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COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 8 Dec 2011

Chapter 18: Central Government Accounting - Comprehensive Expenditure Review.

Mr. Robert Watt (Secretary General, Department of Public Expenditure and Reform) called and examined.

Before we begin, I remind members and witnesses to turn off their mobile telephones, as interference from mobile telephones affects the sound quality of the transmission of the meeting. I advise witnesses that they are protected by absolute privilege in respect of the evidence they are to give to this committee. If they are directed by the committee to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given, and they are asked to respect the parliamentary practice to the effect that, where possible, people should not criticise nor make charges against a Member of either House, a person outside the House or an official by name or in such a way as to make him or her identifiable. Members are reminded of the provisions within Standing Order 158 that the committee should also refrain from inquiring into the merits of a policy or policies of the Government or Minister of the Government or the merits of the objectives of such policies.

I welcome Mr. Robert Watt, Secretary General, Department of Public Expenditure and Reform. I congratulate him on his appointment. Will he introduce his officials?

Mr. Robert Watt

I am accompanied by Ms Oonagh Buckley, who looks after pay and IR matters in the Department; Ms Judith Brady, accounting section; Ms Louise McGirr, who looks after matters relating to PMDS and performance; Mr. Tony Jordan, pensions section - he will retire and benefit from a pension in the new year and he has appeared before the committee several times; and Mr. Paul Ryan and Ms Cep Carty, finance unit of the Department.

Chairman: The full text of Chapters 10 and 18 can be found in the Annual Report of the Comptroller and Auditor General or on the website of the Comptroller and Auditor General at www.audgen.gov.ie

Mr. John Buckley

Spending from Vote 7 on pension payments for 2010 was €354 million after taking account of receipts of €83 million received by way of appropriations-in-aid. Vote 7 principally covers the cost of pension payments to retired civil servants and prison officers. The cost of pension payments to other public servants such as teachers, gardaí and Defence Forces personnel are met from separate voted funds. Receipts under the pension-related deduction from civil servants, which came into effect from March 2009 onwards, are not included in this Vote but rather are set against the expenditure of the Departments in which the civil servants work. The administrative cost of the vote was borne on the Department of Finance in the year we are reviewing.

From a wider perspective, public sector pension entitlements represent a major liability payable by the State to its employees. The entitlements arise under what are known as defined benefit schemes, which fix the benefit payable. This is in contrast with defined contribution schemes that fix the contribution of employers and employees but where the benefit payable, ultimately, depends on the proceeds of the investment of those contributions.

The last time the pensions of public servants were costed was in a report I produced in 2009 when the accrued liability or the then current value of occupational pensions earned by State employees up to 31 December 2009 was put at €116.4 billion. This is somewhat out of date and there would be merit in completing a similar exercise in the near future given the adjustments that have been made to pay and pensions in the interim.

Two chapters in the 2010 annual report are relevant to the work of this particular Department. The first of these looked at some aspects of the Civil Service performance management and development system which has been operating for more than a decade. The system has multiple objectives designed to ensure clarity around the role of employees, how personal objectives link to organisational goals, the performance standard expected from the employee and how staff development needs may be met. The annual performance rating of individuals has implications for eligibility for promotion, the award of pay increments and movement to higher scales.

The report draws attention to the fact that the completion of annual reviews needed to be speeded up - less than 60% of 2009 reviews were completed by the time the situation was surveyed the following year in 2010; the fact that very few were assessed at the lower levels on the five-point scale suggests a risk that underperformance was not being addressed with implications for award of pay increments. On the other hand, from a compliance perspective, the audit testing found that for a sample of pay increments actually awarded the annual review had been completed by the time those awards were made. The overall implication is that the conditions relating to eligibility for pay increases and promotion may be driving the completion of assessments more so than the performance-related goal of ensuring that individual performance is aligned with organisational objectives or business goals in a timely way.

There seems to be a number of indicators that underperformance is an unresolved problem. Almost one fifth of employees who took part in a survey sponsored by the Department felt that their Department was not managing underperformance appropriately. This is supported to some extent by the fact that a very low percentage of staff are rated as 1 or 2 on the five-point rating scale. A focus group used as part of the study was quite definite that underperformance was both serious and needed to be addressed. The audit found that the Department had already begun to address these issues and the Accounting Officer will be in a position to outline the measures that are being taken there.

The second chapter being considered today is a general overview of the management of voted funds by all Departments. It gives the overall outturn position and highlights some matters that the Department may need to take account of from the point of view of better financial management and accounting. In particular, it notes cases where advances are made to State bodies even where they hold substantial cash balances; liabilities that had not matured for payment were met from Votes; and advances from one Vote to another were fully charged although the related work had not progressed.

Under the cash accounting system, which applies to Votes and, of course, has the merit of simplicity, there is always some scope for distortion since it is generally the timing of payment that determines the year money is charged and accounted for. The risk is that payments could be advanced to use up surplus funds or delayed when budgetary pressures come to bear, thus reducing the reliability of the accounts as a record of outturns and it would also of course reduce the reliability as a basis for decision making.

In regard to the economy in cash holdings, as we discussed in the earlier session, the National Treasury Management Agency operates a treasury function, which allows public bodies to deposit funds with it. Simultaneously, it allows the bodies to get a return on the deposits and reduces State borrowing. Some consideration might be given to how this mechanism could be better used to sweep up such funds.

While, overall, the advance payments and the liabilities that had not matured for payment were not material in the context of any Vote, we considered that it would be opportune for the Department to give additional guidance to other Departments on the timing of the recognition of expenditure in the appropriation accounts. The Department has issued circulars in response to those matters, which I have no doubt the Accounting Officer will outline to the committee.

I thank Mr. Buckley and call on Mr. Watt to make an opening statement.

Mr. Robert Watt

I am delighted to be here in my capacity as Secretary General of the new Department. As we discussed already this morning with the Minister, Deputy Howlin, the Department and the committee share the same goals and members can be assured of our support and co-operation in this forum or in other ways as we deem appropriate.

As the committee will be aware, the establishment of the Department required a very significant effort. A number of functions transferred from the Department of Finance and the Department of the Taoiseach, in addition other functions to address commitments in the programme for Government. A very significant piece of legislation was passed by the House to give effect to these changes to establish the new Department.

It is useful to recap on what the Minister for Public Expenditure and Reform now has responsibility for, which includes the management of gross voted expenditure, the annual Estimates process, general sanctioning powers in relation to expenditure and policy matters relating to the appraisal, review and evaluation of spending. We touched upon some of these issues this morning in the context of the value for money code which the Minister has published. The Minister also has responsibility for public sector management and reform, including industrial relations and public service modernisation.

Our Department was given three key objectives by the Government, the Taoiseach and the Minister: to manage public expenditure to more sustainable levels; to manage a significant programme of public sector reform; and to support the Government in its wider political reform agenda. Since the Department was formed, working with the Minister, Deputy Howlin, and the Government we have delivered on a wide variety of different issues and I will touch on them very briefly. We have established a new management team in the Department, with external recruitment; managed overall spending within the parameters set by budget 2011; delivered the jobs budget; participated in several troika reviews of the programme for Ireland in conjunction with the Department of Finance; worked on a new pay policy for senior public servants and officeholders; developed legislation to significantly reduce future public service pension costs - a very significant piece of legislation, which I understand will pass its final Stages in the House next week; reformed the Top Level Appointments Service, including an external chair of TLAC and more members; changed the terms that apply to Secretaries General on retirement; worked with Government on the future State assets disposal programme; developed and published the public service reform plan, which we discussed already this morning; made significant progress on the development of proposals in relation to a wide variety of shared services; prepared a review of capital priorities which was published a few weeks ago; managed the comprehensive review of expenditure, which I understand we may touch on in this session; and managed the Estimates process and this week published the book of Estimates in respect of 2012.

It may interest the committee that since July the Department has answered 965 parliamentary questions - not all from Deputy O'Donnell, but one or two; 43 FOIs; and 1,900 reps' in addition to a variety of other activities. It is useful to set that out. It is important at this forum to pay tribute and thanks to the dedication of the staff in the Department who work very hard in delivering on all these other matters for the Minister, Deputy Howlin, and for the Government.

Following the establishment of the Department, the transfer of functions included the transfer of responsibility for the minutes of the Minister in the context of Committee of Public Accounts. This is an issue the Chairman has raised with me previously and we touched upon it this morning in terms of the timeliness of minutes. As of mid-July this year, there were five minutes outstanding with 108 recommendations all relating to the 30th Dáil. Since that time a significant effort has been put in by the Department and we have now issued responses in respect of four out of those five reports. That means that 74 of the recommendations have been responded to in full since July, and 43 are remaining and responses are due to issue shortly in respect of those. We have put in a very significant amount of effort in ensuring that the backlog of responses has been addressed.

As the committee is aware, officials of the Department have met Committee of Public Accounts officials to consider how we can improve the timeliness and relevance of this approach and maybe this is something we can have a discussion about. There is certainly a need for us to look at this whole process to ensure that recommendations, minutes and responses are timely and relevant. As the Minister discussed this morning, it seems somewhat unusual that for reports from 2007 and 2008, recommendations in relation to those are only being responded to this year. That is something that we are happy to work with the committee on doing better.

On the public service reform agenda, we have heard much about it already this morning. Budgetary reform is an element of this and I would like to touch on it briefly because it will have implications for how we spend and account for public money. As announced by the Minister, Deputy Howlin, this week we need to modernise our approach to budgeting. This year's comprehensive review of spending was important in this respect. There are two aspects I would like to touch on very briefly. The first concerns the need to evaluate public spending more rigorously. The second relates to the role of committees and this House, the Oireachtas. This was also touched upon earlier by Deputy Harris and others.

