I move: "That the Bill be now read a Second Time."
The Bill before us is the first step towards creation of a revitalised and customer-focused public service and towards placing a stronger focus on how we manage our public expenditure to get the best possible impact from available resources.
Turning first to the reform agenda, we will build a more efficient public service which will be manifestly fit for purpose and which will deliver the essential services we all need in the most integrated, transparent and accountable manner possible. This is my vision for the reformed public service, a vision built upon the traditional public service values of integrity, impartiality, diligence and commitment. We will focus on what is needed to help rebuild public confidence in the institutions of the State and make a positive contribution to economic recovery.
The process towards achieving this vision has already begun. As Deputies will be aware, a highly significant programme of public service reform has been initiated by the new Government. We spoke about some of this during the debate on Private Members' business yesterday evening. This process will take place alongside an ambitious programme of constitutional and political institutional reform. There will be a fundamental change in democratic and public governance; and a dramatic change in the cost efficiency and methods of delivery of public services. It is clear that notwithstanding developments to date, the cost of delivering public services must be reduced further, with fewer staff and tighter budgets, and that the public service must become better integrated and more customer focused, as well as being leaner and more efficient.
Before I proceed to outline the details of individual provisions of the Bill, it is important to restate the objectives of the public service reform process on which we have already embarked, and to provide an update on the steps taken to date or that are under way towards making the vision a reality.
The Government is committed to the fundamental review, reform and overhaul of all aspects of Government and administration in Ireland. The establishment of the Department of Public Expenditure and Reform reinforces the political and economic importance attached to delivering on the broad reform agenda, and the role which the Government believes a streamlined and highly performing public service can play in our national recovery. Work is already under way to give effect to the reform commitments the Government has made to the people and the Bill marks the final part of the beginning of a challenging journey to achieve the vision we have set ourselves and which the people fully deserve.
The programme for Government also envisages a renewed focus on a range of related reform issues, including legislative changes to facilitate more open, transparent and better government, an increased focus on organisational and individual performance improvement, giving citizens greater choice and input into service delivery, and a more empowered, skilled and customer-focused public service to deliver on all of these changes.
We need to build upon the undoubted commitment and ability of public servants at all levels to foster a culture of high-performance, flexibility, openness and accountability. The importance of rebuilding public confidence in the institutions of the State cannot be over-estimated. We must make better use of our resources, and draw more efficiently on the potential that exists to improve sharing of public information. We are determined to maximise the dividend from ICT, in terms of reducing the labour intensity of service delivery, by promoting the wide-scale adoption of shared services in human resources, payroll, pension, financial management, payment services and so on; business process improvement; and increased online delivery of services and payments.
Leadership will also be essential, and the newly established senior public service will play a key role in developing our cadre of public service leaders. Yesterday, I had the privilege of speaking to the first forum of the senior public service because I took the opportunity of the recall of all of our ambassadors so we had the widest possible cross-section of senior officials in public administration in the country. This will involve empowering and equipping public servants and releasing their potential to become more flexible and more proactive in changing what they do and how they do it. I am very open to ideas coming from people on the ground who can see around them the changes that are needed and who are now beginning to feel they have the flexibility to speak out. I want to devolve authority to people to make decisions and be accountable, and give the freedom to people to disagree with politicians and political leaders so there will be proper debate and scrutiny of public decision making.
Delivering such a programme of reform in the coming years will not be easy. However, the passing of the Bill will represent a highly significant important step in this process. It will provide the critical impetus for reform that is needed and will facilitate an integrated, focused and co-ordinated approach, and it is highly significant that the Bill places public service reform functions on a statutory basis for the first time. This is extraordinary but it is a fact.
As well as having a defined role in public expenditure issues, the Minister for Public Expenditure and Reform will be in a position to place the issue of reform at the centre of government.
Members opposite have commented that during the last election campaign the issue of reform was very high on the electorate's agenda for the first time. We must ensure the diverse elements of the public service move in a common direction with a determined purpose to deliver the public service Ireland needs and deserves, namely, a changed, more effective and less costly public service and a public service operating under a new legislative framework designed to promote a new culture of performance and accountability.
In tandem with the extensive public service modernisation reforms being pursued, the Government has an ambitious agenda for budgetary consolidation over the coming years to put our public finances back on a sound footing. This will involve further major savings in the expenditure area, coming on top of the expenditure consolidations of the past two and a half years. This will impact on individuals and families. We have seen the consequences of that but this process must be undertaken.
To lay the groundwork for these expenditure savings, the Government is taking a forensic approach through a comprehensive review of expenditure to ensure that the savings are prepared rationally and with regard to the priorities set in a negotiated programme for Government rather than just applypro rata top slicing across all programmes.
The comprehensive review will draw on international experience in this area, including the Canadian programme review approach of the 1990s, at which I looked, and the UK comprehensive spending reviews. This is an acceptance that as a country we cannot afford the same level of services and that prioritisation — and re-prioritisation — is now required.
