Other Questions

Economic Policy

Bernard Durkan

Question:

54. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform the extent to which public expenditure and reform targets will remain an integral part of economic strategy and to which prudent management in this area will remain beneficial; and if he will make a statement on the matter. [1922/16]

My question is on the extent to which prudent management of the economy is required on an ongoing basis.

The Deputy will recognise the pivotal role played by my Department in successfully delivering on key Government priorities such as securing fiscal stability, sustainable economic growth and social progress. As a result, Ireland was on course to exit the excessive deficit procedure at the end of 2015, with a forecast general Government deficit of close to 1.5% of GDP for 2015.  That is what we estimate the outturn figure will be. When one considers that five years ago, we set out on a path to have a deficit of 3%, which many commentators said was unachievable, and that we now have a deficit of half that, it shows the remarkable journey the Irish people have embarked on. It has brought us to a secure position.

The recently published capital plan sets out a €27 billion multi-annual Exchequer capital investment to be made over the next six years. That will lay the foundations of continued and sustained growth.

Public sector reform was a key element of the Government's response to the crisis and continues to be an essential part of the strategy for recovery. Significant progress has been made since the publication of the first public service reform plan. A second public sector reform plan was published in January 2014 which puts a new focus on improved service delivery and achieving better outcomes. 

Managing the delivery of public services within budgetary allocations is a key responsibility of each Minister and Department. With Ireland moving to the preventive arm of the Stability and Growth Pact in 2016, it will be essential that every Department prudently manages delivery of services within their voted allocations to maintain the hard-won fiscal stability and support economic progress that is now a real potential for us.

I thank the Minister for his comprehensive reply. I further ask the extent to which he believes it will become possible to deal with the issues that had to be neglected owing to the shortage of finance in recent years? To what extent does he envisage the various headings benefiting from such measures?

That is a good and prescient question, to which there are two components. First, it is incumbent on any Government to live within the Stability and Growth Pact, the legal binding agreement to which the State has signed up and for which the people of Ireland have voted. There are choices within this to examine the fiscal space available in the next few years and to decide on how it should be deployed. That debate will be held during the general election campaign and each party, including each party in government, will have a different view on it. From my perspective, I wish to devote the bulk of the fiscal space available in the next five years to improving public services because despite the interactions I have in this Chamber, there are pressure points that must be addressed, as well as new services the Government would like to add. For example, it started to so do in the area of child care in the last budget, while in the budget before that the Government focused on housing, but it has a lot more to do and this debate must take place during the course of the general election campaign. However, it must all be couched in terms that will ensure the recovery is not put in jeopardy. This imperative becomes all the more real when one considers what is happening economically in the international environment, including China and elsewhere.

I thank the Minister. Does he foresee a situation where specific identifiable targets can be set in the areas to which he has referred that must be addressed henceforth within the scope of the growing economy? He mentioned housing and I presume it also includes health and child care services. To what extent does he perceive specific targets as being necessary and identifiable in the course of that part of the recovery?

Again, there are two answers to that question. The first concerns the fiscal allocation one gives to each Department and what one wishes to do with it. There will be a political debate about that matter because every party will have its own policy platform to put to the people and the make-up of the next Government in a few months time will determine how much money will be deployed in each area of public expenditure or given by way of a tax rebate. There will be a robust debate about that matter. From my perspective - I believe I debated this issue on national television with Deputy Sean Fleming - one issue will be the size of the State and whether people wish to shrink its size and its activities or to expand it. This will be an important debate to have in the context of the next general election.

Public Sector Pensions

Seán Fleming

Question:

55. Deputy Sean Fleming asked the Minister for Public Expenditure and Reform the full-year cost of ceasing the public service pension reduction on pensions of up to €50,000; the number of persons who would benefit; his plans to do this; and if he will make a statement on the matter. [1916/16]

What is the full-year cost of ceasing the public service pension reduction on pensions up to €50,000, which is approximately the figure up to which a couple can receive a medical card automatically if they are over 70 years of age, and the number of people who would benefit from this? The reduction only extends as far as those on pensions of €34,132, despite the amendments I tabled when Members were discussing the passage of the financial emergency in the public interest, FEMPI, legislation.

