Vol. 862 No. 1
85. Deputy Sean Fleming asked the Minister for Public Expenditure and Reform the role of his Department in respect of the overall Book of Estimates for 2014, in view of the largest ever set of expenditure overruns across nine Departments; and if he will make a statement on the matter. [48015/14]
I wish to ask the Minister for Public Expenditure and Reform about his role and that of his Department in respect of the overall Book of Estimates for 2014, in view of the largest ever set of expenditure overruns across nine Departments.
Twelve months ago, Ireland successfully exited the EU-IMF programme of financial support. This was achieved after five years of significant expenditure reductions and restraint across all areas of Government.
The expenditure allocations published in the 2014 Revised Estimates Volume required the delivery of an expenditure reduction of €1.6 billion in order to achieve the budget 2014 deficit target of 4.8% of GDP. This target was well within the 5.1% of GDP deficit ceiling under the excessive deficit procedure.
Over the course of 2014, there has been a significant improvement in the economic and fiscal outlook. Economic growth and revenues from tax and PRSI are well ahead of the budget 2014 forecasts, with the deficit for the year now forecast to be well below the 4.8% target. It is in this context, with tax receipts €1.1 billion ahead of forecast, that decisions regarding Supplementary Estimates have been taken.
As signalled earlier in the year, some Supplementary Estimates were required to fund a further round of stimulus investment from the proceeds of the disposal of State assets and also to make additional funding available for infrastructure repair and restoration works associated with winter storms. It has now also been possible to make further funding available for essential public transport capital investment. In total, the Supplementary Estimates have delivered €200 million in additional funds to support essential capital expenditure.
The Supplementary Estimate now being provided to health will ensure effective provision of this key service and allow the health sector to deal with some one-off costs without any impact on services to the public. Some Supplementary Estimates are timing-related, with a shortfall of almost €0.2 billion in appropriations-in-aid now forecast to be received in 2015 rather than 2014.
Given that the improved economic and fiscal background achieved by the Government provided fiscal space to meet additional expenditure, it was important when considering Supplementary Estimates that essential services be protected to the greatest extent possible in the light of the difficult but necessary expenditure reductions we have implemented for a number of years.
In his Budget Statement of 15 October 2013 the Minister stated:
The two Government parties agreed a strategy for this budget and the Estimates. It involves reducing the tax and spending consolidation from the published €3.1 billion to €2.5 billion, targeting a general Government deficit of 4.8% for 2014 and in the process, achieving a primary balance.
The Minister did this on the basis of a flawed Book of Estimates from which he read on that same date. He knew that they were false when he referred to them. The country also knew that they were false. Within 24 hours, the then Minister for Health and the chief executive of the HSE, Mr. Tony O'Brien, had disowned the budget because they felt it could not be achieved. The Minister, Deputy Brendan Howlin, forecast that medical cards probity cuts would offer savings of €113 million, but everyone knew the Estimates were wrong. The proof lies in the fact that we are now providing for the largest Supplementary Estimate in the history of the State to correct a budget that was flawed from the outset. The figure is now €1.2 billion, of which €680 million pertains to the Department of Health.
A question, please.
Had the Minister factored that figure of €1.2 billion into his budgetary estimates last year, he would have exceeded the deficit ceiling of 5.1%. He knowingly came to the House to present a figure that was under the target of 4.8% in the hope the Department of Finance would bail him out with extra tax revenue. Did he do this deliberately?
As the Leas-Cheann Comhairle knows, that is not a question. The Deputy made a series of false charges which were argumentative and which are not normally allowed at Question Time. When the Government took office, the deficit in 2010 left by the shambles of the previous Administration, of which the Deputy was a prominent member, was a Zimbabwe-like 30% of GDP, which was unprecedented in our entire economic history. The deficit after four years of the Government and prudent management of expenditure by my Department will be 2.7% next year. We have already exited the EU support base that we required during those difficult years. The simple yardstick is whether we have achieved the 4.8% deficit target set for this year through the expenditure ceilings and controls that I implemented. The answer is that not only have we achieved the 4.8% target, but we have greatly exceeded it, to such an extent that I was in a position to give additional support in areas that the Deputy's party every Wednesday demands be given extra funding. There is, of course, a disconnect between Fianna Fáil during Private Members' time and the new Fianna Fáil presented by the Deputy.
