JOINT COMMITTEE ON FINANCE AND THE PUBLIC SERVICE díospóireacht -
Wednesday, 14 May 2003

Vol. 1 No. 8

Business of Joint Committee.

Chairman

There is no correspondence relevant to today's meeting. Item No. 4 is the finalisation of the draft work programme. I ask members to look at the draft work programme which has been circulated. Some items were included as a result of discussion at our most recent meeting.

I draw attention to two issues. Public private partnerships were raised as an issue for discussion by the committee. The Committee of Public Accounts commenced a detailed discussion on this area at its meeting last week. I had documentation from the National Roads Authority which is pursuing that aspect in detail. Also, in regard to the Minister for Finance, the National Treasury Management Agency and the national pensions reserve fund, documentation has been circulated to committee members which clearly states that when the legislation was being passed it provided that the national pensions reserve fund would report directly back to the Committee of Public Accounts rather than to this committee. There is no merit in this committee trying to do the work that specifically was to be dealt with by the Committee of Public Accounts. There is a reporting mechanism to the Dáil on which the legislation is specific.

Deputy Ó Caoláin

Is the Chairman referring specifically to the national pensions reserve fund?

Chairman

Yes.

Deputy Ó Caoláin

This committee certainly has a role and function in addressing the national pensions reserve fund. The idea that the Committee of Public Accounts has exclusivity over deliberations and consideration of how this fund is being managed is something we should challenge. The Minister for Finance, Deputy McCreevy, and the National Treasury Management Agency which manages the fund should come before this committee in order to address the way the fund is invested. That scrutiny role is quite definitely for this committee and comes under our remit in terms of finance and the public service. I will be disappointed if this committee is denied its opportunity. The issue of how the national pensions reserve fund is utilised is something I raised with the Taoiseach yesterday. It falls within our remit and we should not accept willy-nilly any excuse for not performing the functions that are ours to perform. I do not accept an outright rejection of the proposal on the basis of exclusivity to the PAC. If we do not assert and affirm our rights, responsibility and jurisdiction over this particular area we will fail, as we did in the course of the last term when the Public Accounts Committee stole our thunder.

Deputy R. Bruton

I find it a bit surprising that the material circulated by the Chairman is not actually the legislative provision but comments made by the Minister on it. I am at a bit of a loss. It appears in some of the Minister's comments that he suggests that the chairman of the Pensions Board will only appear before the PAC. However, in other comments he makes it seems he is quite open to the possibility that the chairman would respond to invitations from other committees. Before we accept that we cannot ask the Pensions Board chairman to come before us and account for its investment policies, we should look at the parent legislation to see if it debars him from doing so, or if it is simply the case that he must report to the Public Accounts Committee because of its accounting requirements but that it is also open to him to report to a committee such as ours. If it is open to him to report to another committee, and the Public Accounts Committee is not actively looking at this issue, we should proceed and ask him to come in to debate the board's investment strategy. This is about to change because in the Finance Act the Government relaxed the capacity of the fund to invest outside of foreign stock markets. It would be timely to invite the chairman before this committee.

Chairman

I accept the points made by both Deputies. My understanding is that there is a specific provision that the chairman of the Pensions Board appears before the Committee of Public Accounts but that there is no provision preventing him coming before this committee. All I seek to do is to avoid possible duplication between two Oireachtas committees. We are free to issue an invitation but he may respond that he is going to the other committee. We do not have statutory authority to call him before us.

Deputy Ó Caoláin

I formally propose that we proceed with the invitation.

Chairman

We can agree that. Deputy Finneran, did you want to contribute?

Deputy Finneran

Some time ago I raised the position of the strategic management initiative and while I see it included in the work programme it is put on the long finger to be looked at, possibly on a future date. We should decide on that because the Joint Oireachtas Committee on the Strategic Management Initiative was stood down and the responsibility was given to this committee. The associated workload would take up a great deal of this committee's time but it should examined. Otherwise we may have no discussion on it until the autumn session. It would be unfortunate and inappropriate to have no public debate on SMI in the first 18 months of this Government.

