The first item on the agenda is consideration of the finance group of Revised Estimates. On 23 February the Dáil ordered that the following Revised Estimates for Public Services 2006, inter alia, be referred to this committee for consideration: Vote 1 — President’s Establishment; Vote 5 — Office of the Comptroller and Auditor General; Vote 6 — Office of the Minister for Finance; Vote 7 — Superannuation and Retired Allowances; Vote 8 — Office of the Appeals Commissioner; Vote 9 — Office of the Revenue Commissioners; Vote 11 — State Laboratory; Vote 12 — Secret Service; Vote 15 — Valuation Office; Vote 16 — Public Appointments Service; Vote 17 — Office of the Commission for Public Service Appointments; and Vote 18 — Office of the Ombudsman. I invite the Minister to make an opening statement.
Vote 18 — Office of the Ombudsman (Revised).
I am pleased to come before the select committee to introduce the Estimates for the year 2006 for the finance group of Votes. Excluding the Office of Public Works, for which the Estimate will be presented to the select committee separately by my colleague, the Minister of State, Deputy Parlon, the provision for the remaining 12 Votes that make up the finance group of Votes amounts to slightly more than €788 million in net funding. The three largest Votes in the group are: the Office of the Revenue Commissioners, amounting to €382 million; superannuation and retired allowances, amounting to €242 million; and the Department of Finance, amounting to €111 million.
Before dealing with the Estimates for the individual Votes, I will make some brief general comments about the economic background to the Estimates. Ireland is enjoying the longest and strongest era of sustained prosperity in its history. Since 1997, economic growth has averaged approximately 7% per annum, unemployment has been reduced from more than 10% to historically low levels, more than 500,000 new jobs have been created, long-term unemployment has been cut dramatically from 5.6% of the labour force to just 1.4% and the debt burden has been reduced from approximately 72% of GDP in 1997 to28%, thereby freeing up significant resources which otherwise would have been swallowed up by debt servicing.
Despite these achievements, there is no room for complacency and we must maintain a disciplined and firm approach. Most particularly, if the economy is to continue to grow at sustainable levels and if inflation is to remain under control, public expenditure must be kept broadly in line with sustainable growth in revenues. At the same time, the Government is determined to continue to target key improvements in public services, tackle the economy's infrastructure deficit and provide for future pension commitments.
In accordance with these priorities, my main objective in framing budget 2006 was to facilitate sustained economic growth while improving equality of opportunity for all. Whereas the reform of the tax system by the Government has encouraged and sustained the jobs market, the big story in 2005 was the increase of 87,000 in employment, at 4.7% the highest annual rate of growth since 2000.
The outlook for this year is, as IDA Ireland has confirmed, encouraging. Jobs continue to be the priority, for which we must remain as competitive as possible in labour and other cost terms. The public finances remain in a healthy position. The debt to GDP ratio is expected to remain at approximately 28% this year, with a general Government deficit estimate of 0.6% of GDP. It is important that the public finances continue on a sound footing.
Tax revenues were strong again last year, producing a significant surplus, with the bulk of the increase deriving from Revenue's special investigations and significant revenues from stamp duties and capital gains tax. Increases of this nature cannot be relied upon in future and expectations must be adjusted to this reality.
The key elements underpinning the Government's approach to the 2006 Estimates are to maintain expenditure on public services at a sustainable level, provide the resources necessary to deliver improvements across the whole spectrum of public services and provide for an ambitious programme of investment in infrastructure necessary to underpin our competitiveness in future.
The 2006 Revised Estimates published on 23 February make provision for significant increases in social welfare rates and a new child care package announced on budget day. They also provide for a substantial increase in capital investment consistent with the 2006 to 2010 multi-annual capital investment framework. Total gross voted expenditure in 2006, inclusive of spending from the social insurance fund and national training fund, will be €50.6 billion, an increase of €5.7 billion or 13% on the 2005 provisional outturn.
Public capital investment has been maintained for a number of years at or close to 5% of GNP, almost twice the European Union average. The Government has provided unprecedented levels of capital investment in public services to tackle the infrastructural deficit and promote sustainable development and growth. More than €43.5 billion — including moneys relating to public private partnerships operated under the National Development Finance Agency — has been allocated under the capital envelopes for 2006 to 2010, of which more than €7.25 billion will be available in 2006, including a capital carryover of €289 million from 2005.
In late 2005, the Government finalised a new ten-year capital envelope for transport. Transport 21 targets more than €34 billion at key transport infrastructure projects over a ten-year period and is a logical extension of the innovative five-year capital investment framework in a sector where projects are of such a scale that a ten-year time horizon is appropriate.
Value for money is a critical issue considering the huge sums being spent. Building on recent initiatives, such as the capital appraisal guidelines published in February 2005, I announced additional value for money measures in an address I made to the Dublin Chambers of Commerce on 20 October 2005. My Department has since engaged with all Departments to give effect to these measures. These involve changes to existing guidelines and practice and planned developments regarding public procurement, the management of ICT projects and consultancies, capital appraisal and training and recruitment of ICT and specialist staff.
The Government decided in 2004 to reform construction procurement by introducing new standardised public sector contract terms for contractors and conditions of engagement for construction consultants, that is, architects, engineers, etc. New contracts and conditions of engagement have been developed which provide for fixed price lump sum contracts tendered on a competitive basis with appropriate risk transfer. An intensive consultation process has been undertaken with the industry on the implementation details. The intention is to finalise the contracts and conditions of engagement shortly, with a view to having them ready for use as soon as possible in 2006. This will be followed by a comprehensive training programme for public service practitioners. The implementation of these reforms will provide much greater cost certainty in budget planning and more cost-effective delivery of capital works projects.