The Minister has skirted around the fact that the 2014 Supplementary Estimate of €1.2 billion is the single biggest Supplementary Estimate in the history of the State. It was nearly matched by the Supplementary Estimate of €1.1 billion in 2012. The two biggest Supplementary Estimates since the foundation of the State have been presented since the Department of Public and Expenditure and Reform was established. The Minister and his Department have done damage to the Estimates process. In the past four years they have failed to perform their basic function of presenting a proper book of Estimates and to live within them. The Minister has rightly acknowledged that the Department of Finance bailed him out. In hindsight, given his record and that of his Department, it might have been a mistake to split the Department of Finance in two. When that Department was responsible for expenditure, as well as taxation, we never had such a gross level of wrong Estimates presented on budget day.
The last time an integrated Department presided over the Deputy's party, there was a deficit of 30% of GDP. It was so crippling that we could not borrow a bob anywhere and had to call in the IMF. That is the record the Deputy is now applauding.
It is a joke. In truth, the Deputy knows well that the €1.2 billion is due to timing factors in many cases. I will offer some details. A sum of €177 million arises from delayed EU receipts from the Department of Agriculture, Food and the Marine, which will be received next year. In the Department of Education and Skills, €77 million relates to an accounting alteration required by the Comptroller and Auditor General of money that was accounted for in 2013 but will now be accounted for this year, so it will reduce the expenditure in 2013. I can go through each of the Departments, but the Deputy knows all of this. The only substantial additional moneys was a decision to allocate €510 million in cash to the Department of Health due to the additional work it has undertaken this year. The Deputy would have something to say if we were to close hospitals rather than provide the money for essential health services.
86. Deputy Mary Lou McDonald asked the Minister for Public Expenditure and Reform the implications for public spending of the expenditure benchmark that will apply as of 2016, as introduced by the six-pack European Semester provision, and incorporated into the fiscal stability treaty in 2012. [47949/14]
My question relates to the expenditure benchmark that will apply from 2016, as introduced by the six-pack European semester provision. Will the Minister explain in layman's or laywoman's terms what he understands the implication of that benchmark to be for government spending beyond 2016? Does he accept that the restrictions it will impose will render it impossible to spend sufficiently to ensure the delivery of full quality services? Does he anticipate that compliance with this benchmark will mean further cuts in future?
The key fiscal objective in budget 2015 is a general government deficit of 2.7% of GDP. Achieving this target will see Ireland exit the excessive deficit procedure. Thereafter fiscal policy will become subject to the preventative arm of the Stability and Growth Pact, SGP.
Each country has a medium-term budgetary objective, MTO, for its fiscal policy. For Ireland, the MTO is to achieve a budget balance in structural terms. Under the preventative arm of the SGP, a member state which has not yet reached its MTO is required to make sufficient progress towards its achievement every year. The expenditure benchmark is a complementary measure, designed to assist fiscal adjustment towards the MTO and to ensure that expenditure grows at sustainable levels thereafter. The arrangements will require that the growth in the level of spending is kept in line with the level of growth in the economy, while also ensuring that we progress towards our medium-term objective of achieving a balanced budget.
The constraints imposed by the SGP will require the continued prioritisation of expenditure to ensure that essential public services are effectively delivered. Choices will need to be made to ensure that funding continues to be directed to deliver education to our young people, provide essential social supports and health services and address emerging priorities such as meeting social housing needs. Protecting expenditure in these areas has been a key priority for the Government while implementing its structural consolidation. Sustainable growth in expenditure also requires that there is a continued focus on public service reform to increase productivity, deliver efficiencies and improve outcomes for service users.
The Minister's response echoes a response that my colleague, Deputy Pearse Doherty, received from the Minister's twin Minister, Deputy Noonan, in which he stated that decisions on allocations from 2016 onwards must not only have due regard for the level of expenditure required to ensure effective delivery of key public services but also the fiscal parameters set out under the preventative arm of the Stability and Growth Pact. This is where the problem arises. The Minister has billed this chapter of the Government's term as the point at which we move beyond austerity and begin to see a social dividend and, presumably, an economic dividend. However, that has not come to pass. My concern is that the expenditure benchmark is pitched at a structural deficit level of 0.5%. The Minister will recall that in the course of a referendum campaign we had a hot and heavy debate as to whether that was a good idea for this State. We took the view that it was not.