We should attempt at least to set out some way of dealing with this important issue, even if it is by a by sub-committee. The Joint Committee on the Strategic Management Initiative did important work. It reported on a number of Departments and it had some successes, for example, the appeals system in the Department of Agriculture and Food would not be there if it had not been for the deliberations of that committee. Maybe it can get priority and we can find an opportunity to get back to work under that heading.

Senator Higgins

Decentralisation seems to be the one glaring omission from the work programme. There is much confusion about what exactly is happening and we need the Minister here to spell out exactly what the plans are, how and when it is going to happen, and so on. We read recently in the newspapers that on the basis of the applications it is oversubscribed. The decision is to decentralise 10,000 jobs but there are 18,000 applications and there is a marked imbalance between the different Departments, for example, there are only two from the Department of Foreign Affairs whereas the Department of Justice, Equality and Law Reform is snowed under with applications. We need the Minister here at an early stage to spell out the decentralisation plans.

Chairman

I will put decentralisation on the agenda. Maybe we will try and agree the topics today and discuss a detailed timetable at the next meeting to decide which ones we will take first.

Deputy Ó Caoláin

Is the list of issues for consideration as proposed additional matters to be included in the work programme already circulated for 2002-03?

Chairman

This is the ongoing schedule.

Deputy Ó Caoláin

Is the new list additional to that?

Chairman

I understand we are operating from the one we circulated today.

Deputy Ó Caoláin

Can the Chairman clarify whether the people named in the first column under "Body and Person" are representatives whom we expect to attend as we are addressing the specific item under examination or consideration in the main column? Third World debt, Government policy on same and the role of the IMF and the World Bank is one of the topics that I have pressed previously. I note that the Minister for Finance is named in that column. Is it proposed that he would attend that meeting? It is imperative that he would attend. It may also be the case that he should attend under several other topics, not least that raised by Senator Higgins about decentralisation as it affects the public service and our public servants.

Public-private partnership was mentioned as an area that would require address by the committee and it is not on this short list.

Chairman

It is item No. 5. I have listed it as PPP so it may not be clear.

Deputy Ó Caoláin

I welcome that. It is listed under "Body and Person". I was reading under "Issue under Examination" and it is not clear at all.

Chairman

My apologies. We will clarify the document for the next meeting.

Deputy Ó Caoláin

That would be a great help. I was dealing with the issue under examination and PPP is not clear there at all.

Chairman

I understand that. Public-private partnership is on the list but I indicated that it is a matter we will want to discuss again. The Committee of Public Accounts commenced a discussion of, and investigation into, that issue last week and it had a report from the National Roads Authority in respect of some of the Kinnegad motorway. It received a lot of documentation much of which was blanked out by the NRA for reasons of commercial sensitivity so the committee felt it could not properly carry out its functions because it was not being provided with the information necessary. We want to avoid duplication between this committee and the Committee of Public Accounts. That is the only issue that I am flagging on which we must be clear among ourselves.

Deputy Ó Caoláin

Can the Chairman indicate the body or person——

Chairman

I will get the format of that document revised and will circulate it to committee members in the next day or two.

Deputy Ó Caoláin

Can the Chairman confirm that the Minister will attend?

Chairman

That is our intention. Before I came into the meeting, in anticipation of the Deputy's question, the Minister for Finance laid before the Dáil Ireland's participation in the International Monetary Fund and the World Bank 2002 annual report, which was placed in the Dáil Library in March. There is a very recent document from the Minister on that. He has direct personal responsibility and he attends the IMF once a year on this issue.

Senator O’Toole

On the PPPs there is also an issue of principle which we should consider. The Committee of Public Accounts might be looking only at the money that was spent but in terms of where it came from and where it is going one of the core attractions for the Government, and one of the core requirements of the EU, was that public-private partnerships would represent a clear transfer of risk from the State to the private sector. It was going through on that basis and did not appear in national accounts as debt, or otherwise, or as a cost. Recently the Central Statistics Office decided, for reasons which I do not understand, in its response on Irish figures to Brussels, to present many of the public-private partnerships as a non-transfer of risk and this is leading to chaos. That is the single issue on which, for example, the Cork School of Music matter has been buried.

Under the heading of body and person, continuing Deputy Ó Caoláin's point, I cannot get an answer to the question as to how the CSO, or who in the CSO, came to a conclusion which is at odds with every other person's assessment of the issue. I would like to hear the CSO's explanation as to why public-private partnerships do not constitute a clear transfer of risk from the State to the private sector.