As regards the finance Vote, slightly more than €1.618 million capital and current funding is allocated under subhead Q, procurement management reform, to provide funding for a range of public procurement management reform projects and initiatives, including electronic procurement and, in particular, the implementation of the construction procurement reforms which will modernise the public procurement environment and deliver better value for money
I will now address the detail of the finance group of Votes. Vote 6, the Office of the Minister for Finance, amounts to just under €111 million, a net increase of slightly less than €24 million on the 2005 outturn. While policy work remains the core activity of the Department, programme expenditure, at €64 million, accounts for more than half the Estimate. The balance is accounted for by administrative expenditure, with €36 million for salaries, or slightly more than 30% of the Vote, and other administrative costs of €12 million, which represent slightly more than 10% of the Vote.
Within the Estimate, the following are the major programme expenditures in the Department for 2006: €23 million is provided to meet expenditure on EU co-funded programmes, including subhead N1, peace programme, subhead N2, North-South Interreg, and subhead O, Ireland-Wales and transnational Interreg, subhead J1, Structural Funds technical assistance and other costs, and subhead J2, technical assistance costs of regional assemblies. In addition to these co-funded programmes, €1.4 million is provided in subhead N3 for the special EU programmes body.
Slightly less than €9 million is provided for programmes relating to public service modernisation. This includes €3 million to CMOD to provide support services to Departments and offices, including training, with a view to the optimisation of business processes, application of modern management techniques, effective use of IT and furtherance of Government information society objectives. A further €1.6 million is provided under subhead Q, procurement management reform, to provide funding for a range of public procurement management reform projects and initiatives, including electronic procurement which will modernise the public procurement environment and deliver better value for money. In addition, €2 million is provided for the change management fund which is held centrally in the Department of Finance to co-finance the cost of implementing in individual Departments and Offices initiatives arising from the SMI-Delivering Better Government programme of change, and a further €2 million for the Civil Service child care initiative which provides funding for a scheme of capital grants for the development of a number of Civil Service crèches in 2006. The child care scheme also benefits from the application of €1.1 million carried forward under the capital investment framework arrangements.
Other programmes include grant-in-aid of €9.3 million under subhead E for Ordnance Survey Ireland and €8.6 million in subhead L for payments to the promoters of certain charitable lotteries — national lottery funded. This scheme is a focused initiative intended to address the circumstances of those private charitable lotteries which have products in the marketplace in direct competition with the national lottery.
Vote 9 is for the Office of the Revenue Commissioners. The net Estimate is €381.727 million, up €35.853 million, or 10%, on the 2005 outturn. Payment of salaries is by far the largest single item of expenditure and is responsible for most of the increase. Outside salaries, the main area of spending is information technology. This continued IT investment has ensured Revenue remains to the forefront in the provision of enhanced services for citizens and businesses, the deployment of effective compliance programmes and maximising revenue collection which is expected to exceed €50 billion gross this year. The introduction later this year of new self-service channels which will allow PAYE taxpayers to update their tax records directly and ensure prompt repayments, where applicable, is an example of the innovative use of information technology to enhance customer service.
Another example is the development of a radically updated customs system, in line with EU requirements, which addresses international trade issues such as container security. This will be rolled out in the first half of 2007. Revenue also continues to invest in risk-based and intelligence-led systems to ensure everyone pays his or her fair share and has commenced a programme to modernise its case management system which is used in audits and interventions with problem cases.
The Estimate also provides funding for the continued enhancement and support of the Revenue on-line service, commonly known as ROS, and the internal integrated taxation services, ITS. ROS provides a wide variety of pay and file and account look-up services for businesses, the self-employed and tax practitioners. Revenue is confident of a continued increase in use from last year when some €12.1 billion in taxes was paid through ROS and the number of returns filed through it for all the major business taxes continued to increase significantly. The e-filing rate for the self-employed income tax return has been particularly satisfactory, with over 65% of these returns filed electronically in 2005. ITS supports the collection and administration of all taxes and will be specifically enhanced this year in relevant contracts tax collection and compliance.
As regards the other Votes in this group, members of the committee have been provided with background briefing material by my Department on all of the Estimates presented today for its approval. I thank the committee for its attention and commend the Estimates to it. I will try to supply any further information or clarification members may request.
I thank the Minister for his contribution. I notice from the strategy statement for the Department that key indicators of progress are the success of the expenditure review process, strong emphasis on value for money and improved service, quality and performance measurement. However, the Minister's officials have come to this committee again seeking approval for the Estimate without a shred of evidence about performance measurement and no indication of the activities associated with this long list of spending items we are asked to approve.
What are we being asked to approve? Are we being asked to say this is money well spent when we have no evidence that is the case or are we here to rubber stamp the Vote? Any fair assessment would see us as a rubber stamp, a meaningless process whereby we talk about matters of interest to us. It is unacceptable, particularly from the Department of Finance which is charged with setting the standard for other Departments and states in its own strategy statement that this is not good enough.
The Minister is saying, "make me virtuous Lord, but not yet," and that better arrangements will be in place next year. I sat here and listened to the Minister's predecessor telling us we would have better arrangements the following year and the same arrangements always applied. I welcome the document the Minister sent and the talk of change but it is not enough. I looked back at last year's Estimates, launched in November 2004. Ministers made all sorts of announcements about integrated ticketing systems in public transport within the year, a minor injury clinic and MRI scanner in my local hospital and 1,600 extra gardaí. At the end of the year I checked and none of these promises had been fulfilled. Ministers release press statements with their Estimates but there are no performance indicators and when they do not happen, no one is held responsible.
We are being codded by a system that is not up to scratch for this day and age. Even the smallest sports club would prepare its accounts and budgets for approval. The notion of coming before a board with a list of spending proposals and no notion of what they will deliver would be laughed out of the room by the smallest society. It appears, however, to be good enough for the taxpayer who will stump up €50 billion this year according to the Revenue Commissioners. I am totally impatient with the way this issue is being handled.
The public service management framework set out in 1997 had all the ingredients. There was to be sound strategy development, priorities were to be chosen, sound project management, good cost control and reporting, performers reporting on key performance indicators and programme evaluation, but none of this has been delivered on the scale we have the right to expect of a Government knee deep in revenue with ample capacity to deliver in these areas. I give the Minister one cheer for the document but only one because we have been waiting so long and seen so little that my patience is worn thin. After the last programme review in 2001, the Government stated the next programme review would be entirely different. In the report in 2004 the programme review almost collapsed and the Secretaries General had to admit that none of the recommendations in the reports undertaken had had any impact on the subsequent decisions about spending. They threw up their hands and gave in.
