I call on the Comptroller and Auditor General to provide an overview of the 2010 annual report and appropriation accounts.
2010 Annual Report of the Comptroller and Auditor General and Appropriation Accounts.
Mr. John Buckley
The report covers three main themes, namely, the whole-of-Government financial position, a certain set of cross-cutting issues which have an effect on public management across the board and specific issues relating to the management of voted funds. The whole-of-Government aspect contains things such as a State account. As members are probably aware, there is no accessible whole-of-Government State account published in Ireland. Chapter 1 provides details of the receipts and payments of the State for the year 2010, the deficit at year end and information on costs relating to the Oireachtas, etc.
The second issue in the set of themes on the whole of Government is funding, which relates to the national debt. They include national debt and public private partnerships and how we fund our deficits and public infrastructure. There is also a chapter in that category called "Funding Developments 2011", which takes the position up to 31 July 2011. Some new information is included there on indicators. Because our national debt is increasing it is important that we look at sustainability, vulnerability and so on. There are indicators included on the debt-GDP ratio, the extent to which the debt exceeds the tax revenue and the amount of tax revenue that is devoted to the servicing of debt. Moving on, we also deal with taxation, so I will not deal with that because we will have that discussion later in the morning.
The fourth set of issues in that category relates to bank stabilisation. There are three main themes included - the measures that have been taken by the State to date, an indication of the base value of the banks after recapitalisation and some comments on managing, and the need to consolidate the State investment. That is included there because we have put €65 billion into the banks and that funding has come from the National Pensions Reserve Fund and various other sources. Therefore, it is important that we find a mechanism to manage that investment in a joined up, consolidated way. We are all familiar with the measures that are dealt with as part of bank stabilisation - the guarantees, the liquidity support, capitalisation and restructuring.
The issues in the third set are cross-cutting, and I will mention just three of them. One theme relates to people management. We looked at the performance management and development system within the Civil Service. We looked at the consistency of ratings, the extent of compliance on a timely basis with the appraisal system, the linkage to pay and how well this system is being used to promote improvement and development of staff within the Civil Service and to manage poor performance. A further theme there is procurement, to which I will return.
Another cross-cutting issue is cash management. There are issues throughout the report that relate to the fact that there are advances in excess of cash needs in certain downstream organisations, semi-State bodies and voluntary hospitals and the need to better treasury manage State funds in this environment. Another issue is the premia which were charged to banks in respect of the guarantees. These premia attract only 1% or so interest whereas the State is paying out more than 5%. Therefore, it is necessary to move them to the central Exchequer as quickly as possible and members will note some issues around that in the report.
There is a set of issues specific to individual Votes. I will not give a catalogue of chapters, I will pick out just some themes, the first of which relates to public infrastructure. Issues include the adequacy of appraisal in areas such as the primary care centres and the implications of not having demand for the investment that has already been made in areas such as broadband, child care facilities and the local government landbanks that now have to be funded by the State over a period of years.
The second type of issue is procurement of goods and services. The theme here is how well the development of strategic procurement is moving. The public service is moving away from devolved procurement towards a strategic basis of procurement and we are looking at that at the level of the national procurement service in the Office of Public Works and in the health area. Members will note some chapters on that. A chapter under the health service that also deals with procurement in the area of services relates to consultancy and external support. The purpose of that chapter is to allow us to take a view on what is involved in procuring services. It is different from what is involved in procuring goods. When one procures goods the transaction is almost completed at the point one gets the goods whereas there is an ongoing relationship in the case of services. Therefore, what one needs is a business case. Tendering is also required, which is well understood. Another requirement is contracting, which is very important because one needs to be able to price, size, and specify what one wants and make sure one checks that one has got what was sought or at least that for which money one paid. There is a different range of issues when dealing with services. The last issue on the procurement of goods and services relates to the move from looking at conformance and rule compliance, as was the case in previous years, to placing co-equal focus on performance and value. Members will note a set issues included on that.
Financial control and supervision, which is the third bullet point listed, relates to the safe management of public funds. It examines how reviews and checks are being carried out in State organisations and whether they have ensured public money is safely managed. It examines issues such as timely bank reconciliations. There is a set of issues around take-on controls in social welfare. There is a set of issues on financial control and supervision.
The fourth issue I have set out is joined-up administration. It examines the extent to which information is shared, matched, particularly in social welfare, and to what extent it is referred for investigation to the people who investigate these matters and followed up. It is about the timeliness of the use of information by State organisations to prevent unwarranted recourse to the welfare system and so on.
A similar set of ideas are contained in the small chapter on the Global Economic Forum which looks at how the ideas surfaced, were followed, mainstreamed and brought into the policy development process.