As the Deputy is aware, the Financial Emergency in the Public Interest Act 2015 provides for incremental increases in the threshold before the public service pension reduction, PSPR, applies this year from 1 January, next year and in 2018, ensuring that from 1 January 2018, all public sector pensions with values less than €34,132 will be exempt from the pension reduction.  This means that 80% of all pensioners will see no pension reduction within 24 months. The PSPR amelioration provided for under the FEMPI Act delivers on my previously stated commitment to reduce the burden of the FEMPI legislation for retired public servants at the earliest date economic progress allowed me to so do. The measures have been costed on a full-year basis in 2018 at a figure of €90 million.  In all cases the maximum pension restoration figure is €1,680 over the two-year period. The Deputy's proposal to increase the pension size threshold below which the PSPR does not apply to €50,000 per year would cost approximately €117 million per year.  In addition, those pensioners still affected by the PSPR, including the very highest paid, would secure a pension boost of €4,080 per year via the PSPR restoration.

I did not think it was the right thing to do to provide for that level of pension restoration for some people, of whom we would be very critical and who have walked away with very good pensions in the State.

Under section 12 of the FEMPI Act, I am required to review the necessity for the FEMPI legislation annually. Whoever sits in my seat will be required to lay the results of a new evaluation before the House next summer. All of these matters will be considered in that context.

The Minister might clarify two of the figures he mentioned. My proposal would only apply up to a figure of €50,000. The Minister spoke about people on higher salaries who had walked away with bigger amounts and who could be in receipt of pensions above that figure.

They get the chunk up to the figure of €50,000.

I was not asking for it, not that I would ask for it, for anyone getting more than €50,000.

One cannot exempt it either.

Will the Minister provide the cost of the reductions on an annualised basis? Will he then provide the cost of taking in the extra 15,000 or 20,000 people by increasing the threshold to €50,000? Those on a pension of €34,132 who have worked all of their lives are only marginally better off than those in receipt of the State pension, which is approximately €400 per week. I know that we discussed this issue at length during the discussions on the FEMPI legislation. I detect a glimmer of a possibility that the Minister might revisit it, subject to the finances allowing it. It is on that basis that it should be re-examined. The issue is whether the Minister wishes to support Fine Gael and tax cuts or to look after the people in question.

One cannot spend money and not have the wherewithal to do so. As a general principle, I would like to be able to deploy more resources to improve public services. I agree with the Deputy. I have had a number of meetings with the representatives of public sector pensioners and I am conscious, as I said to the Deputy during the debate on the FEMPI 2015 legislation, that, unlike pay restoration for those who have 30 or 40 years of work ahead of them, it is different if one is facing, if one likes, a more limited time horizon because one is elderly. I wish to ensure pension restoration will happen as quickly as economic circumstances allow. We will give back €1,680 to each pensioner under the proposals we enacted last year. Could we go further and move quicker? We will see what economic progress will allow us to do in the coming months. If we can sustain economic progress, this will be a priority for me personally.

I am pleased that the Minister is coming round to the point of view I expressed consistently during that debate. I know that his senior partner in government has given big commitments on tax cuts, if it is back in government. I hope the other party in government will give equally strong commitments to look after people who are, as the Minister said, elderly; some of whom may not be around in 2018. They were looking for a quicker restoration and I understand their point. I think the Minister also understands it. Those who are marginally above the limit to qualify for a medical card should be allowed pension restoration in full in as short a period as possible. Outside the departmental official-speak, when we get out on the hustings, I hope the Minister will agree and that there will be a sentence in his policy document on the lines of what has been suggested.

All of our focus on pay and pensions restoration has been on the lowest paid first. As I said it would be, that is and was the hallmark of the FEMPI legislation. We are providing for full pensions restoration for people who would have been on a salary of roughly €68,000 when they were working, which is the case for 80% of public servants. They will see full restoration of their pensions under the provisions we have enacted. Increasing the threshold to €50,000 would mean that we would be providing for full restoration for people whose salary would have been €100,000. We will need to go there eventually, but I did not set it as a priority in terms of the scarce resources I had available last year. As more resources become available, people are entitled to have their pensions restored as quickly as I can manage it.

Tender Advisory Service

Mary Lou McDonald

Question:

56. Deputy Mary Lou McDonald asked the Minister for Public Expenditure and Reform the number of complaints made by small and medium enterprises to the Tender Advisory Service since it was launched in February 2015; the nature of the complaints, concerns and issues raised and which of them were the most common; and if he will make a statement on the matter. [1946/16]

My question relates to the number of complaints made by small and medium-sized enterprises to the Tender Advisory Service which was launched in February 2015.

I ask the Minister to set out the nature of these complaints, concerns and issues, to identify the most common complaint or issue raised and to make a statement on the matter. I am sure he is conversant with the number of complaints and frustrations that present for SMEs in seeking to compete for, much less win, public contracts.

The Tender Advisory Service, TAS, was launched last year to provide an informal outlet for potential suppliers to raise concerns in respect of a particular live tender process. The service is aimed at improving communications with suppliers and increasing professionalism and consistency in the way procurement processes are carried out across the public service. The service will be reviewed at the end of February this year following 12 months in operation.

