Dáil Éireann debate -
Tuesday, 31 May 2016

Vol. 911 No. 1

Priority Questions

Public Procurement Regulations

Dara Calleary

Question:

31. Deputy Dara Calleary asked the Minister for Public Expenditure and Reform his plans to reform how the Office of Government Procurement operates to ensure maximum participation by small and medium enterprises in public contracts; to set specific targets for the proportion of Government procurement to reach these enterprises; to support greater co-operation between groups of these enterprises in bidding for contracts; if all public contracts are advertised in an accessible way; and if he will make a statement on the matter. [13252/16]

Minister of State at the Department of Public Expenditure and Reform (Deputy Eoghan Murphy)

Public procurement is governed by EU and national rules, the aim of which is to promote an open, competitive and non-discriminatory public procurement regime which delivers best value for money. It would be a breach of EU rules for a public body to favour or discriminate against particular candidates on grounds such as nationality and organisational size and there are legal remedies which may be used against any public body which is infringing these rules. However, there is at EU level a recognition of the need to promote and facilitate SME participation in public procurement. The new EU directives on procurement, recently transposed by the Office of Government Procurement are intended to make it easier for businesses and SMEs to tender for public sector procurement contracts. Measures specifically designed to improve access for SMEs and start-ups include: the financial capacity criterion is now less demanding - it is generally limited to twice contract value; electronic methods of communication are now mandated in parts of the award process; use of a self-declaration of compliance with selection and exclusion criteria by suppliers to reduce red tape, as in a European single procurement document; the discretion to divide public contracts into lots, with the proviso that opting not to divide a contract into lots must be explained in the procurement documents; and provision for consortia bidding to encourage SME involvement. A number of these measures had been accelerated into policy in 2014 in advance of the transposition of the new directives by Circular 10/14 issued by the Office of Government Procurement. This was broadly welcomed by SME representative bodies at the time.

The Office of Government Procurement works with the industry bodies, including ISME, IBEC, the SFA, Chambers Ireland and the CIF, as well as the Department of Jobs, Enterprise and Innovation, InterTrade Ireland and Enterprise Ireland to promote the engagement of SMEs in public procurement. Evidence of the work and co-operation in the area can be seen in some of the following events organised by InterTrade Ireland and supported by the Office of Government Procurement in 2015. For example, in 2015 there were 19 go-to-tender workshops attended by 276 businesses. There were two meet-the-buyer events, one in Belfast and one in Dublin, attended by over 1,300 businesses and buyers from across the public sector, North and South, which focused on the opportunities for SMEs with major public sector buyers across the island.

Similar events are planned for 2016. For example, a "meet the buyer" event has been announced for 8 June in Belfast and another is scheduled for October in Dublin.

Additional information not given on the floor of the House

The reform of public procurement across the public service is ongoing and will continue to provide opportunities to the SME sector to win business. The OGP will continue to work with industry to ensure that winning Government business is done in a fair, transparent and accessible way and to ensure that Government procurement policies are business friendly.

Deputy Dara Calleary

I wish the Minister and Minister of State every success in their new roles. Government procurement costs €8.5 billion per annum, or €23 million per day, and should be used as an employment creation mechanism as well as getting value for money for the taxpayer. Increasingly, it has become the preserve of bigger companies and consortiums which are coming together to tender for contracts thereby excluding local SMEs, particularly in the education sector where locally based SMEs are expected to fund schools and institutions.

One of the requirements of Circular 10/14 was that buyers should publish an award notice which indicates the value of the contract awarded and the tender. In 2014, only 24% of buyers published an award notice. What percentage of buyers published award notices for 2015 and 2016 to date?

Deputy Eoghan Murphy

One of my first actions when I took responsibility for this area was to meet with the people in charge of the OGP, given that it is such an important area, as the Deputy pointed out. Given the amount the State spends on procurement, the OGP is incredibly powerful. We can use this economic soft power for many good things, including getting value for money, as we are trying to do. This does not necessarily mean achieving the lowest price but getting savings for the State while improving services. We can do this in tandem with a social good, as we have done in a number of areas regarding certain types of provisions in the bids to help areas that need regeneration or employment. We can also help SMEs to get access. Circular 10/14 introduced a number of areas that would help SMEs to tender for business and win public contracts, including advertising tenders on the eTenders website. We have a new directive coming in regarding e-invoicing. We encourage SMEs to get into consortium bidding. I can get the percentage the Deputy requested, although it is not yet available for 2015.