The next set of issues is around change management, an area which raises issues almost every year. Members will recall PPARS and other such areas but this year the matters we have looked at include primary care team development. If one is trying to move from one mode of organisation such as individual functions within the health sector, each managed by its own manager, to a team basis of organisation, clearly, one needs a plan to get from A to B with goals and milestones and a validation or verification process afterwards. The same is true when one is moving from devolved procurement to strategic procurement at national level. One needs a plan to get there. That is a theme that runs through a number of chapters.
The next issue relates to exploiting or protecting investment and it examines the extent to which certain facilities, IT facilities that have been developed at a cost of approximately €20 million, have been commissioned and brought into use. Items such as sports capital grants and the extent to which the facilities we have paid for are in place and the need to take charges and liens when the State makes major contributions towards the capital costs of developments.
The second last point is on responding to the impact of the downturn. The reports listed examine how we addressed productive capacity and employment, enterprise stabilisation measures, credit which involves the Department, Enterprise Ireland the Credit Revenue Office. There is a report on the rural social scheme, which is included because it is an example of a State funded work scheme and in this environment it may be interesting to compare that against the community employment scheme and the new Tús initiative. There is some work included on micro business and there is a range of reports around enterprise in the current environment. There are 16 chapters between last year and this year that the committee still has to deal with on health. They largely break down into issues of financial management, resource utilisation, capital investment and service delivery. I deliberately did not focus on specific reports. I just wanted to pick out themes. The reason I did that is because as well as looking at the individual accountabilities of organisations it may be important to look at the themes that are emerging as well and to see whether the new Department of Public Expenditure and Reform may be able to sponsor initiatives to help address those themes.
Mr. Buckley mentioned €64 billion from various State entities that was used to capitalise the banks. He raised the issue of co-ordination between the various sources such as the National Pensions Reserve Fund in order to manage that amount of money. Does Mr. Buckley suggest that there has not been the requisite co-ordination between the State entities?
Mr. John Buckley
No. We are moving into a new phase. In the bad bank scenario we have invested €31 billion to manage a bunch of assets. That is part of the picture, but to capitalise the banks we are putting in €65 billion which is a bigger amount. As we move into the phase where the banks are capitalised, the State's involvement with the banks will move away from the emergency-type situation we have had up to now to one where we need to manage the investment. We need to segregate our actions in the area of policymaking away from the managerial operations that any investor would use.
The Comptroller and Auditor General has obviously thought of that and he is thinking ahead about how to deal with it. Does he suggest that it is not happening at Government level, that there is not evidence of such an approach?
Mr. John Buckley
No, I am saying it is there but it is difficult. For instance, the difficulty is that the National Pensions Reserve Fund must have its own due diligence done every time it puts a piece of money in and every time it follows what is happening. The State is the same. All the various components have their own interests and requirements to look at their investment and to account for that. What I am saying is that there will be more coherence. There is a need for coherence. It is not for me to set the policy but what I am saying is that there is a need-----
Is there a point person currently?
Mr. John Buckley
We know that people have moved from the NTMA to the Department of Finance. A group of people who were recruited by the NTMA are working on banking in the Department of Finance. What I am saying is that perhaps we need to put a structure and system around that so that we are clear on the accountability of those people so that an account is delivered for the State's investment in the banks which amounts to a sizeable amount of money. It is bigger than the amount of money that has been invested in the bad bank work-out situation.
I thank the Comptroller and Auditor General.
Does any other Member wish to ask a question on the matter? Given the publication of the Comptroller and Auditor General's report for 2010 we now have sufficient information and data to fill out our agenda until Christmas. We have circulated a copy of the work programme on which we can sign off next week. There is no rush to do it today but if members have a preference for particular Departments or agencies which they would like to come before the committee, they should let us know. I am thinking in particular of NAMA and the Dublin Docklands Development Authority. We can prioritise those suggestions.
Deputy Michael McCarthy sends his apologies for his absence today. He also asked me to tell you that he is unavailable to attend on 6 October when he is scheduled as the lead speaker. He asked me if I would swap with him because I am the second speaker the following week. Is that okay?
That is fine.
Is NAMA scheduled to come in between now and December?
We are awaiting a response from it and for the material to come in. Then we can decide on a date. We have the 2010 report and it is up to members to study the work programme we have suggested and between now and next week to make suggestions on who in terms of priority they would like to see before the committee and on what dates. The information can be made known to the clerk. We can factor it into the work programme and agree it next week. I referred to the Dublin Docklands Development Authority and NAMA. Their accounts will be before the Department and when the information comes in to us then we can schedule them in. We are working on the work programme but we want to find out the priorities of members. Is it agreed that we will sign off on that next week? Agreed.