The Minister's predecessor said that between 2002 and 2005 he would reduce public service numbers by 5,000. Estimates published last week show that instead of a reduction of 5,000, there has been a 12,500 increase in the number of employees.
It is 6,000.
I can give the Minister the figures from the documents he has produced. Was the Government decision to reduce the numbers rescinded or was it just not pursued?
The decentralisation programme goes to the heart of the Department of Finance's responsibility. I am frustrated that such an important Government decision was not accompanied by proper strategic planning. Choices were made on political hunch. No business case was made for any of the decisions. The spatial strategy intended to guide decentralisation made no impact on the pattern. There was no consultation. It is no surprise to find that nine out of ten people do not want to go with their posts to the new location.
Meanwhile, the Minister's colleague in the Office of Public Works is pushing ahead happily and has acquired 18 locations while another 12 are at an advanced stage in negotiation. He will soon have 30 locations. As far as one can tell the Minister's Department and one or two others are the only ones to move, out of the 53 that were to be delivered by the end of this year. The accountability is inadequate.
They were never all going to be delivered this year.
That is what we were told. The Minister's predecessor told us not only would they be delivered but the future of Ministers would depend on their being delivered. This was to be an acid test of Ministers' effectiveness.
They were never going to be delivered because no advance thought was given to the move. Government never undertook the normal procedures. It bypassed its public servants and senior advisers. No Government memorandum was presented to Cabinet setting out the pros and cons, the threats and weaknesses of the plan, how to address them and resolve the underlying difficulties. It was a stroke which is falling asunder and has not met its schedule because it never could. We have a right to expect more thought from a Government with such resources available. This was a deliberate move to frustrate a proper system of governance.
Returning to these Estimates, it wears thin being asked to approve money for spending when one sees Ministers at a stroke bypass all proper procedure and go ahead with a policy on hunch rather than on sound planning. I fear that in a couple of years the Comptroller and Auditor General will say we have sites and buildings, many of which are half-empty; shadow officials in Dublin are performing tasks also being done down the country, and there is difficulty delivering coherence because the planning was not carried out or matched in the way it ought to have been.
It is also frustrating that Ministers have stepped back from the project. We are told to address serious questions about the process to Mr. Flood whose implementation committee is not answerable to the House beyond having made one visit to this committee. It is not an accountable system and surely not an example of the sort of governance the Department espouses in its strategy statement. The Minister is doing the opposite of what he espouses in the first major project he has undertaken.
In the Minister's Estimate, under travel and subsistence, and incidental expenses, the costs will rise by €1.5 million, more than 60%, because of the decentralisation move in the third quarter. What is the estimate of such expense associated with the moves? If, as it appears, it will be €1.5 million in a quarter for 160 posts the total is approximately €9,000 for each post in one quarter. If that were replicated over the year it would amount to €36,000 in travel and subsistence per person. I would like to see a break-down of the travel and subsistence and incidental financial implications of decentralisation.
Is the Deputy looking for the figures for the Department of Finance?
Yes. Items A2 and A3.
The cost is €130,000. That is the allocation to meet additional travel and subsistence needs arising from decentralisation to Tullamore.
The Minister quotes increases from €780,000 to €1.2 million and from under €2 million to more than €3 million, an increase of 60% in both cases. I would like to see a proper framework of the costs associated with decentralisation, the ongoing costs, set-up, shadow staffing, promotional and new recruitment costs. The House has a right to expect a proper cost estimate on the current side, and on the building side, for such an important issue.
I have submitted parliamentary questions to every Department but none, not even the Minister's, is willing to indicate or estimate the current costs associated with decentralisation. That is not acceptable. This is a major Government project, like PPARS or any other major projects, for which we should see proper costing and have a sense that there is someone in charge who will take responsibility for what is happening.
I ask the Deputy to give other members an opportunity to speak. We will discuss the Votes after the opening statements.
Will the Minister explain the proposal outlined in the first part of the document we have received, to increase public service numbers by a net figure of 8,818? Like Deputy Bruton I understood there was a net increase in these numbers last year of between 10,000 and 12,000. I recall Mr. McCreevy sitting in the Minister's place, saying that public service numbers were decreasing. He announced this in several budgets too.
Some of the numbers cited here are devoted to the health and education services and to the Garda Síochána. Many people will welcome that if the staff is to provide front line services. I do not, however, understand why the Minister's office will merit an extra 45 staff, and why superannuation and retired allowances in his Department will merit almost 400 extra staff whereas the Office of the Revenue Commissioners will receive only seven extra staff. That must be a comment on the Revenue Commissioners.
Those are pensions.
Are the pensions for the Revenue Commissioners?
No.
The document states that the Office of the Revenue Commissioners will go from 6,436 to 6,445.
The Deputy is referring to superannuation and retired allowances. The figures the Deputy mentions for my Department are an increased number of pensions.
This is way off what the Minister and his predecessor told the Dáil. I raised this yesterday when I asked whether this is oiling the machine for the next general election. In respect of administrative jobs in the Civil Service Mr. McCreevy pump-primed all the numbers.
Will the Minister analyse these proposed increases and say which are front line staff and how many are due to the decentralisation process? When the Minister kindly answered a question I put last week he said that of the 135 members of staff from his Department going to Tullamore less than 15% were from the Department but 63 had been shifted into the Department pending their transfer to Tullamore. The Minister also noted that a further 20 staff were similarly getting ready to transfer there. All of this smacks of a significant increase in staffing numbers because of decentralisation which has the happy political advantage for the Government that it will provide many extra posts. However, after the general election in 2002, cutbacks had to be made all over the place, especially in front-line services, for almost two years. Will the Minister provide further details of his proposed extraordinary increases in the numbers of public servants in the light of what he and his predecessor had indicated was the Government's game plan?
