Eircode – the unanswered questions
Sir, – The Minister for Communications Denis Naughten (February 15th) need not write so defensively about Eircode in response to criticism of the project by Una Mullally (“Eircode: there goes another ¤38 million down the drain”, Opinion & Analysis, February 13th).
The problems of Eircode, as documented by the Comptroller & Auditor General (C&AG), long predate the Minister’s short term in office.
The €38 million cost of the project was published by the C&AG, the officer under the Constitution charged with ensuring value for public expenditure. The Minister claims that only €21.3 million has been spent on “the implementation phase and Eircode and Eircode service operations which began in July 2015”. The C&AG’s cost is 78 per cent greater than the €21.3 million cited by the Minister. The Eircode project obviously incurred costs before July 2015 and will incur more until the project is cancelled.
The prospect raised by the Minister that we could save some €17 million by stopping the project now is attractive. The costs of the project have increased from €18 million in 2009, to €25 million in 2004 and €38 million in 2015.
The Minister relies on the Eircode promoters’ figure of 35 per cent of Irish addresses being non-unique. That is not a problem for those who actually deliver the mail, and 91 per cent of mail is delivered the day after posting. Efficient post delivery staff know where we live.
Comreg, the regulator for the sector, stated in 2005 that “it is unclear at this stage as to the extent that Eircode could present opportunities for market development and market efficiencies”.
Previous claims of a crock of gold at the end of the Eircode rainbow included €3.6 million annual benefits to the Revenue Commissioners, now dismissed by both the C&AG and the Revenue Commissioners. The benefits to An Post of €2.9 million a year in extra revenues, based on “ an expected increase in revenues from growth in mail volumes”, contrast with the annual decline in postal volumes of 4 per cent and some 40 per cent since the project was mooted in 2005. The estimated annual benefits to the private sector were €3 million a year based on “improved efficiency and effectiveness and improved conditions in the postal market”. These benefits were strongly disputed by witnesses at the Oireachtas committee.
The Minister’s claims of benefits in his letter, ominously, are not quantified. The C&AG cites a sensitivity test in 2010 that “if costs are increased by 15 per cent and benefits decreased by 15 per cent the project would have a marginal positive net present value”. With understated costs and overstated benefits, the C&AG finds the cost-benefit analysis of Eircode unreliable.
An aspect neglected by the Minister’s letter is the conduct of the Eircode project by his department. This was heavily criticised by the C&AG.
Perhaps the Minister might address in his next letter to The Irish Times the following points made by the C&AG? A project adviser contract for €54,000 in 2008 “without a competitive process”; contracts “with six other consultants were without a competitive process”; Consultant B had a contract valued at €103,000, but by August 2015 €145,000 had been paid; Consultant C had a fee of €2,000 but payments totalled €38,000; Consultant D had a contract for €24,000 and was paid €51,000; Consultant E had a contract for €30,750 but was paid €46,000; and Consultant F had an invoice price of €115,000 but an estimated cost of €200,000. An outreach campaign costing €527,000 was awarded, also without tendering, to a charity to fund a campaign “to assist those who were considered to be vulnerable and hard to reach, or who may be bypassed by the marketing campaign, or who may be confused or worried about the introduction of postcodes”. Tendering process lapses caused the European Commission to request the Department of Communications to adopt “measures to avoid similar errors in the future and to inform the EC of those measures”. In June 2015 the European Commission notified the department that it did not consider that the department had “addressed the concerns raised”.
Reform of Irish public administration is impossible while the Eircode extent of moral hazard and ministerial capture persists. – Yours, etc,
Department of Economics,
Trinity College Dublin.