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Dáil Éireann debate -
Tuesday, 26 Nov 1985

Vol. 362 No. 1

Private Members' Business. - Report of Committee on Public Expenditure — Charge Card System: Motion.

I move:

That Dáil Éireann takes note of the Report of the Committee on Public Expenditure:

Review of a Proposal to Introduce a Charge Card System for Civil Servants Travelling on Official Business.

I thank the House and particularly the Minister for Finance for the opportunity to have a brief discussion on this proposal which can effect some standard of savings and introduce greater efficiencies in certain areas.

This committee report, circulated to all Members of the House, which is a short one, examined the possibility that the Exchequer might benefit from the introduction of charge card facilities for civil servants travelling on official business. The committee felt that an experimental pilot scheme should be established which would allow civil servants to use charge cards in making payments related to official travel. The report suggests that the use of such charge cards could improve the Government's cash-flow and could also gain credit of about 60 days in some cases on payments for official travel and related costs. In this context I should mention that the gross expenditure last year was £21.5 million for travel and £14.5 million for subsistence — a total of about £36 million.

The committee also suggests that the use of charge cards would improve employee productivity and morale, that official travel would become more convenient and would involve less security risk and also that the Government's buying power with the travel service and other suppliers would be enhanced because expenditure could be readily monitored and reported and would, therefore, have a greater competitive edge.

The improvement in employee productivity and morale would concern any member engaged in any evaluation of the public service at the present time. In view of the difficult economic era there has been an increased degree of scrutiny in relation to public expenditure generally. One of the concerns is that some of this evaluation may result in a diminution of morale and professional pride in a service for which this House has a great degree of respect. The introduction of a modern innovative purchasing technique which implies by virtue of its being granted to the recipients a certain degree of trust would unquestionably add to the morale and productivity of the people involved and would show civil servants that they are trusted to do their business effectively and efficiently on behalf of the State. It obviously means that official travel will become more convenient. Anybody who has gone abroad on official business will be aware of the occasional difficulties which arise caused by the need to make elaborate pre-emptive arrangements and of the difficulties attached to transacting business in foreign currencies and so on. A card which brings the opportunity of doing business in an international language reduces the difficulties.

Not insignificantly, the reduction and the virtual elimination in some respects of the security risks, which the card would bring with it, is also to be welcomed and would make for greater peace of mind for the bearers of the card.

The Government's borrowing power is close to the heart of the Minister and those watching public expenditure patterns as they emerge. The buying power of the public service could be more easily monitored and evaluated by the high tech approach which is adopted in the context of charge and credit cards. The enhancement of expenditure monitoring would yield significant results. Easier, more rapid evaluation of where individuals and Departments spend moneys will unquestionably lead to stronger purchasing power. It is significant that because of its clear accountability factor it would lead to a reduction in mistakes, whether deliberate or otherwise, in the claiming of expenses for travel arrangements. The card affords an enhanced measure of security in that respect. The competitive edge is also a valuable one. Where there is the possibility of block purchasing, of competing in the market place, these things are helped where one has more accessible information at one's fingertips.

In July 1984 the committee decided to investigate the possibility that the Exchequer might benefit in overall terms from the introduction of charge card facilities for civil servants travelling on business. At this stage it is no harm to distinguish between the concept of a credit card and a charge card. The main difference seems to be that a charge card account has to be settled in full approximately every 30 days, whereas with a credit card account it is possible to get something like twice that length of credit free of charge depending on the time of the month at which the charge is incurred. A charge card is normally a method of deferred payment which is targeted at the business traveller who is not looking for credit as such. In terms of cash flow and creditability there may be potential for evaluating and possibly implementing a system for charge/credit cards.

The committee heard evidence from Diners Club International, to whom I on behalf of the committee extend gratitude for their great willingness to talk to us without any strings attached to help us to develop this report. They acted in a selfless and civic-minded manner for which we thank them. The resultant paper is to the benefit of all. The Diners Club International at our request made a detailed submission and the views of the Department of Finance were then obtained on the feasibility and possible cost benefit to the Exchequer of the introduction of a charge card system.

