Toll Roads Boondoggle - The “acceptable” face of waste in transport spending

Lord Glentoran · 15-05-2020 10:14am #1

Shane Ross was faced with questions in the Dáil yesterday about moneys payable to the toll road operators during the Coronavirus crisis. Turns out there are no enforceable break clauses so the taxpayer is caught on the hook for subventing the M3 amongst other private sector outdoor relief schemes.

No wonder certain buggers lobbied against extending the railway to Navan. Too much gravy to be had. Funny how every penny spent is grudged to the railway and the rest of PSO transport but spaff all you like on shadow tolls, me boyos.

Linky link: https://www.thetimes.co.uk/article/coronavirus-in-ireland-taxpayer-left-on-the-hook-for-under-used-toll-roads-xq9sr79f2

L1011 · 15-05-2020 11:37am

Only two toll roads have this clause. The M3 had gone over the traffic levels requiring payment before this all happened but this will have brought it back under

Losty Dublin · 15-05-2020 5:22pm

It's one of those peculiars that leaves people dubious about infrastructure planning and how our solutions are arrived at. That a carrot had to be dangled to ensure that the M3 built was one thing but you'd wonder entirely about the sense of having the non tolled M2 close to the twin tolled M3. Meanwhile both M's are partially serving Ratoath and Dunshaughlin and Ashbourne on poor regional roads on what are exceptionally busy cross country routes. And as for an improved road to Virginia, Cavan and Fermanagh, well the N3 clearly doesn't count beyond the Boyne.

And all at the expense of the long lamented railway. But not to worry, sure they have a wee 24 hour bus to keep them amused :rolleyes:

Zebra3 · 15-05-2020 6:01pm

Losty Dublin wrote: »

It's one of those peculiars that leaves people dubious about infrastructure planning and how our solutions are arrived at.

Legal corruption.

NTR give money to FF.

FF give NTR no-loss contracts.

Podge_irl · 15-05-2020 6:36pm

In isolation it is impossible to know whether this was a nonsensical or reasonable deal. In reality to give anyone guaranteed income you get something in return. Maybe in normal traffic patterns the govt would get more income than if they hadn't guaranteed a certain level.

Peregrine · 16-05-2020 12:52am

It was already happening with the Limerick Tunnel before COVID-19.

A Transport Infrastructure Ireland official told the committee “conservative estimates” projected further traffic payments of about €150 million over the remainder of the contract, bringing the total projected State expenditure to about €200 million.

https://www.irishtimes.com/news/ireland/irish-news/taxpayers-face-200m-bill-for-underused-toll-road-1.3437169

PeadarCo · 17-05-2020 7:45am

Zebra3 wrote: »

Legal corruption.

NTR give money to FF.

FF give NTR no-loss contracts.

It's public private partnerships so the toll in effectively equates to the interest rate on the money borrowed. If you guarantee a certain return you may be obtain a lower interest rate(and therefore lower toll charge) over the life of the loan compared to making the return dependant on toll takings. You are going to measure this over the life of loan. While the government takes the hit for low traffic volumes it also benefits when traffic volumes exceed the target.

Calling this legal corruption is completely reactionary and shows a lack of knowledge of why these decisions are taken. Just because you don't like the decision and understand why it was taken does not suddenly make it corruption.

Zebra3 · 17-05-2020 9:26am

Why did NTR give money to FF?

SEPT 23 1989 · 17-05-2020 9:37am

https://www.google.com/amp/s/amp.independent.ie/irish-news/private-firm-to-reap-115bn-bonanza-from-m50-toll-deal-26628381.html

[Deleted User] · 17-05-2020 9:45am

PeadarCo wrote: »

It's public private partnerships so the toll in effectively equates to the interest rate on the money borrowed. If you guarantee a certain return you may be obtain a lower interest rate(and therefore lower toll charge) over the life of the loan compared to making the return dependant on toll takings. You are going to measure this over the life of loan. While the government takes the hit for low traffic volumes it also benefits when traffic volumes exceed the target.

Calling this legal corruption is completely reactionary and shows a lack of knowledge of why these decisions are taken. Just because you don't like the decision and understand why it was taken does not suddenly make it corruption.