Chairman

It is possible that some of the projects as proposed do not represent a transfer of risk. The liability is with the State from the outset.

Senator O’Toole

If one takes something like the Cork School of Music, or any school, the cost is gone from the State. The State does not give any guarantees, which are given by the private contractor in a contract with the board of management or authority running it. They are guaranteed by bond so the risk is taken from the State. That was the requirement of everybody entering a PPP because it is one of its big attractions. That was the clear requirement of everybody going into this. That is one of its big attractions.

Deputy N. O’Keeffe

There has been dissatisfaction in the construction industry also and we should bring its representatives in to get their view on PPPs. There is a substantial cost factor when tenders are made which is turning away some members of that industry. Some of the red tape could be cut out using some of the criteria used in other countries.

Deputy Burton

We need to look comprehensively at PPPs. Those operating schools under PPP arrangements are already finding that there are problems with simple things such as local community access to halls. There is a huge amount of material available from the UK regarding Jarvis, the major PPP contractor here and in the UK. We should have an overall look at PPPs and how they operate in this country.

There is a substantial lack of clarity about the full cost implications of PPPs in terms of capital and maintenance costs and, it now appears, tax expenditure costs. It has emerged regarding the Kinnegad bypass, that the PPP operator will effectively get capital allowances, though they will not be called that. That is a very significant additional cost to the State in the form of tax expenditures foregone and a substantial change in what I would have understood previously were the economic terms.

We need to consider some examples of PPPs and the implications surrounding them. In the UK, there are already instances where when maintenance costs proved excessive or unmanageable, the PPP operator has, in effect, walked away and left the project to the local authority.

Senator O’Toole

It is crucial to recognise that there is hardly any relationship between the PPP model in this country and that in the UK, even though Jarvis operates in both.

Deputy Burton

I disagree.

Senator O’Toole

Having represented both jurisdictions, I am certain on this matter. The same company, Jarvis, is involved in both. However, I have gone to the trouble of visiting many of the schools involved such as those in the Sligo area. The level of service and maintenance is the highest the schools involved have ever had.

Deputy Burton's point about access is absolutely correct and the operator has clear responsibilities in that regard. However, we must look at this from an Irish perspective. To give one simple example, public private partnerships are not supported by the Irish Congress of Trade Unions in the North of Ireland, because it cannot agree with the system there, whereas it fully endorses the system in the Republic. The systems are that different.

Another issue raised by Deputy Ned O'Keeffe is that one of the problems with PPP, in regard to making it accessible, is that it is aimed at huge projects. Smaller projects such as schools do not require the same amount of paperwork leading into a project, but it is so costly to get a bond guarantee for smaller projects that they cannot be undertaken. Consequently, in many cases - I have chapter and verse on this - a small contractor who would like to have an input, as a member of the local community, into building a local school, cannot get bonding. That is given to a large company such as Jarvis and then contracted back to the local person at a higher cost. We are losing money because of such difficulties.

There are a range of issues to be discussed on the operation of PPPs. While we must ensure that PPPs can work in ways that provide the accessibility mentioned by Deputy Burton, we must also recognise the need to expand the process in terms of access. We should ensure that it has a risk transfer and that a project cannot be handed back to a local authority, as it has in a number of instances in the UK.

Deputy N. O’Keeffe We should not condemn the construction industry. I have had representations from the industry with regard to the prohibitive cost of tendering for PPPs as opposed to tendering in the normal way. There are a number of issues to be ironed out.

Chairman

How do members want to commence the process? We want to hear from the Department of Finance in the first instance and will take it from there.

Deputy C. Lenihan

Deputy O'Keeffe was correct to point out that large civil contractors in this country are in some cases paying as much as €3 million just to tender for a PPP road or other project - an extraordinary cost. If we do not deal with this cost, the contractors will find better places to deploy their skills and resources. The construction industry would be a good group to have in at the same time as the Department of Finance. The industry is involved at a higher level on the big projects, as Senator O'Toole mentioned.

Deputy Burton

We need to get a sense of the full cost of PPPs, whether in terms of direct cost, finance cost, capital cost or tax expenditure cost. We need a comprehensive picture of the costs associated with PPPs and that has not yet been made fully available. It is something this committee should seek.