Deputy Dara Calleary

Could the Minister of State outline the sanctions for Government agencies that ignore Circular 10/14? In 2014, the Small Firms Association, SFA, made a submission to the Committee of Public Accounts that stated 82% of its members surveyed believed the emphasis in procurement was on price rather than on value for money. There is still a very strong perception among the SME community that price is king and that the value for money and social issues, which the Minister of State mentioned, are irrelevant.

TenderScout has done a survey and an analysis of Irish public procurement, which I recommend the Minister of State peruse. It suggests only 11,000 firms in Ireland are involved in public procurement, which is only 6% of the company base in the country. This indicates how many people are not interested in it, or do not feel they are competitive enough to get involved in it, and, thus, the opportunities that exist and the challenge that faces the Government in terms of using procurement as a much better tool of business.

Deputy Eoghan Murphy

Only 7% the public procurement contracts awarded goes overseas while 93% goes to Irish-based suppliers. The Deputy referred to an overemphasis on price. We use the most economically advantageous tender model. I will detail the emphasis given to price and non-price factors in some examples of competitions in 2015. In the 22 professional service contracts awarded in 2015, the ratio of price to non-price factors was 30:70. In the nine awards in 2015 for clothing competitions, the ratio was 50:50. In ICT research and advisory services in the national framework, the ratio was 40:60. In the enterprise application support services framework, the ratio was 30:70. It is not just a question of overemphasis on price. We examine other factors.

The lotting allocated under Circular 10/14 has allowed for lots to be awarded by region, for example. Lots can be broken down - for example, cleaning can be divided into clinical and non-clinical cleaning. There are areas in which we are constantly trying to reform and improve how the Government procures to ensure SMEs can have as good a chance as anybody else in getting tenders.

In terms of our engagement with the Small Firms Association and other interested bodies, I chair two groups that are focused on trying to help small and medium enterprises in the area of Government procurement.

Legislative Reviews

David Cullinane

Question:

32. Deputy David Cullinane asked the Minister for Public Expenditure and Reform the status of the review of the financial emergency measures in the public interest legislation which must take place before 30 June 2016; how the review sits with his statement that the Lansdowne Road agreement is the only game in town; and if he will make a statement on the matter. [13250/16]

Minister for Public Expenditure and Reform (Deputy Paschal Donohoe)

As this is my first opportunity to take questions as Minister for Public Expenditure and Reform, I look forward to working with Deputies Dara Calleary and David Cullinane. I especially acknowledge the contribution of the former Minister, Deputy Brendan Howlin, who conducted himself in this role and led the Department for many years. I always had an appreciation of the great contribution he made to restoring the country's fortunes and now that I find myself in the place where I am taking on the role he played, that appreciation is even greater. I will always hold to this when he uses his expertise to put questions to me about what I am doing.

Moving on to Deputy David Cullinane's question, under section 12 of the Financial Emergency Measures in the Public Interest, FEMPI, Act 2013, the Minister for Public Expenditure and Reform is required to review the necessity to have the FEMPI legislation annually and cause a written report on the findings to be laid before each House of the Oireachtas. The most recent report made under the 2013 Act was laid before both Houses of the Oireachtas by the then Minister on 29 June last year. In that report the Minister found that, having regard to the purposes of the relevant Acts, the overall economic conditions in the State, national competitiveness and Exchequer commitments in respect of public service pay and pensions, the measures put in place by the FEMPI Acts 2009 to 2013 continued to be needed in 2015. However, the review also noted that for 2016, out to September 2018, the Government had approved proposals which subsequently gave rise to the Lansdowne Road agreement. The FEMPI Act 2015 included a series of measures, including the gradual unwinding of the pay reduction measures as they applied to public servants in line with the Lansdowne Road agreement and the amelioration of public service pension reductions applying to retired public servants.

Additional information not given on the floor of the House

The estimated costs of the measures which are being implemented from 1 January 2016 in respect of public service pay and pensions on a full-year basis in 2018 are €844 million and €90 million, respectively.

As Minister for Public Expenditure and Reform, I am required to undertake a further review of the necessity to have the FEMPI legislation and report to the Oireachtas before 30 June. That report is being prepared to be laid before both Houses of the Oireachtas.

