Bertie Ahern
Question:6 Mr. B. Ahern asked the Taoiseach the savings, if any, in public expenditure which have been made as a result of the strategic management initiative. [23221/96]
Ceisteanna — Questions. - Strategic Management Initiative.
The Delivering Better Government report published on 2 May 1996 recommended changes to existing financial management controls and procedures, including a more appropriate public financial framework for setting public expenditure allocations and delegating authority to Departments to manage resources allocated to them. The changes are designed to provide the basis for improved financial performance required to underpin a results driven approach across the Civil Service.
In particular, the results driven approach of SMI requires clarity in the outputs to be derived from public expenditure and is designed to achieve better efficiency in service delivery and to place greater emphasis on achieving the best value for money. The costs of providing improved quality public services under the SMI must be met from efficiency gains and the new systems and structures being put in place in respect of public expenditure management and control, as envisaged in Delivering Better Government, are designed to achieve this.
Consequently, the main areas of change proposed for financial management centre on the introduction of a multi-annual budgetary process, delegation of financial authority within Departments and to Departments from the Department of Finance, improvements to the administrative budget system and the introduction of financial management systems which reflect accruals accounting principles. In order to implement the proposals in the report in these areas, a financial management working group has been assigned the task of developing and overseeing implementation of proposals in the report. The working group has now developed an overall programme of action which will see these changes being implemented in the coming months.
These changes, when taken in tandem with the publication of departmental statements of strategy, will result in better control of expenditure and the achievement of value for money through regular reviews of expenditure programmes. This process will take time to implement but we will begin to see the first benefits of this new approach in 1997 with the introduction of multi-annual budgeting.
The SMI approach is also based on the integration of a number of elements into the overall programme of change for the Civil Service. The initiatives which have been outlined above in regard to financial management systems must also be integrated in the overall framework for managing performance in the Civil and Public Service. Changes in this area are being overseen by the working group on human resource management and the programmes of action of the working groups are being designed and integrated to underpin the approach to improved performance across the entire range of services provided by the Civil and Public Services, including financial performance.
The main purpose of the strategic management initiative was to make savings by reducing administrative overheads. Will the Minister explain in detail why she believes substantial savings will be made in 1997 when the administrative budgets for 1997 for all Departments have increased enormously? I understood the SMI would result in a huge reduction in administrative overheads but instead there has been a dramatic increase. At what stage is the three year cycle of the budgets? I understood in this year's Book of Estimates there would be comprehensive detail about departmental budgets over a three year cycle, but I was gravely disappointed when I did not find that information. The Minister said it will be available in 1997. Will it be part of the budget day presentation? Is it the Minister's view or is there evidence to show that millions of pounds will be saved under the SMI in the short, medium or long-term?
It appears the Deputy has a misconception of the strategic management process. If it was merely to be fiscally driven and if savings were the bottom line the guiding Department would be the Department of Finance, but the SMI is steered by the Department of the Taoiseach. It was started in February 1994 by the then Taoiseach, Deputy Reynolds. The reason the Department of the Taoiseach has ownership of the strategic management process is that there is a much greater vision in terms of the Civil Service as we approach the 21st century.
That is much more important than money.
There will be savings, but they will not necessarily translate into a reduced budget in all cases. We will have to redirect the money saved in certain areas into other areas as services are demanded and decide the most effective way to use the Civil Service and public service. There is expenditure in some areas that perhaps will not be needed and specialities may be needed in future which heretofore were not needed. Making savings does not automatically mean a reduced budget in all areas, although it can mean that. One area where there has been an improvement in the past two years — I think everyone will agree it was needed — is in the numbers in the Civil Service, where major problems were experienced. There is not a reduction there yet, but if the previous rate of increase had continued we would have had severe problems.
The numbers in the Civil Service have increased.
Deputy Ahern referred to the Estimates and increases for next year. In presenting the 1997 Abridged Estimates and summery capital programme, the Minister for Finance pointed out that while the increase in current spending is greater than the target set in A Government of Renewal, that is an average annual 2 per cent real increase in 1996-7, budget targets will provide for the general Government deficit to be maintained comfortably within the Maastricht guidelines and 1997 will be the ninth consecutive year in which Ireland's fiscal performance has satisfied the defict criterion. Moreover, the debt-GNP ratio continues to decline. Significant real spending increases to meet social and economic priorities are possible because we achieved rapid economic growth in revenue buoyancy.
