Public Service Modernisation Programme: Presentation.

The next item is a discussion with officials from the Department of the Taoiseach and the Department of Finance on Delivering Better Government with particular reference to the strategic management initiative and public service modernisation. We are joined today by Mr. Dermot McCarthy, Secretary General, Mr. Philip Kelly, Ms Eileen Kehoe and Ms Triona Quill, all from the Department of the Taoiseach and Ms Carmel Keane, Mr. Tony Gallagher and Mr. Robert Pye from the Department of Finance. On behalf of the committee I thank them all for attending today and welcome them to the meeting. Before the discussion begins I advise that while comments of members are protected by parliamentary privilege those of visitors are not so protected. I remind committee members that they should not comment on, criticise or make charges against a person outside the committee or the Houses. We will commence with an introduction by Mr. McCarthy and then have a short PowerPoint presentation by Mr. Kelly and Ms Keane, to be followed by an open discussion with members of the committee.

I thank the committee for the invitation this morning. As members will be aware the strategic management initiative, the modernisation process in the Civil Service, is overseen by an implementation group of Secretaries General, chaired by myself, which is serviced by the Department of the Taoiseach. Responsibility for implementation of the programme rests with the head of each Department or office but at the centre it is co-ordinated jointly by the Department of the Taoiseach and the Department of Finance. Accordingly, we thought the best way to open the discussion would be to have a joint presentation by the two Departments, which Mr. Kelly and Ms Keane will commence.

I will begin by outlining some of the background to the Department's involvement in the modernisation agenda and go through some of the details of recent initiatives in this area. Members will be aware that the current programme of modernisation in the Civil Service dates back to 1994 when the then Taoiseach, Albert Reynolds, launched the strategic management initiative. This gave rise two years later to the launch of Delivering Better Government by the then Taoiseach, former Deputy John Bruton. That document was and remains the template for action across the different areas of modernisation in the Civil Service and that drive for modernisation spans all areas of the public sector. My presentation today will centre mostly on the Civil Service itself.

Delivering Better Government set out three broad priorities for modernisation which can be summarised as maximising the contribution of the service to the national economy and society; making better use of resources; and improving standards of service to the public. As members will see from the screen, there are six broad areas of modernisation, which are fairly standard in terms of international experience. The top three areas of the pyramid are focused externally from the service, being customer service, openness and transparency, and regulatory reform. The bottom strands are more internally focused, being concerned with how it runs itself in terms of managing money and people and using information technology, processes and systems. The six strands represent common experiences of modernisation among OECD countries. In comparison with others it is probably true to say that Ireland has had one of the most sustained programmes and consistent processes of modernisation in each of the six strands.

The background for modernisation is provided by successive national agreements. They provide the framework for modernisation both in the Civil Service and in the wider public service and I would like to outline how we have responded to some of the potential gaps and deficiencies identified over time. I refer to the evaluation by PA Consulting of the strategic management initiative, the Mercer evaluation of our performance management schemes and other evaluations, and how we integrated those responses into a renewed change programme which has been taken on board in the context of Sustaining Progress. While the commitments on modernising the Civil Service are contained in Sustaining Progress their fulfilment requires local action by local management and partnership committees in each organisation. The work of those groups is overseen by the performance verification group structure, provided for in Sustaining Progress and replicated across each of the major sectors of the public service. My colleague, Ms Keane, will deal with the work of the performance verification group.

The Secretary General mentioned that the work on modernisation is undertaken on a collegiate basis by the heads of the Civil Service Departments and offices. An elaborate structure of research groups, policy development groups and networks operate under the guidance of the implementation group of Secretaries General and across each of the major seams of modernisation. In some cases those groups comprise the network officials from every office and Department because those networks are designed to support people in leading change within their organisation. In policy development or for research groups we selected experts from around the system to work with us on particular projects.

The Department of the Taoiseach takes a lead role in a number of areas, including human resource management. Human resources is one of the key areas in which the PA evaluation had noted slow progress. While my colleague from the Department of Finance will talk about the legislative changes that have taken place in recruitment, namely the Public Service Management (Recruitment and Appointments) Act 2004 and the draft legislation going through the Oireachtas at the moment regarding performance management and discipline, I will deal with the performance management and development system currently in operation in the Civil Service.

The system was launched in 2000 and aims to link the higher level three year strategy statements and annual departmental and divisional business plans to the work of the individual civil servant. The system centres on a set of performance targets agreed between jobholder and manager and identifies the training and other supports which the jobholder may need in order to achieve those targets and develop his or her personal expertise. The successful roll-out of the system involved some five training days for every member of staff across the Civil Service. More than 30,000 staff each getting five days training was an extraordinary achievement. Subsequent to the roll-out of the model we have enhanced it by including a facility for upward feedback between the jobholder and the manager. We are currently in the process of providing training to staff so that the upward feedback is used constructively. The introduction of PMDS has been a significant development in the Civil Service because it underpins a cultural shift to a more active and direct engagement between management and staff within the service.

I will now deal with the area of customer service. Members will note from the presentation that there has been a development in this area since the launch of the quality customer service initiative in 1997. Departments first responded by developing what were called "customer action plans" aimed at mobilising staff on the quality service agenda. Their efforts in that regard were driven by the development of principles underpinning customer service that would inform the design and delivery of our services to the public.

In order to focus more on the actual service delivery and the quality of those service standards the Taoiseach launched a charter initiative at the end of 2002. I am pleased to say that all the Departments and offices have now produced a customer charter containing specific service commitments. More important, their annual reports, to be published during 2005 and 2006 will contain detailed analysis of how those commitments were met in practice. Rather than have exhortatory documents about the quality of our service we now have specific commitments to standards in the charters and detailed reporting on how those standards will be met. That will certainly be the case for the Department of the Taoiseach because we have engaged in extensive anonymous surveys of our stakeholders as to what they think of our standard of service delivery and have also engaged external expertise to benchmark our performance. That will be appearing in our annual report for 2004 when it is published.

The area of regulatory reform has been identified by PA as a key element of the modernisation agenda. However, it also identified it as an area where there had not been any significant progress. In recognition of this the Government decided Ireland should be peer-reviewed by other OECD member states in respect of our regulatory systems and performance. That review was conducted in 2001 and brought some momentum to the regulatory reform agenda. The case for better regulation is based on the desire for improved governance through consultation and transparency, the need for a responsive and flexible regulatory system to promote competitiveness and better advice and service to government based on improved analysis. One of the key findings of the OECD in its review of Irish regulatory systems was the need for a national policy on regulatory reform. The OECD had also called for a more rigorous approach to analysing regulatory proposals, called regulatory impact assessment. I am pleased to say we can report progress in that regard. The Government published a White Paper entitled Regulating Better in January 2004, setting out some core principles — necessity, effectiveness, proportionality, transparency, accountability and consistency. These should underpin our design of legislation and regulators, be they sectoral regulators or bodies concerned with the making or enforcement of rules. They are the key principles we are promoting among officials involved in the design of regulators and the drafting of legislation.

There are commitments in the White Paper regarding the introduction of regulatory impact analysis, which is an evidence-based approach that improves the quality of decision making, while enhancing openness and the public consultation process. It involves an assessment of whether new regulation is required and a detailed analysis of the likely benefits and costs, including hidden costs, associated with the introduction of regulation. Regulatory impact assessment requires the regulator, whether sectoral or governmental, to estimate the cost to the Exchequer of enforcement in terms of inspectorates and prosecutions and the cost of compliance for business or the citizen in terms of form-filling, the need for expert advice and so on.

A model for regulatory impact assessment has been developed and was piloted across the Civil Service a year ago. That pilot study is almost complete and the Government intends to publish a model for regulatory impact assessment, which will be introduced into the mainstream of Civil Service systems. In line with the commitments in the White Paper, the Department is in the process of drafting guidelines on consultation. These guidelines will be used by public bodies in the course of consultation activities to make them more meaningful, frequent, wide-ranging and transparent, through publication of observations received. The guidelines will be submitted to Government shortly and it is intended to publish them in July of this year.

The Statute Law Revision Bill, dealing with pre-1922 legislation, has passed Second Stage in the Seanad and is scheduled for Committee Stage on 25 May. I will elaborate on this further at a later point if the committee wishes, but basically this exercise involves the examination of the stock of pre-1922 legislation to determine how much of it is moribund or redundant. The aim is to simplify the Statue Book by the removal of such legislation. That work is being led by the statute law revision unit of the Office of the Attorney General in conjunction with the Department of the Taoiseach.

The issue of regulatory reform has taken much wider significance at European level and we have been progressing this agenda domestically and in the EU. The European Commission is committed to the production of impact assessment statements on all major legislative proposals. It is expected that the European Council and the European Parliament will adopt a similar discipline relating to all major amendments to legislation. Regulatory reform was put at the top of the EU agenda during the Irish Presidency and we co-sponsored a four-presidency initiative on this issue. This is being followed up by a six-presidency grouping, of which Ireland is part, that is keeping regulatory reform to the fore as part of the EU's attempt to realise the objectives of the Lisbon strategy.

In the area of e-government, developments in technology and electronic systems have been a key support to the modernisation process, the objective of which is improved service delivery. A range of high profile projects are in place, including revenue on-line, motor tax renewal on-line, the Oasis and Basis projects and on-line land registry. Other projects have won domestic and international awards, for example, the General Registration Office project. Under this project, a woman can register the birth of her child while still in hospital and, on arriving home, receive notification of her child's allowance amendments and PPS number. In the past, that process took over 30 days but it is now completed within a few days, which is a significant improvement in terms of integration and speed of service.

