Apologies have been received from Deputy Pearse Doherty. Deputy Jonathan O'Brien will attend in his place. The first item on the agenda is consideration of the Finance Act 2004 (Section 91) (Deferred Surrender to the Central Fund) Order 2019. Does the Minister of State wish to make a contribution?
Finance Act 2004 (Section 91) (Deferred Surrender to the Central Fund) Order 2019: Motion
I welcome the opportunity to make an opening statement on the deferred surrender facility, which is an important technical instrument to allow the Dáil to formally approve the expenditure by Departments and agencies in the current financial year of capital moneys carried over from the previous year. The multi-annual system is designed to improve the efficiency and effectiveness of the management by Departments and agencies of capital programmes and projects.
This is not the first time the capital carryover figures have been disclosed as they were first published in the Revised Estimates Volume in December and subsequently set out in Schedule 2 of the Appropriation Act 2018 which was signed into law by the President on 20 December 2018. The total level of carryover sought from 2018 into 2019 is slightly more than €93 million, which is 1.5% of the total gross voted capital allocation of €6.007 billion for 2018. The carryover amounts provided by the Appropriation Act are required to be confirmed by an order made by 31 March of the following year, after approval by the Dáil, to allow for the expenditure to take place. The carryover facility allows for a portion of unspent moneys which would otherwise be returned to the Exchequer under the annual system of allocating capital to be made available for spending and programme priorities in the subsequent year.
The provision of the capital carryover facility recognises the difficulties inherent in the planning and profiling of capital expenditure and acknowledges that, for any number of reasons, capital projects may be subject to delays. This type of approach of managing infrastructure expenditure makes sense and has thus far been very successful.
It helps to ensure better project management and avoid uncertainty in the context of delivery. The multi-annual system also gives more certainty to contractors that they will be paid for the work they do. It has also helped to improve value for money and eliminate the potential for wasteful spending on non-essential works to ensure that full capital allocations are spent before the end of the year.
The total gross capital allocation for 2019 amounts to €7.34 billion. The capital carryover of €93 billion will bring the total Exchequer capital available for spending in 2019 to €7.435 billion. The €93 million relates to 12 Departments and various capital projects and programmes that did not conclude at the pace anticipated in 2018. These are Vote 18, the National Shared Services Office, for which the figure is €1.168 million; Vote 20, An Garda Síochána, €3.581 million; Vote 22, the Courts Service, €2.5 million; Vote 23, the Property Registration Authority, €56,000; Vote 24, Justice and Equality, €942,000; Vote 29, Communications, Climate Action and Environment, €15 million; Vote 30, Agriculture, Food and the Marine, €22 million; Vote 31, Transport, Tourism and Sport, €18.366 million; Vote 32, Business, Enterprise and Innovation, €27.6 million; Vote 33, Culture, Heritage and the Gaeltacht, €700,000; Vote 37, Employment Affairs and Social Protection, €1 million; and Vote 39, Office of Government Procurement, €96,000. Departments and agencies have delegated responsibility to manage their capital projects and programmes within the terms of the delegated capital sanction set down by the Department of Public Expenditure and Reform. The availability of the capital carryover will assist in meeting their ongoing procurement and expenditure requirements.
To support Departments as they work to achieve value for money in investment in capital infrastructure, key reforms have been introduced. The Land Development Agency has been set up by the Department of Housing, Planning and Local Government to ensure optimal use of State land. Four new funds have been set up focused on urban and rural investment, climate action and disruptive technology to prioritise funding to the best projects. They are being managed by the relevant line Department. A construction sector group has been established to ensure regular and open dialogue between Government and the construction sector. A Project Ireland 2040 delivery board of Secretaries General meets regularly to ensure effective leadership of the implementation process. The investment projects and programmes office, IPPO, has been established in my Department to co-ordinate reporting on Project Ireland 2040 and drive reforms, including strengthened business case and project appraisal. A capital projects tracker is published on the Department's website to inform citizens of the variety of projects being rolled out in their area and to give a greater overview to the construction and infrastructure sectors. The tracker is currently being updated. A capacity and capability review of public sector bodies is being commenced by the Department in order to ensure that the State's delivery practices are to the highest standard. As part of the ongoing reform of Ireland's capital management systems, the Office of Government Procurement is conducting a review of construction procurement strategy and we are reviewing the public spending code. The purpose of these reviews is to strengthen the existing guidance to better align with the realities of project delivery and with a particular focus on improved financial appraisal, cost estimation and management.
Looking at the breakdown, much of the carryover seems to relate to salaries. Is there an explanation for that?
No, it is capital projects.
Yes, but looking at the breakdown, the explanation given for a number of them relates to salaries. Are they salaries relating to the capital projects? This is the underspend in capital that is carried over. Does an overspend in capital also carry over and reduce the amount of available capital in the budget for the following year under the relevant Vote?
No, the underspend is last year's money that has not been spent. I did not see the note about salaries but I assume it involves salaries relating to the projects where the money has not been spent currently so there is work to be done. It is not all just bricks and mortar. A significant part involves relates to salary so that would make up the salaries portion highlighted by the Deputy.
I suspect it is just a formula used in terms of wording. I have the text of the motion. It provides a breakdown. For each Vote, it starts with the words "for the salaries and expenses of" the respective office so I imagine it is a standard wording but it is not actually salaries if I am reading it correctly.
This is the title for the Vote. It is the subhead, which is the capital project itself. It is not salaries.
The reference to salaries is the title. It is not actual salaries, it is capital spend. What are the implications of an overspend for the following year? If there is an underspend, it is carried forward to keep the budget but does an overspend reduce the following year's budget?
The overspend is subsequently dealt with in that year depending on what is required so there may be a revised Estimate if the overspend is sufficiently-----
So it has no knock-on effect into the following year.
No. Revised Estimate would be presented rather than reducing the capital in that subsequent year.
Following on from Deputy Michael McGrath's questions, under the heading financial description, it states what it is for. It involves financial management and shared services. There is a description afterwards. Reading from the notice, I can see information about capital building, office equipment, external IT, Forensic Science Ireland, ICT programme, forestry and bio-energy. It breaks it down into the heading and gives the information regarding what the sums are for.
What is our schedule for the meeting?
We will conclude on this matter now and then move on to the Bill.