You are just parroting the usual justifications for PPP. You are not explaining its misapplication here.
Zebra3 has accurately assessed the lie of the land.

PeadarCo · 17-05-2020 10:10am

[Deleted User] wrote: »

You are just parroting the usual justifications for PPP. You are not explaining its misapplication here.
Zebra3 has accurately assessed the lie of the land.

If you would prefer to have less money to be spent on other infrastructure and on public services that's your call. Having the private sector paying for the M3 certainly helped the government finances in the last recession unless you would have favoured even more austerity measures. But again that's your call. Remember the money that the private sector invested was money the government didn't have to borrow, which has increased the governments borrowing capacity.

The post I responded to explained nothing. It called the decision on the method of financing the M3 and a number of other motorways corruption without a single bit of evidence. Your gut feel is not evidence. Just because a decision is made that you disagree with doesn't make it automatically corruption. Look at the Brexit debacle and the current Covid crisis. Look at Trump and Johnson and the damage they have caused because they haven't bothered to understand the details and went with nice sounding slogans.

[Deleted User] · 17-05-2020 10:14am

Yeah, Yeah, Yeah. Excuse the indefensible all you want. FF were a corrupt bunch of sh!ts and used infrastructure projects and public contracts to enrich insiders.
Never forget how venal they were during those years.

Is PPP, correctly implemented, capable of delivering value for money to the taxpayer?; probably yes. Did it? No.

Carawaystick · 17-05-2020 9:03pm

PPPs are just a way of cooking the books for neoliberals.
You get a company to get their profit, and build the infrastructure costing the same as if the state built it... so it has to cost more in the long run. but the geniuses that brought austerity think its they way to do it.

PeadarCo · 18-05-2020 9:38am

[Deleted User] wrote: »

Yeah, Yeah, Yeah. Excuse the indefensible all you want. FF were a corrupt bunch of sh!ts and used infrastructure projects and public contracts to enrich insiders.
Never forget how venal they were during those years.

Is PPP, correctly implemented, capable of delivering value for money to the taxpayer?; probably yes. Did it? No.

So what's your evidence? All I see are slogans that are not backed up by one bit of evidence.

As we have seen with Brexit and the Covid 19 crisis deciding policy by slogans and ignoring evidence isn't a good idea.

Lord Glentoran · 18-05-2020 12:16pm

PeadarCo wrote: »

So what's your evidence? All I see are slogans that are not backed up by one bit of evidence.

As we have seen with Brexit and the Covid 19 crisis deciding policy by slogans and ignoring evidence isn't a good idea.

“Nothing to see here, look away now” :rolleyes:

[Deleted User] · 18-05-2020 5:13pm

PeadarCo wrote: »

So what's your evidence? All I see are slogans that are not backed up by one bit of evidence.

As we have seen with Brexit and the Covid 19 crisis deciding policy by slogans and ignoring evidence isn't a good idea.

Were you paying even the slightest bit of attention during the late nineties and noughties?
The only reason why more PPP wheezes weren't done was because FF insiders were squabbling as to how it would all get divided up. It is part of the reason why nothing got built in Dublin Dockland by the time the crash came. It actually delayed delivery...how perverse is that.

donvito99 · 19-05-2020 11:18am

Lord Glentoran wrote: »

“Nothing to see here, look away now” :rolleyes:

Maybe you should engage with the points he expanded on rather than refusing to elaborate on any of your own and fishing for thanks

Lord Glentoran · 19-05-2020 1:27pm

donvito99 wrote: »

Maybe you should engage with the points he expanded on rather than refusing to elaborate on any of your own and fishing for thanks

Maybe I won’t, thanks, other than to reiterate that there is endless largesse tolerated to keep the status quo of rural sprawl and ever expanding road traffic going at any price.

Sligo eye · 20-05-2020 3:52pm

PeadarCo wrote: »

So what's your evidence? All I see are slogans that are not backed up by one bit of evidence.

As we have seen with Brexit and the Covid 19 crisis deciding policy by slogans and ignoring evidence isn't a good idea.