Delivering better service to the public represents the first stage of e-government. A second stage is the use of e-government for internal administrative systems to provide better support for finance and human resource management. An important project in this regard is the e-Cabinet project, led by the Department of the Taoiseach and developed to suit the specific needs of Government and Departments. It provides a fully electronic process from the initial drafting of a document to its final consideration at the Cabinet table. The system has been in operation for just over a year and is proving to be extremely successful.

The next stage of the development of e-government will examine how electronic support for integrated working and greater collaboration on policies, processes and services, can be achieved. To put it more concretely, the intention is that e-government will allow different people in different organisations to collaborate across organisational boundaries to achieve better cross-cutting approaches to policy development.

The roles of the Department of the Taoiseach are complementary in driving e-government, combining the Department's strategic direction with the expertise in systems technologies provided by the Department of Finance. The Department has specific tasks and a leadership role, shared with the Department of Finance, on the wider modernisation agenda. We cannot hope, as a team of 14 officials within the Department, to undertake the transformation of a system of more than 30,000 people, in over 30 offices and Departments in hundreds of locations. Our job is to seek out new opportunities, to analyse any problems or blockages within the service, research new ways of working and disseminate learning on best practice from within the system and from international experience.

The Department's publications, events, ourtwo websites — — are designed to advocate change and innovation within organisations. The many networks serviced by, or participated in, the Department extends its reach into individual Departments and offices. The Department cannot tell people to change, but it can sell the benefits of change to them, both for the public and the staff. The leadership of successive taoisigh and Secretaries General has been extremely important in this regard. The Taoiseach, for example, initiated an awards scheme for excellence in customer service across all areas of the public service.

Through the Department's work with the Department of Finance in brokering national pay agreements between that Department and the trade unions, the aim is to provide room for organisations to develop in line with Government priorities and their stakeholders' needs.

My colleague, Ms Carmel Keane, from the Department of Finance, will outline the work of the performance verification groups and the range of issues for which her Department is responsible.

Ms Carmel Keane

The public service modernisation programme is essentially about two issues: improved customer service and responsiveness to customer needs; and effective performance orientated management. My colleague explained some of the elements of the modernisation programme. Many of these measures have been in place for some time and are part of the way in which we do our work. However, these initiatives have to be further developed and built upon to enable our system of management to respond successfully to changes in our work environment and the needs of the people we serve. A strategic priority of the Department of Finance is to support and improve public service management and, in this context, to facilitate the implementation of the decentralisation programme. This committee has devoted considerable time to discussions on the decentralisation issue, which I mention because it informs day-to-day management.

The main goals of the Delivering Better Government programme are a focus on outputs and performance, improved use of resources and people management and better co-ordination and decision-making. Following the launch of Delivering Better Government in 1996, a number of additional elements have been included. Partnership structures at local level are an essential part of the management of organisations. Other issues include procurement reform and decentralisation.

The methods by which staff is managed are crucial because achievements are made through people. The process, which began with the Delivering Better Government programme and has been continued through the Sustaining Progress agreement, is based on the principle of a public service organisational structure with effective staff management. The aim is to ensure that active staff management by the managers directly responsible exists at all levels within Departments and offices. Within this general approach, we have worked to establish a framework for human resources management to cover all aspects from recruitment to management of Civil Service staff as they progress through their careers. As the committee will know, the Public Service Management (Recruitment and Appointments) Act 2004 puts new arrangements in place to supervise the recruitment of staff. The Civil Service Regulation (Amendment) Bill 2004, currently before the Dáil, provides for better and more active management of staff within Departments by managers with direct responsibility. It also deals with disciplinary issues up to and including dismissal.

Recruitment is an important issue. Substantial changes have occurred within the Public Appointments Service. We now work in a recruitment environment where we compete on the market for the best people. It is important that our recruitment processes are effective in identifying the skills, competencies and knowledge needed by Civil Service staff. There has been a significant increase in competitive promotions within the Civil Service. All promotions in some Departments are on a competitive interview basis. A new information technology system to support human resources management within the Civil Service is being embedded in most Departments and offices. The Department of Finance is adopting a shared services approach to managing these systems.

Financial management is key to any management system. In the past five to ten years, a number of changes have taken place in this area. Key areas include the implementation of the Management Information Framework, the aim of which is to enable Departments to systematically utilise financial and non-financial management information to monitor and, where possible, improve performance in achieving objectives. The Department of Finance aims to promote and co-ordinate work on the implementation of the Management Information Framework across Departments. I am pleased to say that virtually every Department and office now has upgraded financial management systems.

The next stage in the process is to prepare performance indicators and management reports which combine financial and non-financial information and to use the reports in a systematic way to provide for better management. The report of the working group on the accountability of Secretaries General and Accounting Officers, known as the Mullarkey report, was endorsed by the Government in 2003. Since then, Departments have reviewed their financial control systems, upgraded internal audit functions and audit committee arrangements and introduced risk assessment. In 2003 and 2004, statements of internal financial control accompanied appropriation accounts.

Public expenditure management reform was a key element of the Delivering Better Government programme. The three year budget cycle currently in place was envisaged in this programme. The multi-annual capital envelopes, which are similar to proposals contained in Delivering Better Government, were introduced in 2004 and responsibilities have increasingly been delegated to Departments. In February 2005, new guidelines for the management and appraisal of capital expenditure were put in place. A facility exists, with the prior approval of the Department of Finance, for Departments to retain savings from efficiency measures and the proceeds from sales of surplus property for spending on high priority capital programmes.

A shift in focus from inputs to outputs and, ultimately, to outcomes is taking place. The shift is assisted by the better management systems and the expenditure review process. A pilot project on resource allocation and business planning is ongoing in the Department. The committee has discussed the proposal contained in the budget to promote improved budgetary processes. The Minister for Finance is exploring this issue and has indicated that, after discussion with Government colleagues, he will discuss it further with this committee.

The resource allocation project is interesting. It attempts to link the strategy statement, the provisions through the Estimates and the outputs in terms of what is produced for money invested. Three Departments are involved and deliberations are taken into account when new options for budgetary reform are considered. Last year's e-Estimates project was successful and will be used in the Department to manage the Estimates process. It is capable of running the Estimates on a multi-annual expenditure process which should yield savings in terms of resources which may be better deployed in policy development.

Will Ms Keane give figures for a specific Department, for example, the Department of Education and Science, in order that we can see the operation of the three year budget cycle and the roll-over to the multi-annual programme? The budget figures show that in many Departments there was an underspend on the capital side and it is almost impossible to work out what the roll-over figures are. In terms of the management structure, is there still a division in the Department of Finance where expenditure is decided? There used to be two sections, one of which supervised expenditure in other Departments.

Ms Keane

Is the Deputy asking about the structure within the Department?

Ms Keane

The public expenditure division of the Department has a central area which co-ordinates the work of each of the Vote areas. Each of the Vote areas or group of Votes——

I know all that; I want to know if the structure has been subject to any of the reform processes or is it the same as it was?

Ms Keane

The Department has changed in the sense that more emphasis is being placed on the evaluation of expenditure. The structure is much the same but the processes are considerably tighter. As the Deputy knows, a lot of work has been done in terms of the profiling of expenditure, the monitoring of expenditure on a monthly basis and much tighter reporting arrangements. Expenditure has come in very much on target in the past three years. Therefore, the processes are much better in that regard. The awareness of the need for value for money and the emphasis on ensuring staff are trained in policy analysis have definitely improved but the divisional breakdown is much the same.

May we have an example of how the first three items on the chart apply in, say, the Department of Education and Science?

Ms Keane

Under the current system in relation to the three year budgetary cycle, the Government decides on the budget strategy and Estimates for the financial year but at ministerial group level the provision for a subsequent year is based on existing levels of service. Obviously, I am not in a position to talk about any particular Department.

The legal and administrative framework within which the Civil Service now works includes the Public Service Management Act 1997; the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act 1997; and the Freedom Of Information Acts, 1997 and 2003, which provided for a substantial cultural shift within the Civil Service. Our disposition now is to publish information and assist people as much as possible by giving them the information to which they are entitled.

The management structure in place includes statements of strategy and annual progress reports. The joint committee will see from the slide that we are linked to the Government programme through the strategy statements through to the business plans for each division through to the performance management system under which each of us has our own individual plan in respect of which our performance is monitored on an ongoing basis.

The accountability of the Civil Service has been enhanced by the new structures. This has led to ongoing cultural change in that there is now a greater incentive to focus not just on effective administration but also on the wider context of work and the wider implications of policy decisions. Since the Public Service Management Act, 1997 was introduced, we have had strategy statements and annual progress reports. We have also had the systematic use of business planning; the setting of objectives at corporate, divisional and sectional level and the more widespread use of performance indicators, an area in which, although a considerable amount of work has been done, much more needs to be done. In addition, we now have a formal system of assigning responsibilities to individual officers.

On the verification process, a matter in which the joint committee has been interested, the public service pay agreement under Sustaining Progress provides that payment of the final two phases of the benchmarking and all of the general round increases is dependent in the case of each sector, organisation and grade on verification of satisfactory achievement of the provisions on co-operation with flexibility and ongoing change; satisfactory implementation of the agenda for modernisation set out in sections 20 and 21; the maintenance of stable industrial relations and the absence of industrial action in respect of any of the matters covered by the agreement.

