SELECT COMMITTEE ON FINANCE AND THE PUBLIC SERVICE debate -
Wednesday, 19 Nov 2008

Business of Select Committee.

Chairman

Members will recall that in February the then Minister for Finance wrote to the Select Committee on Finance and the Public Service asking it to co-ordinate an overview of the annual output statement process undertaken by the committee this year. Following previous discussions, the responses received and consideration of the research paper prepared for the committee by the library and research service, a draft response to the Minister has been circulated for discussion and agreement by the committee. Do members wish to make any additions or amendments to the draft letter before them? The second paragraph on the second page states:

The Committee is strongly of the view that they require further refinement and standardisation in order to achieve clarity in relation to the monies which have been spent in the context of each programme target, the activities involved, the outputs produced, the overall outcome and the link back to the subheads in the Estimate.

That is the kernel of the letter.

Deputy Richard Bruton

As a general principle these statements are of limited value until there is a clear link forged between the money and the targets we talked about. At the moment there are broad categories of cash expended and a series of targets, some of them achieved and some not. If budgets are to be spent in a way that performance is clear, there has to be a link from the outset between the money being allocated and the performance that is expected. They will not always be perfect but the current system whereby budgets and Estimates are drawn up without any indication of what it is intended to achieve, is very unsatisfactory.

The output statements come much later in the development and it is retrofitted into the money that is already committed and then in itself it is highly selective as to what targets they decide are important. The selection of targets rarely connects with the public's view of what is the priority of those Departments. They are typically progress targets — a very high proportion of them are progress targets like the completion of some committee meeting or having six colloquiums on some subject. They are not hard-edged targets that the public would understand.

This process is not succeeding in linking money with results. It is not making clear what the Government is trying to achieve and setting some form of accountability standard for it. It is falling between all the stools. While I do not think it is to be rejected, it is a move in the right direction but it is so seriously flawed that unless it quickly improves it will be generating heaps of paper and very little real performance motivation.

Chairman

That is the reason included in the last page, that the other key actions which the committee has agreed would enhance the process for select committees. The Deputy has been talking about some of those things, about making it more focused. I invite the members to study the letter——

Deputy Joan Burton

The letter is written in very diplomatic language. There are quite a number of points in it which are hard-hitting in the language of diplomacy. However, given the current position of the country there needs to be something more direct said, such that it is very difficult for the members of committee to identify the value for money in the output statements. I suspect we do not have a way of ascertaining what it costs Departments to produce the output statements.

The process so far has been a joke in some ways. I gave the example of one of the early examples the committee received which was about quality bus corridors. As everybody knows, in many of the quality bus corridors the time taken to travel has gone back rather than forward. It is meaningless unless it is linked with the provision of buses, for instance. We were given this glowing report where all the boxes were ticked — a bit like the health of our financial institutions where the regulator managed to find no technical problem with solvency issues in any of the financial institutions but none the less, we were told they were collapsing.

This kind of output statement is part of a trend in public service reports which sheds very little light on the process. I agree with the contents of the letter but at some point earlier in it there should be a very clear statement that members of the Select Committee on Finance and the Public Service have found them to add very little value to the process of examining Government expenditure. As the report said, it may well be that in other countries where a culture has been built up they are valuable compared to the ones we have seen so far.

This year the difficulty has increased. On budget day, we were given Estimates for 2009. We had Estimates for the rest of the year between 14 October and 31 December 2008. We have no mechanism for linking the two. It makes the Estimates for 2009 particularly unknowable as to whether they are meaningful at all. The format and the theory behind them remains good but they are not providing any insight and evaluation of Government accounting. It is almost impossible to use them in any meaningful way.

Chairman

The content of the letter is saying this in effect.

Deputy Joan Burton

I know it is.

Chairman

I presume the Deputy is asking if it could be put in less diplomatic language.

Deputy Joan Burton

Yes and at or near the beginning of the letter.

Chairman

It is the structure of the letter rather than the content.

Deputy Joan Burton

The content is very good as is the reference to the report which was commissioned. It is a good report and it is very insightful. The comparison with other countries in the report is very helpful and it certainly helped me.

Chairman

We will get a restructuring of the letter.

Deputy Joan Burton

All it requires is a sentence at the end of the first paragraph to say that so far, the committee has found the output statements to be of very little value in helping it to examine the performance of public expenditure.

Chairman

I have no problem with that.

Deputy Kieran O’Donnell

They are very academic in nature, what I saw of them this year. They serve no purpose.

Chairman

I think that is agreed.

Deputy Kieran O’Donnell

They are bad value for money for the public purse.

Chairman

Is that agreed?

Deputy Chris Andrews

Is it possible to have something less academic? They talk about plain English. Is it easy to do those things?

Deputy Richard Bruton

The most important thing is not the plain English; it is to say, here is a programme——

Deputy Joan Burton

It sets out what has been achieved.

Deputy Richard Bruton

——which cost such an amount and delivered such and such results. They were 10% short of what we thought. We can then look at the cost per unit it delivered and whether that was good value. There was nothing like that. It was not so much that they were academic but that they were——

Chairman

We are all in agreement.

Deputy Joan Burton

Otherwise they will just file it.

Deputy Richard Bruton

I suggest we should be blunter and say that——

Deputy Joan Burton

We should say we have found it of very little value.

Deputy Chris Andrews

Ask Deputy Edward O'Keeffe to frame it.

Deputy Richard Bruton

Can we recruit him back to the committee?

Chairman

He would not return.

Deputy Chris Andrews

Wild pigs would not drag him in.

Chairman

It would embarrass me.

Deputy Joan Burton

That could be a Cork thing.

Deputy Kieran O’Donnell

The word is the two Deputies are a very good team in Cork East.