Can the Minister tell us his understanding of the stringency of the requirement for a structural deficit of 0.5% of GDP? Is he seriously saying he does not believe it will have an impact and necessitate further cutbacks?
I understand the very important question the Deputy is asking. The calculation of the expenditure benchmark is subject to a number of key inputs including the GDP deflator and potential growth. The Department of Finance is engaging with the Commission to calculate a reasonable benchmark for Ireland. In the answer to the parliamentary question to which the Deputy referred, the Minister for Finance, Deputy Noonan, gave an indicative figure, but the figure is not fixed because the modality is still being debated, discussed and ironed out with Brussels. Personally, I take the view that a one-size-fits-all scenario is unsuitable because our growth capacity is much greater than that of the rest of the EU. The Department of Finance is working on these matters. This time last year, we expected to be required to make additional adjustments of €2 billion for the budget in 2015. The changed circumstances allowed us not to make those adjustments but to expend an additional €1 billion. That was a change of €3 billion over a year. I expect that ongoing negotiations will give a degree of flexibility in expenditure to meet the demands we have set as well as preserving prudence.
Clearly, prudence is a desirable virtue when dealing with public expenditure. I agree with the Minister that the trick is to invest sufficiently and to kick-start growth so that we move from a vicious cycle of austerity to a virtuous cycle of investment and return, socially and for the Exchequer in terms of tax returns. The Minister said a conversation was ongoing between the Department of Finance and the European Commission. What is the Minister’s understanding of the expenditure benchmark? Does he regard it as a binding rule or a general guideline? I could not agree more that a one-size-fits-all approach would be bad news for Ireland. I suggest that the Minister take the latter interpretation that this is a guideline rather than a binding imposition on the State. Is this the Minister's view?
The Stability and Growth Pact is binding on us, as it is on every eurozone country, and is designed to ensure fiscal policies are sustainable into the future and prevent economic collapse due to our being profligate at any time in our electoral or economic cycle. The estimates provided in the answer to the parliamentary question are technical and will change and evolve as potential growth rates and GDP become clearer. The negotiation will have to be agreed with the Commission, and the work is ongoing. I agree with the Deputy that we need an economic and social dividend to allay the hardships the Irish people have endured over recent years. Now that we have built economic sustainability, we need the product of it to manifest itself in people's lives. While it will be slow and steady, it will be clear. I have always believed in stimulating the economy, and this is why, two years ago, I introduced a €2.25 billion stimulus programme. Early in the new year, I will bring the new five-year multi-annual capital plan before the Dáil, which will be part of the stimulus that will do the very thing the Deputy has indicated should be done.
87. Deputy Seamus Healy asked the Minister for Public Expenditure and Reform as pay and pensions in payment are now being processed separately in the public service, if he will introduce legislation to give the Alliance of Retired Public Servants a statutory right to an audience with the Government and pension authorities; and if he will make a statement on the matter. [48118/14]
The effect of my question is to ask the Minister if he will agree to introduce legislation to provide for a legal right for public service pensioners to an audience with the Government and pension authorities and access to the Labour Court and the Labour Relations Commission on a statutory basis rather than on a concession basis.
Again, I thank Deputy Healy for the question. The question of legislation to give rights to pensioners or representatives of pensioners to engage in industrial relations matters or to appear before the State's industrial tribunals is a matter within the remit of my colleague, the Minister for Jobs, Enterprise and Innovation, not mine. It of course is not necessary for any group to have legislation passed or to have legislation passed on behalf of its representatives to seek to engage with any Minister of the Government. I am happy that the Alliance of Retired Public Servants has formed a group to give voice to the major concerns of public service pensioners. When I first met pensioners in May 2013, I indicated to them my support for the formation of such a grouping. I also stated my intention as a matter of priority to move towards reducing the burden of public service pension reductions, with the initial focus on the people in receipt of low pensions, at the earliest date that economic progress permitted.