My second point concerns accountability. I find it absolutely unacceptable that we do not have available to us today the Estimates and capital rollover figure for the Health Service Executive which accounts for the biggest portion of public spending. Ministers often have the excuse that they have inherited a situation about which they can do nothing, but the Government established the Health Service Executive only the year before last. By choosing to give the HSE a different accounting year that finishes on 31 March, it has made it virtually impossible for Opposition Deputies to make much sense of the health service figures until long after the event.
Although finance officials might think a missing €56 million is a bit of a joke — "What is €56 million between friends?" — that sum is equivalent to 10% of the Health Service Executive's capital budget. I want to know what is going on. I presume the story leaked in the health supplement of yesterday's edition of The Irish Times was on foot of a briefing from the Department of Finance or the Health Service Executive. The story suggested the money had been spent for current expenditure purposes with some juggling of small projects. What does that mean? Were the managers of places such as St. Raphael’s or the Navan Road services for the mentally and physically handicapped offered capital expenditure funding by the Health Service Executive and, ultimately, the Minister’s Department only in November, as many reports suggested, which was so late in the year that it was impossible for the money to be spent? The HSE seems to have played hard and fast. Such bad planning, in effect, allows the Minister — I say this only after great consideration — to cook the books.
It is unprecedented that one of the biggest items of expenditure should be absent from the Revised Estimates. The reason for this is the Government's decision two years ago to muddy the waters. Even if the previous health boards operated on a financial year ending on 31 March, anybody who knows anything about accounting will confirm that it is extraordinary that a Government that has adopted a calendar financial year should arrange matters such that figures for the biggest spending heading in the public service come a full three months after the end of the calendar year. The Minister owes the House an explanation.
Like Deputy Bruton, I received the Minister's invitation to discuss how the Estimates and Revised Estimates process might be reviewed. I considered the model schemes he suggested but those schemes, rather like the figures in the Estimates before us, tell us nothing. For instance, the details for the Department of Transport listed the 21 quality bus corridors in Dublin as an achievement but they did not mention of outcomes. On at least eight of those bus lanes, journey times to town have increased on average by more than 20 minutes. However, in the Minister's proposal for a revised measurement of outcomes, that is offered as an achievement. The Revised Estimates process is difficult enough as it is. Unless the Minister is prepared to acknowledge the important and reasonable reforms suggested by the all-party Committee of Public Accounts which considered how the practice of other parliaments compared to our experience, it is not worth undertaking any review.
I would like an update on the confusion surrounding tax credits and certificates. I know that many have received their certificates following my raising of the issue last week, but the volume of errors is enormous and on a scale I have not seen before. Perhaps the Revenue Commissioners ought to have received more staff. What is the story with Revenue's information technology system? Is all going well or are there difficulties with it? The number with wrong certificates who are now contacting all sorts of people, from Deputies to the presenters of radio programmes, is far higher than I have ever experienced before. We need an explanation as this is important.
I call on Deputy Murphy to make an opening statement on behalf of the Technical Group.
As someone who was not previously a committee member, I do not have the benefit of being able to refer to previous years. Therefore, I will probably stumble through what I have to say.
Decentralisation is a major issue, given that we are only embarking on, rather than being in the middle of, the process. It is difficult to see how a programme of voluntary relocation can be delivered without significant increases in the number of public servants. I have no problem with increasing the numbers of civil or public servants in front-line services for which more staff are required such as speech and language therapy, occupational therapy and the other services about which we are continually contacted because of the inadequacy of the existing level of services. We have a geographical imbalance in their availability. For example, in constituencies such as Kildare North that have witnessed significant increases in population, the increase in the number of public servants has not been in proportion to the level of need. I have no problem with increasing the number of public servants as long as they are employed in tasks that the public believes are needed. However, when additional public servants are employed simply to deliver a decentralisation programme, it is difficult to get one's head around how the public services are being managed.
I could not but notice that the Revised Estimates for public services report showed some Votes as incurring very large increases in incidental expenses — in one case, the increase is 102% — and other expenses such as travel, lunches and so on. Such expenses can only increase year on year if public servants are to be required to travel longer distances. I have concerns about the roll-out of the decentralisation programme, which is not at all clear. I also want to draw attention to a number of other issues raised in the report. I was amazed at the 125% increase in spending on the secret service. I do not know whether the Minister for Finance can go into detail, but I cannot for the life of me figure out why we should be increasing spending in that area by such a sum.
I am pleased to see that more people are likely to live to the age of 100, given the 34% increase in the Estimate. At the same time, there does not appear to be any increase in the amount they will be given.
There is a 405% increase in spending under the heading "value for money" in the area of e-government. This can be a very good investment, as long as it is delivered well. For example, local authorities in Britain saved a very significant amount through having an e-procurement process, on which one can see a return. I would be concerned, however, that it might simply be spent on consultancy contracts rather than delivery.
On the Ombudsman and the Information Commissioner, the time taken to resolve cases is getting longer all the time. There is a clear need to continue to invest in this very valuable service. A large sum is going on salaries and wages. That is good, since it is people who ultimately deliver a return.
There is an increase in spending on the Ordnance Survey. If one goes to the Land Registry, one sees that there is a considerable gap in mapping availability, in respect of which the Ordnance Survey obviously has a role to play. One can secure up-to-date maps for some places but not for others. Is the additional expenditure likely to produce an improvement in the service?
I have picked at a few areas, but decentralisation is the key issue. How it will play out and the overall cost of the programme are of obvious concern to everyone.
I compliment the Minister on his approach to the national finances. When I hear questions raised about extra civil and public servants, I wonder whether the complaints should be focused on the extra 5,000 teachers, 7,500 nurses, 750 consultant posts, or the 1,500 or 1,600 gardaí. It is very easy to criticise an increase in the civil and public service, but if one analysed matters and said to the committee that one did not want any of those additional posts, that would lead to real political debate.
