Written Answers. - Departmental Costs.

Michael Ahern

Question:

61 Mr. M. Ahern asked the Minister for Finance the plans, or proposals, if any, he has to combat the out-of-control costs of running Government Departments as outlined in a recent report by the Chamber of Commerce of Ireland. [15174/95]

I welcome this opportunity to comment on the CCI reportGovernment Department Financial Performance Indicators published in August.

The conventional wisdom among those who would offer advice to Government is that public expenditure in recent years has been rising too rapidly — much faster than inflation — but not that it is out of control as the Deputy suggests.

The CCI report focused on the increases in administration costs for various ministerial Vote groups over the period 1992 to 1995. It found that 1995 expenditure was 19.18 per cent above the 1992 base year as compared with a CPI increase of about 6.7 per cent over the same period. Individual performances ranged from a low of -2.98 per cent for the Department of Enterprise and Employment to a high of +75.28 per cent for the Department of Equality and Law Reform.

Elsewhere in its document, the CCI reports that NCSS expenditure rose at an average annual rate of 8.4 per cent in the period 1990-94, as compared with an average CPI increase of 2.7 per cent.

I would endorse the CCI's valid concerns about the way in which public expenditure generally — and not just administration costs — has grown since 1990. My main quibble with its report would be where it goes on to suggest that the rate of increase in administration costs for a particular Department is a reflection of its performance, good or poor, or "fiscal incontinence" as the report says. This is far too simplistic an approach. It rests upon a view that Ministers or Departments have considerable discretion as to the amount of administrative resources they can commandeer. This is just not so.
Where individual Departments' costs have diverged from the average, this is invariable due to a whole range of special factors, such as decentralisation initiatives by the Government which have temporarily boosted staffing numbers and also involved extensive fitting out costs; or decisions to expand existing services or introduce new ones arising from commitments in the programmes for Government of the various Governments over the period; or changes at EU level, such as the CAP reforms which led to new schemes for making support payments to farmers etc.
As to what I and the Government intend to do about these increasing costs, we are taking a number of initiatives. For instance, last June we took steps to contain the rate of increase in public service numbers and stabilise this situation. Secondly, we accepted, in our Programme for Government, the need to contain the growth in overall expenditure; in particular the growth in gross current supply services expenditure is to be limited to an average annual rate of 2 per cent in real terms in 1996 and 1997.