The objectives of the committee's inquiry were to examine the procedures used within the public service in the payment of charges for travel and subsistence, to compare them with the alternative system proposed by Diners Club and to consider whether better value for money could be obtained from that or some other system.

I hope that the House and the Minister for Finance will embrace the committee's fairly moderate conclusion that a pilot scheme should be established for the introduction of a charge card system. In arriving at this conclusion we were mindful of the fact that charge cards are used widely in the private sector and by certain semi-State sponsored bodies where they do not cause any difficulty and where they add to the ease, flexibility and accountability of the organisations which use them. In addition, the operation of the charge card service in the US Federal Government has proved to be successful and the most recent reports on that indicate that that experiment has been very successful and that it is proposed to extend it. Therefore, the committee are conscious of the need for innovation and experimentation within the public sector and we understand that a pilot scheme or, indeed, a service-wide scheme could be introduced by the charge card companies operating in Ireland and that if approached in the right way they might do this free of charge. Our recommendations suggest that the pilot scheme at least should be carried out free of charge if at all possible and that it would not involve any net increase in cost to the Exchequer. We believe that is in the interests not just of the Exchequer in this case but of the credit/charge card companies who, one would hope, would justifiably also generate extra business and extra advantage from the activity.

Of course, we are fully aware that there will be occasions when charge cards cannot be used. This has been the experience in the US, and this is overcome by maintaining a more modest system of cash advances in cases where cards would not be appropriate. However, with the increasing scope first of all in terms of range and comprehension of card services throughout the world, and secondly by the increasing variation in terms of flexibility and versatility which the charge card companies have now introduced, there are relatively few cases where it would be necessary to continue with the cash advance system. Therefore in the circumstances my committee have no hesitation in recommending that a pilot scheme should be introduced following detailed investigation by the Minister for Finance of the merits of the scheme on the understanding that there would be no net increased costs to the Exchequer.

We are confident that the proposal, which I submit is modest, would have advantages not just for the Exchequer but also for the individual Departments and individual users of the charge card system in terms of self-image, flexibility, versatility, and efficiency, not to mention the significant savings which we believe will arise from the introduction of the scheme eventually.

I will conclude by restating my gratitude to Diners Club International and Mr. Brian Murphy particularly and to the other card companies who have offered whatever assistance and advice they can to help us to progress the system. I express my gratitude to the Minister for Finance who has at all times — I am not saying this merely because he is in the House but because it is true — expressed a particular degree of sympathy towards the aims and aspirations of the committee and has taken a close personal interest in our work which we have found heartening and encouraging. Accordingly, I commend this modest report to the House and to the Minister and await with interest his reaction to it.

The committee recommend that we introduce a pilot scheme in an appropriate Department for a limited time on the condition that there would be no increased net cost to the Exchequer. I will comment on that proposal in a moment.

I would like, if I may without disrepect to the committee or chairman, to observe that the remarks that he made just now about the effects of a charge card system of this kind on the morale of the Civil Service are not remarks that can be attributed to the committee but rather to one group who made a submission to the committee. I would also like to make the point that my Department, indeed at my instigation, were quite keen to ensure that we provided whatever information and analysis we could on it, and we identified as part of that the areas of expenditure which might be amenable to the use of charge cards. In relation to 1984 they are the following: an expenditure of about £900,000 by the Civil Service on foreign travel and about £4.5 million on domestic travel which is largely composed of expenditure on petrol. To the extent that the chairman of the committee, Deputy Keating, is making the case in relation to foreign travel I must point out that it is a rather small proportion of the total amount of travel and subsistence expenditure in the Civil Service.