In parallel with the comprehensive review of expenditure, the Government is also reforming and modernising the entire system of budgetary management. Under our government programme and the EU-IMF agreement, this Government is committed to introducing an independent fiscal advisory council. This should be in place by the summer on an interim basis. A fiscal responsibility Bill will include numerical fiscal rules and provide for a medium-term fiscal framework. As part of that framework, we will set out multi-annual expenditure ceilings.
The comprehensive review of expenditure will be instrumental in laying the groundwork for this initiative. The fiscal responsibility Bill is already at an advanced stage and will be published before year's end. The Bill will also reflect the new EU fiscal governance arrangements which, as Deputies know, are in the process of being finalised.
The reform agenda and the comprehensive spending review, which I outlined, set out what needs to be done to deliver a more effective public service for the people and businesses. The framework for how this change agenda will be delivered is provided by the Croke Park agreement. The significance of that agreement is rooted in the reality that the scale of the desired changes and reforms cannot simply be imposed on a system of more than 300,000 people without their agreement, active engagement and co-operation and without proactive and ambitious leadership at every level in public service bodies.
Under the agreement, public service unions have fully accepted that the guarantees the Government has given to avoid pay reductions and-or compulsory redundancies are dependent on driving forward implementation of the programme of modernisation and improvements in productivity against the backdrop of significantly reducing financial and staff resources. In practice, that means that staff need to be willing to retrain, where necessary, to take on more responsibility, to work across professional and technical boundaries and to be open to travelling within a radius of 45 km to take up new positions in a more flexible mobile public service.
It is also clear that the agreement can serve as an effective enabler of economic recovery by helping to create greater stability and certainty and, above all, a climate of industrial peace — necessary conditions under which difficult decisions can be taken and, more important, fully implemented.
My Department has a key role to play in driving implementation of the Croke Park agreement working closely with the implementation body chaired by Mr. P. J. Fitzpatrick. Over recent weeks, the implementation body has been engaged in an intensive review of progress to date under the agreement and is in the process of completing its assessment. The body's report will be considered by Government and published shortly and I look forward to having the chance to debate that in this House. I am confident the report will show that considerable savings and efficiencies have been achieved under the framework of the Croke Parkagreement.
We know, for example, despite a fall in the number of public servants of more than 16,400 since the end of 2008 and which has led to considerable payroll savings, services are, by and large, being maintained and, in some cases, being improved or even expanded. We also know of examples of major changes in the health sector and the Civil Service such as the reform of the medical laboratories, the transfer of the community welfare service to the Department of Social Protection and the management of the accelerated voluntary departure schemes from the HSE.
The Government has made it clear that it wishes to honour the commitments given in the agreement. However, that will only be possible if the agreement is implemented in full. Notwithstanding the progress to date, it is clear that much more needs to be done. There are enormous pressures on us to cut expenditure significantly and to reduce the size of the public service while at the same time making every effort to minimise the negative impact on services.
In the programme for Government, we have set down targets to further reduce the number of public servants by between 18,000 and 21,000 by 2014, compared to the number at the end of 2010, and by a further 4,000 by 2015. The framework provided by the Croke Park agreement will be critical to achieving these challenging targets and the savings that derive from such a cut in numbers. If services to the public, business and the community are to be maintained with significantly fewer staff and significantly less resources, we will need to see accelerated delivery of the full range of reform and efficiencies envisaged under the agreement such as much greater integration of public service organisations so that services are designed around the practical needs of the citizen; the better targeting of services in order that we avoid duplication of effort; accelerated progress in the area of e-Government in order that we deliver faster service to the user, minimise opportunities for fraud and reduce transaction costs for the Exchequer; and the consolidation, as far as possible, of financial, payroll, procurement, pensions and human resource services in each sector as well as the processing of standardised information such as medical cards.
I hardly need to remind Deputies of the difficult economic background against which this reform agenda is being undertaken. Unfortunately, everybody in the House is fully aware of that. We find ourselves facing unprecedented economic challenges. Gross domestic product — the most comprehensive measure of economy activity in Ireland — has fallen in each of the past three years. The labour market has borne the brunt of this adjustment and, as Deputies are all aware, unemployment has risen sharply.
Having said that, the recent flow of economic data provides some grounds for cautious optimism. The recovery is being led by developments in the external sector. What we are seeing is a substantial improvement in our competitiveness — we are pricing our way back into foreign markets. This is generating higher exports and boosting inward direct investment. Last year exports increased by 9.5% which was the strongest rate of growth in a decade. In other words, we are beginning to trade our way out of recession. While the outlook for the external sector remains bright, domestic demand conditions are likely to remain muted and flat, at least in the short-term. Over time, sustained strong export growth will help raise overall employment levels and I hope put unemployment on a downward path.
The measures outlined in the Government's recent jobs initiative will also help to underpin the labour market. However, we cannot rely on the external sector alone. The public service must also play its part. We must be ambitious and ensure the reform initiatives we are undertaking, informed by the outcome of the comprehensive expenditure review and delivered within the Croke Park agreement, deliver a slimmer, more streamlined, efficient and effective public service. That is what we must achieve.