On the question of evaluation, one of the lessons from the review has been that good quality analytical work can be undertaken by the public service when there is a clear mandate to do so and a clear timeframe within which to deliver results. This week, our Department has released all of the background CRE documents for public inspection. It is a significant volume of material prepared by the Departments and it is all available on our website. People can see the key documents that were input into the decisions the Government has taken and announced this week. They show a serious engagement with this process across Departments and offices generally. In many cases, the standard of evaluation has been very high. The challenge for the public service is to harness this energy and commitment, so that the CRE is not just a once-off exercise. We must maintain the momentum and ensure that public spending is subject to review and evaluation on a continual basis.

There are processes that exist at present, notably the value for money, VFM, and policy reviews, that have been around since the 1990s. These reviews have been gaining some traction over recent years, and some of them have yielded useful results. However, the reviews have fallen short of their initial ambition, with only limited coverage in terms of overall spending covered by the reviews. We are pleased that the Government has agreed to reform this area entirely. As part of the announcements this week, a new VFM code is being introduced which allows for a much more focused approach to conducting expenditure evaluations, which will tie in more closely with the work of the Dáil committees. This is something we might come back to discuss in more detail with the committee on a separate occasion.

I should add that our approach is influenced by the experience internationally, particularly the Canadian experience of programme reviews during the 1990s which is seen as the exemplar in terms of how governments should look at spending and consolidation in the context of a wider fiscal consolidation. What is interesting about the Canadian system is that it has evolved from major, once-off reviews into what are called "strategic reviews", with an ongoing process of evaluations and continuous assessment of the priorities associated with different spending lines, as the Minister mentioned earlier, in order to have more of a zero budgeting approach as opposed to an incremental approach each year to spending. This approach is, in broad terms, what we are hoping to introduce in Ireland.

The second broad theme I wish to discuss is the enhanced role for the Oireachtas and its committees. The reforms fall under about five broad headings, all of which share a common theme, that is, an enhanced set of tools and a new opportunity for the Dáil and its committees to be involved in the business of expenditure. There have been a number of reports on this topic over the years. The Committee of Public Accounts produced a detailed report in 2005 on reforming the Estimates process, calling for the entire process to be brought forward so that parliamentarians could input their views and perspectives before the Estimates are settled later in the year. The Oireachtas Joint Committee on Finance and the Public Service also produced a report about a year ago, calling for re-formatting of the Estimates so that costs and outputs could be seen against each project or programme.

In essence, these reports are now being acted upon by the new Government. To begin with, this week we have published expenditure ceilings for each Department not just for 2012 but also for 2013, with indicative upper ceilings also in place for 2014. This means that Oireachtas committees, particularly the sectoral committees, are now in a position to engage with Ministers from the outset of 2012 on how their future Estimates should be prioritised. Moreover, we are now introducing performance budgeting on a general basis so that when the 2012 Estimates are published in the new year they can be referred to Dáil select committees for discussion.

At this stage we are setting out not just the inputs or the amounts of spending but also the outputs, outcomes and targets so Deputies can see not just what is being spent but also what the Government is hoping to achieve with that expenditure. This should lead to more meaningful discussions on Votes when they are discussed. I referred earlier to opportunities. This is an opportunity for the system to be more engaged in the formulation of expenditure policy and the establishment of expenditure priorities.

Finally, our Department is taking the lead on public service reform, but reform is something that should preoccupy all of us in our jobs in every Department and in every institution. In that context, we look forward to working with this committee and hearing its views and comments on what we are doing and to feed into that process.

To turn briefly to the items before us, Vote 7 is the superannuation Vote. The forecast gross outturn on the superannuation Vote for 2011 is approximately €424 million. That is lower than expected due to a lower number of retirements than expected when the Estimate was set. Overall, there is an upward trajectory for retirements over the decades ahead, reflecting the demographics of the Civil Service. It is interesting to note that the average age in the Civil Service is now 45 years, compared with 35 years about 15 years ago. The average age has increased and we have, compared with other countries and our history, a very old Civil Service. Less than 7% of civil servants are aged under 30 years. This speaks to what the Minister mentioned earlier about the need for some recruitment into the Civil Service despite the reductions in numbers and pay allocations. We will have a very significant problem in the future if we do not start engaging in limited recruitment, despite the difficult financial situation we face.

Next year is projected to show a spike in retirements as civil servants are expected to retire before the end of the grace period, after which their pensions will be based on the lower cut salary. The provision for 2012 shows an increase over the 2011 Estimate to reflect the expected retirements. That was set out in the Estimates published by the Minister this week. Over the longer term, the costs of pensions will rise significantly. Expenditure by 2022 is projected to be over €640 million, a rise of over 50% over the 2011 level. The number of Civil Service pensioners is estimated to reach around 28,000 by 2022. Meeting these costs will be a significant challenge and the Government has set out a number of legislative changes which will, in part, address the cost of pensions in the future. I will not go through them but Deputies will be familiar with some of them.

We welcome chapter 10 relating to performance management and development and its findings. We agree with most of what has been set out by the Comptroller and Auditor General. We carried out an extensive review of PMDS over 2010 and concluded, from feedback, that PMDS is not seen as an effective tool in the management of performance. That dovetails with the conclusion of the report before the committee. I will outline in a moment the reforms that we have already introduced relating to performance management in the Civil Service, but I wish to put them in the context of broader reforms in HR being delivered by my Department and HR units across the Civil Service.

We face significant challenges in developing the public service of tomorrow, which will be a great deal leaner. We know that to deliver excellent public services with fewer resources we need our workforce to be talented and skilled, innovative and responsive, and to perform to the highest levels. In response to the challenge of how we do more with less, the effective deployment and management of our primary resource, our people, is more important than ever. To address this challenge we have established a HR policy directorate in the Department. This directorate is examining fundamental reforms aimed at improving the way the Civil Service is resourced and managed. Key deliverables will include workforce planning - to ensure that we deploy existing staff optimally, manage corporate memory loss, and identify the skill gaps to allow targeted, well focused recruitment over the medium to long term. We mentioned this already. Given the number of exits and the demographic profile, we need to recruit. However, we must recruit in a different way from the past, with more emphasis on specialist skills.

The senior public service is very important. To underpin the need for reform across the public service we need strong leadership. We have established a senior public service to promote a more integrated approach and to strengthen the leadership capacity of the public service. We are reforming performance management. We have developed a comprehensive approach to the reform of PMDS and we are working closely with Civil Service management and unions in this respect.

Some of the criticisms that emerged as part of the review of PMDS include: the process is overly bureaucratic with an emphasis on form filling; a lack of consistency and fairness of standards for performance, that is, it is perceived that there are too many high ratings with everybody rated as above average; and a failure to deal with underperformance. In response, our Department has taken the initiative and is working with HR units to strengthen management capability across the Civil Service. Earlier this year my Department developed guidelines and training material on the management of underperformance. Over 100 staff from HR units were trained on the new guidelines and related HR policies such as the disciplinary policy. Departments are now expected to train their own line managers on the management of underperformance, which is a major challenge within the system. We accept and recognise what is set out in the report before the committee, that underperformance is a major issue that must be addressed.

While the initial focus of reform has been on simplifying and streamlining the process, we need to do more. Phase 2 of the changes to PMDS will focus on looking at the distribution of ratings across Civil Service Departments to see how they can be improved and how fairness and consistency across Departments can be strengthened. We will bring forward proposals on how to address these issues in 2012.

Turning to the chapter on central Government accounting, we welcome the Comptroller and Auditor General's comments. The recommendations make an important contribution to shaping policy and we accept them. The recommendations are being implemented across the expenditure reform agenda. Progress includes the agreement of a revised procedures with the Revenue Commissioners regarding accounting for vehicle registration tax, to which the Comptroller and Auditor General alluded. Regarding State cash management, a circular consolidating the requirements for grants and grants-in-aid issued to all Departments in December 2010. This refers to the issues mentioned by Deputy O'Donnell about the need to reduce cash balances and to ensure the State as a whole is reducing the financing costs of holding cash unnecessarily.

The policy on unmatured liabilities is under review, taking account of the wider context of Estimate reform, including the development of a medium term expenditure framework. One initiative that is particularly important in this respect is the move to allow carryover of unspent current funds from one year to the next. Many of the issues referred to by the Comptroller and Auditor General in respect of unmatured liabilities concern the fact that we are, in effect, paying early because we have the cash. People think that if they do not spend it, those dreadful people in our Department will take it from them. If we have a more mature system where we say that people can have the carryover of unspent current funds into the next year, that will reduce the tendency for spending towards the end of the year and, in some limited cases, of actually paying liabilities that are not yet matured, as identified by the Comptroller and Auditor General. This reform will lead to a more mature approach and there will not be such a smell of paint around Government buildings and offices so that at the end of the year, people will not be brought in to do jobs in November and December, as it was once characterised by someone. This will be an important reform if it is put in place.

We also share the view of the Comptroller and Auditor General that all accounting officers need to ensure that arrangements are in place to record effectively all transactions, produce accurate accounts and facilitate a prompt and efficient audit. With this in mind, and taking account of the concerns expressed, a circular has been issued to all Departments by Judith Brady and her team, outlining the requirements for the timely production and submission of accounts of bodies. We have reminded the system of that matter, which was raised by the Comptroller and Auditor General.

We are happy to be here and to answer any questions.

Can we publish Mr. Watt's statement and the supplied materials?

Mr. Robert Watt

Yes.

I will let Deputy McCarthy speak first as he has an appointment later.

I thank Mr. Watt and his officials for attending. Regarding the comprehensive spending review, he mentioned the roll-out of performance-based budgeting. Can Mr. Watt expand on this point? In the HSE, money follows the patient. Is that the concept he envisages?

Mr. Robert Watt

For the 2011 Estimates, two Departments produced the Estimates in a different format. The input and spending were listed on a programmatic basis along with the outputs and outcomes expected to be achieved from that spending. For the vast majority of Departments, the detailed Estimates volume that will be produced in February or March of next year will set out spending on a programme basis and what we are hoping to achieve. We will list the amount of money and what we hope to get for it in the case of a programme such as the rural transport scheme. We will improve this year upon year so it will not be perfect next year. We welcome the views of committee members and others on this. It is an attempt to link spending with what we are getting from the spending. In the past, the book of Estimates was produced and focused exclusively on spending with no indication of the outputs and outcomes. This performance report will show what the Government expects to get from the different Departments and agencies for the money voted on by the House, which is a key element.