The recommendation itself should be put in the context of the existing methods of dealing with travel and subsistence costs. Both travel and subsistence allowances for domestic and foreign travel in the Civil Service are determined within the conciliation and arbitration framework. The subsistence allowance combines both actual and overhead costs and is expressed as a per diem rate which is varied from time to time in line with the development of travel costs generally. There is an advantage in that in terms of the simplicity of supervision of travel costs by those charged with responsibility for the accounts branches in Departments and, while there may be different views about their level, the system we have in operation at the moment is easily controllable and its results are fairly transparent for those who must make sure that it works as it is intended to work.

There is no doubt that the charge card system would reduce the need for cash holdings by individuals who are travelling and the Exchequer might also benefit from the reduced demand for imprests; imprests being to the layman the indent that an officer makes before he travels in order to be funded. In my Department's submission to the committee we estimated tentatively the savings on the cost of funds at about £100,000 and that was largely a kind of cash flow saving that we identified there. With interest rates now considerably below the level they were at when that submission was made, I would think that the saving could be considerably smaller than that. Of course there would be certain costs. While the chairman of the commitee has indicated that it might be possible to run a pilot scheme without charge — that is free of charge by one of the companies — I am not giving any hostage to fortune in saying that. I hardly think it realistic to expect that that would always be the case. Some costs would be involved which could take a variety of forms.

There would also be some difficulty, particularly as regards domestic travel and subsistence. The case is now, and I do not know how long it will be the case, that there would be some restriction on the number of outlets in which charge cards could be used, so that the gain in convenience in terms of domestic travel for the officials involved might not be all that significant. Some administrative costs would be involved also because, to the extent that one is running two systems in parallel, an extra administration cost is involved, and to the extent that one was running a charge card system with the current C and A determined system of travel and subsistence allowances, one would have to be matched against the other in any case to make sure that the criteria of the travel and subsistence allowance scheme were being adhered to. Therefore, I see some difficulties in it from that point of view.

One company made a submission to the committee and other companies have made submissions to my Department which we have looked at. I think I am right in saying that the Department of Finance is the only Department in the Civil Service that has an experience of charge cards because, as far as I know, it is the only one where we have any number of official charge cards. They are used by a small number of officials who have to travel abroad frequently in the course of their duties and I am bound to say, although I am sure that the gentlemen in question are people who like convenience when travelling, that they do not appear to have made a great deal of use of the cards for a variety of different reasons not the least of which is the fact that they are travelling on fairly well worn tracks and other arrangements have been made to cover the expenditures involved.

I have an open mind on the subject to put it at its most general. There would be a difficulty in relation to the integration or the simultaneous running of the system with the travel and subsistence allowances system that exists under the C and A machinery and I am not quite sure that there would be any very substantial or noticeable gain in convenience to officials on the one hand to set against some possible administrative difficulties on the other hand.

If I may return to the morale question for a moment, I am not 100 per cent convinced by the arguments that the system of charge cards would have a noticeable effect on morale. I do not think it is a matter of trust or anything of that kind. Indeed, I should like to make the point that at one time I had an official credit card that was made available to me by my employer. When I left the employ of that organisation I felt, having used the card quite a bit during my period of employment, that it would not be a bad idea to have one on my own account. As happens in many such cases, I did not do anything about the matter for a while until one day I received a letter of offer from a company that said that I had been picked out of a fairly select group of people in a particular income bracket and that they would be very happy to have me as one of their card holders. Of course, that galvanised me into action again and I said, "That is a good idea; I was intending to do that anyway." I filled in the form, sent it off and waited for my card to arrive. The next thing that arrived a couple of weeks later was another long and polite letter from the company which said how happy the company were that I had applied to become a card member and asked for my permission, and a date to be fixed, to send an investigator to have a chat with me. That incensed me no end and I wrote back a very rude letter to the company saying that they had picked me, that I had not gone out looking for them and I was not particularly impressed that after they had picked me on the basis of having access to certain confidential information about me they also wanted to send an investigator as well. The moral of the story was that I did not go ahead with that on the basis of that experience.