That is what is called changing the goalposts.
The public finances are under control and that will continue. There will be an opportunity on Thursday next for a more detailed debate on the Estimates and as that aspect of the Deputy's supplementary is a matter for the Minister for Finance. I respectfully suggest that he wait until then to pursue that avenue. A financial management working group has been set up with specific terms of reference to report to the new co-ordinating group of secretaries and the first report is with Government this week. That group——
Is it the liaison group, the co-ordinating group or the other group?
The Deputy should not be facetious. If he read Delivering Better Government he would understand the procedure. Deputy Ahern understands the procedure but apparently Deputy Burke does not. The financial management working group has examined four areas: multi-annual budgets, which is the subject of the Deputy's supplementary; delegation of financial authority from the Department of Finance down the line; the administrative budget system and accrual of accounts. The Deputy rightly pointed out that multi-annual budgeting has been introduced. The Government has approved expenditure projections to 1999 on an existing policies basis with contingency provisions for 1998 and 1999.
It is proposed, as the next step, to draw up medium term financial envelopes for Departments as well as programmes of policy review on specified outcomes relating to the financial envelopes and initiate a consultation process with senior management in Departments when the medium term budget targets are being set. Much work is being done in that area at present. Notwithstanding the interruptions, I trust I have answered the Deputy's question.
I do not agree with many of the Minister's replies. I agree with the Strategic Management Initiative and will continue to support it, but saving money was part of the objective. The initiative was launched by the Taoiseach to try to keep order over all Government Departments and the Minister for Finance was to deal with the fiscal aspect — I instigated most of the systems to commence work on it. The administrative budgets for 1997 for every Government Department have increased dramatically and that is in line with public expenditure generally. Whoever gave the Minister her briefing note — probably somebody from the Department of Finance — it is gobbledegook.
Expenditure for the period 1995-7 has increased by 20 per cent. There are no savings, although in some areas the increases are not as substantial as some of those to which I referred earlier. Strategic management in the public service will be at nought if we continue as at present. The country cannot afford an increase of one-fifth in public expenditure in a two year period. As soon as growth levels decrease and inflation and interest rates increase we will be in a bad way again.
I dissuade the Deputy from making a speech.
Will the Minister point to one area in the 1997 Book of Estimates where there is a reduction in expenditure as a result of the strategic management initiative?
There is no evidence at this point of a reduction in expenditure. Delivering Better Government, which was published on 2 May last, is the document which recommends changes to existing financial management controls and procedures, including a more appropriate financial framework for setting public expenditure allocations and the delegation of authority to Departments to manage resources allocated to them. Since that document was only published in May of this year, it is not yet reflected in public expenditure. I accept what the Deputy is saying. The Deputy's question was specifically to ask the Taoiseach about the savings, if any, made as a result of the SMI to date, which assumes it is driven by savings per se. I ask him to use the expression “value for money” instead of savings. Achieving value for money should mean we will get effective savings in the years to come, as opposed to what would have happened otherwise.
Like Ben Dunne.
I am not sure where he comes into it, perhaps I am missing something.
He provides value for money.
Value for money is critical and all Government expenditure must be underpinned by that principle but value for money and savings are not quite the same thing. As the Taoiseach said, the strategic management initiative for the public service and Civil Service for the future must be driven by a vision of what we want it to contribute to social and economic life the 21st century. We must decide, first, what we want, and second, the most effective and efficient way of delivering that through the public service.
Could we have a translation of this?
We should not first cut the public service and then decide what services will fit — that is to put the cart before the horse.
Could we come to another question, please? We have dwelt too long on this one.
We do not understand it and neither does the Minister.
Perhaps when he returns, or after Christmas, the Taoiseach will consider the concept of the strategic management initiative, which is severely under threat.
No, it is not. It is secure and in good hands.
No attempt has been made to follow it through. The Minister is talking about management but does she know that to keep their expenditure levels for 1996, all Government Departments and agencies are running around like headless chickens, ringing manufacturers and businesses——
This is tending to become a debate but we are in Question Time.
——to provide goods or services before 31 December? There is no management and the SMI is neither strategic nor visionary.
I am coming now to Question No. 7——
That will no longer be an option. The cash bay system has not lent itself to an effective use of money.
A tax and spend Government.
There are plenty of committees.
It will provide value for money in the public service.
Perhaps the Minister of State would recognise the Chair.