There is no “value for money” in giving away public assets for nothing

Paul Sweeney23/04/2017

The Minister for Health Simon Harris insists that “his ‘golden share’ in the new €300 million State-funded national maternity hospital means the public interest will be protected and the facility will operate independently.”

But why give away public assets to anyone, to any company, to any charity or to any religious order? Why is a so-called “Golden Share” needed when we, the people, should own the asset?

St Vincent's maternity hospital
St Vincent's maternity hospital

St Vincent's Hospital with €300/500m Free Gift Investment in red

 

Has a “Value for Money” study under the Department of Finance’s own framework been undertaken on the project and on the allocation of its ownership to the St Vincent's Healthcare Group (SVHG)? Was there a competitive tender to run this important National Maternity Hospital?

This is the modern way of getting the best bids for major work undertaken for the state. Is it that the nuns did a good job for 100 years and because of this, they are assumed to be the best outfit to run the hospital? Are “grandfather rights” the way a modern state should allocate vast sums of money? Especially when our health service is not  currently giving “value for money”?

 

Free Privatisation is Much Bigger than this Hospital

The issue is much bigger than the new National Maternity Hospital. The ownership of many, perhaps most schools and most hospital buildings and their equipment in Ireland, funded and maintained by the state, was given free to religious orders, without competitive bids. Granted the religious may have supplied the sites.

Successive governments simply gave the schools and hospital buildings away to the religious orders in the past because Ireland was a Catholic state and they appeared to do the job. But that was then. Now all public assets which were given away free to the religious, worth tens of billions of euros, should be taken back into public ownership and be finally added to the Balance Sheet of the Irish state as public not private assets.

These assets could then be rented back at appropriate rents to those orders who are efficient and caring – possibly many of them.  The fact that the religious orders delivered education and health care on behalf of a predominantly Catholic Irish state in the past does not mean that this system of “free privatisation” of public assets should continue.

It is free privatisation because no payment was made in return for the assets. Normally in privatisations there are buyers who pay money for public assets through a bidding process.

There is growing opposition in political parties to free privatisation of billions of euros of public assets in schools and hospitals to various religious orders. The opposition has been driven in part by the fact that some of these orders have reneged on agreements to redress those they abused in past decades. This issue alone – not the free privatisation of public assets - has forced somnolent politicians into finally being critical of the fact that this religious congregation is to be the owner of the new hospital at Elm Park.  The religious orders were to pay half of the €1.5bn redress costs.

It is possible that many politicians have not even considered that this amounts to free privatisation of public assets due to the history of the power and influence of the religious orders in Ireland.

 

Where is the Value for Money Study?

Ten years ago the government published a guide on establishing value for money. It is a technical 110 page document. It states that “The Government’s Value for Money and Policy Review Initiative is part of a framework introduced to secure improved value for money from public expenditure. The objectives are to analyse Exchequer spending in a systematic manner and to provide a basis on which more informed decisions can be made on priorities.”

This guide may have been used in evaluating whether the new maternity hospital was needed, but why was it not applied to the issue of ownership and thus control and to the bidding process to run the hospital?

The decision by the government to give the €300 million physical asset of the National Maternity Hospital to the SVHG is being made made for all the wrong reasons. There has been no “value for money review” of whether it should be given to this organisation, nor has there been a competitive bid for operation of this  major public investment. The ownership of the asset will be with the SVHG, with the state only having a dubious “Golden share". 

Governments finally need to take a wider public interest viewpoint and terminate all free privatisations of hospitals and state-funded schools, and furthermore, seek to take back the ownership of all such historic free privatisations and ensure that these assets are listed on the state’s own Balance Sheet.

This is a version of an op ed piece in last Saturday's Irish Times by Paul Sweeney.

 

Posted in: HealthInvestment

Paul Sweeney     @paulsweeneyman

paul-sweeney

Paul Sweeney is former Chief Economist of the Irish Congress of Trade Unions.  He is a member of the Economic Committee of the ETUC and chair of TASC’s Economists’ Network. He was a President of the Statistical and Social Enquiry Society of Ireland, a member of the National Competitiveness Council of Ireland, the National Statistics Board, the ESB, TUAC, (advisor to OECD) and several other bodies. He has written three books on the Irish economy and two on public enterprise, including The Celtic Tiger; Ireland’s Economic Miracle Explained and Selling Out: Privatisation in Ireland, chapters in other books and many articles on economics.


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