Deputy David Cullinane

I wish the Minister and the Minister of State well in their new jobs and also the Members of other parties who have been appointed spokespersons for this brief.

I thank the Minister for his response, although my question was whether he believed the Lansdowne Road agreement was, as he said publicly, the only show in town. He is right in that he has to report to the Oireachtas on extending the FEMPI legislation. I understand this, but we also have a programme for Government in which the Government has committed to the establishment of a public sector pay commission and which also refers to dealing with the issues of pay equality and pay equalisation. How and when will that happen? When will the teachers and nurses on different pay scales because they happened to enter the public sector in 2011 but who are doing exactly the same job as others be treated fairly and on the basis of equality? They deserve to know the Minister's intentions in this matter.

Deputy Paschal Donohoe

On the Deputy's first question as to why I believe the Lansdowne Road agreement is the only game in town, as I have said publicly, the reason I made this claim is evident in the result of the vote by the Teachers Union of Ireland announced last night, which I welcome. I also welcome the huge effort put in by the union and the Minister, Deputy Richard Bruton and his officials. We now have another union in the State which recognises the value and protection the Lansdowne Road agreement can offer to its members and the way it can offer a framework to enable them to progress.

Deputy Brendan Howlin

A parting gift to the Minister.

Deputy Paschal Donohoe

One of many gifts. If Deputy David Cullinane wants proof as to the reason the agreement is the only game in town, the most recent can be in the vote last night. The reason I have made the claim about the Lansdowne Road agreement and the broad FEMPI legislation measures is that they offer the only framework in which we can manage the need for better public services and at the same time meet the wage aspirations of those who provide these public services.

Deputy David Cullinane

With respect, Sinn Féin has given qualified support to the Lansdowne Road agreement. We said that if we were in government, we would implement it. It is not what we wanted and we would have done it differently, but it is the agreement now in place.

As such, I do not have a difficulty with the implementation of the agreement because at long last it gives something back after years of cuts in public sector numbers and pay. My question to the Minister is on the commitment in the programme for Government to establish a public sector pay commission. When is that going to happen and how is it going to happen? The Lansdowne Road agreement did not deal with the issues of pay equalisation. The Haddington Road agreement dealt with it in some respects in that it merged some of the pay scales, but it did not deal with the issue in its entirety. I am asking the Minister a straight question. How is that issue going to be dealt with?

The Minister is extending the FEMPI legislation, which is emergency legislation. Does he still believe there is an emergency? The Government talks about a recovery at every opportunity it gets, but when it comes to public sector pay, we still have an emergency and emergency legislation must be kept in place.

Deputy Paschal Donohoe

In order to continue and maintain the recovery that is under way, we need to ensure that our national finances are sustainable. A crucial element of that is ensuring that we have responsible wages in place for those who work in our public services so that we can meet the wage needs that they have now and in the future. The unfunded wage increase of today is the wage cut of tomorrow. I acknowledge that we are moving into a different phase in our economy, but that means the need to manage wages, whether from the point of view of the competitiveness of our economy or the affordability of our national finances, is as strong as ever.

I welcome the acknowledgement Deputy Cullinane gave to the Lansdowne Road agreement. It is very valuable that he has done so and I appreciate him noting that in our first engagement here in the House. In regard to the role of the public service wage commission, I am required under the Lansdowne Road agreement to consult with all participants in that agreement before we set up any new process for how we look at matters. We aim to begin that consultation in the coming weeks.

Programme for Government

Brendan Howlin

Question:

33. Deputy Brendan Howlin asked the Minister for Public Expenditure and Reform if he has costed the agreements made with Independent Teachtaí Dála and with Fianna Fáil to maintain the Government; the total costs involved; the impact for the 2016 Estimates of Expenditure; if he envisages alterations in expenditure limits for any Department in 2016; and if he will make a statement on the matter. [13249/16]

Deputy Paschal Donohoe

The programme for a partnership Government lays the foundation for the new Government's ambition to build a strong economy and deliver a fair society. It is complemented by the policy principles set out in the agreement made with Fianna Fáil to facilitate the effective operation of the partnership Government. The programme contains a commitment to spend at least €6.75 billion more on public services by 2021 compared to 2016. This will allow expenditure to be increased to meet the additional costs arising from an ageing and growing population and to provide for targeted improvements in public services. In addition, the Government proposes a cumulative additional €4 billion in Exchequer capital investment up to 2021.

