State projects over €20m need a Cost Benefit Analysis but does the National Broadband Plan have one?

There are questions over whether one exists

State projects over €20m need a Cost Benefit Analysis but does the National Broadband Plan have one?

Communications Minister Alex White | Photocall file photo

There is uncertainty if a formal Cost-Benefit Analysis has been undertaken for the National Broadband Plan.

Speaking with Newstalk on Wednesday afternoon, Communications Minister Alex White was asked three times if such a report had been undertaken, but did not answer categorically.

Mr White spoke to Newstalk shortly after Wireless Broadband Ireland (WBI) claimed that the NBP is “seriously flawed,” and has not been properly assessed for potential costs and benefits.

WBI, a grouping of 36 wireless broadband companies (many of whom are small regional suppliers), recently commissioned UCD economist Colm McCarthy to undertake a detailed economic analysis of the government’s proposals.

Under the Public Spending Code of the Department of Public Expenditure and Reform, a comprehensive CBA is mandatory for all projects costing €20m or over.

The NBP aims to deliver 30 megabytes per second (mbps) to every home in Ireland by 2020, with estimates for the cost running from €500m to €1bn.

The Central Expenditure Evaluation Unit say that in projects above €20m "a rigorous application of CBA along with all other elements of the Public Spending Code is mandatory at all times. Robust appraisal is also required in order to prioritise competing projects for investment and decide whether investment proposals are justified.

WBI claim that "it is not clear if this requirement has been complied with."

Speaking on Lunchtime on Newstalk today, when asked by Jonathan Healy if a CBA has been carried out Mr White replied:

“Could there be any doubt about the benefit of broadband?”

When pushed on if an actual CBA had been completed, Mr White said.

“Well, I mean, yes in the sense that we know what the cost is, we’ve assessed the different approaches we can take to funding it.”

When pushed again on if a formal CBA has been undertaken, Mr White said: “Well we know the benefit, there can be no doubt about the benefit.”

You can listen to the exchange on the player below:

McCarthy says that “a CBA needs a clear estimate of expected costs, a quantification of benefits and a counterfactual (that is the course of events likely to play out should no policy action take place), and a consideration of alternatives.”

The NBP published seven expert reports in July of 2014, but Mr McCarthy found that there is an absence of accurate information on costs or the benefits derived from delivery of nationwide broadband.

Analysing one of the reports – carried out by PwC on the benefits of the NBP, McCarthy found there was “no attempt to place monetary values on any of the identified benefits as in a conventional CBA.”

He adds that there has been nothing published in the NBP documentation “which quantifies the benefits of increased broadband delivery”.

Ireland’s percentage of potential broadband customers whose location makes them “not commercially viable” is three times the European average. The European average of 10 per cent is tripled in Ireland, with 30 per cent – or 757,000 homes and business, covering 96 per cent of the State’s land mass - considered to be in broadband black spots.