In the health sector, HealthStat sets out performance indicators for aspects of the health system. We are proposing to develop GovStat, which will replicate that for other parts of the public sector, such as education, local authorities and the Civil Service. We will have more timely metrics on performance so that Dáil Members, Ministers and citizens can see what we are getting and how well bodies are doing. The Minister of State, Deputy Brian Hayes, is responsible for it in the Department. It is an attempt to replicate the approach of HealthStat, which is well regarded, in other sectors to develop more timely indicators and metrics of performance. We are trying to reform the publication of the Estimates and performance budgeting and also developing GovStat.

Much has been said about the savings achieved under the Croke Park agreement. Can Mr. Watt tell us how the savings are measured? If one hears that it has achieved savings of €2 million or €3 million, are these real savings? Is this a case of creative accounting with money that has not been spent? How are the hard savings measured? How do we measure that a particular aspect of the deal has resulted in Exchequer savings of a certain amount? Who monitors measurement of the implementation of the agreement and examines the efficiency it delivers?

Mr. Robert Watt

The monitoring is done by the implementation body, which is chaired by PJ Fitzpatrick and includes representatives of the management side, colleagues from my Department and representatives of the employee's side, the unions. They are charged with monitoring performance under the Croke Park agreement. Monitoring is based on information they receive from aspects of the system. They receive information from Departments, agencies and other sectors. They monitor, collate and assess information and produce a report on how well we are doing every quarter.

The figure includes pay savings, which was referred to in recent reports, due to the reduction in the number of public servants. The Croke Park agreement enables the system to continue to provide services, and enhanced services in some cases, with a lower staff complement. Those pay reductions are accounted for in the monitoring system set up under the Croke Park agreement. They are real savings and, as the Minister outlined in his Budget Statement speech, the pay bill will fall by €3.5 billion, or 20%, between 2008 and 2015. This is a significant reduction in the overall pay bill. There is a discussion that some of this is offset by higher pension costs, which is true, but we would have incurred them in any case as people retire. Previously people would have been replaced but now they are not being replaced and that is a real saving compared to the counterfactual. The Estimates material published this week by the Department shows the changes in the pay bill. That is consistent with the Croke Park agreement and the monitoring of it. Every quarter, we look at the presentation of the Croke Park agreement report. The most recent was very impressive and clear and we are trying to ensure it is as clear as possible so people see what Croke Park is delivering.

Aspects of non-pay savings are also being delivered through the Croke Park agreement across a variety of different areas, such as procurement savings, reform, changes in structures, which in the absence of Croke Park agreement would have been difficult in the past. It might be useful to hear from local managers. We have received presentations from a county manager who explained the changes at local authority level facilitated by the Croke Park agreement and the savings accruing. It is a significant change to what would have been possible outside of the Croke Park agreement.

The third aspect is service improvements. Some service improvements are taking place with reduced budgets and a lower staff complement and these are captured within the Croke Park agreement data. We should focus on the fact that there is a higher demand for more services and the system is able to respond significantly to enhanced demand with the lower allocation. There are 500,000 more medical cards since 2007, the jobseeker's benefit budget has increased by 200% and more people seek support in social welfare. There are more four or five year olds arriving in the education system. There has been an increase in the quantum or in the volume of services, despite the reductions in numbers and spending across the board.

The Minister talked about the policy in regard to the Croke Park agreement but in terms of setting out what it is delivering, it is clear it has delivered and we have set out those progress reports. We need to ensure the next one is clear and clarifies what has been achieved.

Have there been any significant changes in work practices? Is there evidence of improvements due to the agreement where a particular aspect of a service was not performing to a certain level? Will Mr. Watt specify if there have been significant changes in terms of work practices?

Mr. Robert Watt

We set out a variety of the changes in the reports. Overtime has been reduced quite significantly across the system. That has been facilitated by changes in work practices. Things are being done differently and in a more efficient way to reduce the need for overtime.

We have had very significant redeployment within the education sector. We have redeployed several thousand teachers where previously there would have been surpluses in schools in the context of the pupil-teacher ratio and the staffing schedule. Teachers have now been redeployed. They are very significant changes.

There has been a move to more online provision of services. This morning the Minister mentioned that 300 services are now provided online. There has been consolidation of different services. The medical card centre in Finglas is an example of it.

A variety of things have happened. As the Minister mentioned in his speech this week and as the Government set out, we are looking at overtime again and at allowances. The Minister will bring forward proposals in respect of sick pay.

We also looked at annual leave. There is now standardisation of annual leave because there were some practices in certain sectors which seemed very unreasonable, that is, the levels of leave to which individuals were entitled. That has been standardised.

A large variety of reforms have been delivered and are set out in the various progress reports. We can provide the committee with the details of them.

Have those endeavours been met with resistance? Is there a case or an area which stands out in terms of resisting the changes? How difficult is to manage that type of resistance?

Mr. Robert Watt

Love has broken out. Our Department is very popular. There can be resistance and managers at local level must work with the trade unions and the employee representatives. Those issues are managed. Nothing stands out. We would like certain things to be done faster. Redeployment is working but sometimes it can be too slow. Nothing necessarily springs to mind.

There are significant challenges ahead for us, in looking at some of the issues the Minister has set out and in regard to aspects of the reform programme. For example, the shared services consolidation, at which we are looking, will involve taking responsibility for aspects of services from bodies and agencies and consolidating them in a new entity. That will take budgets, numbers and responsibility from Departments and agencies across a number of different areas. I have no doubt that will be a challenge. I am sure there will be many debates and even resistance in some cases to that.

When we look at individual issues, there can be resistance but, generally, co-operation has been very impressive. We need to look every year and next year will be a difficult year again for the service given the downsizing. That will bring forward more challenges which will need to be addressed.

I refer to the issue of the moratorium. If one looks at the HSE, in particular, it is very expensive to use agency nurses, so there is not really an effective economic case for the moratorium in some areas. If one looks at the effect on the HSE budget, it is ridiculous in the extreme. The Minister said earlier that the Government would look at relaxing the moratorium in some areas. It must be asked if it will be targeted at the HSE because the moratorium is costing it a lot more, not to mention the conditions of the people working in the agency system as opposed to those attached to the HSE. It is a ridiculous system and it is clearly not working in this area. What measures will be taken, in particular in the context of the Minister's earlier comments?

Mr. Robert Watt

At one level, the moratorium has been very successful. We have reduced public service numbers and the pay bill quite substantially. Numbers will be down 37,500 from 2008. To 2015, we will save €3.5 billion. There have been very significant changes that, in part, have been brought about by the moratorium. However, there are exceptions to it in education, in aspects of health, in essential posts and in statutory posts. While it can be characterised as being somewhat crude, there are exceptions to the moratorium where people who leave are allowed to be replaced.

The Minister clarified this morning that approximately 9,000 people will leave the service next year. Overall numbers will fall by 6,000, so we expect there will be recruitment of 2,000 to 3,000 people next year. The exact level will depend on the position at the end of February. There is some recruitment to address some of those issues. It appears in various areas where if the service must continue, we need to be flexible and bring on board some people.

We have set up a manpower planning group. Each sector now has a manpower planning group to look at the problems and issues that may arise from the numbers leaving the system, so that we can identify problems and try to fix them. We are doing the best we can in terms of the enormous changes taking place.

The Minister has an open mind on the moratorium and exceptions to it. If issues arise from different sectors and Ministers come to him, then he will respond flexibly to that.

There is one area of concern. This week we got the list of Garda stations to be closed. The Garda training college in Templemore has not had recruits for some time. That will have a critical impact in terms of fighting crime and crime prevention. Will the Government consider hiring gardaí next year which will allow the training college to function as it should? There should be recruits there. It is the first time in years that there has not been any movement.

Mr. Robert Watt

That is something for the Minister for Justice and Equality, Deputy Shatter, and his Department and not for us to talk about today. I should say that the new employment control frameworks for 2012 to 2014, inclusive, will be set out in more detail after the end of February next year when we get a better sense of the numbers retiring. We have set out overall allocations for reductions in numbers across the system but the Government will set out in detail the numbers. In that context, the Minister for Justice and Equality and the Department of Justice and Equality will set out the position for Garda numbers.

Is there a concern about the number of people who will leave the public sector next year and about a brain drain? Clearly, people will be enticed to leave. Will account be taken of that? It might ultimately influence the decision to relax the moratorium.

Mr. Robert Watt

We need to manage the system as best we can with the lower staff resources and the reduction in pay allocations. That is an enormous challenge for managers across the system. It is why we will try to be as flexible as we can and are planning in advance. The Minister said he would like three months' notice of people who intend to retire by the end of February. We are starting to gather some intelligence now based on the end of November returns. We will look at that over the next few weeks with our colleagues in different sectors to see where the problems are.

The Minister will respond as best he can given the resourcing issue. However, we have a very binding constraint. We do not have the resources, so we must do whatever limited recruitment we can within the envelopes set, within the employment control frameworks and with the cash envelopes set for Departments.

The brain drain is an issue because more experienced colleagues will leave who have a lot of experience and corporate memory. It is a challenge for all of us to ensure that we have the systems in place and we have new people coming in where we can to fill the gaps.

I refer to the qaungos. An bord snip nua and Mr. McCarthy made very clear recommendations. One of the reasons the quangos cannot be dealt with expeditiously, or as one would assume, is the legislative implications in terms of bringing forward primary legislation to allow for mergers, wind downs and amalgamations. That a reason action cannot be taken more swiftly. What measures are being put in place to look at the legislative framework and to arrive a situation whereby one could do a lot more with quangos because one cannot do anything currently in view of the legislative difficulties? What progress is being made in that area?