The Government stated it would reduce numbers by 5,000, but that is not what it did. We tend to believe Ministers and accept their word.
The Deputy will have to appreciate that this country moves on at a pace year after year. We have another 500,000 people working in the country.
Why did the Government not announce a change of policy?
We have a level of economic activity second to none in Europe. Obviously, we may have to meet the challenge posed by the additional people living and working in the country and the higher numbers of children who require schooling. The extra gardaí and consultants are all necessary. I see no reason anyone would say they are not needed.
This committee has heard a great deal about decentralisation in the past two and a half years. My recollection of the debate has been of continual attempts to undermine the decentralisation programme. My reason for saying this is that certain parties in both local and European elections clearly stated they were opposed to the programme. At one stage we had a call from an Opposition MEP to get all elected persons in the Dublin area together to oppose decentralisation. It would be much fairer if the Fine Gael Party came out straight and said the Dublin policy on decentralisation was one of opposition, while their country cousins ask for their constituencies to be included. The Labour Party does not know whether it is coming or going on the matter. This committee has heard all kinds of debates, with attempts to scupper the programme.
Whether we believe it, 10,600 members have still applied for decentralisation. I understand the figure is increasing by approximately 100 per month. People are interested in the programme. There are difficulties, as everyone appreciates, and there are trade union and labour relations matters to deal with. There is no question — no one would wish it otherwise — of there being anything other than a voluntary scheme. However, there must also be protection for the civil servants involved, on which negotiations are ongoing. The debate has not been honest at this committee or in the public domain in the past two years.
I will address some of the issues raised. Approximately 111 Delivering Better Government and expenditure reviews have been completed over the two rounds since 1997. Of the latest 54 reviews, 14 have been completed and 14 quality-assessed, leaving them close to completion. Five are at the stage of quality assessment, while 21 are ongoing. I have stated I wish the expenditure review processes completed this year, during the first half, if at all possible. That way, we will be able to have a proper debate on the reviews undertaken.
On that point, in several parliamentary replies last year the Minister stated that early in 2005 he would submit to the Government an entire new programme for the next three years, but that did not happen.
I will presently——
Presently.
It is about my being satisfied that what is proposed for expenditure review meets with my requirements. That involves working with Departments to finalise those that will be carried out. They will be conducted during the course of 2006 to 2008.
Will the Minister include health and the OPW which were inexplicably left out of the last review?
It was not a question of their inexplicably being left out. As the Deputy is aware, major reform is being undertaken owing to administrative reorganisation of those services from a quality perspective. We wanted this in place, not because it is unimportant that we continue with reviews, since we will do so. They will be undertaken in the course of 2006 to 2008.
The Minister is too busy sailing to look at the compass.
It is about using resources to best effect to ensure we provide for reform. Everyone talks about reforms, but we are providing for the most major reforms in the health service in 35 years. The Deputy asks why there has not been a whole series of reviews in addition. We are introducing reforms and when they have bedded down, the review process will be resumed. There is no question of not acquiring a priority. It is a matter of getting the job done without ending up with a whole series of reviews to change management policy. That was a policy decision I took and which I defend. The Deputy may disagree with that——
The evaluation system put in place in 1997 was to be like a map and a compass for the type of reform the Minister is talking about. Instead of using that map and compass, it was left aside and now he is saying we will undertake——
It was not left aside. If I am allowed I will deal with some of the Deputy's points. I am answering them. Some 111 reviews have been completed. Is there any aspect of those reviews with which the Deputy has an issue? Does he want to discuss them? He wants to suggest that no reviews are taking place.
I do. I want——
Obviously there will not be a discussion. There will be interruption.
Of course there will be interruption. I expect the Minister to interrupt me, too.
In that case we will not have a very informed debate.
We will.
We will not. I will rush matters along as quickly as I can. As regards expenditure reviews, as the Deputy knows, there were suggestions from line Departments on the areas that should be reviewed. Those should accord with the priorities the Department of Finance requires. I want to see substance to the review process.
That I have not signed off on them yet is not because I do not attach priority to them. I want to satisfy myself in further discussions with my officials that we are getting reviews in the areas we should get them. One of the observations I would make about the process is that the line Departments make the suggestions as to where they should be done and then we proceed with the reviews on that basis.
I am glad to hear the Minister at least accepts that the critique of what has been going on is well made.
It is like everything that has begun and is being put in place. People want to suggest that it is not working. It has been working and we need to improve it. I am not suggesting that everything is exactly as I would like it to be. One of the issues of this review process is that there is a need for line Departments to undertake this process in a way that subsequently achieves improvements down the line. This is preferable to just reviewing the process where people might just say there is no problem and seek to move on. In some cases that is the position. Others need to be vigorously investigated.
I agree with what the Minister is saying in many respects but he cannot airbrush over the fact that in 2004, seven or eight years into the process, the high level group of Secretaries General said the reviews that had been done were patchy and had achieved no impact on subsequent decisions on budget allocation. That was an absolutely fundamental flaw in the Vote.
Some of the reasons for that critique were that the areas targeted did not warrant review. In other words, are we getting to the area of expenditure reviews that should be given priority and enable us to learn whatever lessons we need from the review process? In some cases there were areas of expenditure under review which did not throw up a problem. The fact that a review confirms that the process of expenditure and accountability is working well is something that should also be considered as a possible outcome of this process.
The idea coming from the Opposition that every area of Government expenditure is wilful waste is clearly incorrect. By the same token——
That is nonsense. The Minister knows well that when this was announced it was said to be a three-year process within which the entire Government programmes would be reviewed. It was not to be a selective but rather a comprehensive programme. He should not pretend that my criticism of under-performance is equivalent to me saying it is a waste of money. That is a distortion and the Minister knows this.
I am not pretending that.
That is what the Minister said.
I am simply referring to the stereotypical argument that passes for debate around here, where the Opposition says everything is a waste and the Government suggests everything is hunky-dory when neither position is correct. It offends people's common sense, anyway. Arising from the report of the Secretaries General is the idea that we need to ensure we have the processes in place, departmentally, that gets us the output and the benefits a review process indicates should emanate from it.