I’d like to know your views. Is Urban sprawl growing out of Dublin and it’s surrounding counties coupled with neglect of rural Ireland and more road building the answer?

donvito99 · 20-05-2020 4:03pm

Sligo eye wrote: »

I’d like to know your views. Is Urban sprawl growing out of Dublin and it’s surrounding counties coupled with neglect of rural Ireland and more road building the answer?

Wouldn't a toll discourage sprawl? Motorways are not used exclusively by commuter traffic.

Tell us more about how massive road building in rural Ireland has "neglected" it?

Sligo eye · 20-05-2020 4:22pm

donvito99 wrote: »

Wouldn't a toll discourage sprawl? Motorways are not used exclusively by commuter traffic.

Tell us more about how massive road building in rural Ireland has "neglected" it?

Tell us why you want to answer a question with a question?

donvito99 · 20-05-2020 4:29pm

Sligo eye wrote: »

Tell us why you want to answer a question with a question?

Peadar makes some substantial points...

PeadarCo wrote: »

It's public private partnerships so the toll in effectively equates to the interest rate on the money borrowed. If you guarantee a certain return you may be obtain a lower interest rate(and therefore lower toll charge) over the life of the loan compared to making the return dependant on toll takings. You are going to measure this over the life of loan. While the government takes the hit for low traffic volumes it also benefits when traffic volumes exceed the target.

Calling this legal corruption is completely reactionary and shows a lack of knowledge of why these decisions are taken. Just because you don't like the decision and understand why it was taken does not suddenly make it corruption.

PeadarCo wrote: »

If you would prefer to have less money to be spent on other infrastructure and on public services that's your call. Having the private sector paying for the M3 certainly helped the government finances in the last recession unless you would have favoured even more austerity measures. But again that's your call. Remember the money that the private sector invested was money the government didn't have to borrow, which has increased the governments borrowing capacity.

The post I responded to explained nothing. It called the decision on the method of financing the M3 and a number of other motorways corruption without a single bit of evidence. Your gut feel is not evidence. Just because a decision is made that you disagree with doesn't make it automatically corruption. Look at the Brexit debacle and the current Covid crisis. Look at Trump and Johnson and the damage they have caused because they haven't bothered to understand the details and went with nice sounding slogans.

... and you come back with...

Sligo eye wrote: »

I’d like to know your views. Is Urban sprawl growing out of Dublin and it’s surrounding counties coupled with neglect of rural Ireland and more road building the answer?

You can't expect people to engage with you when you've no interest in reciprocating. Let's hear your argument against PPP.

Looking forward to Lord Glentoran's substantive contribution /s

Sligo eye · 20-05-2020 5:05pm

donvito99 wrote: »

Peadar makes some substantial points...

... and you come back with...

You can't expect people to engage with you when you've no interest in reciprocating. Let's hear your argument against PPP.

Looking forward to Lord Glentoran's substantive contribution /s

I’m not looking for you or anyone to engage with me, I’m simply here to make the point that not everyone is subscribed to the groupthink that assumes we all want things in this country to stay the same.

donvito99 · 20-05-2020 7:31pm

But back to the topic at hand, the IMF appraised PPP in Ireland as follows:

PPPs are regulated by a comprehensive framework of laws and procedural guidelines, aligned with international good practice.

https://www.imf.org/~/media/Files/Publications/CR/2017/cr17333.ashx

So all the hyperbole would seem to be unfounded.

Zebra3 · 20-05-2020 7:57pm

The IMF?

:D:D:D

devnull · 20-05-2020 10:02pm

The standard of posting in this thread is well below what we expect around here - I expect it to improve going forward.

- Moderator

Sam Russell · 23-05-2020 4:59pm

PPP can never be lower cost than the state funded model for infrastructure. The state can always borrow at lower cost than can a non-state entity because the state can always raise taxes to pay the debt unless the state defaults. Defaulting is very rare and it occurs if the state becomes a basket case.

I think the acronym PPP is better described as Privatise the Public Purse. This is because in all these contracts the public side takes all the risks, and the private side takes all the profits. If the tolls are too low, then the public pays the shortfall. If the traffic is twice the predicted level, then the private side makes excess profit. If it get really rough, the private side defaults, and the public picks up the shortfall.