The verification process is an independent one. Each Department must prepare a modernisation action plan setting out its objectives and targets over a given period. This plan must be approved by the performance verification group. The Department concerned must then come forward with evidence of progress achieved under each objective. The verification group will consider this report and decide whether progress to date warrants approval to pay the increases due under Sustaining Progress and benchmarking. The key point is that there is a direct relationship between payment and implementation of the modernisation programme.

The performance verification group has regard not just to progress in the Department as a whole but to the extent to which the different grades or categories of staff have co-operated in the process of modernisation. Each verification group has an equal number of management, union and independent members. The independent members have relevant expertise and, where appropriate, represent the customer sector. Each group has an independent chairman. In the case of the Civil Service group, the chairman is Donal de Buitleír.

We have just been through the fourth verification process, relating it directly to the period during which payments were due. The last benchmarking payment is due on 1 June together with the general round increase. Departments have had to present action plans indicating what they intended to achieve in terms of modernisation. They have submitted their action plans and reports to the verification group. The Secretary General has recently submitted the fourth report to the Civil Service verification group and as soon as it has been subject to due process, we will be happy to make it available to the joint committee. That should happen within the next week to ten days. The verification group will then decide whether satisfactory progress has been made to merit payment and will recommend accordingly to the Secretary General for Public Service Management and Development. Essentially, that is how the system operates. The key elements are the direct link to pay, the maintenance of industrial peace and the achievement of the targets set under Sustaining Progress.

One could ask me: what has changed? We have a new legislative framework; better systems of management are in place while the issue of improved financial and expenditure management processes has been addressed, although much remains to be done. There are also improved people management structures while all civil servants are very conscious of the need for a better customer service. We can move the agenda further forward putting together the various strands now in place.

The next steps are to make the progress achieved to date more visible and optimise the use of the financial and non-financial performance information now available to us. In the next phase of modernisation we will be seeking to further strengthen the measures in place and to deal with them in the context of a decentralised Civil Service.

I thank the witnesses for their comprehensive presentation, which indicates that much work is going on. However, the question those like me, who represent ordinary punters, must ask is what has changed in 11 years. The central objective of Government remains the delivery of high quality public services which are responsive to public needs and which deliver good value for money. The jury is still out on whether we are delivering good value for money. I have pointed out elsewhere that since 2000, which is only five years ago, we have increased public spending by €21 billion. That is a rise of 66% in five years — an extraordinary increase in public spending — yet one would be hard pushed to point to the areas where there is significantly better delivery. I return to the SMI in that regard. What is happening in the context of that initiative is laudable but is it changing what is happening on the ground? I do not see it from my vantage point as finance spokesman for Fine Gael charged with dealing with Estimates and so on.

The expenditure review initiative was supposed to be one of the key developments. We had a report recently from the Secretary General in charge of that area. Only a quarter of the promised reports were carried out. Key Departments have done nothing and have been allowed get away with that. Many important studies were abandoned and there is no evidence that any of the lessons learned, where they are implemented, are having an impact on the programmes they are delivering.

Estimates presentation is Dickensian. We are provided with virtually no information about programme cost or performance. I understand from the presentation that we are supposed to have information on cost allocation to programmes, management information systems, targets and reporting on performance. I read all the strategy statements of key spending Departments and searched for performance indicators but I could find none. Rare examples of performance indicators are cited and in most of those cases they are not being delivered. I refer, for example, to the area of education in terms of increasing the number of children who sit the leaving certificate. That is an indicator but it is one on which we are not making any progress. Drug seizures were a target of the Department of Justice, Equality and Law Reform but it is an area in which it has performed dismally. Drug seizures have collapsed. The numbers have decreased dramatically in the past few years. There is no evidence that cost and spending allocation is linked in any way to performance and that we are rewarding high performance in the allocation of resources. There is no sense in which performance is driving allocations. Deputy McGuinness would know more about that issue than me.

We are led to believe we have cracked the notion of cost overruns and bad planning in terms of the delivery of projects but we are continuing to see a string of white elephants coming through. There are political matters afoot other than the SMI, such as Punchestown and Kenmare, but in many cases — and Deputy McGuinness could probably cite many more — it does not appear to be filtering through and we do not appear to be getting it right in terms of delivery.

Risk management is supposed to be in place but when it came to the issue of nursing home subventions, which was a major risk posed to the Department of Health and Children, everyone's hands went up in dismay. That issue had been in the Department for years but no one thought it was a risk that needed to be managed. Everyone was running away from it as if it was a hot potato that should be dropped. I realise that this issue is being examined in other quarters but it appears that risk management is not filtering down the line.

On performance related awards, the representatives tried to tell us that benchmarking is a performance related award but I have examined these action plans to determine if they were driving extra performance. It is the old notion of payment for co-operation in change and modernisation dressed up in new clothes. We were supposed to be moving away from that but I do not see that happening. Extraordinary restrictions on recruitment, which are to do with a much older type of approach to public service recruitment and management, remain within the public service. There are bans on recruitment from outside the public service in some cases. Restricted competition is confined only to people in Departments. That has no place in a modern system.

The delivery of public service in other countries has been characterised by contracting out, market testing, benchmarking against best practice, performance related rewards and delegation. That is a very active programme which is visibly managed in other countries yet I do not see any evidence here of that type of aggressive approach to strategic management.

I thought I would find an update of the evaluation of the PAC on the website which I am sure the representatives will tell me is very out of date — having emerged in March 2002 — and that much of the material would be addressed but it appears to give a jaundiced view of SMI. It states that in the relationship between Ministers and Departments there is not sufficient alignment in terms of political intent, strategy development and business planning and Ministers may on occasion feel distanced from aspects of the day to day business of the Department while civil servants believe they are struggling with an ambiguous policy direction. It goes on to state that many Departments are producing annual reports as required but that the quality and usefulness of such reports is questionable. They are more than questionable, they are very weak.

The site also states that it is apparent that the customer service initiative has not yet delivered significant benefits to customers in terms of cost-cutting, which would have been a key concept of SMI. It states that regulatory reform is at an early stage but we must not forget that three years on all we have seen is a new policy paper about it. I may be wrong but I have not seen a major reduction in regulatory burden as a result of three or four years of work.

The site proceeds to state: that progress remains to be achieved on performance reward elements and that no concrete steps have been taken in this area; that manpower planning systems are virtually non-existent; that no Department or office has yet established service level agreements with the Civil Service Commission; that development of managerial and leadership capacity is a critical enabler of change; and that more structured arrangements need to be put in place to facilitate lateral mobility. I do not know whether any of this is happening.

The site further states that the link between financial analysis and decision-making remains relatively weak. That is adequately proven by recent events and decisions. I could cite dozens of further examples. The key targets that they are now changing are not on the website. While it is heartening that some work is being done on, for example, performance indictors, saying that work is still being done and that this remains an important area 11 years on is unacceptable. I have doubts about the commitment and drive in respect of this area.

Decentralisation was mentioned in passing. Was that an example of strategic management in action? I believe it was not. A business case was not made. There was no Government memorandum. It was launched on budget day. As far as I am aware, no risk analysis was carried out. There was no advance consultation. There was no analysis of "good fit", so to speak, and while there was diverse opinion among the many people who came before this committee, whose opinion would be highly respected, many were of the view that sufficient thought was not put into this matter. It was not an example of strategic management shining through in the way we made a hugely important decision on the running of public services.

We need to see much more limited targets in terms of what the group will deliver. We want to see that this is being done in Departments. We want to see penalties on Departments that are not co-operating. It is criminal that Departments opted out of expenditure review initiatives. That should not be allowed. Their budgets should be cut because they are not co-operating. There must be some edge to this and we must insist on performance indicators in three months' time and not in six or 11 years' time. In three months' time each Department should have them or their administrative budget should be cut. That should be the impact if we want to make this work; otherwise the next 11 years will pass and we will still be talking about these issues. Such hard-nosed insistence comes from the group or perhaps the political course. I do not know where it is to be found but I do not see it. I am trying hard to look for it. It is not that I am ignoring it or trying to take a swipe but if it is happening, it should be much more obvious to someone like me who is close to what is happening and tries to keep himself informed. We are not getting the bang for the buck that the people I represent deserve. This can be seen in the areas of health and policing and across other key service areas. This has to change.

I would like to comment on Deputy Bruton's wide-ranging remarks. I appreciate his continuing interest in and commitment to engagement with this issue.

In some respects it is difficult to track the full impact of what has been under way in recent years under the SMI but looking back one can see patterns of change and enhanced effectiveness reflected, for example, in the CSO report published last December on the measurement of Ireland's progress. In a number of areas it tracked significant improvements in the quality and impact of public services.

There are difficulties in achieving the transparency of effect that the Deputy wishes to see, as we all do. For example, in regard to performance indicators, Ms Keane mentioned the resource allocation project where three significant spending Departments have put significant effort into seeking to attach appropriate performance indicators to all their main activities by programme. I hope we will be able to see some of this work in the public domain in the not too distant future but it was difficult to attach credible and reliable indicators in many areas.