However, some of the reviews indicated that there was a good accountable mechanism in place and matters would go as one might have expected. I emphasise that this is not the only mechanism available to Government for testing value for money issues. It is one important element in the continuing drive to secure value for money and the more effective and efficient management of public expenditure. The introduction of multi-annual capital envelopes has been an improved and more effective mechanism. Publication of the revised capital appraisal guidelines in February 2005 has certainly improved that situation. The value for money initiative I announced on 20 October, building on those guidelines of February 2005, is further evidence of our commitment to that area. A circular has been sent by my Department, arising out of all of that, to Departments, earlier this year. There was the reform of the Estimates and budgetary process which I announced in 2006.
It is interesting that when I try to have a more informed debate and have a three-year appraisal of future developments and bring forward statements in the autumn, this is thrown back in my face by some Deputies. Yet every second word from the Labour Party is about reform. When I make the effort to bring a greater sense of collegiality to the debate, I am told in effect, to forget about it. I note the honourable exception of Deputy Bruton in that regard.
The question as regards the public service employment issue which I provided by way of reply, yesterday, 28 February, to a parliamentary question submitted by Deputy Paul McGrath, outlines the factual position. From 1997 to 2001 there had been increases of almost 43,000 or 19% in the number of public service employees. When the policy was introduced in December 2002 to the end of 2005, the increase was of the order of 6,300 or just over 2%. We have therefore seen a significant slowdown in the increase in numbers. We have always made clear that it is not an indiscriminate policy. There have been reductions as regards the numbers employed in the Civil Service, the Garda Síochána, local authorities and non-commercial State-sponsored sectors which have been reduced by 3,700 — and the target for this group of personnel has been exceeded. However, numbers employed in the health and education sectors have increased by 10,000 over the 2002 baseline.
I accept that the original targets in the health and education sectors have not been met. We have been prepared to increase numbers to meet priority needs in front line and essential services. The employment of additional front line staff, for example, has been approved for new health units, additional disability posts in the health sector, special needs teachers in the education system — numbering thousands — and to increase the number of gardaí; this is in line with an approach stated when the policy was launched. That is an important point to make. The Government decided to increase numbers to meet priority needs. The employment of additional front line staff has been approved for those units as well as the additional disability posts I have outlined. In the light of trends, the policy, therefore, has definitely been a success by that standard. It was not an indiscriminate policy. Much of the increase in staff numbers relates to health and education at a time when the Opposition argued that it was insufficient.
With regard to decentralisation it is important to put some issues on the record. As Deputy Finneran has said, there are about 10,600 applications for decentralisation so far. The central applications facility, CAF, remains open and new applications are received each week. The objective of the decentralisation programme has never been to simply move civil servants to provincial locations. It aims to move civil servants who volunteer to relocate to positions outside Dublin. There has already been considerable movement of staff within and between Departments and offices in preparation for decentralisation — with about 1,150 officers already assigned to posts that will be centralised. Departments are continuing their detailed preparations as regards all aspects of the programme. The key issue is not the degree of mobility, but how it is managed. The Civil Service has considerable expertise in managing successful decentralisation moves. The key issue is not the degree of mobility, but how it is managed. The Civil Service has considerable expertise in managing successful decentralisation moves. Organisations such as the Revenue Commissioners, the Department of Social and Family Affairs and the Department of Agriculture and Food have managed large-scale moves in the past, while retaining excellent service to the public. Mobility is not something new, but a normal element of human resource practice across Departments to ensure that staff move posts on a regular basis in order to acquire skills, expertise and knowledge as they progress through their career. The decentralisation implementation group has set out a phased approach to this, which means we are concentrating initially where the staff are ready to move and the accommodation issues allow for an early move. This has also required each organisation to prepare detailed implementation plans, setting out the practical steps to prepare for relocation. Processes and systems have been put in place to support induction and training of new staff, knowledge management, records management and so on.
The Deputy asked whether decentralisation would result in an impact on public service numbers. There is no suggestion of an increase in public service numbers to support decentralisation. Staff wishing to remain in Dublin will be placed in existing posts within Dublin. The phasing of the programme and the turnover of staff will provide significant opportunities to place Dublin-based staff over the full length of the programme. An additional process is not, therefore, proposed in the management of decentralisation. However, it is a complex issue and it requires much effort, discussion and management. We have had successful relocations in the past. The recent decentralisation implementation group reports set out how to identify the early movers and how quickly we can proceed with the move. It was always a voluntary programme. In order to show the seriousness of our intent, my predecessor wanted to proceed with it as quickly as possible, consistent with the principles he enunciated on the day the programme was announced. Discussions with some staff organisations are more rapid than others and we must deal with that. However, the Government is committed to this process as we think it is the right way to go. Deputy Finneran made a fair point when he said that there is at least a consistent voice on the Government side. There are very varied opinions on the part of the Opposition. Pronouncements here do not correspond with the stated positions of parliamentary party members or with the inquiries I receive from them, nor do they correspond with statements made in the local media.
A process is in place to capture all non-property costs of decentralisation. Costs will not be significant in the early stages, but data is currently being collected and will be relayed to the committee as soon as possible. I discussed the issue of the decentralisation of my Department in the House yesterday during parliamentary questions.
There seems to be a greater demand among lower-grade civil servants to move, probably because they are younger and are not yet property owners. It would be a miracle if the desired location of 10,000 civil servants was the same as the proposed locations. A multiple of that number would be needed to fill the various posts in the different locations. Does the Minister expect that it will be delivered on time or according to the programme, given the numbers that have volunteered at this stage?