As stated in the programme, the new Government will ensure in respect of every policy challenge that a balance is struck between addressing urgent priorities by utilising the action plan framework set out in the programme document and engaging in long-term planning and thinking so that lasting solutions with broad-based support are implemented. In order to implement this approach effectively in practice, a key action for the Government's first 100 days is to secure agreement with the Oireachtas on putting in place a reformed budget process. This is intended to secure a more participatory approach underpinned by a substantially enhanced Dáil input into and feedback on the development of budgetary priorities. It is envisaged that an important element of this new model will be to facilitate appropriate consultation and engagement on the costings of specific measures intended to respond to particular programme for Government priorities, as well as examining how these measures align with overall fiscal parameters.

Additional information not given on the floor of the House

In this regard and as part of the proposed new arrangements in respect of the budget process, which I announced with the Minister for Finance last week, it is proposed that the Government will publish a mid-year expenditure report. It is envisaged that this report will set out revised end-year outturns for 2016, outlining the impact of any additional expenditure on ministerial expenditure ceilings. This new approach will have a central role to play in guiding and informing deliberation by the Oireachtas on budgetary options and in shaping the Government's budgetary proposals in due course. These proposals would then form the basis for setting out the proposed departmental expenditure ceilings required to accommodate the specific measures to deliver the programme for Government priorities.

Deputy Brendan Howlin

I wish the Minister every success in his challenging job. I do not know whether it is good news or bad to note that I will not be shadowing him myself into the future. However, I wish him and his Ministers of State well. I have two simple questions for the Minister. While I appreciate the 2021 perspective in his reply, I did not ask about it. I asked two things. The first was about the costings. The Department has prepared them and there will be FOI requests in that regard. However, it is important in the new politics that we get answers in the House rather than wait for responses to FOI requests. What is the cost of the commitments entered into by the Government with Fianna Fáil and the Independents?

What are the implications for this year's Revised Estimates of expenditure? What additionality is there in the 2016 Book of Estimates? Today, I read that the Government had made a number of commitments about Garda overtime and so on. Will there be adjustments in the Revised Estimates Volume, REV, for 2016 and when will we be notified of their specifics?

Deputy Paschal Donohoe

I am reviewing the status of the 2016 Estimates with the Government. We will introduce them later this year than would have been the norm during the Deputy's tenure in this role. I aim to secure Government approval for the Estimates soon. When that is done, the information will have to be made available to the Dáil because the Dáil must vote on them.

Deputy Brendan Howlin

I thank the Minister but surely the Government did not enter into programme for Government commitments without costing them in advance. That would have been foolhardy in the extreme. What are the costs of those commitments over and above the Revised Estimates for 2016?

Under the new budgetary process, we will shortly see Estimates. However, discussing the 2017 Estimates would be a vacuous process if we did not know the implications of the 2016 outturn figures. Regarding the Garda Vote specifically, what is the Minister's best shot at the additionality that will be required? I do not doubt that the Minister has asked about and has been well briefed - he has very good officials - on the expected health overrun this year. Will there be additional money for delayed discharges, the fair deal scheme, the winter initiative and the waiting list initiative? This morning on the news, I listened to the Minister of State, Deputy Finian McGrath, who wanted an emergency €80 million fund for new drugs. Will that be provided as well?

Deputy Paschal Donohoe

I agree with the Deputy that in the context of the new budgetary process, we must know where we stand this year before we look to next year. He made a fair point. Alas, my answer to him is the same.

Deputy Brendan Howlin

The Minister does not know.

Deputy Paschal Donohoe

I am reviewing the issue with my colleagues. As soon as I have reviewed the Estimates that were designed to be passed at the start of this year and determined whether they remain the appropriate ceilings, we will make the figures available to the Dáil, as is required and given the fact they need to be passed.

Regarding the Deputy's question on the cost of the programme for Government, it will be more than €6.7 billion over a five-year period. As to the year-by-year cost, my colleagues and I will go through the same process that the Deputy implemented well in the previous five years. We will consider the commitments on a year-by-year basis. Those that are affordable each year will be met, with their costs included in the Estimates for that year.

