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Finance Minister accused of being 'kept in the dark' over children's hospital overspend ahead of Budget

Paschal Donohoe admitted it would have been ‘helpful’ to have been informed of the cost overruns as it developed.

Image: Sam Boal

PRESSURE MOUNTED ON Finance and Public Expenditure Minister Paschal Donohoe today as he faced questions about why he was not informed of the massive overspend with the new National Children’s Hospital ahead of Budget day in October.

Appearing before an Oireachtas committee today, Donohoe admitted it would have been “helpful” to have been informed of the cost overruns as it developed.

The Oireachtas Public Accounts Committee heard last week the total cost of the project is “highly unlikely” to come in under €2 billion

A figure of €983 million for the development was approved by government in 2017.

Questions today focused on how Health Minister Simon Harris was made aware of potential budget overruns in August, yet Donohoe and Taoiseach Leo Varadkar were not informed until 9 November.

A statement from the health department said the process to find out the final costings “were not concluded at the time of Budget discussions”. 

Timeline

Here is an outline of the timeline about who knew what when:

  • August 2018: Harris is made aware of the potential cost overruns of the hospital, but does not know the exact final figure. He asks his officials to investigate what the final cost of the hospital is estimated to come in at.
  • August – September 2018: The extent of the cost increase was being established. A number of independent audits and reviews were commissioned, alternative options for completing the project, and future project governance requirements were being considered, according to a department statement. 
  • September 2018: The National Paediatric Hospital Development Board sought a further three-month window to conclude negotiations. All the while, Budget discussions are underway with all departments.
  • 11 October: Budget Day – an additional investment of €1.2 billion in health is announced.
  • 9 November: The cost escalation was highlighted to the Taoiseach at a meeting in the Department of Health on the 9 November which included officials from the Department of Public Expenditure and Reform.
  • 19 November: The Department of Health submitted a report from the National Paediatric Hospital Development Board on the cost overrun and the reasons for it to the Department of Public Expenditure and Reform
  • 23 November: Health and finance department officials meet to discuss the report.
  • 18 December 2018: The draft government memo was shared with the Department of Public Expenditure and Reform and the Department of the Taoiseach in early December and was submitted to Cabinet for its meeting on 18 December 2018.

Threat to health projects

Since last year, it has emerged that costs continue to rise, with the Taoiseach acknowledging that capital health projects may now have to be delayed due to the overspend on the hospital.

Details of the projects impacted are to be released next week. 

Today, finance minister and the Taoiseach came to the defence of Harris today, with Varadkar telling the Dáil the health minister “did the right and appropriate thing” by getting the full information and facts and figures before presenting it to government.

It took almost three months for Harris to gather the final figure, but when the Taoiseach was told of the skyrocketing costs he said his reaction was one of “disbelief”.

‘Kept in the dark’

During the committee hearing today, Fianna Fáil’s Michael McGrath and Sinn Féin’s Pearse Doherty said the minister for finance was effectively “kept in the dark” about the massive cost overrun throughout his Budget discussions with the minister and the Department of Health in August and September 2017.  

Donohoe said had Harris come to him earlier in August to flag to him about the potential overruns, he would have asked the health minister to investigate it further and “quantify the scale of the issue”. 

“This is what he was doing across that period,” said Donohoe, who added that as soon as he was made aware of the full-scale of the problem he became “heavily engaged” with Harris, the Department of Health and the HSE.

Doherty said the message Donohoe conveyed today is that is is okay for a minister – in any department – to be aware of an overrun and not inform the line minister who was in the middle of the budgetary process.

Donohoe said he had a lot of engagement with the Harris on a lot of matters, including capital projects and level of capital expenditure available. 

He said weekly meeting were held in relation to health expenditure, adding that “no issue” was raised in those meetings. 

“I was given no indication that there was a problem with this project,” he said.

He added that Harris was “doing his best” to manage what was a very challenging project.

Donohoe said there are “clear learnings” from the National Children’s Hospital project.

A government spokesperson said Harris has “absolutely not been reprimanded” for not informing the finance minister and Taoiseach sooner.

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