Mr. Robert Watt

The Government has set out its plans for quangos. It will be up to each Department to look at the legislative basis underpinning each body to see what changes are required. It is a very significant legislative task to make the necessary changes to abolish a particular entity because the functions will have to be transferred elsewhere. The Government has set out the policy and it is our task to deliver on it. It has been suggested a quango may have to be set up to abolish quangos, as it involves a significant effort. We have already reduced 41 which has taken some time. Deputies will be aware of the length of time it takes to put legislation through. The Government has decided the policy and considered the issues involved and options available. It has its list and it is up to us to deliver on it.

I thank the Secretary General and Deputy O'Donnell for allowing me to go first.

As the quangos are wound down, however slow it may be, is it not a fact that the staff involved will have to move back to the various Departments? Therefore, it is not a closing-off of the staff.

Mr. Robert Watt

No.

There will be no savings in that regard. Has anyone suggested to those who serve on the boards of some of the quangos that they should not take the payment they receive as part of their patriotic duty to the State which is in a state of collapse? Could it be suggested across the various Departments involved that as a measure of their commitment to rebuilding the economy they waive any payment they receive while the Government works through the legislative process to wind the bodies down? I ask the Accounting Officer to consider notifying the various quangos, bodies and agencies.

Mr. Robert Watt

We are always open to receiving waiver forms. The Department is always available to those to want to say, "No thanks, I will not take the fee." There are a number of individuals who serve on boards who do not take their fees and expenses and who do not wish to have this publicised. There is an issue for us. Perhaps at the start of the year we might say to members of boards that there is a facility for them to waive their fee, if they so wish. In the case of those boards which are looking after organisations which will be abolished in the coming years, there might be an opportunity for them to do so. This is an issue at which we could look.

One could start with the social partners and the officials who serve on boards. Perhaps they might lead by example and encourage those in the private sector to do likewise.

Mr. Robert Watt

We issued a letter last month to officials of Departments stating an official who serves on a board should not receive a fee. For public servants, this already applies. Members have seen some of the publicity generated around the issue in the last month. We are open to ideas on how we can make savings.

We can encourage them to do so. To this end, we can write to them.

The performance management system was mentioned. It is obvious from the report that it was very much a farce. I am sure those looking in from the private sector at how the boxes were ticked were aghast at the outcomes. It did not serve those involved in the process well. Is it not an awful reflection on senior managers within the Civil Service that they would not deem it their responsibility to ensure the system reflected properly what was happening in a Department? Is the fact that officials have a job for life and cannot be fired the reason one has poor performance? Surely the ultimate sanction for a person not performing is the loss of his or her job. That sometimes focuses the mind and people tend to perform to a standard that will allow them to keep their positions and jobs, particularly given the downturn in the economy. Is the policy being continued that those who enter the Civil Service sign a contract under which they cannot lose their positions?

Mr. Robert Watt

The Chairman has raised a number of issues. We accept that the PMDS, as it is operated, has not been effective and said this in our response to the report. We also said we agreed with most of what had been said. We have responded by establishing a dedicated director within the Department to work with the HR units across the system to try to have a much more focused approach to managing performance and under-performance. I am happy to say in front of the committee that the PMDS has not worked. It has not been effective in setting clear goals, ensuring performance is monitored and that under-performance is addressed. This is more of a cultural issue than anything else. It is up to senior managers throughout the system to have these discussions with staff members to set clear targets and set out clearly what they expect to ensure they perform.

The Chairman is correct that the system of pay and conditions of employment in the public service is different than in the private sector. However, there are similarities. One can be fired in the private sector for a variety of reasons, but it is difficult to fire a person for under-performance. Sometimes the difference between the public and private sectors in that respect is exaggerated. People can be made redundant in the private sector for economic reasons, but firing somebody for under-performance is much more complex.

Given the incentives or tools available to managers, the system in place means they will have to be much more effective and proactive in managing under-performance. We are very conscious of this and committed to doing more in this area next year. It is a cultural issue that needs to be addressed. Given the pressures on numbers and budgets in the system and what is happening in the private sector, we cannot tolerate a situation where we are carrying individuals who are not contributing.

Related issues on which the Minister has focused are absenteeism and sick leave. These issues must be examined, given the higher rates of absenteeism in certain parts of the public service compared to the private sector. My Department, the wider Civil Service and the Minister will engage with the unions in the new year on various aspects of the issues involved as part of moving to a culture of performance. We are fully supportive of what the Comptroller and Auditor General has said in his report and will be happy to come back after a certain period to speak in more detail about what we are doing and indicate whether we are making progress and the system is improving.

I am delighted to hear Mr. Watt use the word "culture", given that it was mentioned in the report of the Department of Finance. It is a big issue beyond numbers that needs to be addressed. The National Standards Authority of Ireland has developed a standard for Departments, but no Department has taken up the challenge of applying it to itself. That speaks volumes about the resistance to change within Departments. One of the ways to introduce reform would be to ask a single Department to apply to itself and implement the standard of the National Standards Authority of Ireland, particularly one which deals with the public. The National Standards Authority of Ireland is part of the Department of Jobs, Enterprise and Innovation. All that is needed is for some Department which deals with the public to step up to the plate to tell it that it is going to show that it can work. It is true that the Government, politicians and the National Standards Authority of Ireland encourage the private sector to apply for standards and celebrate proudly their achievement, yet the Government and Departments will not attempt to apply a similar standard to themselves, even though one has been developed. The challenge for each Department is to step up to the plate and let us see how it performs. This would help to deal with the management of staff issues, tell the public that it was engaged and willing to change and could bring about what the Minister has described as better relationships with its customers, or citizens. That is what is critical. In some cases, reform could be measured by a county manager or a senior official answering the telephone from time to time.

Mr. Robert Watt

I am not that familiar with the standard to which the Chairman refers, but we could certainly look at it. We have comparable processes and procedures in Departments. We have an organisational review programme whereby we have looked at most Departments and assessed their performance and capabilities, how they are responding to customers and how their systems are organised. The main Departments carry out customer surveys and look at feedback from those with whom they interact to try to get a sense of how well they are doing. We have rewards for excellence and best performance and also have very detailed systems of accountability, through this and other committees, in responding to representations made, FOI requests and parliamentary questions. There is a variety of mechanisms to ensure Departments are held accountable and are performing.

We could all pick out cases in which things could be done better in terms of the PMDS and the monitoring of performance. However, in the main, we have Departments which are performing well. The vast majority of civil servants are performing, committed, dedicated and working hard. It is our job as managers to ensure the systems and structures are in place to enable the 35,000 in the Civil Service to do the best they can and meet their potential. I am not suggesting the Chairman is saying this, but I would not agree with the narrative sometimes mentioned that the system is terrible and that nothing works because that is not the case and people would accept that it is not. However, we do accept that there are areas in which we need to improve.

When constituents stop turning up in such numbers at my clinics, I will agree with Mr. Watt that the system is working. We are experiencing the fall-out from a system that is broken in places. In respect of the implementation body for the Croke Park agreement and the many other areas in which departmental systems are scrutinised, they are not scrutinised by outside organisations. A private business is set up and the National Standards Authority of Ireland and similar bodies come as independent bodies and put it through its paces. That is what the public wants to see. That is the reform they want to see. I encourage Mr. Watt to go down that route.

Chapter 18 refers to taxpayers' money lying in State organisations and quangos. This is money is idle. How much is involved? Money is lodged with the NTMA overnight to bring down the national debt. It gets a return on this money. We can change the model for the payment of moneys to these organisations. Mr. Watt spoke about it being paid on a cash basis. If the cash comes in and it is lying idle in a quango, that is a very bad use of taxpayers' money.

There is huge scope on the value for money platform. Do the witnesses know the total number of regulations across all sectors? What about the numbers in each Department? The problem is that if a State body or quango is criticised about regulations, it will tell us that it is only implementing them, that it did not come up with them, yet such bodies and quangos have to deal with people on the ground. This brings us back to the Chairman's point on measurement. A good public sector is in place to deliver a service to the general public, but it is also in place to provide the environment in which enterprise is allowed to flourish and create jobs. One of the major hidden costs impeding SMEs is the cost of implementing regulations, many of which have been in place for years and are outdated.

On the public service reform platform and the value for money review, will the Department of Public Expenditure and Reform request each Department to carry out an audit of all the regulations in place? Will it request them to provide the results for the Department by, say, 31 March? The Department could review the results and it should be able to eliminate any unnecessary regulations by 30 June. That might bring clarity to the role of specific quangos and the question of whether they are needed. We might be able to find out if they are implementing outdated regulations. That would achieve huge value for money and be very beneficial for the public and private sectors.

What is the level of absenteeism in the public sector? Can the cost be quantified? What is the average age of those involved? How can we make progress in the next ten years? What models can be put in place? Do staff in the public sector move to the private sector on secondment? Is there an interlink between the public and private sectors, as the private sector could learn a lot from the public sector also? There are great people in the public sector and the problems are often due to the system. There are very innovative individuals working in the public sector, from whom the private sector may not benefit enough.

I am worried about what will happen after 29 February. We are dealing with public bodies and people in them with a reservoir of knowledge who are due to leave before 29 February. I am worried about the numbers involved and that there will be major problems in March when the Department will be firefighting. Has Mr. Watt had any indication of the numbers who applied before 30 November? What procedures can be put in place to deal with this issue? I am talking about areas such as social welfare, the HSE and the education sector. Mr. Watt might give us an indication of that. I wish Mr. Jordan well. I assume he is retiring on 29 February. There has to be robust debate. We are in a period of change which I hope will be positive.

What are the controls over the people carrying out PMDS reviews to ensure their work is of an acceptable standard? What are the control mechanisms in place to ensure people know where they stand when reviews are carried out? We need to have a transparent system. There are people in roles in the public sector whose performance would change if they were moved to another role. We need a flexible system. If a manager is carrying out a review who examines his or her performance?