To date, 27 suppliers have engaged with the service. Of these, four queries were eligible for consideration. Suppliers raised concerns regarding tender specification, the terms and conditions set out in the tender documents, the use of lotting, and requests for sample work. Following an assessment of each eligible query, TAS liaised with the relevant contracting authority. In one case, this resulted in a contracting authority broadening the specification and extending the closing date for the tender. In another, the contracting authority reconsidered its lotting strategy, which led to a further subdivision of a lot. In the remaining two cases, having assessed the queries and liaised with the contracting authorities, no action was deemed necessary.

The remaining 23 queries were deemed ineligible or not appropriate for the service for reasons including that the issues raised were of a general nature and not specific to any particular tender, the supplier had not yet engaged with or exhausted the existing process which is part of the tendering requirement and the supplier had engaged with TAS too late, for example after the whole tendering process was concluded. In instances where the queries were deemed ineligible, suppliers were redirected to either the Office of Government Procurement, OGP customer service team or the contracting authority dealing with the specific tender. Details of the TAS scheme, including frequently asked questions and the standard inquiry form, are available on the procurement website.

It is essential that there is not just an advisory service for small and medium-sized enterprises and microbusinesses in respect of these tenders, but that there is also an effective complaints mechanism. Such a mechanism should give a result to complainants and not just tea and sympathy. The Minister is familiar with many consistently raised issues that are of a general nature, yet also apply specifically to individual contracts. The prioritisation of the lowest price above wider social and economic benefits is one such issue. The idea of consortium bidding, which flies in the face of how most SMEs and microbusinesses operate, has also been raised time and again. There is a lack of consistency between contracting bodies, for instance in marking criteria. These are general themes and dilemmas that emerge repeatedly and have to be addressed. I wonder if there is confidence in the Tender Advisory Service actually to deal with those issues. The Minister says a number of queries were deemed to be ineligible because they were general. That does not mean they are not worthy, important and in need of investigation and remedy.

I am mindful of the points the Deputy makes. TAS was set up as an advisory group 12 months ago and will be subject to review next month. I will be very interested to see the outcome of that review. No doubt we will be making improvements to the service on the basis of practical experience over the last 12 months.

It all underscores the fact that the establishment of the Office of Government Procurement has been such an innovation. It is the first time the Government in all its agencies, guises and buying divisions, has consolidated its approach to the SME sector. The OGP talks directly to the Small Firms Association, ISME, IBEC and so on. Over time, the process will improve.

In terms of the Deputy's specific points, for example on consortium bidding, one of the things we are encouraging SMEs to do is bind together to bid for domestic Government contracts, and also to get a share of the European market, at which they are now increasingly looking. That will all be good news for SMEs in Ireland.

I am well aware the Minister is encouraging that kind of consortium bidding but I am sure he is aware, through his discussions with ISME, the Small Firms Association and further afield, that this is very problematic for small businesses and nearly impossible for micro businesses. When the review happens in 12 months, I believe it is very important there is a listening ear to the reality of how business operates in real time. Whoever is in office, the Government might have a notion of what is best or what is best practice, and it is fully entitled to promote that, which goes without saying. However, if that is something that cannot be complied with or that runs against the grain of how these businesses operate, it needs to be looked at. In truth, many SMEs and micro businesses believe they are effectively locked out of the tendering processes.

I mentioned a number of the issues that arise. I should also mention timeframes, which many small businesses regard as far too tight, and the cost of entering the tendering process, which is way too high. In addition, the issue of transparency across public procurement is raised time and again. The OGP is a good innovation and I have supported it from the beginning, but these issues need to be sorted out.

I will not disagree and I thank the Deputy for supporting the OGP. It is a very good organisation which is exposing all these issues for the first time. In terms of transparency, it is the first time we have had a transparent system of public procurement. For decades, nobody knew who was buying what from whom across the public service.

There is a journey to be travelled to ensure we have much better interaction with small firms. Some small firms are frightened off because the thing seems too difficult. They need to be helped and we are working on that. The meet the buyers outreach programme is where we talk to SMEs throughout the country about specific tenders or projects to see how the companies can bid for these tenders and to assist them. There will be occasions where it will be a requirement for companies to band together, and we will assist that too. All this is important.