In terms of output, there are usually indicators that are plausible but in terms of impact, they can be much more difficult. Deputy Bruton might be familiar with the authoritative report from Professor Tony Atkinson produced last year for the Office of National Statistics in Britain on the impact on productivity in the public service. Despite an exhaustive report and gathering the best experts, they had to enter significant caveats in the report on what it was possible to measure with reliability. This applied to the reliability of target setting from a policy point of view.

We have a number of examples, however, where the progress that has been made systemically can be seen. For example, the numbers employed in the Civil Service to deliver what I suspect is more rather than less output in the past two years have fallen by over 4%. This would be a reasonable indicator of productivity.

Looking at some specific service enhancements, reference was made to the improvements made in the GRO, the General Register Office, and the linkage to benefits payments which Ms Keane mentioned. There are others. For example, in the past year or so the Department of Social and Family Affairs has reported a reduction of 30% in the average processing time for payment of claims for disability benefit, despite increased volumes and a reduced staffing level. For the Department of Agriculture and Food, the implementation of the new payments system in tandem with the continued operation of the previous payments structure suggests a robust approach to the application of technology and new systems which will liberate significant numbers of staff for other purposes in the very near future. In respect of the Revenue system, reference was made to the extent of self-service possible through on-line systems.

There are examples of good practice which is world class. Our Dutch colleagues recently concluded that the Irish public service was arguably the most efficient within the European Union by reference to indicators they had chosen. We have not had a chance to validate this but I am prepared to believe them, at least for the moment.

If we look at the process of public service modernisation as an iceberg, some of what is visible above the water is impressive but there is much below the waterline in terms of systems development about which perhaps we have not been as transparent as we might have been and in respect of which it has taken longer to deliver tangible benefits than one might have expected. However, in terms of the culture of the system, the focus on results and the commitment to evaluation, while the expenditure review process was, as Deputy Bruton reported, patchy in spots, significant other forms of expenditure review were in place in the context of EU funding and the national development plan processes. It is not as if evaluation was not taking place and is not a key priority.

The PA criticisms of the SMI were entirely welcome because they charted a course which enabled us to regauge our bearings. In the period since the report was published there have been significant developments. I will mention one. As the Deputy said, the PA report highlighted a potential disconnection between the political process and political leadership at the head of Departments and SMI activity which was seen as managerialism, yet, as PA observed, the management of Departments is about policy which has necessary implications for the way public organisations are run. The Government decided to change the way in which statements of strategy and annual reports were prepared to ensure a much better fit between political priorities, oversight and accountability and the managerial systems in place.

Decentralisation is a major challenge for the public service. It was a policy decision of the Government taken in the context of the full range of its policy objectives and goals. It presents challenges to individual managements and the management of the system as a whole but it also creates opportunities because such change can be transformational. It can create opportunities to advance the redesign of processes and produce new thinking about where and how services and responsibilities are located as well as, for example, accelerate the deployment of new technologies to enhance efficiencies. While it is a challenge, it also brings certain possibilities which would not otherwise arise to accelerate the modernisation process.

On the issue of pay and change, despite extensive international research, the connectivity between performance pay and higher levels of performance is not proven. On the issue of team based performance and organisational awards, there is some evidence that performance pay leverages higher performance at the group or organisational level but the position is not clear at the level of the individual. Difficulties faced in complex systems is how output or the impact of changes can be traced to the individual with whether we have fine systems to measure individual contributions to what are whole of government outputs.

There are difficulties with establishing the cause and effect and the metrics that would allow one to make fine judgments in adjusting people's pay scales depending on their annual performance. I am not saying it is impossible but that there are certain difficulties with it.

Some of the most recent research on the application in the education area of performance awards was presented in Dublin last week by UK researchers. It concluded that the performance awards, although paid on an individual basis, were important in bringing public scrutiny into the classroom and leverage performance systems into the education system. They were not so much about individual recognition of an individual teacher's performance but rather allowing for whole school evaluation and a wider evaluation of what teachers are doing.

We do not have any of that. We do not have whole school evaluation in a meaningful sense or data published by schools on what is happening in the schools. No performance indicators have been published by the Department of Education and Science as to what aims it is trying to achieve in terms of literacy, drop-out levels and so forth. One can argue about the details of whether an individual teacher's pay should be changed but we have no information. We are not at that level where we are trying to evaluate the performances of two teachers in adjoining classrooms. We do not have anything.

I can understand Mr. Kelly's argument and it is correct. However, we must start at the top and set our goals and specific performance indicators, gather the information from the schools to examine what is happening on those performance indicators and start a change process within those schools with the objective of doing better. Why should school X be doing worse than school Y when they have similar pupils and resources? A learning process starts and it can be driven forward. It need not always involve pay at the end of it but it should involve resources going to the school. There should be a sense of getting something back for the effort the school is putting into improving its performance. We do not have that structure and there is no sign of it appearing.

Education is one sector but the health sector is the same. One could go through the sectors. Not having such a structure 11 years later is a huge gap in SMI. It is not good enough.

I accept the Deputy's point. To say that we do not have any measures in the education system is probably not entirely fair. There are OECD studies which deal with literacy, mathematics, science, languages and so forth in the different age cohorts of students.

Measures are only for the process of driving change. The only measures that are important are the ones that schools are collecting and comparing them with other schools doing similar things. This can encourage them to do better. The OECD ranking us against South Korea or some other place will not change what happens in the classroom.

Perhaps Ms Keane wishes to comment.

Ms Keane

The Deputy made a good point about having a limited number of targets in place. We need a hard but limited number that are transparent. I hope the management systems currently in place will lead to that.

Sometimes when one's comment is analysed politically it can appear differently on paper. I respect the Civil Service and public service and those who serve in the organisation. They have done good work. They are honest and decent people and are well qualified. My general view is that in many cases there are square pegs in round holes. In the promotion system the pole is particularly greasy. It does not offer the opportunity to people in the organisation to get out, make their mark and be promoted on the basis of being best qualified for the position. Promotion is often attached to the years that have been served and the person's grade.

I would love to be optimistic after hearing what has been said but my experience of this has been somewhat different. I consider myself to be a stakeholder in the process but I have never been consulted or asked my opinion. While we have exchanges at these meetings, the officials appear to consult in-house and have a benchmark of comparison with other public and Civil Service organisations in other countries. Perhaps the best benchmark would be against what is happening in the private sector. There are good business practices in that sector which, if adopted by the public and Civil Service, would improve the situation immensely. As long as the Civil Service continues to benchmark in-house and not involve all stakeholders, there will be an image that things are going well, and there is a raft of different reports available to point the service in a direction whereby it can report success.

That is far from the case. Listening to what the officials said this morning and comparing it to my experience leads to the conclusion that we are living in two different worlds. The real test is asking the customer what they think of the service. In the case of local government, for example, there are serious questions about the service being delivered and how the customer is treated. That is clear from how the telephone is answered. The Minister said that he would insist that people answer the telephones. Throughout the public service machines answer the telephones. My office is full of customers who are deeply unhappy with the service. It is not clientage. If the service was being delivered, these people would not be in my constituency office. I long for the day that happens because I will know then that there are plenty of happy customers for the service being provided.

Better local government simply has not worked. Ask members of the public and they will say it is not working. They cannot get some of the basic services they demand from that sector easily and efficiently. There are good, decent people working in the local government system but they do not get promotion. One wonders how they are stuck in the same job all the time. Take the example of the Health Service Executive. It is a new organisation but is based on former health boards. I am not referring to the daily running of hospitals but information from the system, which is non-existent. It is simply unacceptable for a Member of the House to ask a parliamentary question on a national issue and not to get a reply for six months. This is my measurement against what the officials said this morning. I am giving them tangible information about what happens in the public arena every day. People are not happy.

The NRA is another organisation which, for fear of contamination from the political system, was put completely outside of its reach. It spends billions of taxpayers' money but we cannot get answers in the House. When it came before the Committee of Public Accounts, it confirmed that it did not even employ an accountant.

There must be sanctions and rewards. I am referring to real sanctions that would be understood as such in the private sector. What real sanctions and rewards exist?

I do not know of a private company that could undertake a project in 1994, such as the work undertaken by the officials, and not have real results in 2005. I am referring to results relative to the customer on one side and the spend of taxpayers' money on the other side.

Tax is collected with diligence and the Revenue Commissioners are consistent in their approach and relentless in their pursuit. I do not see the same relentless approach and diligence, however, towards the expenditure of taxpayers' money. I do not think a private company could afford 11 years of this work. If the work was succeeding and paying off, the Committee of Public Accounts would be almost redundant but it is not. Every Thursday it hears about instances of massive overspending, poor administration and lack of accountability. That cannot be good for the morale of the public service.

Information technology was referred to in the context of how it will deliver. Last year representatives of a number of Departments appeared before the joint committee who gave the excuse that technology was the flaw in their systems. It was cited as the reason they had not delivered but that excuse would not be acceptable in the private sector. Such businesses would probably have gone bust.

We were told regularly that medical cards were not counted because the required technological system was not available. As a result, general practitioners were overpaid by €6 million and the money has still not been recouped.

I revert to the customer again. If one overpays a poor unfortunate in receipt of social welfare payments, from the following week they will have to repay €3 per week. If that rule of law applies to such a person, it should also apply to others. That service has been in operation since 1994 — roughly the same time as the National Roads Authority was established — yet in that time we have had massive overspends, absolutely no value for money and little accountability for some schemes. I am not talking about reports concocted by me or "Prime Time" but factual reports put before us by the Comptroller and Auditor General. I find this unacceptable. Perhaps Mr. McCarthy will explain why in the course of his work over 11 years we have had the opposite experience at the Committee of Public Accounts every single week during the period.