Mr. Robert Watt

I thank the Deputy and I shall endeavour to answer his questions. We are very happy to have a robust debate and it is the style we would like to encourage. Within the limits of section 19 of the 1993 Act, which precludes me from talking about policy, I will do my best to try not to break the law in front of the committee.

On cash balances, within the overall system spending we are due to spend €3.9 billion on capital and there is a Vote for current spending of €51.8 billion next year. In his report the Comptroller and Auditor General identified a number of cases out of the quantum of spending where cash balances were sitting in a number of agencies.

The Road Safety Authority had €23.5 million.

Mr. Robert Watt

That is not appropriate. The Controller and Auditor General set out the reasons why it is inappropriate, with which we agreed. We set out new guidelines on grant-in-aid. Money should only be provided for specific purposes where spending will be incurred and grant-in-aid should not be provided if cash is sitting in an account. We all know about the cash situation facing the State.

Mr. Robert Watt

The financing cost of it is important for us to minimise. We have issued new guidelines on that and it will be interesting to see what the position is in respect of this year when the Comptroller and Auditor General does his report.

Can Mr. Watt quantify the figure?

Mr. Robert Watt

I have some recollection of a figure of over €100 million. I will revert to the Deputy. As I mentioned when the Minister, Deputy Howlin, was here we looked at the banking shared service-----

Mr. Robert Watt

Part of the work has involved trying to establish exactly what position would be-----

A figure of €100 million or €150 million is a phenomenal amount of money.

Mr. Robert Watt

If money is not being used appropriately cash could be earning a more appropriate return. If we have to reduce the cash demands on the Exchequer it has a cost.

Let me give the Secretary General an example. The Pensions Board came before the committee two weeks ago. It has €7 million on deposit. The reason it gave was that it was reducing its charges and this would allow it to cover the shortfall over the next number of years. That is a terrible abuse of taxpayers' money. It has no worries. It is like a business deciding to put €100,000 on deposit and regardless of how the business does it will have the money available.

Mr. Robert Watt

The issue does not arise for the vast majority of spending. It has the potential to arise in regard to grant-in-aid to certain bodies. We will look at the numbers and try to establish what are the balances.

Can the Secretary General pursue the NTMA model? Money is put on deposit overnight with it. Can a formal review be done?

Mr. Robert Watt

We are happy to revert to the Deputy when we establish what the numbers are and what is the position. We are aware of the suggestion in regard to the NTMA. We are working on shared banking services with the Department of Finance and can revert to the Deputy in the new year. We will go through the numbers.

In terms of regulations, a recent review in the UK established over 20,000 regulations impact upon small businesses.

Do we have the numbers for Ireland?

Mr. Robert Watt

I imagine it is something similar. I would be surprised if it was very different from that number. They straddle environmental regulations, health and safety, mainly labour market regulations and the burden of compliance with statistics. A number of reviews have been done on this. A burden on small business report was done a number of years ago which set out the position in respect of small businesses and a number of recommendations.

As the Minister mentioned, labour market employment is the responsibility of the Minister, Deputy Bruton, and I understand some work is being done on that. The suggestion of an audit of stock has merit because many regulations are in place to address particular problems which are no longer live or are obsolete. We do regulatory impact assessments for new regulations. Any additions to the stock are reviewed. It does not address the main concern of the Deputy, namely legacy issues which may exist.

There are trade-offs. Businesses comply with various regulations because they are put in place to achieve policy objectives in the public good. There is a trade-off. We may be able to implement regulations in a different or more effective way. Some regulations may be obsolete. It is something which the Minister, Deputy Howlin, supported.

A lot of regulation is inspired by EU directives and transposition is always an issue for us. It is fair to say that at various times we were very enthusiastic and comprehensive in how we transposed directives. Sometimes we need to be a little bit more flexible.

From my perspective it is very straightforward. At the moment Ireland does not seem to know the total number of regulations, whether good or bad. We need regulation, as we have seen historically in the banking sector. In terms of moneys on deposit in various State agencies Mr. Watt could revert to us in January and give an indication of the situation.

The Department engages with various Departments. I ask Mr. Watt to revert to us with information on where processes can take place and which timeframes can be implemented. An audit could be carried out by all Departments and it would make sense for them to report to the Department of Public Expenditure and Reform. The Department could develop a body of regulation fit for purpose by the end of June.

Mr. Robert Watt

That is an issue we can take up with the Minister. It is something with which the Government would have to work and each Minister would have to look at the regulations within his or her area of responsibility. It has merit and we will revert to the Deputy.

We asked people who intend to retire by the end of February to give us an indication of their intentions by the end of November. That does not give us an absolute fix because people are in a position to retire with four weeks' notice. We are collating the figures for the public service as a whole. We have been occupied since the end of November but we will get numbers for the Deputy.

In the Civil Service, 185 civil servants have notified us of their intention to retire by the end of the this year and a further 680 intend to retire by the end of February, a total of approximately 900. I have no doubt-----

Is that the complete number?

Mr. Robert Watt

That is the information we have now. I have no doubt there will probably be a few hundred more who will give notice to retire four weeks from the date-----

In the normal way.

Mr. Robert Watt

We have a reasonable fix on that. There is a challenge for us. We know where they are departing from and the local managers will have to address the gaps that are left. This situation is replicated across the local authorities, health and education.

Is this purely within the Departments?

Mr. Robert Watt

I am referring to the Civil Service. We are collating the intelligence from across the system and we can share that. We have set up these manpower planning groups to look at our response to the exodus we face and the resultant reduced numbers. The Minister mentioned some limited recruitment as a response. I outlined our plans in reply to Deputy McCarthy's question. It is a big challenge for the system on top of the demographic challenge which the Deputy mentioned.

Recruitment to the Civil Service happened at various times. In the 1970s there was extensive recruitment which tapered off in the 1980s and then recruitment began again in the early 1990s. This cyclical recruitment pattern is not the best way to manage a service because it is preferable to have a comparable number of people in each age demographic and this is not the case. We are all getting older and unless we bring in new blood into the Civil Service that average age of 45 will keep creeping up. The Civil Service manpower planning group will examine the situation in all Departments and decide on the needs of the service.

The Deputy referred to the public sector versus the private sector. The simplistic attitude is that everything in the public sector is terrible and everything in the private sector is wonderful but this is not true, as we all know. However, we can learn from the private sector and vice versa. Our approach now is to use open recruitment in order to bring people in from the private sector. For example, Mr. Paul Reid, who attended this morning, was recruited from the private sector. The opportunities exist for people to compete for posts, meaning that people within the Civil Service can compete on the same basis as people from outside and this is how it should be. We would like to see more mobility, we would like to see more of our people leave for a number of years and then return and we would like to see more people from the private sector coming into the Civil Service. This is the model which has been followed to some degree in the Department over the past 18 months to two years.

This mobility benefits everybody and it should be encouraged. There is nothing to fear from it as it brings about an exchange of knowledge and of different ways of doing business. We can learn from people who have worked in different organisations and different sectors and we hope to continue with this model. It is an opportunity for people in our organisations to experience work in the private sector for a number of years. For instance, graduates who have spent five or ten years in the public sector can then spend time in the private sector. We are in favour of such a scheme and it would be very useful.

On the question of absenteeism, I will provide written details to the committee rather than reading out the statistics here. The absenteeism rate in the Civil Service is 4.9% which equates to just over 11 days a year on average. This figure is skewed by long-term illness or absenteeism so people absent for more than 20 days, those absent longer term, have skewed that number. The median number would be a little less. The typical civil servant would have fewer days absent than that 11.3 days. The situation for other sectors varies and we can provide the committee with those details.

There are different ways of measuring the overall cost of absenteeism. The direct loss is the loss of benefit from the payment of a person's salary because they are not working and also the cost in the education system is that substitute teachers must be employed if a teacher is absent for more than one day. The cost of the substitution and supervision scheme is €300 million and only a small part of that is due to absenteeism related to sickness as there are many other reasons for the absence of a teacher. We reckon that across the system absenteeism costs somewhere between €400 million and €500 million. There are issues to do with how absenteeism is measured across the different sectors. It is a conceptual issue as to whether it is the lost outputs of the salary or the cost of substitution in some areas.

Has the Department had the opportunity to analyse the statistics? There is a loss of €500 million. We need to find out the reasons for the absenteeism.

Mr. Robert Watt

We have data from the different sectors and there is a slight variation in that some sectors are better than others. We have examined a number of issues within the Civil Service and there are different procedures in place. For instance, an individual with a certain number of uncertified sick days - I think it is nine uncertified sick days - must have a discussion with the human resources manager. A person who is absent for more than four weeks is obliged to have a discussion with the chief medical officer. We are taking a more proactive approach in regard to absenteeism. The system may vary across the different sectors but managers are now more conscious of the cost and the implications and that we need to be much more proactive.

For the information of the Deputy, the rate in our Department is 3.1% which is below the average Civil Service figure. Excluding long-term illnesses, our rate is only 1.2%. A small number of people are on long-term absence. The position in our Department is better than average and we aim to manage absenteeism proactively. The management group looks at it every month in order to assess and monitor absenteeism. I will supply the Deputy with written details.

Please. I thank Mr. Watt.

Mr. Robert Watt

The Minister stated we are looking at a new policy on sick leave and he will discuss it with the trade unions.

I thank Mr. Watt for his presentation. I had a telephone call from a constituent in Galway who is very upset about all the road works. She thinks the city council needs to spend all its money or else it will lose it next year. She is very annoyed that these road works have started up all over the city. I said I would bring it to the attention of the Department. I will tell her I brought it to the attention of the Secretary General of the Department of Public Expenditure and Reform and I cannot do any better than that.

Mr. Robert Watt

If I may interrupt the Deputy, if these are capital works, for instance, a new road, then there should already be a capital carry-over. Maintenance is classified as current expenditure. Under the new rules that should not happen so the road works should be evenly spread throughout the year in future. I may not be providing any consolation to the Deputy's constituent.