Public Procurement Contracts

Mary Lou McDonald

Question:

57. Deputy Mary Lou McDonald asked the Minister for Public Expenditure and Reform the extent to which, in all public procurement processes, accessibility is considered, given that users have differing capabilities and that users' abilities may be impaired, either permanently or temporarily, by various physical, intellectual, sensory or mental health disabilities; and if he will make a statement on the matter. [1947/16]

This question refers to accessibility in all public procurement processes. Public bodies have a legal responsibility to incorporate accessibility in the procurement process under section 27 of the Disability Act, which came into effect on 31 December 2005. What does that look like, how does that operate and what weight or seriousness is afforded to it?

The area of accessibility for people with disabilities comes under the remit of the Minister for Justice and Equality and, as Deputy McDonald said, is addressed in the Disability Act. Public bodies are required under section 25 of the Act to make their public buildings, other than heritage sites, accessible to people with disabilities in compliance with the relevant building regulations.  In regard to goods and services, section 27 requires the head of a public body to ensure services provided and goods supplied to the public body are accessible to people with disabilities, unless that would not be practicable, would be too expensive or would cause an unreasonable delay.

This legislation is supported by a number of documents which have been issued by the Disability Authority, which again is a matter for the Minister for Justice and Equality. These include a code of practice issued in 2008 and a guidance document issued in 2012. The guidance document is available on the OGP website in order that staff involved in carrying out and managing the procurement of goods and services are aware of their responsibilities.

The Disability Authority has pointed to the benefits of increased accessibility for people with disabilities that can be brought about by public procurement. The Government endorses this important way of maximising social inclusion and we will be working ever more closely to achieve those objectives.

I thank the Minister. The reason for raising the issue is that, as I hope we can agree, issues pertaining to disability and persons with disabilities are far too often marginal or peripheral to mainstream debate, and we need to change that. It stands to reason that the State, in particular the Government in office, through all its actions, including procurement policies and processes, needs to lead from the front.

I would like the Minister to be more specific rather than say the Government endorses this approach. I know there are guidelines in place, but what oversight is there of these guidelines? In what instances have those guidelines fallen and what action has been taken to remediate that and to ensure we do not just have good guidelines and legislation but also have good practice?

I agree with much of what the Deputy has said. When talking about any issue, we need to ensure we are inclusive. My good friend and colleague, now Uachtarán na hÉireann, always talked about vindicating citizenship to ensure everybody can exercise full citizenship, regardless of disability, gender, sexual orientation or anything else. This is important. I agree entirely with the Deputy that we need to talk about these issues in a mainstream way.

In terms of specifics, it is not simply a matter of saying we support guidelines. For example, in the context of accessibility to facilities for people with disabilities, guidelines are set out in Part M of the building regulations and, as a matter of law, people constructing buildings must have regard to them. Drawing and technical specifications describing the buildings must have regard to these regulations and be designed to ensure there is full access. A certificate attesting compliance with the regulations must also be submitted prior to the commencement of works.

I am aware of that, but for all that, we meet people with a disability, specifically people who use a wheelchair, who tell us their experience is not of an accessible city, town or services. I hope in the course of the next general election they will spell out specifically the inaccessible nature of many facilities. While it is not under the Minister's remit, I could provide the example of one of the big complaints in the city of Dublin, namely, the issue of access to taxis. This falls within the remit of transport, but is outside the remit of the Minister because taxis are privately run.

In the review of matters as we come to the end of the Minister's time in government and as we prepare for an election and, one hopes, a new government, this issue needs to be central. We need to take actions that impress upon public bodies, buyers and providers of services that the law and regulations must be enforced ambitiously and generously in a spirit of citizenship.

Again, I do not disagree with the Deputy. We need to ensure the regulations are policed and that people comply with them. However, I go further than that. It is not a matter for "us" to ensure "they" are looked after. We need to be inclusive. That is why, for example, the Office of Government Procurement councils dealing with purchases - the Deputy mentioned fleet and transport - include a member of the Irish Wheelchair Association. This member is there specifically to ensure these measures are not peripheral or part of a checklist but an integral part of the procurement process. We need to transfer this process across the system to ensure people with disabilities are fully represented in decision-making. They should not just be outside advisors but be at the heart of decision-making on matters that affect them directly.

Public Procurement Contracts

Clare Daly

Question:

58. Deputy Clare Daly asked the Minister for Public Expenditure and Reform the impact on Irish small and medium enterprises of the tendering process for Government contracts, which favours big businesses; and if he will make a statement on the matter. [1940/16]

This question follows on from points made by Deputies Wallace and McDonald earlier about the procurement process. The Government spends billions annually on goods and services and in capital expenditure. I note the Minister said in response to the other Deputies that he is aware there are problems and that he is working on the issues, but that will be too late for many small businesses because of the bias that exists currently towards big business. What assessment has the Minister carried out to look at the scale of this?

I reject that there is any bias towards big business. If there were, it would be unlawful under both domestic and European law.