In a case where the private side is not making enough, the they renegotiate better terms. It happens a lot in third world countries, where the terms are regularly renegotiated halfway through the term to the benefit of the private side.

I am not sure if there are overtones of corruption, but there is certainly the opportunity for it to occur. Given the current low interest environment, PPP contracts should be off the table.

The Children's Hospital is one case that could do with investigation.

I think the National Braodband contract stinks, where the private side puts up €200 million, and keeps the infrastructure, while the state is on the hook for €3 billion. Single bidder, who is not the original bidder of that consortium would be a red flag. The details are confidential.

PeadarCo · 24-05-2020 7:48am

Sam Russell wrote: »

PPP can never be lower cost than the state funded model for infrastructure. The state can always borrow at lower cost than can a non-state entity because the state can always raise taxes to pay the debt unless the state defaults. Defaulting is very rare and it occurs if the state becomes a basket case.

I think the acronym PPP is better described as Privatise the Public Purse. This is because in all these contracts the public side takes all the risks, and the private side takes all the profits. If the tolls are too low, then the public pays the shortfall. If the traffic is twice the predicted level, then the private side makes excess profit. If it get really rough, the private side defaults, and the public picks up the shortfall.

In a case where the private side is not making enough, the they renegotiate better terms. It happens a lot in third world countries, where the terms are regularly renegotiated halfway through the term to the benefit of the private side.

I am not sure if there are overtones of corruption, but there is certainly the opportunity for it to occur. Given the current low interest environment, PPP contracts should be off the table.

The reason the public is paying the shortfall is due to the structure of the deal. Had that not been the case the toll would have been higher. To say the private sector takes all the profits is factually incorrect in relation to the M3. Its the Irish state that takes all the profits and losses. Once the private sector fee is obtained the state takes everything above. We have had numerous years where the state made a profit from excess tolls. The state takes the risk but it also takes the profits. And remember we are looking at a 30 year period. There are always going to low and high points. Neither of which can be focused on exclusively.

On your point about states not defaulting and always having access to low interest loans that's not always the case. Even in the life time of the M3 motorway. During the last recession the only reason the state did not default was due to the intervention of the EU and IMF. There were numerous political parties who said at the time we should have defaulted and still stick to that line. The reason the state was in danger of defaulting was because the interest rate it was being charged to borrow. Many large private institutions were able to borrow at cheaper rates than the Irish state at the height of the crisis. This in a period of low interest rates. Just because interest rates are low does not mean they will remain low for every country.

There is an argument that the motorways should have been entirely funded by the private sector and tolls used to pay for it. That would have resulted in a higher toll fee paid by the users of the motorway.

There have been numerous allegations of corruption on this thread without a shred of evidence to back them up. The only evidence provided is an IMF report which was dismissed out of hand as it ran contrary to the idea that Irelands process was corrupt. PPP is not unusual and a fairly standard part of financing public infrastructure across the world. If you want to call this corruption and to discuss it, you have to provide evidence. Just because you disagree with PPP or any other decision does not make that decision corrupt.

Sam Russell · 24-05-2020 10:25am

PeadarCo wrote: »

The reason the public is paying the shortfall is due to the structure of the deal. Had that not been the case the toll would have been higher. To say the private sector takes all the profits is factually incorrect in relation to the M3. Its the Irish state that takes all the profits and losses. Once the private sector fee is obtained the state takes everything above. We have had numerous years where the state made a profit from excess tolls. The state takes the risk but it also takes the profits. And remember we are looking at a 30 year period. There are always going to low and high points. Neither of which can be focused on exclusively.

I do not think it works quite like that. I think there is a transition where the tolls are shared, but I have not read the contracts so I cannot be certain.

On your point about states not defaulting and always having access to low interest loans that's not always the case.

I made no mention of always having low interest rates. What I said is that Gov generally have lower interest coupons than private enterprises. Clearly in extreme cases, like the crash of 2008, that might not pertain.

