The Ulster Canal 09: affordability

Now, the position as it appears to me is that there has been a change of policy somewhere about how the canal to Clones is to be paid for (“Irish Exchequer” -v- Waterways Ireland), and that that change has not been publicly discussed. I am not confident that I fully understand the change or its implications and I would welcome enlightenment: secret cabinet documents would be particularly welcome.

I am not, however, suggesting that Waterways Ireland assets could not or should not be sold to pay for new projects; indeed the Financial Memorandum governing its affairs explicitly envisages such a situation:

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. […]

Asset Register

79. The Body shall establish and maintain an asset register. […]

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.

82. The Body shall not sell or develop any property or rights of the Body without the prior approval of the sponsor departments and the consent of the Finance departments, and, where appropriate, until the amount of clawback due to the department/s and any other funders has been agreed.

83. The Body must obtain the best price possible for the disposal of any asset. Specific prior approval must be obtained from the sponsor departments, with the consent of the Finance departments, for any proposals to sell assets at less than market value.[i]

And WI has sought and received approval, from the North/South Ministerial Council, for asset disposals:

The Council agreed proposals for a number of property disposals in the context of a range of development projects on the waterways.[ii]

The Council agreed proposals for a number of property disposals in the context of a range of development projects on the waterways. [iii]

The Council agreed proposals for a number of property disposals in the context of a range of development projects on the waterways.[iv]

There is no information about what properties were sold, save that after the second round we learned this:

Waterways Ireland disposed of six properties that required NSMC approval. They were all in the Irish Republic; there were none in Northern Ireland. None of the disposals was financially significant.[v]

How much could WI raise?

But I think that none of those disposals were intended to pay for the Ulster Canal, because they precede the publication of the Department of Finance’s Infrastructure Investment Priorities 2010-2016: A Financial Framework, which uses the future tense:

Where possible, Waterways Ireland’s own resources will be used in advancing this work.[vi]

As the Department of Community, Equality and Gaeltacht Affairs had mentioned property in Dublin …

There is some uncertainty in the current economic climate about whether the cost will — as was intended — be met by sale of Waterways Ireland assets in Dublin (where there is some property vested in WI that has commercial potential).[vii]

… I asked Waterways Ireland this question:

Could I please have a list of the properties in Dublin that Waterways Ireland has considered disposing of in order to fund the restoration of the Ulster Canal to Clones?

The reply was:

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

But if the funding requires the sale of WI assets, that contention is not quite true, as proposals for such sales must emanate from WI. I presume that, if the two relevant ministers tell the Chief Executive to sell stuff, he’ll have to do so, but WI must still make the proposal. Perhaps the best solution would be for me to ask WI for a list of its surplus assets:

Surplus assets with a net book value of €24,680,000, (STG£23,863,856) have been included. The 2007 comparable net book value was €25,200,000, (STG£18,503,561). Formal valuations were carried out by GVA Donal O Buachalla and CB Richard Ellis Ireland. The valuations were prepared in accordance with The RICS/SCS Appraisal and Valuation Standards.[ix]

I also note that

In 2008 […] Percy Place, Plot 8 and Lennox Street were reclassified from non-operational heritage assets to surplus assets.[x]

I understand that “Plot 8” (at the Grand Canal Docks in Ringsend) was to be developed in cooperation with that promoter of property development, the Dublin Docklands Development Authority:

Through the Master Plan 2008, the Authority will seek to continue community development towards achieving a sustainable platform for community growth. The CB report cited the need for various facilities to be provided. […] The Plot 8 Community Facility development, when complete, will accommodate community training, crèche and subvention enterprise space. […]

The Authority is also committed to providing a training and community facility as part of the Plot 8 development at Grand Canal Dock and is enabling the relocation of the Ringsend Community Training Workshop and other organisations, together with enterprise spaces, into the new facility. […]

Policy LU22

Progress the implementation of the Plot 8 community facility in Grand Canal Dock in association with community groups and Waterways Ireland.[xi]

I don’t know of any recent progress with Plot 8. I know nothing about the other sites other than that Lennox St is north of Portobello Harbour and parallel with the Grand Canal in Dublin, while Percy Place is close to Lock 3 on the Circular Line. It would of course be nice to know what those assets are now worth. Given the state of the Irish economy in general, and its property market in particular, I suspect that they would be enough to buy a large bag of boiled sweets, but perhaps not a lot more. Still, no doubt if I ask Waterways Ireland, I’ll learn what the assets are now thought to be worth.

And if it’s not enough?

This is where it gets interesting. The Department of Finance said:

There is a Government commitment to the restoration of the Ulster Canal. Where possible, Waterways Ireland’s own resources will be used in advancing this work. In the absence of readily available exchequer funding, the sale of other assets may be considered where appropriate, subject inter alia, to value for money considerations.[xii]

To me, that means that three possible sources have been considered:

• WI’s own resources, which won’t be adequate to the task
• exchequer funding, which will not be readily available
• the sale of other (unspecified) assets (by their unspecified owner).

