Vol. 783 No. 3
6. Deputy Thomas P. Broughan asked the Minister for Public Expenditure and Reform the position regarding the tendering process for the national lottery licence; the date on which a decision will be made; and if he will make a statement on the matter. [51432/12]
On 4 April 2012, I announced that the Government had decided to hold a competition for the next national lottery licence and that the licence will be for a 20-year period. Since April, my Department has carried out a considerable amount of preparatory work for the competition. It will be necessary to revise the National Lottery Act 1986. The Government has approved the general scheme of the National Lottery Bill 2012. The general scheme has been sent to the Office of the Parliamentary Counsel to the Government. It is my intention to seek Government approval for the Bill in the current session and, subject to Government approval, the Bill will be published shortly afterwards. In tandem with the publication of the Bill, I will set out a scheduled timeline regarding the competitive process for the next licence.
A key concern citizens have is that given the national lottery is, to some extent, a licence to print money, it may be a classic case of selling off the family silver. The lottery has raised approximately €4 billion for good causes and yet in media reports, the Minister seems to be talking about an up-front free for 20 years of only €400 million to €600 million. Is that any kind of a decent deal for the people?
Is the Minister taking the right approach? Would some sort of annual licensing or some sort of seven-year up-front licensing have been a better approach? Is the 20 years set in stone? Why is it 20 years? Camelot in the UK operated on a seven year licence and it got an extension. An Post operated on a ten year licence and it also got an extension.
Why has there been such a delay? We were expecting the legislation on this last month and now we are talking about June 2013. Has the Minister had discussions with any of the major operators we are familiar with in Europe, such as Camelot or Lottomatica, the Tatts group or the other large operators, some of which we are involved with in the euro millions scheme?
In the context of An Post, has the Minister has any consultations or discussion with the Minister for Communications, Energy and Natural Resources, Deputy Rabbitte, given that the future of An Post is so difficult because of the evolution of e-mail, web-based mail and so on? Has the Minister discussed the matter with An Post? Has he looked back over the experience An Post has had over 25 years in very successfully raising €800 million per annum?
Does the Minister have a baseline figure in his mind which any prospective tenderer would have to be prepared to give to the State? Would it be the current 30% plus for An Post or will the Minister go with Camelot's approach of 28%? Is this set in stone? Is the Minister embarked on the right course or is this a bad deal for Ireland?
I will answer the Deputy's last question first. It is not a bad deal for Ireland. I would not do it if it was not a good deal for Ireland. There were a few misconceptions in the Deputy's long set of questions. He talked about the up-front fee which I expect to use to build the national children's hospital and he set that against the good causes. The good causes money is separate and the total volume of money for good causes provided by the national lottery last year was 30.5% of total take. I would put that into the base Act - it cannot be less than that going forward. We cannot get less than that and I would hope we would get more than that. In terms of the €4 billion the Deputy spoke about, we will at least get that in the coming years as long as the volume of turnover for the lotto is maintained. Some of the franchisees were concerned. I told them I would maintain in law their 6% stake. Many small shops and so on depend on it. This is good all around.
The Deputy asked me if I had discussed it with other operators. I have not discussed it with Camelot. I am not interested in involving myself in the process. I set up protocols and I published them as soon as I made the decision and brought my proposals to Government so that I would not be involved in the allocation process at all. I am obliged by European law to tender for this licence. One cannot just award a licence like this.
The only issue is what is the best value for it. I have been told a 20 year licence will maximise the value, because there is a very significant input into software and computing technology involved in this. The longer the lifeline one gives to ensure one gets value for that, the better and more attractive the proposition becomes and the more money one can get up-front for the State, and God knows right now the State needs capital for these purposes. I will be obliged to revise the legislation and we will have a full and open discussion on it.
The Deputy asked if I had discussed it with the Minister for Communications, Energy and Natural Resources, Deputy Rabbitte. This was a whole of Government decision, so obviously every member of Government had full involvement in it. As I said previously, although I do not know because I have excluded myself from the licensing award process, I would be surprised if An Post was not one of the tenderers for this. It might see this as a stand-alone or as a proposition for which it might bid.