I advise the Deputy, if she has any information relating to manifest bias in that regard, to notify the Garda as a matter of urgency.

As the Deputy knows, public procurement is governed by European and national rules. The aim of the system is to procure open, competitive and non-discriminatory procurement. Most Deputies in the House who spoke on this issue today indicated that the establishment of the Office of Government Procurement, OGP, is a breath of fresh air. It is the first time we have real data and that we know who is buying what and at what cost. We know the criteria in place. I have said to people who ask similar questions that of course there is room for improvement. For example, we are examining the entire procurement process all the time and the tender advisory service will be reviewed next month to ensure that any complaints that have been received will be fully acted on. As I indicated to the House previously, 27 complaints have been received to date. Concerns from any small firms will be addressed and real capacity will be given to the small and medium enterprise, SME, sector to ensure it can win public contracts. Two thirds of public contracts are already won by the SME sector and the overwhelming majority of contracts, in volume and in monetary value, are won by companies within this State.

That is all good but of course we can do better. Having a transparent and open State process with which people can interact will be an enormous step forward. As I stated to other Deputies, I hope to be in a position to bring legislation before the House to establish the OGP on a statutory basis. We can address these matters in some detail when we look at that.

The Minister knows well there are major problems in this area and the bias, although not specific, comes from the manner in which the contracts are constructed and the reality, as a result, is that small and micro-businesses end up being unfairly disadvantaged. The proof is that Irish manufacturers which may have previously made uniforms for State services or provided school books and so on - businesses that have operated for decades - are no longer there. Much of the business has gone to international corporations.

The Minister is, frankly, wrong in saying that 66% of public service expenditure is with SMEs. That is not correct. The reality is that 97% of Ireland's small businesses have fewer than 40 employees. The Minister, for the purpose of this issue, counts an SME as a company with up to 250 employees. That is not a small or a medium-sized business. There are problems and small and medium-sized businesses have indicated that these relate to the manner in which contracts are constructed. The idea of saying to companies to get together and pretend they are one big company will not work for companies that naturally compete with each other. How come other countries can organise contracts to benefit their own types of businesses? For example, in Germany, all their trains are made by Siemens. Why is it that we cannot organise our contracts in Ireland to benefit the types of companies that are predominant here, which are small and medium businesses?

I do not believe we build trains in Ireland. There is a European definition for SMEs and for comparative reasons, we subscribe to that. Micro-businesses have up to ten employees, small businesses have up to 50 employees, medium-sized businesses have up to 250 employees and larger companies have more than 250 people. Under the SME definition, two thirds of the goods and services tendered for are won by SMEs in the State. We cannot discriminate against larger companies. If a company in Ireland employs 200 or 250 people, should it be excluded from potentially winning State contracts? Is there some sort of magic number? Is it 50, so if a company has 51 employees, it cannot get a State contract? That would be a ludicrous proposal.

The Deputy referred to the publication of books. I looked at what happened before we had the centralised Office of Government Procurement and individual schools were tendering for books. The same company was supplying the same products to a variety of schools at different costs. We must have some regard to value for money for the taxpayer; that discipline must be brought to play in a transparent fashion in the OGP process. I have said that of course there is room for improvement and it is something on which we will continue to work.

What we see is really neoliberalism unleashed. The centralisation of these-----

That is meaningless gobbledygook.

If the Minister buttoned it for a bit, he might listen. The centralisation of these contracts has resulted in the de facto exclusion of small and medium-sized businesses. That is a fact. These are the employers that make up the majority of employment prospects for Irish citizens. The point I am making is that other EU countries have managed EU rules to protect their own employers.

Like that small company called Siemens.

The Minister has been found wanting and with the Government imposing a turnover limit on companies, the European Commission has found that it wrongly excluded SMEs from competing, for example, for the Eircom contract. Businesses are arguing that many of them cannot tender for the work; large companies are tendering but the actual work is contracted out afterwards. That the Government has not carried out a comprehensive analysis on the companies that were there before it came to office but which are no longer there is a failure to inform the debate.

I notice that the SME the Deputy instances in Germany is Siemens, a tiny little company with hundreds of thousands of employees. It is hardly the typical SME-----

Just answer the question.

-----that we want to win contracts. As I have stated, we have facilitated all SMEs in the State in fully involving themselves in the tendering process. We have "meet the buyers" processes and there are seminars with potential employers. There is a website and we give training on tendering. That is absolutely new and it never before happened with State procurement until the Office of Government Procurement was established. Virtually everybody in the House, except the Deputy asking the current question, has welcomed the OGP. She probably wants to go back to the position where we did not know who was buying what or at what cost.