Chairman

We will move on with——

Deputy Kieran O’Donnell

When are the annual output statements published?

Chairman

The Departments are starting to prepare their Estimates and annual output statements for submission to committees in the new year. To have any impact at all in next year's documents, the committee should aim to agree to what we have done and we have amended it.

Deputy Kieran O’Donnell

When will the committee receive the annual output statements? It is pointless getting the annual output statements this year that do not serve the purpose they should serve.

Chairman

It will be early in the new year.

Deputy Joan Burton

Is that for 2008?

Chairman

Yes.

Deputy Richard Bruton

The report for 2008 will be published for our Estimates debate. They have to bring that document with the Estimates.

Deputy Joan Burton

Given that the budget was earlier this year, will the Estimates be moved forward?

Chairman

We will ascertain the position. They should. I do not know.

Deputy Kieran O’Donnell

The point is that the statements should have some value. They do not contribute that.

Deputy Richard Bruton

I will clarify the point. Output statements should be clearly linked to the Government's priorities, which are supposed to be set out in the strategy statement. That linkage has to be forged. The output statement should set out the money spent on each target. When a target is set, we should know how much money is connected with it. We should have some ability to assess whether the cost per unit of the outcome that is delivered represents value. That may require a comparison with benchmarks elsewhere, for example in the private sector. That is the process. Ideally, the process should provide for links between the origin, the money and the facts and some evaluation of the facts.

Chairman

The problem is that they are not clear enough.

Deputy Richard Bruton

Just one of the four elements I have mentioned is in place.

Chairman

We all agree on that. We will move on to the next matter, which is the value for money and policy review of the flood risk management programme. The select committee's terms of reference state that it may consider any value for money and policy review that is commissioned and conducted by the Departments of the Taoiseach and Finance. Value for money reviews provide an important mechanism whereby spending Departments can conduct in-depth examinations of expenditure. Such examinations involve a consideration of the effectiveness of selected expenditure programmes. Does the select committee wish to schedule a future meeting to consider the report on the flood risk management programme, a copy of which is available?

Deputy Richard Bruton

We should tie it in with the committee's consideration of the 2009 Estimate in this area. Perhaps we should seek the early presentation of the 2009 Estimate for expenditure under this heading. That would allow us to consider the allocation for 2009 in the context of this study. The difficulty with previous studies has been that while they were sometimes good in themselves, they had no bearing on budgetary allocations for subsequent years. Secretaries General have admitted that the lessons of such reports, which can be bland, are not generally applied. They do not dictate change in the way money is spent. I glanced at the report on the flood risk management programme earlier. I do not know how much was paid to Goodbody Economic Consultants, but it does not strike me as great value.

The report suggests that these projects were appraised before they commenced. The appraisals showed that they had net economic value. The report does not present the details of those appraisals or suggest whether any ex post appraisals were conducted to ascertain whether the benefits which were hoped for were actually delivered when the flood relief programmes were concluded.

Chairman

I can vouch for the work in Mallow.

Deputy Richard Bruton

The report does not tell us much. The consultants mentioned witheringly that a programme of clear budgets, targets and timelines was not put in place at the outset. They suggest that it is not surprising that the flood relief work came off the rails when the preparatory work had not been done. They indicate that the programme has come off the rails. They point out that those involved have not met the targets for spending money or delivering projects. Those involved in the projects have offered assurances, which they have not substantiated, that all the projects represent good value for money. When one scans the document, it sheds a little light on the process, although not enough to justify the amount of money the consultants who compiled it were undoubtedly paid. We should invite representatives of the Office of Public Works to this committee to discuss the office's Estimate for 2009.

Chairman

That is fair enough. We can do that.

Deputy Joan Burton

I presume they will come to this forum to discuss the Estimate early in the new year.

Chairman

We will check the dates, etc.

Deputy Richard Bruton

The discussion with the Office of Public Works is usually crammed in at the end of the discussion with the Minister for Finance. It is a session that is——

Chairman

It is too fast.

Deputy Richard Bruton

It is peremptory.

Chairman

Yes.

Deputy Richard Bruton

We commented last year on the inadequacy of the OPW's output statement. It was by no means the worst statement. It was probably far ahead of most statements. If we want to undertake this process in a meaningful manner——

Chairman

We can contact the OPW to say we want more detail.

Deputy Richard Bruton

We should say we want to discuss the output statement and this evaluation.

Chairman

We do not want that debate to be an addendum to the finance debate.

Deputy Richard Bruton

Yes.

Deputy Joan Burton

The other critical issue, particularly in my constituency, is whether the flood mapping work that has been done has any bearing on where development is allowed. There are major and significant difficulties in my locality. Heavy rain caused problems in September of this year. For example, flood waters got through the walls of lower ground level apartments. I do not refer to apartments that are significantly below ground level. They may be half a step below ground level. The same problems arose in duplex houses in Clonee. The owners will have to vacate them for approximately seven months.

It is well known that the buildings in question were developed on a flood plain. The Irish language name of the River Tolka is "An Tulcha", which means "the flood". A large number of small streams come together in the Clonee area to form the River Tolka. It is difficult to know whether flood impact reports have any impact. The downstream cost of flooding that is borne by the State is horrendous. It is clear that people who end up living in houses on flood plains have, at most, only two opportunities with regard to house insurance. They cannot get any further insurance cover after that. The consequences of flooding for individuals can be severe. I would like to know whether any of that has changed.

Chairman

We will raise that matter as well. The last item on the agenda is a letter from the Chief Whip regarding the timing of the debate on the Supplementary Estimates. The OPW, the Department of Defence and the Department of the Taoiseach have confirmed that they will not have Supplementary Estimates. If there is no other business, we can end the meeting.

The select committee adjourned at 3.10 p.m. sine die.