What kind of fee will Davy Corporate Finance earn from this? Have any potential operators been excluded at this stage? Will Davy Corporate Finance meet operators during any tendering process? Could people in the Department or in An Post not have independently carried out this e-tendering process? We have had grave problems with the e-tender website in a number of other tendering matters and some tenders seem to be like the fourth secret of Fatima. The Minister knows about one competition and prospective bidders trying to get information.
The period of 20 years referred to is a long time. I am coming to the end of my 20th year as a Member of this House. It is a long time and the House has changed incredibly. The Minister of State, Deputy Hayes, might even be leader of Fine Gael by the time this-----
Deputy Broughan might be leader of the Labour Party.
Hopefully, although sooner rather than later.
You might even do better.
What is the deal for Davy Corporate Finance?
I have already answered that question in response to a priority question. There are conditions in the Davy contract in terms of timelines and things to be fulfilled. The payment will be dependent on those being achieved. I have said I will give a full account of what is paid once the tendering process is completed by the middle of next year.
I have tried to exclude myself, so I have not discussed this process with An Post or anybody else. I should be at arms length from it. I simply want the design of it to be robust, want good value for the Irish taxpayer and want the process to give us money up-front in the short term and at a time when we are desperately short of capital to get people back to work in construction and to build a national children's hospital for the children of Ireland on which we can look back with pride not only in 20 years time but, hopefully, in 40 or 50 years time and say that this Dáil at this time did one magnificent thing, that is, to provide a flagship world-class hospital for the children of Ireland. That is important.
7. Deputy Charlie McConalogue asked the Minister for Public Expenditure and Reform if he is satisfied with the work of the central procurement function; the savings that he expects it to achieve; and if he will make a statement on the matter. [51641/12]
The National Procurement Service, NPS, was established in April 2009 on foot of a Government decision assigning responsibility for procurement to the Minister of State at the Department of Finance with special responsibility for the Office of Public Works. All functions of the former Government Supplies Agency were subsumed into this newly established unit. The NPS is tasked with centralising public sector procurement arrangements for common goods and services not including the construction sector. It has also become a centre of excellence for the provision of procurement advice and implementing procurement policy in line with best practice and Government initiatives, including the continued development of e-procurement strategies.
Through the aggregation of demand for common goods across the public sector the NPS can leverage the market, ensuring potential suppliers can offer significant cost savings on the products being tendered for through volume discounts. The NPS has reported estimated procurement savings to the end of 2012 under its frameworks of €127 million, comprising €14 million in 2010, a further €36 million in 2011 and projected savings of €78 million for 2012. The e-Tenders website generates estimated administrative savings of on average €10 million per annum.
I tabled this question so there could be a general discussion on the issue. The reply is quite vague and I would like more information on the outcomes. The Minister referred to savings of €78 million to the end of this year, but are targets set by the central procurement facility for each line Department and are they available, or is it done centrally through the Office of Public Works? Perhaps the Minister would give the timescale for that. When something is being tendered, does the Department do it internally or externally and how does the Department make the call? Earlier, we talked about shared services internally. Sometimes it is possible to do it externally, although some people have reservations about it. However, if it is not a core activity of the organisation, such as administration, sometimes some of it could be done cheaper externally. The HSE representatives told the Committee of Public Accounts last week that the HSE was considering outsourcing the payroll and human resources facility in the HSE if it appears to be the right thing to do from a cost point of view. Does the Minister have any public sector and private sector comparators to decide which route to be taken? Was that done in respect of SUSI, Student Universal Support Ireland?
My final question is the hardy annual one about Garda cars. The Minister is familiar with the requirement that the cars be taken off the road at 300,000 km. I asked the chief superintendent at the joint policing committee in my constituency about that recently. He said it is national policy but, as he pointed out, no car in Ireland is better serviced and maintained than a Garda car because it must be in good condition. He thinks it is a tragedy and I do not know any garda who does not also think it is a tragedy. We are told this is because of procurement. The Garda Commissioner is grateful for the new cars this year and next year but do the tender documents sent by the Minister's office for those cars specify the 300,000 km requirement? The Department says the industry will not guarantee it, but how can four different companies all fix on the same figure? It has been stated at Oireachtas committee meetings by senior figures in the Department that the 300,000 km figure has been set by the industry. If it is not set by the industry, why is the Department setting it in the tender documents?