Even in the life time of the M3 motorway. During the last recession the only reason the state did not default was due to the intervention of the EU and IMF. There were numerous political parties who said at the time we should have defaulted and still stick to that line. The reason the state was in danger of defaulting was because the interest rate it was being charged to borrow. Many large private institutions were able to borrow at cheaper rates than the Irish state at the height of the crisis. This in a period of low interest rates. Just because interest rates are low does not mean they will remain low for every country.

Currently, interest rates for the state are near zero for 10 year bonds. It is time to borrow to build needed infrastructure, but not to borrow for social welfare or vanity projects.

There is an argument that the motorways should have been entirely funded by the private sector and tolls used to pay for it. That would have resulted in a higher toll fee paid by the users of the motorway.

Well, when we put in a toll, the road signs and the location is always put to favour the toll and make avoiding it near impossible. The West Link was built that way and we had to pay billions of Euro to get it back. In the contract, the state were prevented from building an alternative bridge across the Liffey that would have bypassed the toll bridge. Not a deal that favoured the State, but times were hard.

There have been numerous allegations of corruption on this thread without a shred of evidence to back them up. The only evidence provided is an IMF report which was dismissed out of hand as it ran contrary to the idea that Irelands process was corrupt. PPP is not unusual and a fairly standard part of financing public infrastructure across the world. If you want to call this corruption and to discuss it, you have to provide evidence. Just because you disagree with PPP or any other decision does not make that decision corrupt.

I have no idea if corruption plays a part in any State business, and certainly no evidence. There have been many claims and accusations of corruption and many Tribunals of Enquiry. Some findings of those tribunals clearly suggested corruption, but they all got their legal fees paid and only one Minister (Ray Burke) went to jail, so just a bottle of smoke - nothing to see here - move along.

I did read through the M6 (Athlone to Galway) PPP contract once and came to the conclusion it was one sided wrt risk and reward. That is the basis for my opinion, but it may be just that particular contract.

[Deleted User] · 24-05-2020 12:16pm

https://www.irishtimes.com/news/toll-roads-firm-denies-knowledge-of-any-gift-from-roche-to-redmond-1.168403
Oft suspected, nothing proved.

...and no, the Irish people should not have paid for tolls on our motorway infrastructure because between the Citizens and the E.U. most of the funds were provided through motor taxation, VRT and VAT along with E.U. development grants but the Government left gaps of about 20 km in f the routes which got filled in with private money so that a toll could be levied and off-ramps not built which made the tolls unavoidable for all practical purposes.

PeadarCo will still tell you enriching private companies is good.

PeadarCo · 24-05-2020 1:05pm

[Deleted User] wrote: »

https://www.irishtimes.com/news/toll-roads-firm-denies-knowledge-of-any-gift-from-roche-to-redmond-1.168403
Oft suspected, nothing proved.

...and no, the Irish people should not have paid for tolls on our motorway infrastructure because between the Citizens and the E.U. most of the funds were provided through motor taxation, VRT and VAT along with E.U. development grants but the Government left gaps of about 20 km in f the routes which got filled in with private money so that a toll could be levied and off-ramps not built which made the tolls unavoidable for all practical purposes.

PeadarCo will still tell you enriching private companies is good.

The article you linked dates from 1999 so it's 20 years plus out of date. It's also a decade plus before the most of the current motorway tolls became operational. There no point responding to the historic and out of date information.

Now if you look at the Transport infrastructure Ireland 2018 report(the most recent current available) you will see no payments were made in 2018 as traffic levels were with in the relevant thresholds. Given the economic situation you would expect payments to be made this year. But if read the report you will notice the life of the contract is 47 years. The decision on where the financing method was a good idea has to made with the 47 year period in mind and not focus on good or bad years.

https://www.tii.ie/tii-library/reports-accounts/

You can argue if the current system is the best idea however its not corrupt. Or at least no evidence has been supplied to demonstrate it and the IMF report of you read it while suggesting improvements does not describe it as corrupt.

On the whole idea of enriching private companies remember it was private companies that build the road and practically all the infrastructure in the state. In many cases like schools for example private organisations own either most the buildings and or the land the building sit on. So if you don't like the state paying private companies to do things well you are looking a discussion in politics not transport.

Toll Roads Boondoggle - The “acceptable” face of waste in transport spending

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