I can only refer the Deputy to the recent reports of the decentralisation implementation group. It set out the phased stages of the move, based on information currently available and the experience of previous programmes. There have been substantial relocations in the past which presented the same problems discussed today. Our experience of previous decentralisation programmes has been good, despite initial reluctance on the part of many people who had legitimate questions to ask. We are embarking on a very ambitious phase of decentralisation this time and this adds to the complexity. However, these problems have been confronted before. The decentralisation implementation group provides us with the information on how the issues are developing as we proceed. The date of decentralisation will be consistent with IR practices and agreements and when property solutions are found. It was never any other way and to suggest otherwise is to misrepresent the position. In an effort to indicate the seriousness of our intent, my predecessor sought substantial progress and I would like to see more progress than we have seen to date. However, we must respect the legitimate interests involved and proceed as quickly as possible, consistent with partnership principles and IR practice.
Subhead A2 is for travel and subsistence expenditure incurred by civil servants, the Minister and Minister of State at the Department, while on departmental business. Provisions have been made in the Estimate for an expected increase in the cost of travel, especially the travel costs associated with decentralisation of parts of the Department in the third quarter of the year. The Estimate for 2006 represents a reduction of €50,000 from the figure for 2005. Another year's provision has been made for travel and subsistence expenditure associated with involvement with EU activities, including ECOFIN meetings. I ask Deputies to recognise the increasing interaction that our staff have with the EU, which requires attendance at many committees in Brussels to advance and protect our interests. I suggest that it is money well spent because absence from these meetings could leave our interests compromised. Our staff also attend OECD meetings and engage in other miscellaneous travel. Travel expenses incurred at home amounts to €393,000, EU travel amounts to €488,000 and non-EU travel amounts to €338,000. The allocation for home travel expenses includes a requirement of around €130,000 to meet additional travel and subsistence needs arising from decentralisation to Tullamore. There will be significant testing and training in Tullamore in advance of and after the relocation of the office.
Will the Minister circulate a separate document that deals with the cost elements? We could then get a picture of the training costs, the travel costs and the incidental costs, as well as the promotion and recruitment costs. As Deputy Catherine Murphy said, on the last occasion the two successful agencies were the Department of Social and Family Affairs and the Revenue Commissioners. The office of the Revenue Commissioners explained to the committee that it had a float of 200 staff which allowed it to manage the process of decentralisation. It also explained that 15% of posts were filled through new recruitment and a further 30% of posts were filled by way of promotion, so new promotional opportunities were created. The oil that made it work for the Revenue Commissioners was a 200 person float, new recruitment and new promotional opportunities.
There seems to be a pretence, which Deputy Murphy probed, that this process happened smoothly with no staff implications, and Departments continued to be able to provide front line speech therapists and so on without any impact. The evidence is that there is a cost, which I want explained. The Minister and Deputy Finneran stated that we speak with different voices, which I accept. I have a different view with regard to the Ordnance Survey, where it was found that none of the professional staff wanted to move with the result that we are at risk of witnessing a meltdown of the Ordnance Survey skills, or Fáilte Ireland, where no-one wants to move, or the overseas development section of the Department of Foreign Affairs, where it seems the technical staff involved in evaluation will not move. There is a different attitude to decentralisation in these areas than is perhaps the case in the Department of Social and Family Affairs, which has well established systems and a method of retraining and re-skilling staff who are changing locations. It is a not a case of claiming to have found the Minister out to suggest a different attitude exists with regard to different elements of this programme. That is simply to be honest.
Are we entitled to make other points?
I will conclude the Vote for the Department of Finance before moving to the Revenue Commissioners.
On the Department of Finance Vote, a new benchmarking process is beginning, for which the Minister is making an allowance of €2 million. I am not clear what is the new mandate. Is the process to be transparent this time? The Minister indicated some level of dissatisfaction with the last benchmarking process — I will not ask him what that level was. However, he certainly indicated a resolve to change. I am unhappy with the secrecy that surrounded the last process. What will be the terms of operation on the next occasion?
With regard to the findings on pay, on the last occasion virtually 99% of grades received increases. On the next occasion, given the statistics available, will some grades receive increases and some receive decreases? Will the framework and terms of reference be more clearly linked to real gaps between public and private sector workers doing the same work? There was a widespread view on the last occasion — nothing has been done to dispel it — that the link between the evidence and the findings was tenuous and that the link between the pay awards and the subsequent productivity changes was very tenuous. I am interested to know how the Minister intends to change this so that the process becomes more transparent and delivers better value.
We have had bad experiences with consultancies in the past 12 months. I note that the Departments under the Minister's wing, so to speak, are increasing their consultancy spend from €19 million last year to €28 million next year, which is an increase of close to 50%. Given the PPARS debacle and the finding that no one was in charge of some of the projects and that the deliverables were not sufficiently identified up-front so projects rolled on without giving value, has the Minister considered the way in which his Department and agencies handled these consultancies so that, first, we only take them in where they will provide added value and, second, someone rides shotgun on the consultants with the result that we will pay for something that is worth paying for.
I refer the Deputy to the initiatives I have announced and the circular I have forwarded to Departments, following a speech I made in October last, which adds to the capital appraisal guidelines and sets out specifically with regard to consultancies what the modus operandi must be, in particular for contracts worth over €30 million. I have set out in public what I expect and a circular was circulated by the Department of Finance to Departments arising from that.
With regard to the level of monitoring, the allocation to Revenue, at €26 million, is obviously the big one. Is there a system of reportage in that regard?
I do not have the Revenue details to hand. I will obtain the answer.
The terms of reference of the benchmarking body provided it should conduct in-depth and comprehensive research and analysis of pay levels in the private sector on the basis of overall pay levels in the two sectors, as well as rates for particular groups such as clerical and administrative staff, technicians and other identifiable groupings such as graduate recruits, the overall pattern of pay rates in the private sector and employments across a range of types, sizes and sectors, and the way reward systems are structured in the private sector. As previously, the body in reaching its recommendations should have regard to the need to recruit, retain and motivate staff with the qualifications, skills and flexibility required to exercise different responsibilities, the need to support ongoing modernisation of the public service, the need to ensure equity between the employee in both the public and private sectors and the need to underpin the country's competitiveness and continued economic prosperity. The body in that work is to have regard to the differences between the public service and the private sector and between the various public service groups within its remit, working conditions, the organisation of work prerequisites and conditions of employment and other relevant benefits, including security of tenure and superannuation benefits.
