

          1. Vanessa (spiritually) Frilly Keane

            The flipping is a significant risk since
            Like let’s be honest
            That’s why these lads got into the gig in the first place

            But of equal risk
            Well IMO anyway
            What should have a similar score/ ranking on the Risk Register
            Is Granahan McCourt themselves

            What if they’re sold or merged?
            What they’ve a Fitness & Probity slip up
            What if they’re own compliance and whathaveya’s fall short of US regulators ?
            Like seriously
            AML/ CTF is a fault line all on its own
            If that moves
            It’s game over and good luck trying to get another crew in to follow through under the same contract

            Ara’
            Ye’ll probably need one’ah the lads around here to flag it instead

            In the meantime
            McCourt himself
            And his connect to the Regan White House should have been enough to get this stopped long before they shoehorned in Siteserv after the Tender deadline passed

  2. BS

    There’s such a collective malaise arounf this…from everyone

    FF wont make a stand and bring down the government over it, becsuse they’d have done the same thing
    the public aren’t bothered cause we used up all our energy stopping dinny getting the water supply

    There’s a collective “quelle suprise” about every major or minor bit of corruption that goes on in Ireland…and I’m guilty of that too…cute hoors and gombeen parish pump politics and little old Ireland deals that used to mean a road here and a new playground there now means national infrastructure deals here and endless toll bridge contracts there…

    1. Spaghetti Hoop

      That’s it in a nutshell. It’s just a slicker, more stylish brand of corruption we have today than the slap on the oul cortina roof of old.

      1. Boj

        I don’t think this is slick at all! It’s more of an in your face ‘what are you gonna do about it’ kinda corruption these days. And we never do anything about it…

        1. :-Joe

          At least don’t make the mistake of supporting one of these ff/fg +lab clowns with a vote…

          Maybe even help a few of the deluded 60%-ish of the voters into thinking likewise about credible alternatives for a change….

          Which is worse. the voters or the policians?

          :-J

  3. GiggidyGoo

    Well, we had the reference of low balling in relation to the children’s hospital. This is FGs own version.

  4. Dr.Fart MD

    FG are useless and v damaging to the country, and that as a nation you can see why foreigners often think we’re thick, because it takes a certain type of thickness to keep voting for FG/FF with the littany of disasters they’re emboiled in

    1. Rob_G

      Do foreigners who meet you come away with the impression that Irish people are thick, Dr. Fart?

          1. Rob_G

            I’ve voted for many parties over the years – definitely not SF, and not FF. Any of the others, I’d consider.

            What I’d never do, is to think that people who do vote for either FF or FG (which is somewhere between 35-70% of the electorate) are thick just because I might not agree with those two parties’ policies.

          2. Boj

            I thought you were an evidence type of guy. Past (and current) performance of FF/FG show me, at least, that they are not running this country for the good of the people, which in my experience is what people want. Therefore is it not fair to say that a huge proportion are a bit thick if they keep voting them in to clearly not run the country for the good of the people? I would imagine your blood type is FG from your own past performance. I shoulda used ergo in there shouldn’t I?

          3. millie st meadowlark

            +1Boj

            I’d say it is a case of the devil you know vs the devil you don’t.

          4. Bertie Blenkinsop

            I think “better the devil you know” is Leo’s favourite Kylie tune as well :)

          5. :-Joe

            If you don’t realise that ff/fg are the same f-ing party of foreign globalised corporate financial shareholder interests and they only represent Irelands self serving wealthy eilite establishment and not the interests of the people…..

            …then yes, you and 60%-ish of the voting public are all as thick as manure….

            Never this, that or them but maybe a vote for the other half of the same partnership is just plain ignorant of reality and politically naive…

            :-J

          6. Rob_G

            @ Boj

            “Past (and current) performance of FF/FG show me, at least, that they are not running this country for the good of the people, which in my experience is what people want.

            Your experience of ‘what the people want’ is at variance with reality then, as FF are the default most popular party, FG the 2nd most. popular

            “Therefore is it not fair to say that a huge proportion are a bit thick if they keep voting them in to clearly not run the country for the good of the people? “

            – nope; people have other priorities than you do. I personally think the broadband plan represents a waste of money, but I might feel differently if I was a rural voter. Most voters are concerned with jobs above all else; FG, though they are less-than-stellar lately on housing and other issues, have certainly delivered on jobs, which probably accounts for the facts that they are currently leading the polls in all three EP constituencies. Most voters don’t care about D O’B or Siteserv or Terry Prone; they care about Brexit and how it will affect their ability to pay their mortgage, and vote accordingly.

            “I would imagine your blood type is FG from your own past performance.”
            – wrong again; one side of my family was rabidly FF until my father, who I imagine has voted for a few of the bigger parties over the years, but never communicated his voting preference to his children, preferring us to figure it out for ourselves.

  5. :-Joe

    Who is the dumbfounded looking eejit standing next to the bloke with the poopypoo-eating grin and both looking like they just won the euro-millions after a six-month roll-over?….

    Lokking forward to the next iteration of the asset stripping firesale of state assets with Telecom Eireann, Eircom, Eir or whatever it’s going to change it’s name to next…

    Anyone know who are the political connections to the main recipients of all this pirate treasure booty about to ripped out of the economy that tax-payers will be covering the cost of for the next few decades?

    Farcical stuff….

    :-J

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