Is there anything in what Mr. McCarthy is doing concerning the Comptroller and Auditor General's office which could provide us with joined up accountability? For example, is it not odd that within the workings of Government the Comptroller and Auditor General's office cannot conduct at will — just like the Revenue Commissioners — random audits of Departments? Why does local government not come within the remit of the Comptroller and Auditor General? Local government is responsible for major expenditure, yet it is accounted for differently and is at arm's length in terms of accountability to this House. I know it has its own audit team but it could be doing the accounts of a particular authority dating back three years. Critical mass could be achieved within the Department by reforming the Office of the Comptroller and Auditor General through giving him more power to deal with current issues if they are of particular importance and ensuring local government comes within the remit of the Comptroller and Auditor General. This would provide greater value for money in dealing with total Government expenditure.

One of the big issues across various Departments concerns human resources in dealing with those employed in the public service. Qualified personnel are not available in sufficient numbers, although they may be available in small numbers across Departments. Looking back over the years, as the Committee of Public Accounts does, such qualified personnel were not available. As a consequence, I imagine there is a great deal of bullying within the public service. Mr. McCarthy might comment on this issue.

I believe in the concept of decentralisation but it could not have been achieved by way of a big bang. While it was announced many years ago, we do not seem to be getting anywhere with it. Like Mr. McCarthy's work, there is a staggering number of reports involved. Currently, there is a lack of public confidence in the way the programme is being rolled out. The public needs to see that it will be rolled out in a manner that is structured and transparent. There must be a real report on the areas identified for decentralisation. I am beginning to have doubts about the reports we receive — not reports on the concept of decentralisation or whether it will work because I believe it will but progress reports. The delivery of decentralisation must be far more efficient.

I call on Mr. McCarthy to comment on the questions raised by Deputy McGuinness. I will also ask officials of the Department of Finance to come in later as quite a few questions were related to that Department.

As regards human resources and promotion systems, there have been significant developments in terms of accountability and mobility. In the past couple of years we have moved from a situation where about one third of promotions would have been made on a cross-departmental basis to one where that figure, on average, will be one half. The human resources function has been enhanced within Departments generally.

I am not aware of a significant bullying problem within the Civil Service. On the contrary, there has been significant investment in training and raising awareness of proper standards of behaviour and the responses to be made when perceptions or allegations of bullying arise.

On customer reaction and the perception of customers on the work being done by Departments generally, we put significant effort into trying to establish the views of those using the services of various Departments and the Civil Service as a whole. This will be reported on annually in the way described. In general terms, the evidence suggests that as far as Civil Service Departments are concerned, there is a significant measure of satisfaction that bears comparison with the position in most private sector service companies.

I cannot comment specifically on local authorities but I am sure there are issues of the kind to which Deputy McGuinness referred. I wish to assure him, however, that we place significant emphasis on trying to stay close to what customers are thinking and what their experience is on practical issues such as the time it takes to reply to correspondence or answer the telephone as well as the substance of the outcome.

As regards benchmarking against the private sector, there are many areas of activity where private sector experience is relevant and helpful. Private sector expertise can be applied directly through the process of contracting which occurs widely. There are examples of private sector performance, in terms of strategy operations and accountability, that I would not regard as appropriate for adoption in the public service. However, there is a process of mutual learning. For example, the development of computer and other information technology systems can be troublesome. In general terms, the record of the Irish public service in terms of IT developments, the time it takes, the cost and so on, is pretty good by comparison with other administrations and with large scale private sector projects.

On the Committee of Public Accounts and the potential role of the Comptroller and Auditor General, fundamentally, that is a policy question. I can see difficulties in applying that system to current decisions or in anticipation of current decisions but I am sure it is something that could be considered.

Ms Keane

On the human resources management side, it is an area in which we have made a number of significant changes but, again, there are issues that must be addressed. On the points made about competency and skills development, there has been quite a strong focus on that in terms of the training programme but, equally, we would like to be able to recruit scarce skills. That is one of the elements of Sustaining Progress. The level of skills and competencies needed across a number of areas is increasing very significantly. The training budgets are reasonably generous and are up to 4% of payroll. We try to have a very strong link between the job requirement, what is necessary in terms of skills to do the job, and relating it directly to the training provided. That is done through the performance management and development system.

On promotions, as the Secretary General said, the drive is very strongly in favour of competitive promotions. That is the way most Departments, at almost all levels, are going. It also relates to the way we select people. The selection process is much more focused on identifying the key skills needed by people in particular roles. Equally, it is designed in such a way that the person participating in the competition is aware of what is required and gets feedback on how the interview went if they have not been successful.

There are policies in place in regard to bullying and harassment and the procedures are quite tight. If there is an allegation of bullying within the system, there is an investigative process through which we would go.

I mentioned open recruitment and the availability of scarce skills. It is a difficult area. We have a commitment to more open recruitment but it is hard to implement. We are working on that. It is one of the issues in the present programme, which has been fairly controversial. We work within a highly unionised system, so we must negotiate most of these agreements internally with our staff associations.

Would agreement be required each time a person with particular skills is being taken on?

Ms Keane

No. There are various ways. It is open to us, at any time, to take on people through contract arrangements if there is a scarce skill. We would like to take people into the general service at certain levels where there is a skills deficiency. That is an area we would need to work out with our unions.

Is that being done?

Ms Keane

Yes. We have made some progress. We have agreements in regard to certain IT skills where we definitely need competencies that are not currently available. We would like to take that further but we must work with our colleagues through the staff associations.

The level of competency required has increased. I agree that we need to be very focused in terms of the type of accounting, human resource and legal skills needed.

Is that the reason the National Roads Authority does not have an accountant on its payroll? Is the fact we do not have people with business expertise in the public service as a result of strong unions or weak management?

Ms Keane

I cannot comment on the National Roads Authority. There is also an issue of people with very valuable skills looking elsewhere for employment because pay rates or conditions of employment are better. We recruit at certain levels into the Civil Service — at clerical, executive officer and graduate levels. They are the key recruitment areas but sometimes we need to recruit in other areas or we need to develop people within to fill those skills. The pace of change has been such lately that we need to be able to recruit at other levels as well. Obviously, we must work on that. That is part of Sustaining Progress. There are two elements. We can recruit at levels other than those where people have left the service and we are in consultation with the staff associations on the professional skills we can bring in at other levels. That is something we must work out.

Is it correct that Departments with considerable expenditure, whether the Department of Education and Science or otherwise, are not free to employ accountants——

Ms Keane

They are free——

——on a permanent basis and not on contract. Can they be integrated into the system?

Ms Keane

That is the key difference. One can bring people in to do a particular job but the key difference is integrating them into the system. That is what we want to do.

I am horrified to hear we cannot employ accountants on a permanent basis and not on a project by project basis.

Ms Keane

One can employ an accountant in a professional capacity but he or she will not go into the management streams. That is the essential point. Most professional accountants would wish to be part of the overall structure——

Of course they would.

Ms Keane

——and to participate in promotions and progress through the system.

It is 11 years on and we are now saying the unions are not allowing this to happen.

Ms Keane

I would not say that. We are in a partnership arrangement and we have certain commitments but we work through them.

The taxpayer is losing out because we cannot crack this simple nut. As an accountant, I can understand how one would feel being brought in to do a project but being told one was not free to apply for any promotions in the Department even though one might be one of the more competent people in the Department. I am being a bit harsh here but it is no wonder——

Ms Keane

There are issues and barriers to be overcome.

The situation is not as bleak as the Chairman may believe in the sense that there is recruitment at specialist grades. Increasingly, we have agreements on cross-stream promotions where people who are recruited to a specialist position, whether in a financial area or, in the case of the Office of Public Works, as an architect or an engineer, can compete for senior management level appointments. We have made appointments from the professional streams recently. The question of whether we should have a greater capacity to bring people in at senior management levels as opposed to professional level is the point Ms Keane raised. Most of us believe there is scope to do more of that, although it is salutary to look at the Civil Service Commission reports in the UK where, at all levels open recruitment is the norm. In fact, 93% or 94% of all appointments made through open recruitment are of people who are already in the public system despite what is sometimes suggested, that the salary levels are not proving attractive. I suspect the same might be found here but we would like to be able to test it.

This is the nub of the difficulty in regard to much of the work undertaken by the Committee of Public Accounts. In its recent report, the Committee of Public Accounts found that during the negotiations on redress for institutional abuse, 11 professionals represented the institutions but that was simply not matched on the State side. Likewise, in the context of considerable expenditure by the National Roads Authority and other projects it is now acknowledged that we did not have the number of professionals on our side to match those on the other side. As a result, as I said at the press conference last week, it was a case of plump hens and cute foxes. We were negotiating with them but they had the strength of professionals on their side. As long as the State does this, it will be constantly picked off by the private sector and the Committee of Public Accounts will have to deal with these issues. We should get up to the speed regarding expertise on accountancy, human resource management and road building.

In the past there was a conventional way to build a road and the State lacked professional expertise. The NRA did not even employ accountants. The State is moving from that structure to public private partnerships. When the education model was analysed, the PPP approach cost between 13% and 15% more than conventional school building. The expertise is lacking to deal with the issues of the day. Professionals should be recruited to a particular grade and given an opportunity in the Civil Service. If they must be paid better, so be it. We are dealing with billions of euro of taxpayers' money, not nickels and dimes. At hearings of the Committee of Public Accounts the Chairman highlighted this issue.

