The Ulster Canal 11: some information from Waterways Ireland (and the budget)

Request under Freedom of Information Code of Practice

On 09 August 2010 at 16:36:40 you wrote: […]

> The funding of the restoration of the Ulster Canal to
> Clones is a matter for the Department of Community,
> Equality and Gaeltacht Affairs. […]

I can see that you might legitimately claim that the final decision is to be made by the Department of Community, Equality and Gaeltacht Affairs. However, according to the Waterways Ireland Implementation Body Financial Memorandum (2005), proposals to dispose of assets are initiated by Waterways Ireland and are subject to the approval of the sponsor and Finance departments.

Furthermore, your Annual Report and Accounts 2008 name some properties that you have classified as surplus assets. Accordingly, and without any reference to the possible purpose of any disposal, I would be grateful if you would let me have a list of the assets classified as surplus at the end of 2008 and since then, together with information on the latest valuations thereof and on progress with disposals.

Finally, I note that in the Ulster Canal Upper Lough Erne to Clones Draft Restoration Plan (published in August 2010) your Chief Executive John Martin says:”The full capital cost of the project (estimated at €35m/£23.8m) will be met by the Irish Exchequer […]”. I would be grateful for information on when and on what basis the estimate of cost was prepared and how it takes account of the range of estimates for the cost of the Lough Erne end (which show a difference of €7.4 million between the lowest and highest estimates).

I would also welcome information on how your Chief Executive’s statement, that the cost will be met by the Irish Exchequer, accords with the Department of Community, Equality and Gaeltacht Affairs’s statement to me that the cost was intended to be met by the sale of Waterways Ireland assets.

I note that the Freedom of Information Code of Practice for North/South Implementation Bodies and Tourism Ireland Ltd applies a presumption of openness so I am now making my request under the provisions of that Code.

My Freedom of Information request was said to have been granted in full. Here are the results.

Assets classified as surplus

The assets classified as surplus were three sites in Dublin:

• Lennox Street
• Percy Place
• Plot 8.

Lennox Street is near the former Portobello Harbour on the Grand Canal. In 2008 it was valued at €380,000; by 2009 the value was down to €280,000 and the latest valuation showed no change. Waterways Ireland says “In the current market disposal is not being progressed.”

Percy Place is near Huband Bridge, further  downstream on the Grand Canal in Dublin; I think the WI building is near the centre of this map. Was it an office for the water-borne turf trade? It was valued at €1,600,000 in 2008 and the valuation has not been changed. Waterways Ireland says “In the current market disposal is not being progressed.”

Plot 8 is on the banks of the Grand Canal Dock in Ringsend, and this was far the most valuable of the three sites. Its status was discussed by the Waterways Ireland Chief Executive, John Martin, with the Oireachtas Committee of Public Accounts on 2 April 2009:

Chairman: I would like to ask some questions, one on Waterways Ireland’s relationship with the Dublin Docklands Development Authority, DDDA. Could Mr. Martin give us more detail on the 1.2 hectare plot of land, No. 8, it was hoping to develop there? We do not have the Department of Finance here today, but in its 2007 report Waterways Ireland mentioned that the Departments of Finance and Community, Rural and Gaeltacht Affairs were monitoring the issue. Could we be updated on that?

Mr. John Martin: We own the freehold of a plot of land but Bord Gáis, which was there years ago, had a 99 year lease from 1964 on it. As the DDDA took over the lands from Bord Gáis it took over the various responsibilities of Bord Gáis. The site is in a triangle of land approximately 1.2 hectares in size between the Dodder and the Grand Canal Basin. We discussed it with the Department and the land seemed to have a very good opportunity for development. It was agreed with the DDDA that we would get involved in the development, it would project manage it for us and a portion of the profit from the development would be allocated——

Chairman: Does the DDDA own it?

Mr. John Martin: We own the freehold but under the legislation the DDDA has rights over part of it for 100 years. The legal advice is that it would have the right to extend that right for another 100 years. Although we are the freeholders, we would not have been able to do anything without its agreement.

Chairman: The DDDA is a relatively new organisation.

Mr. John Martin: It is; it was Bord Gáis before that.

Chairman: How did it acquire its rights?

