Minister for Finance says broadband profit unlikely

Paschal Donohoe says any cheaper option would not bring plan to all rural households

Minister for Finance Paschal Donohoe conceded that the cost of the broadband plan would affect the Government’s net fiscal position in the future. Photograph: Francois Lenoir/Reuters

Minister for Finance Paschal Donohoe conceded that the cost of the broadband plan would affect the Government’s net fiscal position in the future. Photograph: Francois Lenoir/Reuters

 

National Broadband Ireland, the consortium that will build the network to connect rural households and businesses to high-sped broadband, is unlikely to make a profit “for a very long time”, Minister for Finance Paschal Donohoe has told a Dáil committee.

Speaking to TDs on Tuesday at the budgetary oversight committee, Mr Donohoe rejected criticisms of the plan and said any cheaper option would not bring broadband to 100 per cent of rural households, which the Government had committed to.

“Lower cost options would exclude a significant number of households,” Mr Donohoe said.

He said if the Government had chosen a cheaper model, he would be at the committee asking questions about why he was excluding some households from the scheme.

However, Fianna Fáil TD Barry Cowen pointed out that the costings of alternative plans were not made available to TDs. Mr Donohoe said the department would provide all the information it could but that some details were “commercially sensitive”.

Compensation

Mr Donohoe defended the decision to make National Broadband Ireland, led by the US businessman David McCourt, the preferred bidder for the contract, but said that if the contract was not signed there were “no significant commitments” to the bidder.

Asked if the State could be liable for compensation to the bidder if the contract was not signed, Mr Donohoe undertook to provide a definitive answer to the committee in the future.

He agreed that much of the bidder’s investment in the network would come from fees generated from the network, and several deputies criticised the level of up-front investment from the bidder. Mr Donohoe said the level of investment from the bidder was on a par with what was normal in public-private partnerships, though deputies complained that with most PPP’s the asset was owned by the State at the end of the contract.

Mr Donohoe also conceded that the cost of the broadband plan would affect the Government’s net fiscal position in the future, though he said he was undecided whether it should be financed from future tax revenues or borrowing.

Expenditure

He insisted, however, that no existing capital plans would be affected by expenditure on the broadband project.

Mr Donohoe appeared at the committee with senior officials from his department, but secretary general Robert Watt, who strongly opposed the project, was not present.

Mr Donohoe said he “nearly always” agreed with Mr Watt, but “we don’t always agree”.

“I value independent and strong advice,” he said.