I wasn’t quite sure about the meaning (not having realised that WI’s assets, rather than the Irish Exchequer, were the first port of call), so I asked the Department of Community, Equality and Gaeltacht Affairs to explain. I was told:

There is some uncertainty in the current economic climate about whether the cost will — as was intended — be met by sale of Waterways Ireland assets in Dublin (where there is some property vested in WI that has commercial potential). That being so, the Government will as necessary provide Exchequer funding to ensure that the project can be completed.[xiii]

I find it difficult to see how the second statement accords with the Department of Finance’s phrase “In the absence of readily available exchequer funding”, with the known state of the Irish economy and with the reduced capital allocation to the Department of Community, Equality and Gaeltacht Affairs.

All fur coat and no knickers

The Department of Community, Equality and Gaeltacht Affairs also said:

However, the question of funding source does not become an issue until construction actually commences next year or the year after.[xiv]

When I queried it, I was told:

Why would we decide precisely [sic] to fund the purchase at this remove, particularly if we don’t know what the market will be like at the time? [xv]

And that’s where I became seriously worried: a government department, in a time of economic crisis, is proposing to commit to the spending of at least €35,000,000, without having any certainty of being able to get the money anywhere. Unless Waterways Ireland has surplus assets that I don’t know about, I cannot see how it can raise that amount by selling property in a slump; nor do I see any certainty that the Department of Finance will supply the money.

So the Department of Community, Equality and Gaeltacht Affairs won’t be choosing between two sources of funding. Its only possible source is the Department of Finance, and its only possible argument is that, unless the taxpayer stumps up, the shame will be too great: the neighbours will realise that we’re all fur coat and no knickers. After all, the neighbours don’t realise that our economy is in trouble:

The Minister of Agriculture and Rural Development: […] The first question was about the economic downturn and whether the works would go ahead. Minister Ó Cuív was keen to point out that the work on the Ulster Canal — which is 100% funded by the South — will go ahead, which is very welcome. In the present climate, we do not know what the next 12 months will bring, so I do not want to say anything that could cause difficulty down the line.[xvi]

And:

The Minister of Culture, Arts and Leisure: At the meeting, there was no mention of any derogation from the Irish Republic’s commitment to fund the project. That section of work, from Clones to Lough Erne, is entirely funded by the Republic. There was no mention that the Republic would step back or withdraw from that, and there the matter rests. […] At the meeting, it was mentioned that there will be efficiency savings, North and South. However, there was no specific mention of funding of the Ulster canal.[xvii]

It is not clear whether Northern Ireland ministers realise that Waterways Ireland assets were to be used to pay for the canal.

Next: what should be done: kill it now.

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[i] Waterways Ireland Implementation Body Financial Memorandum (agreed with the Body, DCAL and DCRGA December 2004) Implementation January 2005

[ii] Joint Communiqué North/SouthMinisterial Council Inland Waterways Sector 16 January 2009

[iii] Joint Communiqué North/SouthMinisterial Council Inland Waterways Sector 9 July 2009

[iv] Joint Communiqué North/SouthMinisterial Council Inland Waterways Sector 2 December 2009

[v] Nelson McCausland MLA, Minister of Culture, Arts and Leisure, Ministerial Statement to the Northern Ireland Assembly Tuesday 15 September 2009 on the meeting of the North/South Ministerial Council: Inland Waterways Sectoral Format on 9 July 2009

[vi] Department of Finance Infrastructure Investment Priorities 2010-2016: A Financial Framework 26 July 2010

[vii] Email from Department of Community, Equality and Gaeltacht Affairs 27 July 2010

[viii] Emailed document from Waterways Ireland 09 August 2010

[ix] Waterways Ireland Annual Report and Accounts 2008

[x] Waterways Ireland Annual Report and Accounts 2008

[xi] Dublin Docklands Development Authority Dublin Docklands Area Master Plan 2008

[xii] Department of Finance Infrastructure Investment Priorities 2010-2016: A Financial Framework 26 July 2010

[xiii] Email 1 from Department of Community, Equality and Gaeltacht Affairs 27 July 2010

[xiv] Email 1 from Department of Community, Equality and Gaeltacht Affairs 27 July 2010

[xv] Email 2 from Department of Community, Equality and Gaeltacht Affairs 27 July 2010

[xvi] Michelle Gildernew MLA, Minister of Agriculture and Rural Development, Ministerial Statement to the Northern Ireland Assembly 03 February 2009 Ministerial Statement on the meeting of the North/South Ministerial Council in Inland Waterways Sectoral Format on 16 January 2009

[xvii] Nelson McCausland MLA, Minister of Culture, Arts and Leisure, Ministerial Statement to the Northern Ireland Assembly 15 September 2009 on the meeting of the North/South Ministerial Council in Inland Waterways Sectoral Format on 9 July 2009