This is an interesting debate, which raises many issues. When the Taoiseach introduced his Department's Estimates to the committee, I raised the question of the performance verification group, which was mentioned by Ms Keane. He was to write to me regarding how it worked and so on but I have heard nothing since.

I received a letter from the Taoiseach's office yesterday evening following up on the Deputy's query, which was circulated earlier.

I did not receive it. Will Ms Keane outline the relevance of the group to local authorities and how their performance can be monitored? As Deputy McGuinness said, many constituents who attend our clinics complain about the service provided by their local authorities and how they are treated by them. They are mistreated in some cases. However, we learned from recent newspaper reports that senior executives in many county councils received significant pay awards for performance. I am denied access to the submissions by local authorities to the performance verification group and cannot find out how the officials performed. I am not interested in their remuneration but I would like to know the targets they set themselves and how they were assessed and verified as having reached them. If the targets are not submitted until August and September, as was the case last year, one would be a poor manager if they could not be met by December. It would be a different kettle of fish if targets had to be submitted in January and officials were rated according to them. Perhaps Ms Keane will outline the access we have to such documentation so that we can examine it to see what is happening. Many local councillors believe that Better Local Government, which cost a great deal, amounted to more expensive local government and did not result in a much better performance.

I refer to information technology in various Departments, which was raised as a difficulty. How could, for example, the Garda's PULSE system be examined? The system was installed at a significant cost and it is still not performing. Last week it was reported that it would be abandoned and reinvented. How can Ms Keane assess that in the context of delivering the strategic management initiative?

One could be forgiven for thinking that everything is rosy in the garden following the presentations but that is not obvious to the public. There was reference to Better Local Government, which has turned out to be a joke. At one time, the county manager was accountable and the buck stopped at his or her desk. However, directors of services and other positions have been created and excessive bureaucracy has resulted. Nobody is ever accountable for anything. Officials are coming or going to meetings or preparing for them.

Or preparing to participate on an interview panel.

That is of absolutely no use to the public. If that is where we are headed with the public service modernisation programme, the Government might as well forget about it now. Better Local Government was fine in theory. One could not have developed a better theoretical approach to providing services but, in practice, it has not worked. Ms Keane stated the aim was, "to provide an excellent service to the public" but that does not make the service excellent. People might feel good when words such as excellent are used and they might feel great when their day's work is done but that is not good enough.

Benchmarking is performance-related. Has a benchmarking payment been refused due to lack of performance or has everybody been found to be absolutely excellent?

I refer to decentralisation. Are promotions linked to the programme? Are civil servants subject to coercion if they do not agree to the conditions of decentralisation? Are their promotion prospects nullified or lessened? The programme was foisted on us during the Budget Statement two years ago. No examination of the programme was conducted and it was not assessed to ascertain whether it complemented other programmes such as the national spatial strategy. No strategic thinking was used in devising the programme. Does the fault for this lie with the Department of Finance or the Minister at the time? Who is accountable for the shambles the programme has become? Is the Department of Finance obliged to make sure that new policies complement policies in place? If so, where does responsibility for the decentralisation programme lie?

I welcome the departmental officials. The committee has been trying to organise a meeting in this regard for two years. I want to comment on a couple of areas. The delegates should appreciate that while I am obliged to attend a meeting and may not be present for their response, it will be on the record.

The strategic management initiative should be a vehicle for the improvement of customer service. I understand this was the logic and thinking behind the process. I served as convenor and secretary of the all-party Oireachtas committee on the strategic management initiative for some time and we produced some valuable reports. Great improvements have been made in some areas. Some of our reports indicate that in Revenue, the Department of Social and Family Affairs and other areas we should acknowledge and recognise that modernisation has taken place and been of benefit to the public.

The one area where customer service has not improved despite the SMI is direct contact between individual customers and Departments. While this might not be true of written correspondence to the departmental headquarters in Dublin and elsewhere, it is certainly an issue for customers who telephone local departmental offices. Undeniably, it is an issue. The lack of response, the unavailability of the person to whom the customer wishes to speak and the avoidance of the obligation to make any response over the telephone are real and inappropriate. This is not the way forward. This aspect of the public service must improve.

Another area on which the all-party Oireachtas committee on the strategic management initiative focused was the opportunity to appeal to an independent appeals system to benefit the customer or citizen. I remember a Secretary General of a Department who came before the all-party committee and suggested it would be inappropriate to have an independent appeals body because the Department dealt with taxpayers' and European money. When I objected strongly to that assertion, the Secretary General then suggested that the European Union would not allow independent appeals on moneys processed by the Department. We invited officials from the Commission to appear before the committee who stated they would have no problem with an independent appeals function and would, in fact, welcome such a development. The appeals board was established but like other appeal boards is not independent. Again, the customer has a problem because to a great extent appeal boards are in-house. I am unsure whether this is the delegates' problem or a policy matter. If it is the latter, I should discuss it in another forum. The fact that many of our appeal boards are in-house is unacceptable.

I wish to make a point concerning risk management. Other Deputies have mentioned the extent to which the issue has not been addressed, particularly in respect of nursing homes. That issue has been discussed and action taken. However, are other similar instances which risk management has not identified coming down the track? For example, what is the position on the MRSA superbug? Will it clean out the taxpayer in three, five or ten years' time? Has the public and Civil Service indicated that it considers this to be one of the greatest dangers we could face in terms of risk management?

It is very difficult to get any information on the next issue, that is, claims against public authorities as they are all settled on the steps of the court. This happens in every courthouse. Settlements are made on the steps of the court and we must wait two or three years to find out what was involved.

I cannot undertand how senior officials who expose public authorities to massive claims and settlements retain their positions and are not sanctioned in any way as far as benchmarking or other matters are concerned. It is not good enough for a director of services or a person in authority to state he or she will consult the appropriate legal adviser who, in turn, consults a senior counsel. All of the people concerned know the public authority has an open cheque. They will agree to represent the authority and undertake to present a good case.

I have seen cases where public authorities have been exposed to awards of €500,000 to millions. Others are coming down along the line. There must be some checks and balances. The level of exposure of taxpayers' money through the public authority system is one of the greatest scandals at health board, local authority and other levels. The Committee of Public Accounts does not get its teeth into this issue because as far as I am aware, it is not responsible for it. I find it hard to acquire the necessary information as a public representative.

In the past 25 years the Department of Agriculture and Food has had a plethora of schemes to deal with and certainly made work for itself. Until recently, in many instances it considered genuine mistakes to be fraudulent acts until proven otherwise but that attitude was put to one side and we now have a single payment system. Will the Department remain exactly as it was or will history repeat itself? The Land Commission was largely disbanded, although minor parts still function, but some years later I discovered that practically all its staff were still attending work as employees of the Land Commissioner. For years they went into offices around the country without having any work to do. This is not a tale told in a public house but a fact. Such a situation cannot be allowed to continue in a system now moving forward.

I compliment the system on the moves which have been made. However, other areas must be addressed, although this may require a combination of policy changes and the SMI.

ICT has a role to play in public service reform. However, one must maintain checks and balances as we have heard of massive cost overruns in recent weeks. Potentially, it provides a means of keeping a measure of control but the nature and breadth of its use are important. If one looks at the experience in the United Kingdom where a major e-procurement package has been implemented across the public service, it includes features such as e-auctions which appear to be a favourite with businesses and have produced very impressive savings of between 10% and 17%.

Have the delegates examined international experience with regard to what is in place? It appears we have individual initiatives instead of a broader one relating to the entire procurement process. I accept there are some very good initiatives, including the motor taxation initiative which is very usable and producing clear benefits. Will the delegates tell the joint committee what is being looked at in the area of procurement because potentially there is a serious role to play in terms of savings if we examine the position in the United Kingdom and the results achieved there?

I echo some of the points made regarding the local government system. As the most recent departee from local government, I can attest that trying to improve local government is completely frustrating because the only measurement is the quality of public services. There are two issues at stake; the first being performance indicators. I noted the comment concerning the reply to Deputy Bruton and the small number of indicators suggested. There are approximately 41 at local government level. It may be that it is too broad. It tends to develop a culture around the issue of bonuses rather than being driven by results in terms of the customer. I have witnessed no improvement in the quality of services, despite the payment of bonuses last year. Services have disimproved in some areas. It is very difficult to rationalise how bonuses can be paid when results have not been achieved.

Local authorities are not operating on a level playing field. Essentially, there is an embargo in place which disproportionately affects developing areas which have experienced large increases in population without a proportionate increase in the transfer of funds to pay for additional staff to provide services. Little account is taken of the very large disparities in the transfer of funds under the needs and resources model to local authorities. Apparently, little attention has been paid to population increases, which bring additional demands. How are these items measured in terms of performance indicators because one does not appear to be measuring like with like?

I would like to comment on some of the points raised. With regard to the application of IT systems, specific reference was made to the PULSE system. I am not qualified to discuss it or other specific systems, although I know there have been difficulties with it. In general terms, the lesson we have learned from procurement in this area is that it is important to have a comprehensive approach to the design of IT projects. It is not just a matter of technology but also of the works processes and systems which need to be taken into account and perhaps changed in tandem with the way in which technology is introduced. For example, I am aware of proposals to change the way in which material is entered onto the PULSE system and to redesign the processes in order that gardaí will not be required to return to the station to enter material. This is an illustration of the need to take a holistic approach.