Following the formal establishment of the Alliance of Retired Public Servants as an alliance open to all public service pension organisations earlier this year, I instructed my officials to make contact with the alliance and to engage with its representatives on the specific matters that concern them. Moreover, I have myself met the alliance's representatives to discuss their particular concerns about the impact of the measures introduced over the last few years, especially on the incomes of public sector pensioners. I therefore am fully aware of the concerns which have been raised regarding the ongoing imposition of public service pension reductions on the pensions of many retired public servants. I am required to review the financial emergency measures in the public interest, FEMPI, legislation annually, having regard to the purposes of the legislation. In my most recent report laid before the Houses of the Oireachtas in June 2014, I concluded that the continuation of the public service pension reduction, PSPR, remained necessary. However, it is important that I, as Minister for Public Expenditure and Reform, give consideration as to how, over the medium term, pay and pensions policy currently underpinned by that FEMPI legislation will be unwound. Any proposals to amend the FEMPI Acts, including any changes to the public service pension reduction, will of course require primary legislation to be brought before the House.
I thank the Minister and will come back to him. I call Deputy Healy.
The Alliance of Retired Public Servants was established informally in 2013 and formally this year. It represents approximately 75,000 retired public servants right across the Civil Service, local authorities, health employees etc. I accept fully and welcome that the Minister has met the alliance. However, he has done so on a concessionary basis and I ask him to introduce legislation that will give the alliance a legal or a statutory right to representation. That is a reasonable request from the pensioners. Briefly, the position concerning pensioners is that pensions are in fact property rights and quite a substantial number of pensioners, approximately 1,500, die each year. I request that the Minister restore the cuts in pensions and that he legislate to ensure any outstanding moneys to pensioners who have died will be paid into their estates.
Again, the actual introduction of legislation that would give any group statutory rights of representation before the State's industrial tribunals or in industrial relations matters is a matter for the Minister for Jobs, Enterprise and Innovation and consequently, I have no function in that regard. However, as I stated, I am happy to meet the retired pensioners' association whenever issues arise regarding matters that might have an impact on their income. On the other point made by the Deputy in respect of property rights, it is something I have repeated often in this Chamber when people call on me to abate arbitrarily pensions and I believe the Government has done this as far as it safely can go constitutionally. I will seek to restore those as the FEMPI provisions are unwound in an orderly way that is sustainable for the economy of the State.
On the legislation, will the Minister use his influence at Cabinet, at the Economic Management Council and with his colleague to further the question of legislating for this group of pensioners?
I will happily raise this point and will indicate Deputy Healy's concern on this issue with my colleague, the Minister for Jobs, Enterprise and Innovation.
88. Deputy Sean Fleming asked the Minister for Public Expenditure and Reform if he will provide a list of shared services projects commenced across the Civil Service since 2011; the costs associated with these projects for each year; when these projects will generate an overall net saving; and if he will make a statement on the matter. [48016/14]
In this question I ask the Minister for Public Expenditure and Reform if he will provide a list of the shared service projects commenced across the Civil Service since 2011, the costs associated with these projects for each year and when the projects will generate an overall net saving.
Shared services are a key element of the public service reform plan and a core priority for my Department. The national shared service office within the Department is leading the shared service strategy and the implementation of shared service projects within the overall reform and renewal context. The new office is directly responsible for overseeing shared service projects within the Civil Service. As part of its wider leadership role, it provides expert guidance and support for other public service sectors in progressing their shared service commitments.
My colleagues, the Minister for Health, the Minister for Education and Skills and the Minister for the Environment, Community and Local Government, will respond separately on the implementation of their individual shared service plans. Each Minister is working on this agenda.
We are advancing three key shared service projects within the Civil Service, which is my area of operation. The first is PeoplePoint, a HR and pensions administration shared service which was established in March 2013. It already services more than 26,000 employees across 21 public service bodies. We also have payroll shared service and the Deputy will be interested to know that I am going to Tullamore tomorrow to launch this shared service centre, with some 20,000 payees already on board. The third is financial management shared services, a major project which is still at a relatively early stage but which is being carefully managed to ensure the resilience of the detailed business case.
I am circulating a table which sets out the cost of each project since establishment in 2011. The total spent on Civil Service shared service projects in 2011 was €5,000; in 2012 it was €5.4 million, while in 2013 it was €10.4 million. Total expenditure on these projects to date is expected to be €7.769 million by year end.