The Deputy is correct, we have ambitious targets for procurement. If we are to reduce public expenditure, public sector procurement has a key role. A recent report from Accenture, which the Government accepted, shows that over a three year period between €250 million and €630 million can be saved by better public procurement. What has happened to date, and I believe I mentioned this at the last committee meeting, is that with the national procurement service established we set up frameworks for things such as energy, postal costs, State advertising, to manage print services and so forth. We have these frameworks but we have not had the buy-in to date from all of the public sector to use them where the discounts are available. The first decision the Government took in July this year was on a mandate to ensure that the centralised frameworks were put in place and are being used. We have told all public sector procurers, of which we have too many and I am on record for saying that, that these frameworks are in place, they are huge value for money and we are now telling people to use them or explain to us why they are not being used.
Second, as the Minister said recently, we will shortly make an announcement about a new head of procurement, and the procurement section will be under the Department of Public Expenditure and Reform. We will be able to drive the process because we now have the tools to do it.
I will see if I can organise a meeting with the Deputy on the question of Garda cars. My understanding is that the task of the NPS was simply to establish a framework and the Garda would decide what it would do on the basis of value for money. It is never the task of the NPS to make those decisions. Its task is to cut out the administration, get more discount through the frameworks and to ensure that the public sector providers use those frameworks. Enormous savings can be made here and I am confident that we are getting our act together in this regard now that the mandate is in place.
I will take up the offer of a meeting about the Garda cars. I have heard conflicting reports at the various meetings I have attended from the Garda and the Office of Public Works. One passes the buck to the other. The biggest issue in the past was when there was no volume discount as part of the arrangement. That is fine if one is buying 50 cars but if one is buying 70 or 80, there should be a lower unit cost. That was not the case in the past.
I will organise the meeting for the Deputy.
8. Deputy Dara Calleary asked the Minister for Public Expenditure and Reform the discussions he has had with the Department of Health and the Department of Social Protection in respect of current expenditure overruns in 2012; the processes he will be put in place to prevent a recurrence in 2013; and if he will make a statement on the matter. [51625/12]
In the Comprehensive Expenditure Report 2012-2014 published in December last year, I set out the various elements of the Government’s new medium-term expenditure framework. One key element was the introduction of ministerial expenditure ceilings, which are three year allocations of current expenditure to each Minister and Department. This innovation is intended to put the planning and management of current expenditure onto the same footing as capital expenditure, which has been managed on a multi-annual basis since 2004.
The 2013 ministerial expenditure ceilings were introduced on an administrative basis and now form the basis upon which the detailed 2013 expenditure allocations are being decided by the Government. In keeping with an EU-IMF programme commitment in this regard, the administrative ceilings are to be put on a statutory footing. This will be done in the Ministers and Secretaries (Amendment) Bill 2012, which was published on 28 September. In essence, the Bill provides for the power of the Government to set out an overall ceiling for aggregate current expenditure for each of the following three years and for the aggregate ceilings to be apportioned into ministerial expenditure ceilings on the basis of a proposal from the Minister for Public Expenditure and Reform. The annual Estimates of expenditure must in turn not exceed the overall limits set out by the Government.
Officials in my Department are in regular communication with line Departments with regard to monitoring current expenditure. Departments and offices report on net current expenditure issues from the Exchequer immediately prior to the end of each month and these figures are monitored against the published expenditure profiles. In addition, officials from my Department meet regularly with these Departments to hold joint financial performance management meetings to monitor financial progress.
The Minister said the ceilings are in place on an administrative basis and will be put on a statutory footing, and that it will be a three year framework. Does that mean, in practice, that if the Department of Health gets €45 billion, for example, over three years, it can spend what it wishes in the first two and it is €10 billion short in the third year but there will be a new Government that will look at it again? What brake is there on a Department that is overspending? I realise we have to accept that with demand-led Departments but, aside from that, is there such a mechanism in place? It must be in place for the end of January, February, March and so forth, not in July and September. It is always in the summer, half way through the year, when it is too difficult to do anything in terms of achieving cutbacks. This has happened every year but I see no sign of any improvement. The troika sought to meet the two Departments it had listed the last time it was here for a good reason. We should use the troika against those Departments. This possibly relates to what the HSE said at the Committee of Public Accounts, which is that it has a different accounting system. It might not be possible to get good information together in different Departments and perhaps legislation proposed here on budget day in respect of savings does not always get implemented. There should be firmer action on this.