I am not saying at all that any company would wish to send me a letter now and ask my permission to send an investigator around to the Department of Finance because the probity and rectitude of the Department of Finance, as we heard a few moments ago from the benches opposite, is without question. I will take up the suggestion made by the committee in the spirit in which it is offered. The best response I can make to it is to say that we will monitor the use of the official charge cards that exist in my Department to see whether in that framework any expansion of their use would prove to be of value. We will have to measure the results of that against the system that exists for the handling of travel and subsistence allowances for officials.

Reading between the lines my impression is that the Minister's mind is not closed to the possibility of looking at the existing charge cards that are used in his Department and, possibly, extending that system. I would be grateful if the Minister would contradict me if I am wrong. I do not know how many such cards there are, or whether the number of cards could be said to constitute a sub-system or not. On the question of morale, I should like to state that none of us is carrying a big flag on that but, regardless of whether it is perceptible or not, it is a reasonable argument and one that has carried weight in the experience of those semi-State agencies here where such cards have been employed. I do not see any reason why it would not have some degree of impact in the same respect for people in the Civil Service.

The principal argument we are making is that it may well affect a saving. I do not think it is that important whether the saving is a big or a small one. All these terms are relative. Even the inevitably cautious reply from the Department of Finance to our initial promotings indicated that there could be a saving. I have no doubt with the relatively strapped position of public finances that any saving should be welcomed and that if somebody is willing to say, "Give us 12 months in a fairly closely monitored area of activity and we will try to bring about a saving for you", that the offer will be taken up and embraced readily in the hope that the target might be overshot.

The Minister referred to the rates for subsistence and travel but, obviously, that is not something we have any view or comment to make on. That is totally outside our jurisdiction and is a matter for the Minister and the conciliation and arbitration scheme. It is not something that our report touches on or something we wish to get involved in. The basic question is the kind of possible savings. Ultimately the reason charge cards and credit cards are becoming more widespread is that areas of the private sector see an advantage in them. I have not adequate experience in that commercial sector to know what those advantages are. I suspect that there are large areas of the public service where such a system would not necessarily be the most appropriate.

I can equally conclude that there must be significant areas of the public service where it would be administratively relatively easy and unquestionably would effect a saving. If charge cards were not working in the private sector we would not be having this discussion. They work because they bring about perceptible advantages. Some of those advantages will undoubtedly accrue in this case if it is given an opportunity. I am sure all Members sympathise with the Minister's bad personal experience related to his initial application and I am mystified as to what might have prompted the scenario of the charge card company sending an investigator to the Minister.

I refused the invitation.

If it is any consolation to the Minister I should like to tell him that a colleague of mine had a similar experience. It turned out that many years ago he had undertaken to take out a subscription to Time magazine and had not paid his dues. I am not suggesting for a moment that anything of such an untoward nature occurred in the Minister's case. I do not know if the card companies will take up the Minister's invitation to send him a letter now because I suspect that the outcome would not be so much that the card company would ask to send an investigator but they might fear that the Minister might send an investigator from the Revenue Commissioners if they were in anyway difficult about it.

The individuals in the card companies with whom the committee and I have had discussions are at the service of the Department. I hope dialogue will ensue and the Minister in his wisdom in due course might come to a judgment which will ensure that the system in his Department in a small way will be extended wherever possible so that any opportunities might be availed of. It works in the semi-State companies and in the American Government. It could work here. What is being said is that a company or companies will sit down with the officials to work out a closely monitored system for a period of time. Administrative costs can be a subject for discussion and negotiation. Certainly, there is bound to be some degree of overlap if two systems are running parallel. Ultimately, there may be benefit in it and we proffer that suggestion in that constructive spirit to the House for further consideration. We are heartened by the fact that the Minister has kept both his mind and the door open to the possibility of development in that respect.

Give it a try, Minister.

We shall.

Question put and agreed to.
The Dáil adjourned at 9.05 p.m. until 10.30 a.m. on Wednesday, 27 November, 1985.
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