I will inform her the Secretary General is working on it .

Mr. Robert Watt

Yes, we are working on it.

Pass the parcel.

I wish to make a couple of points on the presentations by the Minister and the Secretary General. The health statistics have always shown Galway University Hospital to be the worst performing hospital in the country. I ask that the follow-on should be to ensure the management is in place to turn the situation around. The hospital has consistently been the worst performing hospital and something is happening finally as a result of new management. The Department should act on the statistics.

The Comptroller and Auditor General's report stated that €800 million was returned to the Exchequer as surplus funds at the end of the year. This was borrowed from the EU-IMF and it was then returned by the Department. Is the figure of €800 million the correct figure? The rate of interest of the borrowing would have been 6%.

Mr. John Buckley

In this case there is a special account facility which is used to sweep up that money held by the PMG at the end of every day. Therefore, there is no extra impact on the borrowing. This is unlike the situation we discussed in downstream organisations such as semi-State bodies, universities and institutes of technology, which is a different kind of issue. The account is in the NTMA suite of accounts and the movements are shown in the Deposit Monies Investment Account.

That is a satisfactory answer from my point of view. The second item is the comprehensive spending review. Each Department will look at its priority expenditure list and it is left to the Departments to come up with ideas.

I do not mean to keep talking about Galway; I do not normally do so at these meetings. Nor do I wish to stray into policy matters. However, I want to raise a decision that was made last year to remove operational expenditure from Galway Airport. I am not asking Mr. Watt to comment on the particular decision, but it raises a broader point. I recall speaking to the then Minister for Transport about the issue, which generated a great deal of lobbying. The Minister was looking after his budget and decided that this was how he would make the required saving of €2 million. When I asked him whether funding which had been allocated from the then Department of Arts, Sport and Tourism to fund an airfield in Connemara would not be better allocated to the airport, he replied that it was a matter for the Department of Arts, Sport and Tourism. When I asked him whether he had spoken to the then Department of Enterprise, Trade and Innovation about its strategic vision for Galway, pointing out that the existence of a regional airport to service multinational companies would tie in with its investment strategy, I was again told that this was not a matter for the Minister for Transport but rather for his colleagues in the Department of Enterprise, Trade and Innovation. I then asked whether he had discussed the implications of the loss of employment at the airport with the Department of Social Protection. That, I was told, had not happened.

My question is whether that type of whole-of-Government thinking formed part of the comprehensive review of expenditure. Anybody can save money on isolated instances. In the case of Mr. Reid, the Minister, Deputy Howlin, acknowledged it was an extra hire but argued that it would save money down the line. One can justify a cost on the basis that it will feed into cost savings and strategy in the longer term. Is that type of whole-of-Government approach incorporated into the comprehensive review of expenditure?

Mr. Robert Watt

In regard to GovStat, it is important because one cannot improve if one does not measure. If we do not know where the problems are, how can we achieve improvements? This is a key issue in respect of public services because, in many cases, it is very difficult to define exactly the output we are seeking to achieve or improve. Once we have the measurements, one can ignore them or do something about them, but at least the information is there.

It is also important to have transparency. In respect of Galway University Hospital, for example, there is a set of metrics which gives an indication of how well it is performing. I am sure that transparency puts pressure on the system to respond in that people might ask why it is not performing as well as comparable hospitals and what are the issues to be addressed. That is part of our thinking - the need to have transparent measurements. We are ultimately dealing with the public's money and the public show know precisely what it is getting for that money and whether certain entities are not performing as well as they should. That comes back to the point the Chairman made earlier about the need for a culture of performance and ensuring everything we do is focused on being better.

I am pleased the Comptroller and Auditor General addressed the question of the surplus. It is a mopping-up exercise, but the specific issue to which Deputy O'Donnell referred is certainly a problem because it has a financing cost and a carrying cost.

In terms of integrated Government, that is the Holy Grail towards which all Governments strive. It is an ambition of every Government to have integrated systems which perform efficiently. We are seeking, within the comprehensive spending review of each Department, to have scope for the Government to stand back and consider the broader implications. We have produced a number of cross-cutting papers which examined issues that straddle several Departments, such as enterprise and other supports. In several cases, for example, we pointed out that a particular issue would not be fully dealt with in a given Department's submission.

However, there is more that we can do to ensure an integrated approach. The restructuring of the Estimates should help, because it will mean the setting out of spending on a programme basis. That will allow us more clearly to see the broader view. For instance, we might discover that a programme in a particular Department looks similar to a programme in another Department and that there may be opportunities there to do things differently or to avail of synergies. We are seeking to take a whole-of-Government approach; it is something one always strives towards and seeks to improve.

The approach to multi-annual budgeting will also be of assistance in this regard. An enormous amount of energy has been expended each year for many years arguing about the increment of spending, whether it will increase by 3%, 4% or whatever. Given that we now have envelopes of funding which are defined for a period, the challenge is to debate priorities within the totality of those envelopes rather than the increment. That provides an opportunity for Government to stand back and examine priorities, ensure a more inclusive process and evaluate some of those cross-cutting issues. If one has more time to reflect upon the totality of the Vote as opposed to the increment, such issues will become more apparent.

In regard to the multi-annual budget, is it the case that the three-year current envelope will finish and we will begin a new programme or that this time next year we will be saying how much will be spent in 2016? Will it go along year by year?

Mr. Robert Watt

Yes, the plan is to have a rolling envelope. In the autumn of 2013 or early 2014 we will have another comprehensive spending review - we will have to summon the energy to do it all again - under which we will set out the envelopes for the following three years. In an ideal situation one would have two expenditure reviews spanning a Dáil term of four or five years. A new Government would set out its spending targets to reflect the priorities in its programme for Government and the prevailing economic situation, to be followed by another review at the halfway point in order to determine spending for the remainder of the term. That is the type of structure we have been advocating for some time.

Is one not left with the problem that in 2014, for example, when the next comprehensive review of spending is commenced, Departments will not know until the end of the year what its budget is for 2015 will be? Are we not simply back to the problem of short-term planning?

Mr. Robert Watt

There will be an overlap between the final year of this three-year plan and the first year of the following three-year plan. The objective here is to reduce uncertainty in order to allow proper planning and to have a more mature discussion about priorities. That is what we are trying to achieve. We know it will take us a while to get there, but we are putting in place a more sensible system and we shall see how it progresses.

The Minister and the Secretary General indicated that 6,000 staff are expected to leave the public sector in February and that 3,000 new staff will be hired next year. I was going to ask about the criteria for hiring but that is probably straying into policy.

Mr. Robert Watt

To clarify, teachers will be recruited, various positions in hospitals will be filled and so on. There are various exemptions to the moratorium in respect of essential posts, statutory posts etc. There will be recruitment in certain areas and, as mentioned, some recruitment to the Civil Service. The Minister will set out his plans in more detail next year after we have seen the exact position at the end of February.

How many people are expected to leave in 2013? Is it another 6,000?

Mr. Robert Watt

The number of projected retirements, that is, the average across the period, is approximately 5,000. There will be a spike next year because of the end of the grace period. We will have to see what transpires, but when we were looking at the employment framework we worked on the basis of approximately 5,000 or 6,000 retirements each year on the basis of the demographic structure within the sector.

If we incentivise redundancy from the public service in 2013, which may not necessarily be the case, we have a situation where 3,000 people were hired in one year only to let go 6,000 the following year. That immediately raises value for money issues.

Mr. Robert Watt

People are retiring when they get to the end of their careers, and it is natural that they would be replaced. However, what is happening with the moratorium is that we are only replacing a very small percentage of those who are leaving. The real issue is that we would have been facing a higher pensions bill in any case. Now, because of the policies being put in place, we are facing a lower pay bill compared with what would have been the position. In the past, we would have replaced everybody who left. There are no plans to incentivise people to leave. It is clear what the position is for them.

What is the natural rate of attrition due to retirements? The 6,000 figure equates to 2% of 300,000.

Mr. Robert Watt

It depends on the sector but it would generally amount to around that figure.

Will most of those reductions be achieved through people retiring and not being replaced?

Mr. Robert Watt

Yes.

The chairman of the Revenue Commissioners indicated to this committee that a large number of staff will be lost to that organisation who would be generating income for the State if they remained in work. Does the Department take such issues into consideration in terms of recruitment and expenditure or is the moratorium imposed on a blanket basis?

Mr. Robert Watt

The Revenue Commissioners were sanctioned some weeks ago to recruit 40 specialist information technology staff. We will consider how many people leave the Revenue Commissioners. The State needs to collect taxes and increase compliance. People in our Department will work with Revenue's employment control framework and the Minister will determine what to do. Revenue is important and he will do everything he can to ensure it has resources.

On the reduction in numbers, the plan is to reduce the public service to approximately 284,000 staff by 2015. If most of the reduction is to be achieved through retirements, surely the Department is able to determine at this juncture where the cuts will be made. The Department has a profile of retirement ages.

Mr. Robert Watt

Yes.

Is there a projection of which areas will be affected?

Mr. Robert Watt

We have an idea and we are developing the plans in more detail with the manpower planning groups that we have set up. We will examine the position after the grace period ends in February. Some people who are due to retire will bring their retirements forward to go before the end of February 2012. The Minister will set out new employment control framework figures for each Department and sector to cover the 2012-14 period so that we can see the exact totals. We can gather the retirements and potential recruitments from these data. We could have published something this week, as we have a reasonable fix on the situation, but we want to see the exact position over the coming months before we set out the numbers.

As the members know from the evolution of Vote 7, we can say by a particular time that we expect X number of civil servants to retire and that we were off by 100 here or 200 there. We do not know individuals' circumstances. One might expect them to retire upon reaching a certain age, but they might love work and their Departments so much that they want to stay or they have other commitments that require a full salary. There is a variety of factors and being precise is difficult, but we have a reasonable fix in broad terms on what is happening to the system, given the demographics.