We are moving to a much clearer budgetary structure than existed heretofore. I will deal first with multi-annual frameworks. It is not a case of handing out the money for the next three years. These are the horizons of expenditure that we expect. Obviously we must generate sufficient money each year. We do not give them an advance payment for next year; we are hard set to find the money for 2013, without giving them an advance payment for 2014 and 2015. However, we give the ceilings. The Deputy will remember the situation previously with capital expenditure and what happened if a Department had capital at the end of the year which it could not expend because of planning delays or something else. I remember the Department of Education and Skills bought computers or the like one year because it could not spend it on schools and it had to use the money.
That is bad and crazy. The previous Government did away with that by having multi-annual frameworks whereby expenditure, if it was not spent, carried over. It does the same on the current side because not everything can be expended in that way. In the agriculture sector, payments and planning can flow into the next year or we can reprioritise matters at the end of the year. It gives flexibility to line Ministers, within agreed frameworks, to spend money in as prudent and as wise a way in accordance with Government policy.
With regard to monitoring, I bring a monthly report to Government. I brought the October report to the Government this week. We monitor every line Department's expenditure profile month on month and it is discussed at Cabinet on a monthly basis.
The multi-annual framework is the way to go for the reasons to which the Minister alluded. In respect of the Department of Health, what plans does the Minister have to bring forward a supplementary budget? The House was notified of four such supplementary budgets. The documentation circulated to us indicates that a supplementary budget will be forthcoming in respect of health. When will that happen and what will be the quantum?
It is likely there will be a supplementary budget for health. I am having a bilateral meeting with the Minister for Health after this session.
I thank the Minister for clarifying that there will be a supplementary budget. I will make an observation to the Minister.
It is Question Time.
Putting in place a system of multi-annual budgeting and planning is the right thing to do but it only works if the Government funds and projects in an accurate fashion. The budgetary overrun in the Department of Health is huge. On the one hand, the Government proposes to cut more from the budget and on the other hand we are faced with the bizarre situation of a supplementary budget days from the announcement of the 2013 budget. I offer that to the Minister as an observation on the complete mismanagement of the health budget.
We spent a lot of time talking about the Estimates procedure. One can argue that there was not necessarily overspending in the Department of Health this year but under budgeting. The budget was wrong and flawed, which is what we said on 5 December last year. We knew the budget was not genuine and the allocated amount was lower than what people in the industry, outside the Department, knew to be the case. We said the budget was not valid. The Government needs to get an accurate budget at the beginning of the year, which did not happen in health this year.
The health budget was of the order of €13.5 billion. It is a multifaceted, complex system that is demand-led. We cannot guarantee that the pressures on hospitals can be accurately forecasted, nor can we do so for the number of people applying for medical cards or any of the other variable factors. I do not yet know the quantum of the Supplementary Estimate but it will be a tiny fraction of the €13.5 billion. It is a little much to say that we did not allocate sufficient funds. It is very difficult to do but we will do it more accurately. The HSE is transforming itself to have more accountable timelined controls and we will see the follow-through next year.
9. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform his preferred options in respect of public expenditure curtailment and reform through the public service over the next two years; the full extent of savings to date achieved arising from commitments entered into prior to or since the EU bailout; the degree to which he expects to achieve further economies in the coming years; and if he will make a statement on the matter. [51598/12]
46. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform the extent to which he has examined the impact of the budgetary cutbacks which he inherited from his predecessors throughout the spectrum of the public services; if delivery of some element of public service has been more severely affected than others; if he will introduce any particular initiatives to address any such issues; and if he will make a statement on the matter. [51597/12]
97. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform the extent to which economies achieved by his Department in each of the past three years to date have been achieved by way of direct cuts in expenditure, savings or other means; if any particular evaluation has been done to ascertain the most cost-efficient and effective strategies; and if he will make a statement on the matter. [51903/12]
98. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform the extent to which he expects to be in a position to reward or incentivise Government Departments or authorities, State or semi-State bodies that have achieved particularly satisfactory results over the past four years to date in respect of targets set to achieve savings or cuts in public expenditure; and if he will make a statement on the matter. [51904/12]
99. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform the extent to which particular Government Departments or bodies under their aegis have achieved particularly impressive results in terms of savings or cost-cutting with the minimum job losses in the course of the past 12 months; and if he will make a statement on the matter. [51905/12]
100. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform the extent to which targets set by his Department in terms of budgetary cutbacks and savings arising from the memorandum of understanding entered into by his predecessors have been achieved in each of the past three years to date; the extent to which he expects the remaining targets to be achieved on time; and if he will make a statement on the matter. [51906/12]
101. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform the extent to which the running costs of all Government Departments and their respective public or subsidiary bodies have achieved targets in terms of costs or spending cuts over the past three years to date; the extent of the scope remaining, if any, throughout; and if he will make a statement on the matter. [51907/12]
102. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform arising from discussions he has had with his EU counterparts, the degree to which savings and expenditure cuts achieved by his Department compares with other EU countries both within the eurozone and without; and if he will make a statement on the matter. [51908/12]
103. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform having regard to the most recent discussions with the troika, if he and they are satisfied with the achievements to date and the future potential for savings; if any particular emphasis has been placed on the specific means of achieving targets in the course of such discussions; and if he will make a statement on the matter. [51909/12]
105. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform the means by which the greatest savings have been achieved throughout all Government Departments; if by reform or direct budgetary cuts; and if he will make a statement on the matter. [51911/12]
I propose to take Questions Nos. 9, 46, 97 to 103, inclusive, and 105 together.
Can the Minister list the questions again?
These are all the questions in the name of Deputy Bernard Durkan. He is a very diligent Deputy.
Prolific.
The Government is making good progress on achieving all of our targets and priorities, as set out in the Government programme. We are bringing public expenditure back to a sustainable level and driving forward the public service reform agenda to ensure efficiencies and reformed work practices play a full part in contributing to the overall budgetary consolidation effort.
When determining fiscal policy, the Government has to take account of a wide range of often competing considerations and policy priorities. The Government decides on the balance between these priorities in setting the broad budgetary parameters - the overall budgetary balance, taxation priorities and the aggregate levels for expenditure. The comprehensive review of expenditure was the culmination of an intensive exercise carried out by all Departments in 2011 to identify means of reducing expenditure in line with commitments under the joint EU-IMF programme of financial support, while minimising the impact on service delivery. All proposals, including those from members of the public and third party submissions, were fully appraised for the exercise and the outcomes were published in the Comprehensive Expenditure Report 2012-2014.
The 2013 ministerial expenditure ceilings were introduced on an administrative basis and I intend to migrate it to a statutory basis. The precise composition of the 2013 budgetary consolidation is a matter for Government, the details of which will be announced in the House on 5 December. In keeping with an EU-IMF programme commitment, the administrative ceilings are to be put on a statutory footing, which will be done by legislation brought to the House this session, I hope.
The substantial fiscal consolidation implemented in 2011 was part of the reason for the reduction in the underlying general Government deficit, from 10.7% of GDP in 2010 to 9.1% of GDP last year, well within the EU-IMF programme target of 10.6% of GDP. This result was attained despite weaker domestic demand, reflecting the Government’s strong revenue administration and firm control of expenditure. All end-quarter Exchequer primary balance and central Government net debt targets set out in the programme have been met.
The central expenditure evaluation unit, CEEU, within the Department of Public Expenditure and Reform promotes best practice in the evaluation of programme expenditure across all Departments and public sector agencies. As part of the comprehensive review of expenditure, the CEEU also produced a series of cross-cutting evaluation papers covering a range of topics that were published on the Department's website in 2011. The role of evaluation was further enhanced by the introduction earlier this year of the Irish Government economic and evaluation service. The work of the service will support Departments in evaluating policy and expenditure options, value for money exercises, cost benefit and regulatory impact analyses, and regulatory and competition issues. These are many of the points recommended to us by Deputy Donnelly. We have recruited a cohort of people who are being trained in my Department. They will be farmed out, if that is not a vulgar term, to work in Departments.