In examining these costs, it is important to understand shared services are not a short-term efficiency measure. Both public and private sector best practice indicates that benefits are generally realised over a three to five year period.
|
Project |
2011 |
2012 |
2013 |
2014* |
|
PeoplePoint |
€5,000 |
€5,340,553 |
€6,577,406 |
€3,141,830 |
|
Payroll Shared Services |
Nil |
€67,650 |
€3,559,408 |
€2,953,569 |
|
Financial Management |
Nil |
Nil |
€262,461 |
€1,674,000 |
|
Total |
€5,000 |
€5,408,203 |
€10,399,275 |
€7,769,399 |
*Figures based on provisional outturn for 2014
I understand the table will be circulated with the reply when we receive it by e-mail in the afternoon. Members on this side of the House have agreed with the principle and always known that there is a set-up cost. New offices and staff must be provided at new locations, while new software development systems must be put in place. Of course, it will take a few years and I am happy that the Minister has given some indication of the cost involved. My main concern is that he have a good handle on PeoplePoint and the shared services payroll. He said the financial management service was progressing separately. I am more concerned about other Departments mentioned where there is cross-departmental redeployment required to make the projects a success. This is a sticking point and the Minister proved it by saying other Ministers would answer separately. That confirms my worry - that each Department is operating in a silo - and I would prefer if the Minister answered for all Departments about shared services across the public service. It is something the Department could usefully do, rather than let each Department report separately.
That is something I will bear in mind. We have a Cabinet sub-committee under the chairmanship of the Taoiseach and each Minister with responsibility for a shared service reports to it. Post-2016, when shared service centres are fully operational, it is projected that PeoplePoint will deliver savings in the region of €12.5 million annually, with payroll shared services delivering savings in the region of €5.6 million annually thereafter. Each Minister is responsible for shared services in the health, education or local government sector but reports to the Cabinet sub-committee on public sector reform. I will give some consideration to centralising a reporting system in order that people will be able to look at it in the round.
Will the Minister send on the full list of shared services projects in the public service? Some of these are in their initial stages, others partly up and running. I know some of these will take time. My local authority area, Laois County Council, is in charge of the shared services project for local authority payrolls. It brings on three other local authorities each quarter, so it will take two years at least to get all of them online.
That is happening with all shared services.
There is a build-up. We are all agreed it could not have been rushed on day one.
On 23 October, I put down a parliamentary question on the number of staff redeployed within local government shared services over the past three years. The reply from the Minister for the Environment, Community and Local Government stated his Department does not collate the redeployment data as requested. How can the Minister for the Environment, Community and Local Government know what is going on when he does not even collect the data? How can the Minister for Public Expenditure and Reform and the Cabinet sub-committee know what is going on if the data is not collected? The Minister stated information is not collected up to grade 7 but grade 8 is done across the Public Appointments Service. There is a massive gap in the information on who wants to move in Departments and even in sections. A local manager can veto staff going to shared services and this causes problems which need to be addressed.
There have been issues with mobility. As we have not been recruiting to the Civil Service, there is a reluctance to cede staff, particularly skilled staff, to projects like this. If there is to be a common shared services centre in human resources management, all the human resources experts in a Department might migrate out of it and managers might not want to lose them. It will improve once recruitment improves as well. I will give some further consideration to having a comprehensive overview of the progress of shared services because they are an important feature of the reform programme.
89. Deputy Mary Lou McDonald asked the Minister for Public Expenditure and Reform his views on the statement of caution by Transparency International Ireland that, despite the recent improvement in the State’s ranking in the 2014 corruption perception index published on 3 December 2014, there are still significant corruption risks to be addressed, including in public procurement. [47950/14]
Question No. 89 refers to the country’s recent improvement in the corruption perception index score of 74 out of 100, tied for 17th place with the United States of America, Barbados and Hong Kong. Those putting together this data sounded a particular note of caution and warned against complacency, identifying in particular the area of public procurement as one that was rich with opportunity for corruption and malpractice. I raised this theme with the Minister in previous questions on the new EU rules on procurement that are to be introduced. What plans has the Minister to safeguard the area of public procurement? Does he accept there is the potential for corruption in this area? What does he propose to do about it?
While I welcome the findings of the recently published Transparency International's index for 2014 which shows an improvement in Ireland's score for the second year in a row, there is an active debate among commentators on the robustness of such measures which indicates the results should always be treated with some degree of caution.