The terms of reference provide that the body should seek to ensure the optimum level of transparency consistent with the efficient and effective operation of the benchmarking process regarding the factors, and their import, which the body took into account when determining the appropriate pay levels. That work is commencing and expenditure this year will be mainly in the area of fees for the members of the body which has been established, costs arising from the engagement of consultants to carry out research and survey work, salary costs for staff seconded to the secretariat of the body and administrative overheads.
With regard to tax credits-——
Before the Minister moves on from benchmarking, the body outlined is no different from the last body. There has been significant criticism of the transparency of the last process. The last group stated that providing any detail was not consistent with it doing its job. The question is whether the next benchmarking commission will offer more detail and justification, and whether more effort will be made to show that the awards are based on productivity change or best practice change, and are linked to-——
It is anticipated that more information will be made available on this occasion than was the case on the last occasion. The benchmarking body is being asked to examine the pay and jobs of specified grades and to produce a report containing recommendations on the pay rates for these grades in the second half of 2007. It is anticipated that, consistent with the aim of making more information available, it would be more informative in that respect than was the case during the first round because of the fact——
On behalf of the taxpayer, will the Minister establish some sort of a framework that gives us the level of transparency we have a right to expect, rather than leaving it to the group to set its own terms?
The group will work on that basis. The chairman will be someone with whom I can discuss these matters as the process progresses. I am on record as stating that I want to see, in a way that is consistent with the group being able to do its job, more public accountability for the basis of recommendations than was possible on the first occasion, for a range of reasons. There are lessons to be learned from that process.
On the question of tax credits, some situations have been identified where the information relating to credits on the 2006 tax credits was incorrect. Most of these cases have already been corrected and taxpayers notified of their revised credits due. Any adjustments are of course automatically backdated to 1 January.
Revenue is working to fix the remaining problem cases as quickly as possible. Given the scale of the operation, involving 2.2 million tax credit certificates, it is inevitable that a small proportion will be incorrect and have to be revised. Revenue is aware of the need to ensure these cases are dealt with as speedily as possible in order that workers' correct entitlements are reflected in their pay. The redesigned PAYE computer system gave rise to additional problems in regard to incorrect tax credit certificates this year. However, the overall percentage of incorrect cases remains relatively small. All certificates were issued by 24 February.
Decentralisation costs in this year's Revised Estimates for the Finance Vote are €1.2 million, under subheads A.2 to A.5, inclusive. In response to Deputy Murphy, Ordnance Survey Ireland has embarked on a programme to upgrade its large-scale mapping which will bring about an improvement in the level of service it offers. In regard to the secret service Vote, the Dáil, for obvious reasons, expressly waived its right to the explanations to which it was otherwise entitled in respect of all grants of public funding under this heading.
Is there something the Minister is not telling us?
These are confidential and sensitive issues. It is standard policy, despite annual savings on amounts provided in the Vote, to provide for a substantial margin. This enables any unforeseen demands to be met, thus obviating the need for a Supplementary Estimate which would be undesirable in a service of this nature. It will be noted from the expenditure table that the margin was substantially increased after 1995 because the Vote had become extremely tight in 1994 and 1995.
Deputy Burton had a question about the Health Service Executive. As we will deal with the relevant order shortly, perhaps I will refrain from commenting until then.
That is the second issue on the agenda and we will deal with it presently.
Now that we have the revised volume, can the Minister give his revised estimate for the percentage increase in public expenditure? On budget day he indicated it would be in the order of 11%. Given that he included at year end the figure of €400 million for nursing home fees and in view of the other significant changes that have arisen, what is the revised figure for the proposed increase in public expenditure?
The revised figure is 13%.
I worked it out at 13.8%.
The figure I have is 13%.
Why does the Minister need 45 extra staff in his Department?
These staff are required to fill vacancies. The Department is still below the authorised level of staffing it has been allocated.
What roles will the staff concerned fill? The 45 extra persons represent a 7% increase in staff numbers. Does the Minister have information on what work they are likely to do?
They will fill current vacancies and also be used for decentralisation purposes.
The number includes staff involved in the decentralisation process.
Yes. There are also vacancies, however, because we are below our authorised staffing levels. We intend to fill some of those vacancies this year.
Does the decentralisation process account for the bulk of this recruitment?
It accounts for some of it. It includes the usual mix of vacancies.
In regard to public service modernisation, I understand the Centre for Management Organisation and Development, CMOD, will be broken up under the decentralisation process, with some of its staff going to Tullamore, some to Kildare and some remaining in Dublin. Will the Minister provide some detail on this?
The training staff will go to Tullamore and the information technology department to Kildare.
Who will remain in Dublin?
The remainder will stay in Dublin.
What role will they play?
The IT support staff will remain in Dublin.
In the event of another PPARS catastrophe, who will be in charge?
The staff based in Kildare will have responsibility in such circumstances.
Can the Minister provide a breakdown of the proposed increases in public service numbers? In regard to the Health Service Executive, for instance, how many are front-line staff, including nurses and doctors? I do not expect the Minister to have the figures now but perhaps he will make them available to us. I understood from Professor Drumm's presentation to the Committee of Public Accounts that he was suffering from a high level of frustration because the cap on staff numbers obliged him to hire agency nurses, for example, at a considerably higher cost than would be the case if they were recruited directly. I would like a breakdown of what the extra 8,818 people will do in their departments.
The numbers employed in the health and education sectors have increased by 10,000 above the 2002 baseline. Many thousands of nurses, physiotherapists and others have been recruited; I am sure the details of this recruitment can be obtained from the Department of Health and Children. We have authorised the employment of extra staff to meet requirements, including, for example, major increases in staff numbers in disability services. I am sure the Departments can co-operate to provide the Deputy with a broad outline.
I thank the Minister.
That completes our consideration of the Revised Estimates for Votes 1, 5, 6, 7, 8, 9, 11, 12, 15, 16, 17, and 18.