Chairman

I agree, with one addition. We should consider the costs but also the benefits. We do not want to be one-sided.

Deputy Burton

I have no problem with that.

Chairman

There are benefits in that projects are brought forward earlier than might be the case with the public sector. We will start with the Department of Finance.

If members are satisfied with what is on our schedule, we will come forward with a detailed timetable on this work programme for the next meeting. The heading is agreed and the question of the timetable now arises. We will have indicative dates for the next meeting.

The next item is discussion of the Estimates process. It has been indicated to us that we should take the Department of Finance Estimates for 2003 in mid-June. The Abridged Estimates were published last November and the Revised Estimates for the public service were printed at the end of February this year. The two are substantially the same document, with minor variations. From the perspective of this committee and the Dáil, it is something of a farce to discuss Estimates for 2003 half way through the year when over half the money is already spent. This committee should state that, in future, discussion of the Estimates should happen during November when the Abridged Estimates are first published.

If a local authority conducted its business like this, it would have been abolished last January. Local authorities and health boards have legal obligations to pass their estimates before the beginning of the calendar year. Every private company approves its budget for the coming year in advance.

Deputy Ó Caoláin

On a point of information, we must also acknowledge how ridiculous it is that local authorities have to pass their book of estimates without having advice on the block grant funding that is to come from the central Exchequer. They must work on their estimates based on the previous year's figures without sight of the funding figures. The same applies in regard to third level grants for students. A scheme must be operated without sight of the amendments or funding to be provided. Those anomalies must be addressed also.

Chairman

I take the point. I realise that there was a delay this year with regard to local authorities but they got notification in time to complete the process. They might have scheduled their estimates meetings before the notification became available. The point I am making is that if Dáil committees are to have any relevance, we should be discussing the Estimates prior to the spending of the money, not half way through the year when most of it is already spent. I am saying that as Chairman, and I will be proposing that we put the Department on notice. As the Joint Committee on Finance and the Public Service, we should put other Departments on notice too that they should be ready for their Estimates debate at the end of the year when they have their work prepared. If Dáil reform, which is being mooted, is to mean anything, we should conduct our business in an orderly and timely manner. Our discussion next month will be largely academic, since most of the money will already have been committed.

Deputy R. Bruton

I strongly endorse what you are saying and suggest that the first issue that we address when the Minister and his officials come before the committee should be precisely that. We should specifically put it on the agenda for the Estimates discussion. I recall that the Minister, Deputy McCreevy, said that he was going to reform the process and have it start much earlier in September so that the whole Estimates procedure should be finished by the day of the Budget Statement. To go back even further, my brother, John Bruton, published a document entitled A Better Way to Plan the Nation's Finances through the Department of Finance. That made the same proposal. The best will of a series of Ministers does not seem to be delivering results, and we ought to have a debate about this, since there is a clear political desire from the Houses of the Oireachtas to do as you have endorsed. It seems that it is not happening, however, and we should have a thorough debate on it.

Deputy C. Lenihan

If you are suggesting, Chairman, that we should discuss the Estimates before the budget, let us make that an objective for the committee for this year, 2003. We must discuss the Estimates before the budget, for they are very important.

Chairman

All the controversial issues that we are going to discuss - or that were controversial when the Estimates were published - were discussed on the public highways and in the pubs of Ireland last October, but not in this committee. They will be history by the time that we come to them.

Deputy C. Lenihan

We should also have a briefing for the committee on the day of the Estimates' publication.

Deputy Burton

Regarding this work programme, if we can identify how much time we would wish to spend on the various headings, we could work out a reasonable period within which we could get the bulk of it done. What we have to do first is decide that we are interested primarily in next year's Estimates. Performance indicators may be of help regarding how the year so far has gone - perhaps in late September - followed by time reserved for the Estimates process, in which we look for the information. However, I see no point in our going back over last year's material at this stage other than to depress ourselves.