On the application of IT in procurement, there is an e-tenders website in operation which is part of the renewal of the procurement function. It also extends to non-technological issues such as the way in which procurement is approached, the aggregation of demand across agencies, the ways to stimulate interest on the part of suppliers and faster competition and the use of volume commitments as a source of efficiency gains. There is much that can be learned from the experience in other areas.

As part of the e-Europe initiative, there is an active learning process across member states. We have had the opportunity to examine how other systems approach the use of IT. In turn, they have come to look very closely at what is being done in Ireland in the Revenue system, the e-Cabinet system and the public service broker which is currently below the radar screen but has the potential to revolutionise public service information systems.

We are probably not in the best position to comment in detail on local government. The joint committee might consider inviting the Secretary General of the Department of the Environment, Heritage and Local Government and some of his colleagues to take part in a discussion on this specific issue. It would be a concern if the investment in the process of seeking better local government was perceived to be producing a worse system. I am aware that some of the objectives put in place in the structure were designed to do precisely this, for example, in the introduction of systems to support community fora and strategic policy committees. If this is not delivering in ways members can identify, perhaps a direct discussion with the officials concerned would be helpful.

On bonuses and the verification of performance, there are two separate issues that may be worth distinguishing. The public service benchmarking process applies to organisations and grades and requires independent verification groups to be satisfied that co-operation with ongoing change, the maintenance of industrial peace and the achievement of specific modernisation objectives have been delivered as a condition for payment. There have been instances where payment has been withheld. The payment was ultimately restored when the problems identified were resolved. It is a determination based on a whole organisation and whole grade approach rather than an individual approach.

For senior grades in the Civil Service and local government system, the Garda and the Defence Forces, there are individualised bonus systems in place linked to specific personal objectives set by the head of the agency and approved by an independent committee which oversees them. Due to the fact that these relate to individual remuneration packages, they are not in the public domain in the same way as the performance verification groups' material.

There are issues regarding bonus systems in the public service about which we are still learning. Mr. Kelly has mentioned that there are significant questions to be raised. The system was introduced on the recommendation of the independent review body on remuneration in the public service and reflects private sector practice for senior management. Whether the fit is as good as it might be in the public service is an issue to which we might need to return having experienced it in operation for a few years.

On risk management, the point that we need to take an appropriately broad approach was well made. We are assisted by the State Claims Agency, a centralised centre of knowledge and analysis of the issues giving rise to legal action. Managements can be made more sensitive to the issues of which they should take account in their risk analysis and risk management plans.

I would like to return to the point made about the availability of expertise to support negotiations and whether the public service is adequately equipped in entering into negotiations with others. My recollection is that the Committee of Public Accounts did not say that expertise was not available in the public service. Rather, it commented on how it was deployed on particular occasions. On legal claims against authorities, I refer to the State Claims Agency's active case management process which is changing the way high volume categories of claim are being processed by Departments and altering the strategy adapted. This will hopefully benefit the Exchequer.

Ms Keane

Sustaining Progress provides for a process similar to that available in the Civil Service about which we spoke. It provides for the presentation of action plans to an independent verification group and for decision by the head of the sector, namely, the Secretary General of the Department of the Environment, Heritage and Local Government. The procedures are similar to those already in place.

On the matter of availability of reports, in the case of the Civil Service and other sectors they are available publicly. I suspect that we should be able to obtain access to the local government report. I will follow up on that matter for the Deputy.

I welcome the members of the delegation, particularly the Secretary General of the Department of the Taoiseach. I apologise for not being here earlier. I had another meeting to attend and a few deputations to receive.

There has been an improvement in all areas but the more we improve, the more complicated the system becomes. In that context, I wish to comment on the answering machine syndrome. When one is connected to an answering machine, one has five options and this choice is repeated again and again. It is not satisfactory and creates inefficiency rather than success.

As regards slide 15, I wish to compliment everyone on the improvement in the Land Registry. I have been a Member of the Houses for 23 years. I do not have many land registry queries today, at a time when the country is undergoing considerable change in terms of site development and in respect of irregularities relating to deeds and transactions. Queries do not appear on my desk anymore, whereas five or ten years ago, when there was less development, I frequently went to the Land Registry about a map or some problem. That has changed and I compliment the registry.

An area I would like to be improved is that relating to the passport office. This morning I spent time with a constituent who is travelling to the Ukraine. The passport of this individual, who intends to spend six months in the Ukraine, will be out of date in four months' time. The person can get into the Ukraine but may not be able to leave again. Passports should be available on demand if people's documentation is in order. I also refer to the €50 charge, which should change. Citizens are entitled to passports and this charge should be examined.

My colleague, Deputy Finneran, referred to agriculture, which has changed recently but which was in the realm of Rip van Winkle age for some time. During the latter period, one could get nothing from it. I always judge public offices on their response to Deputies' representations. If the response is efficient, it shows commitment. Where there is no response, there is inefficiency and a lack of commitment on the part of the Department or local authorities. I would not be critical of local authorities as I come from Cork, where the county council is very good. I hear my new colleague in Dáil Éireann make reference to local authorities but I point out that we have an efficient operation in Cork and there is great commitment. Though I am aware that there is a plethora of schemes there, the Department of Agriculture and Food needs improvement and examination.

Slide 16 indicates that the Taoiseach's office is undertaking the transformation of a system of more than 30,000 people in over 30 Departments and offices in hundreds of locations. Today there are 2 million people in the workforce and 3.8% of our people are recorded as unemployed. Of that 2 million people, which has increased from 800,000 in the past ten years, what is the percentage of people working in the public service and Civil Service? It might be necessary to come back to me later but that figure would speak for itself. The dole queue would be longer were it not for some of the agencies we have but I wonder what they are doing. That is why I ask the question.

The success of the economy can be attributed to one thing, namely, low interest rates. This is the main driver of the economy and the change from sterling in 1979 gave us many benefits. All our success is based on cheap money. We can consider other economies outside the monetary union which have higher interest rates and are not making the same progress as Ireland. I commend the delegation, although I would like to have been here to see all the slides in order to obtain a better understanding and make further comments. There is more good than bad.

I wish to make some comments before I call Deputy Burton. Can Mr. McCarthy clarify whether he is referring strictly to the civil and public service when he talks about modernisation? For example, is the HSE included in what we are talking about? Are the 100,000 people in the health services included in this system?

They remain very much in the public service system.

Are they included in this modernisation programme?

The modernisation programme includes the entire public service but is managed on a sectoral basis. The group represented here is responsible for the overall shape of the modernisation project across the entire system. It is also responsible for applying it within the Civil Service. Sectoral responsibility for areas such as environment, health and justice rests with the relevant Department.

Perhaps Mr. McCarthy can send the committee a note on people who have joined as professionals and who have now progressed. How does the system work and how many people have been integrated?

I am disappointed that I have not heard the phrase "joined-up Government". The public can be highly critical on this point and it is becoming a cliché. When the Department of Finance receives an Estimate, does it take the view that it does not want to hear any further or should it have a greater role in terms of managing resources within each Department? It is clear to us that there are not sufficient people with independent financial expertise in other Departments. These people are making decisions on estimates of projects. We have referred to the NRA but it is endemic across many Departments. Projects that are estimated to cost a certain amount end up costing three or four times that amount. I conclude that there is a deliberate policy of underestimating the cost of all major projects.

If the true financial cost were indicated at the beginning, people would balk and say that a project was not possible. The Dublin Port tunnel is an example of this, as it would not have happened if the true final cost had been announced at the outset. I am a member of the Committee of Public Accounts and I believe that people either do not know how to make estimates or that they are deliberately not revealing the true final cost at the outset. There is a school of thought that certain people try to get projects off the ground and then let the cost rise in the belief that such projects cannot be stopped at that stage. That is undermining public confidence in public representatives, in all the bodies that continually get these figures wrong and it is damaging to the public service.

As a member of the Committee of Public Accounts, I have seen many people, such as a new Accounting Officer or a member of senior staff, come before the committee and say they were not in a Department or office when something of this nature happened two years previously. They state that it will not happen on their watch but in five years' time I am sure that person's successor will make the same comments. The system breaks down through a lack of follow through and personal commitment. No one has personal responsibility if an issue goes wrong.

One issue that the delegation might discuss or send a note on is secondment between the public and private sectors. A few years ago a system was in operation which was good both for the public and private sectors but we have put in place demarcation lines whereby one cannot have people from the private sector in the public sector for fear they might learn facts to their advantage when they go back to the private sector. Everybody loses out from that approach. Cross-fertilisation of skills would be good for everybody involved and I would ask for a general comment on that. Before the delegation answers those questions, Deputy Burton wishes to speak.

I apologise for leaving and for perhaps covering matters already covered by others. The presentation is great but I do not understand half of it as it has many acronyms and I am sure I would need a masters to understand it fully. The core of the problem is that it is difficult for ordinary people who use public services to understand this language. The words openness, transparency and accountability are mentioned in one of the schedules. What do they mean?

I was struck by an example used by my colleague from the Government party, Deputy O'Keeffe, and will use the same one. The cost of the works in Kilkenny went up from €15 million to €45 million.

Deputy McGuinness will be disappointed Deputy Burton did not credit him with that example.