My priority in implementing a suite of reforms under the programme for Government to enhance openness, transparency and accountability has been to take concrete measures to reduce corruption risk permanently. In this context, a wide range of measures to facilitate more open, transparent, accountable and ethical public governance arrangements have been introduced. These include legislation for lobbying, whistleblowing, freedom of information, open government and Civil Service accountability. These comprise important elements of the broader policy framework necessary to ensure the ethical performance of public functions.
On account of important reforms previously put in place, employees in the public sector are required to adhere to ethical standards under the ethics Acts. As an essential part of the overall reform programme, my Department is finalising a review of the current legislative framework for ethics in public office, taking account of international best practice. In this regard, it is completing a detailed draft general scheme of a Bill designed to have a consolidated, modernised, simplified and streamlined set of arrangements, including a strengthening of the current investigations and sanctions regime.
I expect to submit proposals in this regard to the Government early in the new year. Subject to Government approval, I intend to publish, alongside the draft scheme, a policy paper on the legislative proposals to inform and encourage public debate and to act as a basis for further public consultation on the proposed Bill. I look forward to hearing the views of Opposition Members and all Members of this House on these proposals.
In order to address concerns relating to procurement corruption risks, Directive 2004/18/EC requires contracting authorities to exclude from the tender process any tenderers who have been convicted of various types and categories of offence, including corruption, fraud, money-laundering and participation in a criminal organisation.
I accept that the data to which we refer is difficult to collect because corruption is illicit and illegal and, thus, does not facilitate data collection. I also accept the Minister's points on ethics legislation, but I want to focus on the public procurement process. The new rules define conflicts of interest in a way that requires member states to prevent, detect and redress such conflicts. Detection measures include the development of red flag indicators and the rules refer to remedial measures also. Grounds for exclusion from procurement have been strengthened to include companies that have unduly influenced the decision making process. All of these elements are new and welcome. Some €8.5 billion is spent through the public procurement process, so I would like to know the specific changes that will be introduced.
Does the Deputy's figure refer to the public procurement process excluding the construction sector?
Specifically, what will be added to the regime in this State to stamp out corruption?
The provisions I have outlined and the requirement for high standards are reflected in the model tender and contract documents for the procurement of goods and general services, as well as in instructions to tenderers and conditions of contract, where the standard forms of contract are used. These documents require that any conflict of interest or potential conflict of interest on the part of a tenderer, individual employee, agent or subcontractor of a tenderer be fully disclosed to the contracting authority as soon as it becomes apparent. Withholding information may result in elimination from a competition or termination of a contract, but this may also occur due to information disclosed. The provisions also prohibit gifts, consideration or commission of any kind as an inducement or reward relating to the award or performance of any public contract.
A public consultation process on the provisions of this directive, which, among other things, provides for additional grounds for exclusion from tender processes, has recently been concluded. The Office of Government Procurement will take full account of the responses received, though I am not sure whether the Deputy took the opportunity to make a submission. In consultation with the Attorney General, it will consider all proposals submitted and the necessity for any further measures by contracting authorities to prevent any form of corruption in procurement in Ireland.
I am sure the Minister agrees when I say it is of the utmost importance that the public has full confidence in the public procurement process. People must know that contracts are awarded on the basis of merit, efficiency, cost and other social considerations, but this is not the case at the moment.
Transparency International is a very credible organisation that has raised real concerns on public procurement. Notwithstanding issues on data collection, the Minister will be aware that, to use a contemporary example, there has been considerable public disquiet about the awarding of the contract to install water meters throughout the State. The perception is that there was a conflict of interest around this issue relating to the big beasts of the Irish commercial field but seeping into politics. It is important that we get this right. I know that consultations have now finished but I want to know that the Minister is minded to include the most robust measures possible to give effect to the directive.
I believe the establishment within my Department of the Office of Government Procurement represents a sea change in taking away procurement from a range of organisations throughout the State and into one centralised body that has standard rules of operation. This will be not only cost-effective but far more transparent in operation. The enactment of the new EU directive will further strengthen this development. It was right to have a period of public consultation about its implementation. I assure the Deputy and the House that I will be rigorous in ensuring that we have a procurement system in this State that is transparent, open and free of corruption.