Capital Expenditure Programme

Dara Calleary

Question:

34. Deputy Dara Calleary asked the Minister for Public Expenditure and Reform to bring forward the review of the capital plan to ensure that critical unmet infrastructure needs are addressed, in particular the need to increase the overall share of gross domestic product represented by investment expenditure; if he is considering additional non-Exchequer sources of funding for capital investment; and if he will make a statement on the matter. [13253/16]

Deputy Paschal Donohoe

I share the premise underlying the Deputy's question that following the right investment strategy is critical to securing economic progress and social development. The process leading up to the publication of the current plan sought to ensure that resources were focused where needed in order to drive economic recovery and meet social needs. This principle was also central to the strategy detailed in the programme for a partnership Government. In specific terms, the programme has proposed, subject to Oireachtas approval, an additional €4 billion in Exchequer capital investment up to 2021. This additional spending in transport, broadband, education and flood defences will be allocated on the basis of the outcome of the mid-term review of the capital plan by mid-2017 that was announced at the time of the publication of the capital plan, the commitment to which was confirmed in the Government's programme.

As always, to support traditional procurement, alternative means of funding necessary infrastructure will also continue to be explored. This is in line with many previously successful investment plans and will build on the success of such methods as public private partnerships, PPPs, and commercial State sector investments.

What is important, however, is that any such off-balance sheet funding arrangement be pursued in a manner that is sustainable in the long term and that the public finances can afford.

I look forward to hearing the views of the Deputy and his colleagues, in addition to those of all Members of the House, on capital investment priorities based on the opportunities provided in the reform of the budgetary process in regard to which the Government announced its proposals last week.

Deputy Dara Calleary

The Minister is to commit an extra €4 billion to 2021 in the capital programme. Given the long lead-in time for many projects, as we all know, surely it would be appropriate to bring forward a review of the plan in the context of discussions under way in another part of Leinster House on the serious need for urgency in meeting housing commitments. With regard to the commitment in the programme for Government to establish 135,000 new jobs in the regions outside Dublin and the associated investment, the jobs are to be created by 2020. This will require a massive capital investment in broadband and the road network. An extra €500 million has been promised in this regard. Surely, therefore, in the context of all the commitments made and bearing in mind that the plan is nearly out of date in the context of the commitments in the programme for Government and the promise of an extra €4 billion, it is time to review the plan.

Deputy Paschal Donohoe

Let us acknowledge that the overall plan involves a total quantum of over €40 billion. Approximately €27 billion is to be made available via Exchequer investment, while the rest is to be made available through various investment plans involving the commercial semi-State bodies. The Deputy is correct that the Government is examining how this figure can be increased, but it is part of a very large investment programme in the first place. The effect of the programme, to be implemented over time, would be to bring our investment, as a percentage of national income and capital, into line with that in other European countries and the investment we need to meet the needs of a growing economy and society.

On the Deputy’s point about the timing of the review of the capital plan, the review has been pencilled in to take place in 2017. However, I take on board his point about how that could be done in such a way as to result in greater confidence in future spending decisions.

Deputy Dara Calleary

Let us not get carried away by the plan which has been described as lacking in ambition. In 2019 only half of what was spent in 2008 will have been spent. The roads budget, for instance, is purely for maintenance works. In the context of the commitments in the programme for Government and given the overall figure to which the Government has committed, would it not be appropriate and sensible – God forbid – to bring forward the review of the plan to update it in the context of the changed environment and, as the Minister said, the likely input not only from a budgetary committee but also the committee on enterprise and that dealing with the regions which is associated with the Department of Arts, Heritage and the Gaeltacht, the Department of Deputy Heather Humphreys. I was going to say the committee on the environment but that does not exist anymore. Responsibility for broadband is now within the remit of two Departments. Who will be in charge? Where will the capital programme for broadband be housed?

Deputy Paschal Donohoe

I am all in favour of making sensible decisions. I take on board the Deputy’s point. He has said we should not get carried away with the investment, but, at the same time, we should acknowledge its scale. The investment programme, to be implemented, will over its lifetime bring investment in national infrastructure up to and in excess of €5 billion per year, which represents a very significant increase. The Deputy made reference to the previous level of investment, in respect of which he is correct, but a consequence of that level was that many national infrastructural needs were met.

The Deputy asked me whether I would consider changing the schedule of the capital review. It is due to take in place in 2017, which means that it is imminent. However, I take the Deputy’s point that we should find some way to signal to the country and the industries that will be involved in building this infrastructure what the level of additional investment will be and when it will materialise.

Acting Chairman (Deputy Jim Daly)

I am moving to Other Questions.

Question No. 35 replied to with Written Answers.