How will the sectoral committees work? In light of the numbers leaving the HSE, for example, will a committee work with Mr. Cathal Magee on drafting action plans to reorganise and restructure the HSE's services to account for 2,000 or 3,000 fewer employees?

Mr. Robert Watt

In recent years, the HSE and the Department have been dealing with the issue of a reduction in numbers and allocations. The HSE will need to reform its plans in response to the reduction in the allocation to the health sector and lower staff numbers.

Was the problem in recent years not the fact that there was a moratorium and people left? There was no structure to it. Some places lost many staff members thanks to coincidence. We will now have an idea of where losses will be for the next three years.

Mr. Robert Watt

The key operational challenge is redeployment. In the context of the Civil Service and reflecting the demographics, if a large number of people leave a Department in a critical position and staff are available elsewhere where pressures are not as acute, the latter can be redeployed. This is the challenge for the system. Previously, there was not much redeployment. We now have much more, as set out in our most recent progress report on the Croke Park agreement. Next year, the issue will be to accelerate and build on that progress so that when there are acute pressures, we can address them via redeployment, specialist recruitment or whatever option is available.

Mr. Watt cited teachers moving between schools as an example of successful redeployment. The impression I have is that redeployment causes difficulties. For example, moving clerical officers from a planning department, where many staff used to work on planning applications but that no longer receives applications, to the Department of Social Protection leads to issues because of different grades, service increments, pensions and holiday entitlements. How is the standardisation agenda proceeding? Will there be a common grade system throughout the public service?

Mr. Robert Watt

We are hoping to move to a more integrated system. We have a public service of 300,000 staff, but employees in some sectors have different conditions, leave entitlements and grading structures than employees in other sectors. How does one move a planner, technician or other specialist in a local authority to the Civil Service? We have met with some success. Community welfare officers are public servants and have been moved into a Civil Service Department. This is the first time that significant numbers of people from outside the Civil Service have moved into it.

It took forever.

Mr. Robert Watt

It took a long time, but we learned a great deal from it and are in a better position for the next move. There are differences. We want a situation in which the system is more integrated, sectors are not silos and there is a greater level of mobility. This raises issues of grading, staffing structures, leave entitlements and so forth. There is considerable-----

How is that work going? It has been referred to by the Department since the latter's establishment.

Mr. Robert Watt

We have taken a number of measures. The Minister has been working on the standardisation of annual leave to the point at which the current approach is much more standardised. Technical grades, for example, planners in local authorities, being able to compete and work as APs or POs in Departments presents an issue. It should happen, but we will address the industrial relations issues next year.

Complexities exist, but we must accept that, if resources in one place can be better utilised elsewhere, we must break down the barriers and encourage mobility, seeing as how they are funded by the taxpayer in whatever guise. This will be good for the individual and the system, as extending opportunities where we can should be a guiding principle.

This morning I pointed out to the Minister that the 9,000 staff in question will not leave in three years time. Rather, they will leave in February. Mobility needs to be improved very swiftly, but Mr. Watt has not given many examples of what has been achieved so far. I beg his pardon - he mentioned the holidays.

Mr. Robert Watt

There has been successful redeployment. As part of that, we have learned the difficulties that arise, particularly when people move from the public service to the Civil Service. Next time, the redeployment must be done more effectively. As the Deputy rightly stated, the last time was too slow. It was the largest redeployment ever into the Civil Service. We need to replicate its success in many more situations.

It could be argued that the last redeployment was quite straightforward, in that one type of public servant went from one sector to another. We are now discussing a series of people moving to different Departments. It will be more complicated.

Mr. Robert Watt

To go through what we have done so far, we have transferred 500 staff into the Department of Social Protection from other Departments to deal with the increase in the demands placed on the social welfare system. We have also transferred 1,000 community welfare officers from the HSE to the Department of Social Protection. This took some time, but it was a significant change. More than 200 teachers in the secondary system and 850 primary school teachers have been redeployed. Between April and September, we redeployed 750 people within the health sector in response to the need to reconfigure the service. Some 700 staff from FÁS have been redeployed to the Department of Social Protection. Added together, 3,000 or 4,000 people have been redeployed. This is a fair amount of activity. Perhaps we need to improve at boasting about our achievements. We need to continue this work and be prepared as best we can for the exodus. I am confident that we will manage. Undoubtedly, there will be problems to which we will need to respond quickly.

I thank Mr. Watt. One always concentrates on the bad aspects, but no one believed we would ever start thinking about public sector reform in the way outlined by the remarks made to the committee this morning. I commend Mr. Watt and his officials on their work.

Mr. Robert Watt

I thank the Deputy.

Will the transfer of staff to which Deputy Nolan referred be completed on the basis of the original contracts of the personnel involved? Will their contracts or salary conditions change? Will encouragement of a financial nature be offered?

Mr. Robert Watt

Under the agreement, it is no less favourable terms than they would have had previously. People who move in would enjoy terms which are no worse than those which they had previously. If somebody moves from-----

So the same contracts and the same salaries apply.

Mr. Robert Watt

Yes. No less favourable terms than they previously enjoyed. This should be contrasted to the situation in the past whereby we did not have redeployment or movement. That was the position and it was extremely difficult.

I accept that. It is good that matters are progressing in this way. In the context of those recruited into the system and the people who may be taken on when others leave, are such individuals given old-style contracts or are their contracts similar to those which obtain in the private sector?

Mr. Robert Watt

New recruits will be coming in on pay levels which are 10% lower than those of existing staff. New teachers will enter service at a lower point on the scale. However, the contract is broadly the same. Annual leave entitlements will be different under the arrangements the Minister has put in place. As a result, they will have less generous leave entitlements than some of their colleagues. If the Public Service Pensions (Single Scheme) and Remuneration Bill is passed next week, fundamentally different pension arrangements will also apply to new recruits. These arrangements will involve a retirement age that will be later than 65 and a career-averaging pension as opposed to one based on final salary. It will be a completely different pension scheme. New recruits will have different conditions: their leave entitlement will be different in many respects, their starting salary will be lower by 10% and their pension arrangements will be different.

Will their jobs be guaranteed or will job security be linked to performance?

Mr. Robert Watt

In terms of performance and conditions, their job arrangements will be the same as those of incumbents.

So they will be employed on far more favourable terms than would be the case in the private sector.

Mr. Robert Watt

I am not sure if I would necessarily accept that the terms would be far more favourable. In a public service context, the rationale relating to redundancy is different. In the private sector one can be made redundant if the entity for which one works is no longer viable. We do not have that culture of compulsory redundancy in the public service. In that sense, the contract is obviously different. We inform prospective recruits that we are offering them a career and that, if they wish, they will have the opportunity of remaining with the public service for the entirety of their careers. There is some exaggeration regarding the difference between the private and public sectors in the context of moving people on or of making them redundant. I do not believe that the comparator is exactly as it is made out to be.

How many people in the Civil Service had their employment terminated as a result of poor performance?

Mr. Robert Watt

Very few.

That is the point. Unless that changes, in the context of public sector versus private-----

Mr. Robert Watt

Neither the Chairman nor any of the rest of us know the number of people in the private sector who have been fired as a result of underperformance as opposed to losing their jobs because economic circumstances have changed. Neither he nor I know the answer to that question.

I think Mr. Watt knows what I mean.

Mr. Robert Watt

Yes. I can speculate perhaps.

Mr. Watt worked in the private sector. He is aware that the major problem regarding performance in the public sector relates to people being secure in their employment. What drives people in the private sector is the need to perform in order to retain their positions, gain promotion or be successful in a business context. That dynamic is absent from the public sector.

Mr. Robert Watt

That is true.

And that is going to be maintained.

Mr. Robert Watt

We referred to the need for us to be proactive in respect of performance and managed performance. However, this matter relates to a function of the nature of the public service when compared to private sector entities. A teacher working in a classroom is funded by the Exchequer. Someone in business survives on the basis of his or her ability to retain clients etc. The nature of the service and activity is different.

Let us come out of the classroom and take the case of civil servants who work in Government Departments and who come before this committee each week. During the past 15 years, these individuals have reported to us on the massive waste of public money. They have also reported on the abandonment of some of the basic principles of accountancy and good practice. They have shown Mr. Watt that they are not even prepared to enter into a real analysis of the performance management systems. In addition, they have displayed a lack of management skills. I am not referring to nurses or teachers, I am referring to those at management level in Government Departments. I can only react on the basis of what occurs at this committee. Nurses and teachers can be judged on the basis of their daily performance. However, my concern is in respect of those who come before this committee. Unless the dynamic relating to the latter's conditions of employment changes, the existing system - albeit with some new arrangement in terms of analysis and accounting - will remain in place.

As stated earlier, the real indication of reform will be the day when people are no longer obliged to attend my clinics or when there is an almost seamless transfer of employees from public to private sector and vice versa. That is how the success of the reform will be measured. That is how I see the matter and I am sure the general public would perceive it in the same way. I am going to give deeper consideration to the implementation of the Croke Park agreement. Some of the measures the agreement contains are, as Mr. Watt well knows, undertaken every day by the private sector, not as part of reform but out of necessity to perform in the marketplace. That is not the driver in this case. We must examine this aspect because it is critical to being successful in obtaining good performance from the Civil Service and at management level within that service.