Regarding the other headings, if the Minister for Finance has indicated that the directors of the National Treasury Management Agency or the national pension reserve fund are willing to come to the committee, provided that we can avail of an advance briefing and a discussion among ourselves - as we did so well regarding the Freedom of Information (Amendment) Bill 2003 - we could examine and have a discussion with those people, perhaps for three hours, followed by a meeting among ourselves to come to conclusions. If we needed to do more, we could do so. Otherwise we are not going to move through this agenda.

Similarly, on the PPPs, we need a note of what we want to know and a presentation followed by questioning. I imagine that we would be able to do that over one day or two half days. If we set ourselves targets regarding timeframes, we could get through a fair amount, something that would be desirable.

Chairman

I will undertake to have a timetable as suggested for the next meeting. We have no dates indicated.

Deputy Burton

It would also depend on the Department of Finance agreeing to brief us, perhaps a week or ten days in advance, to give us time to absorb the information. We do not want someone sitting before us reading out five pages and taking up three quarters of the time. It would be better if we had the five pages and could have a look through them. He or she could make a brief presentation on it, and we could question him or her. That would be a much better use of our time.

Chairman

We will ask that the statement from the person attending be with us well in advance so that we have time to study it. Then, when we reach the stage of the meeting, we can take the statement as read, not having to listen for 20 minutes to something being restated that we have all read the night before.

Is there any other business?

Deputy Ó Caoláin

Will the Minister be returning for this part of the meeting?

Chairman

No.

Deputy Burton

Chairperson, at our meeting before Easter, I asked you about the Houses of the Oireachtas Commission Bill 2002. I understood that it would be coming in fairly soon, but we have not seen it.

Chairman

There has been no update from the Department on the Bill for the Oireachtas commission. This committee has said that it is available to take it. The Bill has concluded Second Stage and been referred to us, but it is still in the Department of Finance for amendment before reaching the Committee Stage.

Deputy Burton

That is a matter of some urgency. It is absolutely crazy that people cannot even come into offices here early in the morning. I do not know if the Bill has any big cost implications - I do not think so - but we must routinely be able to take full occupation of our offices from, say, 8 oclock in the morning. That is not an unreasonable request given the traffic and the fact that people are here overnight. The current situation is absurd. Such matters as Saturday morning use should also be included.

Chairman

We will formally undertake to get a date from the Department for that legislation, for the delay is not at our end. It is not among us but in the Department.

Deputy R. Bruton

The Minister must agree an envelope for three years, and that is the key thing that is holding the matter back. Passing the Bill is a formality - the three-year envelope is the issue. Once the Bill is passed, the whole thing will be handed over to the Oireachtas commission.

Chairman

As there appears to be no other business, I declare the committee adjourned until 28 May when we will meet to discuss the code of conduct of standards of behaviour for public servants, which has been referred to this committee, with a deadline of 6 July for it to be back in the Dáil. A similar procedure has gone through for elected officers.

Deputy Burton

I suggest, since we are facilitating the Department of Finance in that regard, that it might facilitate us by providing a brief regarding public private partnerships at that meeting so that we could deal with the work at the following one. If we do not set deadlines, we will be foostering around forever.

Chairman

We will put those two matters on the agenda for the next meeting: the code of conduct and standards of behaviour and public private partnerships.

Deputy Burton

Can we get a briefing on the PPPs so that we can read it and come back?

Chairman

We will ask the Department of Finance to let us have that.

Deputy R. Bruton

Perhaps you could clarify whether we will have a substantive discussion or simply ask the Department to supply us——

Deputy Ó Caoláin

That is not the proposal.

Deputy R. Bruton

The proposal is to have the documents only.

Deputy Burton

That is Wednesday fortnight. I am concerned that we get advance documentation so that we can read it rather than listen to someone reading it out and try to ask questions on the hoof.

Deputy R. Bruton

Chairman, is there much substantive discussion in the code of conduct, or could we invite the pension fund on that day for a "double bill"?

Chairman

I am not sure.

Deputy N. O’Keeffe

There is no point in overloading the agenda. Wednesday is a very busy day in the House too, with deputations and all sorts of things.

Deputy R. Bruton

But we are only nodding the thing through.

Chairman

It might be better if we had the documentation on the public private partnerships, for that has to be in the Department. Let us stick with that for the meeting, together with the code of conduct.

The joint committee adjourned at 3.30 p.m. until 3 p.m. on Wednesday, 28 May 2003.