Another €100 million bailout bill for workers as road construction companies take their pound of flesh

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Public Private Partnerships (PPPs), as we’ve been led to believe by those who support them, are ways in which public bodies can share the costs and risk involved in providing public infrastructure such as roads, schools etc. with private sector companies.

 

But in recent days it has emerged that PPPs entered into for the construction of the M3 motorway and the Limerick tunnel are set to land  the taxpayer with a €100 million bill over the lifetime of the contracts.

 

This cost comes from clauses inserted in the PPP contracts which result in all of the risks involved being shouldered by the taxpayer.  Amazingly, the contracts contain a penalty clause which guarantees the private companies involved a minimum amount of traffic on the motorways every day.  And if the volume of traffic fails to meet expected levels, the taxpayer, via the National Roads Authority, will hand over a payment to the contractor – some way of ‘sharing the risk’!

 

And because of the economic downturn, traffic levels are way below predicted levels.  According to sustainable transport lobby group PlanBetter (see www.planbetter.ie) traffic volumes on the M3 motorway are 22% - almost 5,000 vehicles a day – below the levels where the penalty clauses kick in.  And in the Limerick tunnel, traffic is 26% - 3,500 vehicles a day – below the penalty fee level.  

 

Many have long argued that PPP contracts have allowed private companies to achieve a high rate of return on their investment while most or all of the income risk associated with the project was borne by the public sector.  These figures bear out these arguments. 

 

The government bailout of bankers and developers has landed this and future generations with a multi billion euro bill as a result of the gambling of the elite wealthy.  It should hardly surprise us that the companies involved in road construction expect to have their profits subsidised by a bailout from our pockets as well.

Words: Gregor Kerr

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