Deputy O'Keeffe also used it and made the salient point that Irish labourers 200 years ago built some of the finest salmon passes and weirs in Fermoy and Midleton, and that was not done with an advanced management structure. The issue is not that something goes wrong because that happens in every organisation. The question is what is the learning curve. The cost of the project rose from €15 million to €45 million and at the end faults were still identified. Deputy O'Keeffe also stated on that occasion that every salmon is worth €10,000 to the Irish tourism industry. He is a successful businessman so I assume he knows what he is talking about.

He is a multi-millionaire.

What is the learning curve for openness, transparency and accountability? That something went wrong is not necessarily the end of the world. The question is whether one has learned from it. In private business or in the professions making an error usually has sharp economic consequences and that in itself forms the learning curve.

I genuinely do not understand how to get my head around the presentation. Three-year envelopes and roll-overs are all described in the document, as are three-year budget cycles and rolling multi-annual capital envelopes. If one could roll ones r's, it would sound much better. I will take an example from the Department of Education and Science which I do not understand. We have had a significant increase in population, particularly around cities and towns in the greater Dublin area and Leinster. Why is the Department of Education and Science, with all of this structure, seemingly completely unable to plan the provision of a primary school?

It does not take an Einstein to say that if one builds 2,000 houses in an area and many hopeful happy young people inhabit those houses, five years later school-aged children will arrive and seek school places. This is a politician's question because I deal with parents as do many of my colleagues. Where is the economic insight in the Department of Finance? This is about numbers, population growth and settlement patterns. If one builds X thousand houses in an area one will need the resources for schools. Every year, I face parents at the end of their tether in various parts of the Dublin West constituency. In one area 5,500 houses were built and are now occupied. I was the leader of the Labour group on the council at the time and nobody on the council objected to those houses and we were delighted they were built. I have worn myself out trying to convince the Departments of Education and Science and Finance that if one develops such a population pattern, one requires resources.

The men on the Blackwater 200 years ago could build a weir. What is required of the civil servants in the Department of Education and Science today is an intelligent capacity to make provision systematically for schools. The capital budget was significantly underspent over the past two years. The net underspend was identified by Goodbodys as approximately 18%. The initial figure that came out during the year was approximately 25%. Ms Keane stated the capital expenditure targets and the reporting targets are now on line. That is a significant management accounting achievement if it is true. How does the management system not deliver infrastructure when there is such a need for it?

I remember the bad old days in 1992 when the country was broke and we had no money, yet three second level schools were built in my constituency. I had many interesting discussions with people from the Department of Finance about it but eventually they were convinced that children require schools. Those three schools are now overcrowded. Can the delegation explain how one relates to the other? I saw the figure of 9,000 for the increase in numbers in the public service and perhaps an analysis of that could be sent to us.

What progress has been made on the new national health authority? What progress has been made in the transfer of civil and public servants through decentralisation whereby they will cross from one sector to the other? I know there may be a problem with seniority as one has administrative officers and principal officers but perhaps a different status structure in a local authority. Decentralisation will be effective if a mechanism can be found to allow persons to cross from a local authority or the health system into Departments or public bodies such as the Department of Education and Science or Bord Fáilte. I do not know if any work has been done on that. It was discussed at a previous meeting of this committee but we did not receive a report on it.

The new health authority is now a national organisation. We have not yet seen what type of structure it will have but it has taken on all of the old system which was heavy on the administrative side rather than the constantly questioned hospitals side. We have a good hospital system in this country but the expanding administration makes it look bad. More procedures and improvements for health come into place every day and that is all for the betterment of our people. We should be more cautious and identify the successes within the health service, rather than criticising it by referring to beds in corridors and so forth. There is a need to streamline the administration.

I wish to point out that 44% of the electorate voted for the party I represent and that 10% voted for the other Government party. There is too much leeway given to that party, which is now in charge of the Department of Health and Children.

I do not expect members of the committee to respond to that remark.

I call for a press conference.

Deputy Ned O'Keeffe mentioned answering machines. There are good and bad answering machines and the good ones make it easier for an individual to do conduct his or her business.

Mr. McCarthy should ring Aer Lingus to find out how good they are.

Aer Lingus wants its customers to use the Internet.

On the question of the passport office, there are development proposals in place, including completing the transition to 100% machine readable passports. Approximately two thirds of passports are issued through the passport express system with An Post. Further changes that could be made are being examined by the passport office at present.

On the breakdown of the 30,000 members of staff, I thought Deputy Ned O'Keeffe was asking me to name them, which would not be possible. However, we can give the analysis of the proportional shift over the years and the wider numbers.

The Chairman expressed the belief that systematic underestimates are part of the system but there is very little evidence of that. If one looks, for example, at the specific instances considered by the Committee of Public Accounts in respect of the NRA and the roads programme, the learning that Deputy Burton referred to did, in fact, take place. In the earlier period examined, there were significant underestimates — although these were similar to underestimates in the UK at the same time — but, more latterly, estimates have been within a few percentage points of the final outturn. Indeed, on the public private partnership side, some award-winning work has been undertaken by the NRA. I hope that there is no bias towards underestimation, other than on a strictly professional basis.

The question of personal continuity and responsibility, particularly before the Committee of Public Accounts, is a good example of the problem of competing objectives in the public service. In terms of promotion systems and mobility, there is value in people moving around between, and in the case of senior management, out of Departments or offices. However, that has a price in terms of continuity in any particular role. Our system should be such that structural and institutional accountability is not weakened in any way and the Comptroller and Auditor General and the Committee of Public Accounts should be fully satisfied in that regard. The personal element of accountability, both in terms of reward and sanction, should be more robust than is currently the case. We hope to see further developments in that regard as a result of the human resource changes that are under way. Ms Keane will deal with some of the other personnel issues.

In respect of the Estimates process and the provision for school buildings, the capital envelope programme should be factoring in the known population movements and, therefore, the known demand for places. I suspect it may be the case that the capital potential is there but that it is not manifest in the school planning or building and perhaps the committee might like to discuss that with the Department of Education and Science.

Ms Keane

I agree that population movements should be factored in during the Estimates process and I will take up those points with the public expenditure division.

Deputy Burton asked for further information relating to numbers, which I will happily supply at a later date.

I should have mentioned the issue of better co-ordination and decision-making and I take the Chairman's point in that regard. The relationship between the Department of Finance and the line Departments is, as highlighted in our strategy statement, changing.

Deputy Burton gave a better example than me in terms of allowing 5,000 houses to be built in an area while the Department of Education and Science is seemingly unaware of the need for capital investment there. So called "joined-up Government" is missing when we see houses being built but no schools. It is not just about officials within one Department. Does Ms Keane understand the point?

Ms Keane

I understand the point and that was a key element of the Delivering Better Government programme.

The secondment system is still in place but we have not been using it as much as in the past. However, it could be reactivated because it is a valuable system. In the Department of Finance we have had a number of lawyers and accountants in the system in the past four or five years. It is proving difficult to get people to swap over because business is buoyant at present.

The human resource programme includes the development of medium-term planning and analytical and forward projection skills.

In the public expenditure section of the Department, there are some economists who, obviously, deal with numbers. Does the Department of Education and Science, for example, have an economist or a person who analyses the figures relating to population changes?

Ms Keane

Yes it does have such a person and there is also a statistical unit within the Department of Education and Science. However, I do not know how many people work in that unit.

Deputy Ned O'Keeffe referred to streamlined administration as well as decentralisation and its impact.

I am concerned about the movement of staff from one part of Ireland to another.

Ms Keane

I am aware that this committee has been briefed on the structures in place to deal with the implementation of decentralisation. The decentralisation implementation group deals with the logistics. A sub-group of general council is looking at the human resource issues, which are essentially industrial relations issues.

Does Ms Keane agree with my point?

Ms Keane

There are issues that must be examined in the context of the decentralisation programme. Departments and departmental personnel officers are working within a decentralisation implementation plan, specifically designed to relocate people. That plan involves identifying the people who will move and making due arrangements, ensuring that, as they repopulate areas, the business process does not suffer. In other words, ensuring that the correct people are put in place and are given the appropriate training. The final element of the plan involves dealing with property issues.

Decentralisation is very popular with communities outside Dublin. I have received requests from people working in local authorities and health boards to move to Fáilte Ireland, Bus Éireann, Department of Agriculture and Food offices and so on. Some of these people are civil servants while others are public servants. There is demand for decentralisation, despite what people in the Trade Unions are arguing. People who want to be involved in decentralisation should be identified and accommodated.

Ms Keane

As I understand it, people were identified but there are issues that must be dealt with in the industrial relations forum.

Approximately ten years ago, there were 850,000 people in the Irish workforce and the unemployment rate was between 18% and 20%. Today, the workforce figure is 2 million and the unemployment rate is 3.8%. What percentage of that 2 million, vis-à-vis the 850,000 to whom I refer, are now working in the civil and public service? If our guests cannot answer that question immediately, perhaps they might send me the information in writing.

We will await a more accurate written response on that matter.

On behalf of the joint committee, I thank our visitors for their contributions. While they met a slightly sceptical committee, I am satisfied that any other 12 Members of the Oireachtas would have made similar comments. We referred to issues which have been raised with us. We look forward to a further meeting during which strategy statements will be discussed.

The joint committee adjourned at 1.50 p.m. until 2.30 p.m. on Wednesday, 25 May 2005.