I did not get to read all of Deputy Durkan's many questions.
We will send Deputy McDonald a copy.
I am surprised the Minister did not allude to his plans for Croke Park nua in respect of future savings. We have not yet had a briefing or account from the Minister on the approach but we have seen the notion of securing a further €1 billion in savings through that mechanism. Will the Minister take the opportunity to say a few words on that?
I am delighted to do so if the Leas-Cheann Comhairle allows me to. I brought a proposal to Government yesterday on foot of the analysis that has concerned me for some time. If someone asked me my greatest concern as Minister over the past number of months, it is the unallocated savings facing the economy next year and in 2014. The medium-term fiscal framework set out expenditure reductions in social welfare, health and across every line Department. At the end of that, a gift from the previous Government is the unallocated savings, which must either be farmed out to individual Departments by making further cuts on top of those already outlined or we must look for another way of dealing with them.
I have been grappling with that for some time. My strong view is that we need to look at 35% of all current expenditure, which is the pay bill, to see if we can get more from that.
I am calling this a Croke Park extension. I want to maintain the principles of Croke Park, which are no compulsory redundancies and the maintenance of core pay. We need to get pay savings, however, and I will be tabling a variety of means to deal with that. I have invited the unions to talk to me next week in order that I can set out my stall. The profiling I am looking for is to begin the process of additionality next year. In the existing pay savings profile I am aiming to reduce the pay bill by 20% by 2015, which is a quantum, in net terms, of about €3.3 billion. I am now proposing that we look for an additional €1 billion over those three years so that the annualised pay saving by 2015 would be an additional €1 billion.
This will be challenging and difficult. The way I have set out to do this is through longer working hours in the public service, changing the framework of the working week, and so on. I do not want to be too prescriptive until I have had a chance to lay out my stall to the public sector unions. I will keep the House informed because this is an important endeavour. If we can sign off on an agreement before the middle of next year we can start the savings next year so that public servants will have a sense of security between now and the end of this Dáil. They will know where they are and can spend and work with security. It will also give security to the Government to know that our ambitious target of bringing the public finances into balance, having a deficit of less than 3% by 2015, will be achieved.
I thank the Minister for mentioning that issue. The original Croke Park agreement allows for average payroll savings of only 1% for each of the next couple of years, which is quite modest. I note that the Minister has come to that conclusion himself.
The Minister did not mention allowances. Has he moved away from that or has he found the issue to be more complicated than he originally thought? I wish him more success than he had with his original proposal to deal with allowances.
Public servants with salaries of more than €100,000 should not receive increases in salary. The concept of someone who is earning more than €100,000 getting a pay rise next year, even if it is called an increment, is immoral and should not be tolerated. The people of Ireland will not tolerate it. It might be claimed that increments are part of core pay, but they are not specifically mentioned in the Croke Park agreement and the matter is open for discussion. Nobody could countenance increases in pay next year, by way of increment, for the highest paid public servants. That has to stop.
The architecture of the current Croke Park agreement, which I have defended and worked to the best of my ability, was not of my construction.
The Minister praised it.
Absolutely. What I inherited was a useful and important enabler for change. I have said that publicly and I acknowledge that. I have worked the agreement to the very best. It is not, however, a robust enough instrument to get us to where we need to be by 2015.
Deputy Fleming made some points about fairness, with which I would not disagree. However, there is no point in saying I would love to do something, even if it is demonstrably fair, if it is not possible legally or would risk being overturned by the courts.
I do not want to be too expansive in discussions here before I talk to representatives of workers directly which, as a matter of courtesy, I should do. In the context of a new extension to Croke Park, however, I hope to be able to deal with a number of issues that Deputies across the House have, fairly, put on the table. I will keep Deputies informed as we make progress along the way. I hope all Deputies will use their influence to encourage engagement with the process to bring about a conclusion that will be good for public service workers and the public at large and will guarantee that we will get out of our dependency on the troika programme and back to normal funding at an early date.