At a briefing on mental health services delivered in the Leinster House audio visual, AV, room, Mr. Eddie Molloy stated that as part of the change agenda he had travelled to Clonmel for a meeting. He indicated that everyone was present with the exception of the individual who was central to the implementation of change - and to the change agenda itself - within a specific area. The excuse given was that the member of staff in question took a sick day. It was not stated that the person was sick and did not attend but rather that a sick day had been taken. This was on the very day that change was being implemented. Mr. Molloy also indicated that at a meeting of senior civil servants - he mentioned assistant secretaries general and principal officers - he was given a clear message that they considered that implementation was not part of their brief and that it was the responsibility of someone else to implement change. He was also informed that they had enough to do with fewer resources without taking on this other agenda that has been created for them. Mr. Molloy indicated that in order to achieve everything relating to the change agenda and the reform package, the process must be both driven and implemented. We can say what we like at meetings of this committee, within our parties or in Government but it all comes down to implementation. If that was the response, it tells one there is resistance within the system, which Mr. Watt acknowledged earlier, yet these people are being paid out of taxpayers' money to do the best they can with less. They do not seem to respect that. I am simply putting the view that we need to move to the point Mr. Watt is trying to get to and beyond - I accept it is slow and difficult and I respect people and their jobs - where it meets with private sector contracts and agreements and proper human resource management where the best is got from people and they are allowed to perform to their best ability. That is my goal. As we discussed with the Minister, Deputy Howlin earlier, that is the difference between my position and the position he holds. That is where respect and credibility come into the system.

Mr. Robert Watt

I do not know if the Chairman wants me to respond to that. We agree in terms of the goals we are trying to achieve and where we want to end up. The Chairman made various comments on various matters but I am not in position to comment on the Department he spoke about that engaged in these things for 15 years. I have not been privy to that conversation and it is not for me to comment on that. We have systems in place, structures of accountability, the Comptroller and Auditor General, reviews and Accounting Officers who come before this committee, therefore, it is up to those structures to ensure Departments are held to account. I am sure that is what the Chairman will be doing.

I do not want to discuss what Eddie Molloy said or did not say because I cannot comment on a private conversation that purportedly happened between Eddie Molloy and an assistant secretary in a Department.

I just cited that as an example.

Mr. Robert Watt

Eddie Molloy worked with us. He has commented on the plan very favourably on many public occasions, on the new Department that has been established, on the sense of energy that now exists and on the implementation and execution of it. I do not know how many times the Minister, myself and Paul Reid have spoken about the need for execution, delivery and focus on its implementation and that is what we are about. Eddie Molloy has been involved with us in sessions with assistant secretaries and others across the Civil Service and the change management units we have established on implementation, on talking about the techniques for implementation and the need for change from the practice of business as usual. However, there is resistance. The system is under pressure in that it faces resource challenges with the numbers who are leaving. People have their job to do and they need to reform in addition to that, therefore, there will be resistance. My sense of it from the interaction we have had in recent months is that there is enthusiasm for this. People want to change, reform, do better and have a public service that responds to the needs of citizens. I agree with the Chairman in terms of performance. Ultimately, the test of this is how well we do in terms of providing services to citizens and how well the Civil Service does in terms of supporting the Government and providing basic services to people. We are all agreeable on that.

I disagree with the Chairman's characterisation of the Civil Service and we might come back to this point. His characterisation of it is not the Civil Service that I recognise. The characterisation of civil servants he has put forward today and on previous occasions is not the Civil Service that I recognise. We accept the system is not perfect but we need a balanced debate and a balanced perspective.

I will finish on this point. Provision of public services funded by the taxpayer that are not subject to normal competitive pressures or that are not the function of a contestable market will be structured and will face different incentives to those services that are provided by a competitive market. That is the challenge of the public sector. That is the reason it is so difficult because the normal pressures to compete, minimise costs and innovate that exist in a competitive situation do not exist in a situation where one is the monopoly provider of a particular service. That is the reason we need to replicate the discipline of the market, where we can, by having metrics, measures and systems in place which encourage people to minimise costs, innovate and so on. It will never be the same. If one is providing a service in a competitive market, the way one operates under the pressures that exist will be different from a situation, whether private or public, where one does not operate in a competitive market situation. There are fundamental issues here about the public sector and how one structures and organises it but we accept, as we have done today, that there are issues for us around reform and performance which we are determined to address. Ultimately, we will have to review and stand back and see how well we do and have that debate as we go through the reform programme.

I want to ask Mr. Watt about one or two other matters. One relates to the fishery harbour centres in terms of 2007 and 2009 as set out on page 249 of the Comptroller and Auditor General's report. The Department takes an overview of their performance, in terms of their accounts. They are also responsible for properties, some of which are tied into upward only rent reviews in terms of their occupiers, usage and so on. There is a value for money issue here because of the investment the State made on which perhaps it is not getting a return. What is Mr. Watt's view on this section of the report?

Mr. Robert Watt

There was a issue about the timely production of accounts. Judith Brady and her team reminded Departments that agencies which have responsibility for budgets should prepare timely reports. Clearly, the Comptroller and Auditor General has referenced a number of cases and where the position is not appropriate. Accounts should be provided in a timely fashion and a few cases have been mentioned. That needs to be addressed and I am sure there is action on foot of the report to ensure that is improved.

Generally, looking across the system, in terms of the Appropriations Accounts we are discussing here, and the Comptroller and Auditor General can confirm this, most of those accounts were prepared by the end of March of this year. In respect of 2010, therefore, most of the appropriation accounts were prepared and signed off by the end of March of this year, three months after the end of the year, which seems timely, and then the Comptroller and Auditor General produced a report by September of this year. Most of the activity, funded in the accounts, has been produced but there are issues addressed in terms of some bodies which we will follow up and make sure people prepare the accounts.

Regarding property issues discussed earlier, an issue arises for us in that the OPW has responsibility for an element of the property of the State but we must examine having a managed system, which straddles the entire system, to ensure that in respect of all bodies which, in effect, are within the ambit of Government and funded by it, we consider property needs, leases and the question of what we do in the context of the needs of the entire system, as opposed to the needs of a particular sector. That is an area we need to examine.

I am not familiar with the particular circumstances but there is a challenge in terms of managing property. Given the position on decentralisation on which we have more clarity and the downsizing of the public sector, we need to manage our footprint in a way that saves significant money. That may involve disposal of assets over time and incurring penalties to get out of leases when the break clauses arise and so on. We need to manage the estate actively.

I raised this issue because the Minister of State, Deputy Hayes, has a particular interest in procurement and so on. I will ask members to leave this particular part of the Vote open until we deal with it in terms of agriculture because they will have an input in that regard. I understand the other part is education. We will leave those two sections open but I draw to Mr. Watts's attention the huge investment in many of these locations and the fact that they are not being used for the purpose for which the money was spent, they are vacant properties, and that there are tenants in properties operating under upward only rent reviews who find it extremely difficult to get Departments to examine the possibility of reducing their rent, as is now happening across the private sector. Will some urgency be applied to the review of the use of the property to make it bearable for the tenants to continue in business or to expand their businesses, as might be the case, in these various locations? Perhaps our views could be communicated through the Department and the OPW to whoever owns the property. We will leave this part of the Vote open until such time as we deal with the Departments.

I noted in the accounts the miscellaneous receipts for €611,171 in 2009 and €381,814 in 2010. Could Mr. Watt explain those amounts?

Mr. Robert Watt

Do they relate to Vote 7?

Yes, Vote 7.

Mr. Robert Watt

We can provide the Chairman with details on the matter.

While the Secretary General is getting that information he might elaborate on another issue. Is GovStat something the Department designed for itself or is there an example of that in other areas?

Mr. Robert Watt

GovStat is something the Minister of State, Deputy Brian Hayes, will drive, which aims to replicate HealthStat for other parts of the system.

Does the model come from the health area?

Mr. Robert Watt

Yes, obviously, it will vary as each sector is different in terms of its characteristics, but it is an attempt to come up with a more meaningful matrix of performance in different sectors. It relates to the point about performance. If we are to improve performance we need to measure. One cannot improve performance without measuring. Ideally, the indicators should be transparent as well. There are examples in other jurisdictions. The UK has a system which we will examine.

I was going to ask if the UK has such a system.

Mr. Robert Watt

The Minister of State, Deputy Brian Hayes, will be responsible for driving that agenda.

Deputy Nolan referred to the National University of Ireland in Galway. It has led to increased awareness and questions about performance which, over time can lead to improvements. We hope to replicate that type of approach in other parts of the system.

We will supply the committee with details on Vote 7. It is for 2010, which was for a total of €83 million, and the miscellaneous costs amounted to €381,000, which is 4%. We will check out the breakdown of the figure and revert to the Chairman. There is a variety of appropriations-in-aid within the Vote from a number of sources.

There is some detail but it is recorded as miscellaneous receipts. In 2009 it was approximately €611,000 and in 2010 it was €381,000. I invite Mr. Watt to come back to the committee with a note of the detail.

Mr. Robert Watt

Yes.

Are there any other questions from members? No. I call on the Comptroller and Auditor General to make a final comment.

Mr. John Buckley

On PMDS, the Department has indicated that it has taken some steps in the area of equipping managers by means of training to deal with under-performance and to simplify the process. In other areas it is a case of work in progress where it is intended to deal with such issues as the distribution of ratings. We will keep that under review as we go forward. We will also keep under review the changes in the area of accounting that are being introduced when we are doing the 2011 accounts.

Complicated issues arise on the fishery harbour centres arising out of transfers of functions from one Department to another, which may go beyond mere accounting. Issues also arise as to whether rents were invoiced. In some respects the organisations that are renting may have got the benefit of the fall-down in that area. We will return to that matter on another occasion.

I thank Mr. Buckley. Does the committee agree to note Vote 7, superannuation and retired allowances, and the comprehensive expenditure review and to dispose of chapter 10 - PMDS? In terms of chapter 18, it was suggested that we leave that open until those two Departments come in to us and we will deal with the specifics of the issue at that stage. Is that agreed? Agreed.

I wish Mr. Jordan well in his retirement. I thank him very much for his service. I thank the witnesses for attending.

I have no doubt our differences with Mr. Watt in terms of public sector performance and reform will form the basis of reasonable and good debate in the future.

Mr. Robert Watt

Let us hope we have plenty of more debates.

We had a good exchange with the Minister and the officials this morning and I am thankful for that.

Mr. Robert Watt

I thank the Chairman.

The witnesses withdrew.

The committee adjourned at 1.45 p.m. until 10 a.m. on 15 December 2011.
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