Mr. John Martin: It took over the leasehold on quite a number of properties from Bord Gáis. It is within its area of responsibility, the same way it got property from CIE and other organisations. We got into discussions with the DDDA and decided we would take the opportunity for a design and build of offices cum apartments with something in it for us. Whatever came out of it was to be split 60% for us and 40% for the DDDA. We put together the documentation and got approval from our Department and Minister to go ahead along those lines. We have not gone ahead. We came to a certain stage, but the board of the DDDA did not recommend moving at this time. We have to watch the market and see what is happening in this area because we are in very uncertain times. The legal agreement is still in place but it would not be reasonable to enter the marketplace at this moment.

Chairman: Aside from the 60% of the profits Waterways Ireland would get, what facilities were the organisation to receive?

Mr. John Martin: Initially we were to get an up-front payment from the developer selected and a new boat slipway and hard standing and a new depot of approximately 1,000 sq. m for our people, we were upgrading and reinstating walkways along the area, there was to be a car park, the lock gates were part of the development and were to be upgraded, one graving dock was to be a working dock and one to be a water feature and additional accommodation for dockmasters was to be provided. There was an agreement on offsetting between us and the DDDA because it also required items to be done. It is static now.

Chairman: Did Mr. Martin say there was an agreement with a developer?

Mr. John Martin: No, an agreement was in place with the DDDA. We were planning to go out last Christmas to a major design and construct tender because we would not have the ability to project manage that.

Chairman: Is it on ice now?

Mr. John Martin: It was to be considered recently by the DDDA board but nothing has happened yet.

This site was valued at €22,700,000 in 2008 but the valuation was reduced to €7,500,000 in 2009 and has not been changed since then. Waterways Ireland says “Due to economic downturn this development is not being proceeded with at this time.”

Even at the 2008 valuations, these three sites would not have covered the full cost of the Ulster Canal to Clones; at the current valuations (and in current market conditions, and with the current status of the Dublin Docklands Development Authority) the sum that might be realised would be hopelessly inadequate. If the Department of Community, Equality and Gaeltacht Affairs wants €35,000,000 spent on the Ulster Canal, it will have to look elsewhere for it.

The estimated cost of the canal to Clones

My question was this:

I would be grateful for information on when and on what basis the estimate of cost was prepared and how it takes account of the range of estimates for the cost of the Lough Erne end (which show a difference of €7.4 million between the lowest and highest estimates).

Essentially, the problem is that the total cost of the canal to Clones is said to be €35,000,000. But several options are given for one section, at the Lough Erne end, and their costs range from €8.5 million to €15.9 million. So is any of them included in the €35 million figure? Should the real figure be somewhere between €43.5 and €50.9 million (€35 million plus option)? Or has WI plumped, in advance of the consultation, for one of the five options and included that in the €35 million total?

Nigel Russell, Director of Technical Services, prepared WI’s response:

In reply to this point I would advise that €35 million is the estimated cost for the reopening of the section of canal from Clones to Upper Lough Erne. This figure is noted in the Technical Update and Summary report of 2006 of “A feasibility study into the Reopening of the Ulster Canal Navigation from Lough Neagh to Maydown and from the Erne System to Clones” this report can be found on the Department of Community, Equality and Gaeltacht Affairs (pobail.ie) web site.

Assuming that the range of estimates being referred to are the estimates noted in part 7.8 of the Draft Restoration Plan (this plan can be found on waterwaysireland.org web site) published with Strategic Environmental Assessment papers. I would advise that these estimates concern the costs for the various options for the Gortnacarrow to Erne section of the project only.

I trust this answers these points.

No it bleeding doesn’t. This reply did not address either of my points: it wasted space by referring to two documents with which it was clear that I was already familiar and it ignored my questions.

First, I wanted to know “when and on what basis the estimate of cost was prepared”. The reply quoted my question, but answered by telling me where the cost was published. Which I already knew. Because that’s where I read it.

So, in the absence of any information from WI, I’ll put forward my view, which is that

• WI is unable to provide any evidence that the €35 million figure is based on detailed, recent studies
• there is therefore no reliable basis for the estimate of costs.

In other words, the question asked on this page is still unanswered.

Now, if I’m wrong, I’ll happily give the correct basis for the figure, but WI will have to tell me what the basis was.

As for the second issue, again WI haven’t answered my question. So, again, there is no evidence to show that the range of estimates for the Lough Erne section of the canal have been included in the €35 million figure. I suspect therefore that the two exercises were conducted in isolation from each other; the overall figure was not revised to take account of the range of estimates for the Lough Erne end. That casts further severe doubt on the reliability of the €35 million figure.

The conflict of views between the WI CEO and the DCEGA

My question was this:

I would also welcome information on how your Chief Executive’s statement, that the cost will be met by the Irish Exchequer, accords with the Department of Community, Equality and Gaeltacht Affairs’s statement to me that the cost was intended to be met by the sale of Waterways Ireland assets.

In response, WI quoted two joint communiques from the North/South Ministerial Council and told me where I could download them. This response added precisely nothing to the sum of human (or indeed of my) knowledge. However, there was a note at the end:

NOTE

The use of the proceeds from the disposal of assets owned by Waterways Ireland in the Republic of Ireland is ultimately determined by the Department of Finance.

The issue of how the Irish Exchequer intends to provide the funding for this project is a matter for the Irish Government.

I won’t comment on WI’s confusing the southern state with a soccer team. I will point out that the first paragraph is slightly misleading, because it ignores the roles of WI and of the sponsoring department in the process. According to the Financial Memorandum governing WI’s affairs:

21. Waterways Ireland may obtain additional funding from sources such as

(i) Charges for use of waterways and associated property, eg: Lockages, Permits, Wayleaves, Licences, Leases; and

(ii) Disposal of assets and/or Sale of property,

subject to the conditions applying in paragraphs 81-83. […]

Disposal of Assets

81. The proceeds from the sale of, or income on, any assets or intellectual property of the Body shall only be utilised by the Body for the purposes approved by the sponsor departments with the consent of the Finance departments.

So the Department of Finance does indeed have a say, but only by way of final consent: it does not initiate proposals. But let us not strain at gnats. The important point to be noted is that the FOI response does not (mirabile dictu) answer my question; instead it quotes support for its Chief Executive’s position.

But that position is at odds with what its sponsoring department, the Department of Community, Equality and Gaeltacht Affairs, told me (in writing). The WI CEO has not seen fit to defend the Department’s position — and he is, rightly, making it clear that the Department’s position is at odds with that of the NSMC.

My interpretation

Here is what I suspect has happened. Note that I have tried to find out the truth of the matter, by asking both Waterways Ireland and the Department; neither has given me the full story. So if my suspicions are unfounded, I’m sorry, but if the two bodies were more forthright I’d be able to present the full story here, with appropriate supporting evidence. And I’d be happy to do so if someone would send me the papers or other records.

I think that the government got a rush of blood to the head (one of many) in 2007, and made an insane promise to fund the Ulster Canal to Clones. That would impress the unionists with southern power and wealth, as well as forcing them to swallow a dose of north-southery.

Then the government got the first hint that it might not, in fact, have conferred enduring wealth on the state. I suspect that the Department of Finance cut the capital allocation to DCEGA and left it short of the money needed for the canal. But DCEGA couldn’t abandon the insane project, which might cause it to lose face with Northern Ireland ministers, so it’s been trying to think of clever ways of getting the money. Its creed seems to be that north-southery must survive. (Unionist ministers must be having fun.) But its attempt to get the money from WI seems to be failing: (a) WI doesn’t want to stump up and (b) the fall in the value of property means that it hasn’t got enough saleable assets to cover the cost.

On the other hand, the rushed “consultation process” of 2010 suggests that WI would still like to be given the money to do some engineering. So where will DCEGA turn next?

It will be interesting to see what Ajai Chopra (IMF) thinks about it.

Update 7 December 2010 (budget day):

Money to be paid by Dept of Community, Equality and Gaeltacht Affairs to Waterways Ireland in 2011:

• current expenditure down from €25,585,000 to €24,335,000 (I make that a cut of just under 5%)
• capital expenditure down from €8,000,000 to €6,000,000 (25%)
• total down from €33,585,000 to €30,335,000 (about 10%).

No information yet on how the Ulster Canal would be affected.

update 12 January 2011

A new page on bullshit provided by the Department of Community, Equality and Gaeltacht Affairs