Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach díospóireacht -
Wednesday, 12 Jul 2023

Changes to Public Spending Code: Department of Public Expenditure, National Development Plan Delivery and Reform

An Cathaoirleach

Apologies have been received from Deputy Jim O'Callaghan and Senator Higgins. Today, we are meeting with officials from the Department of Public Expenditure, National Development Plan Delivery and Reform regarding changes to the public spending code. I remind members that this is our first session. Afterwards, we will meet with officials from the Central Bank. I welcome Mr. John Conlon, Mr. Kevin Meaney and Mr. Frank Newman.

Members are reminded of the rules regarding privilege. Those on campus have full privilege but those off campus may not. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.

To start the meeting, we will have an opening statement from Mr. Conlon.

Mr. John Conlon

I thank the committee for the opportunity to discuss the changes to the public spending code that were announced in March. I am an assistant secretary in the Department of Public Expenditure, National Development Plan Delivery and Reform. I am accompanied by my colleagues, Kevin Meaney and Frank Newman, from the national investment office in the Department.

The public spending code and infrastructure guidelines set out value-for-money requirements and guidance for evaluating, planning and managing Exchequer-funded capital projects. I should emphasise that management and delivery of investment projects and public services and the appropriate national frameworks is a key responsibility of every Department and Minister. The code is underpinned by a number of principles. Given that many large infrastructure projects can have a high degree of complexity, improved decision making throughout the life cycle of a capital project is required. Proportionality is core to the public spending code, with additional rigour applied to projects as they increase in cost and complexity. It provides a focus on cost competitiveness. It provides for accountability and transparency and enhanced project governance and management. The code, as a tool, can help ensure that projects are set up for successful delivery.

As the committee will know, investment in capital projects has grown substantially in recent years, from €4.6 billion in 2017 to over €12 billion this year. The national development plan, NDP is providing for ambitious plans to enhance public transport infrastructure and to provide a greatly enhanced estate for school and education facilities, more homes and better healthcare. In the public transport sector, for example, good practice is in place where the sponsoring agency, Transport Infrastructure Ireland, has well-defined responsibility for evaluating, planning and managing capital projects. The approval authority, the Department of Transport, has the ultimate responsibility for projects and assesses the business case at the appropriate stages.

Major investment projects require rigorous appraisal and the scale and detail of evaluating, planning and managing projects should be commensurate with the scale of the proposal. Ireland has had challenges in terms of capital delivery across recent decades and with some major projects in recent years. The public spending code seeks to rigorously appraise projects early in the development stage to ensure that likely risks and costs have been fully considered prior to approval. It should be noted that cost overruns on major projects are not unique to public sector. Private projects are just as prone to cost and time overruns, which can arise for many reasons. The issue of successfully managing the delivery of major projects remains a key business requirement.

The Department considers that good governance in capital projects is beneficial for effective delivery. The code provides processes for risk management, solid controls and clarity in objectives by bringing a rigour to decision making, noting that the development of capital projects is essentially grounded on a series of decisions. Factors such as scope creep, which are deviations from the original design, and delays due to the planning process and, in some cases, subsequent judicial review are often provided as reasons for overruns on cost or time. Other causes can often be derived from various biases, including optimism bias. The code protects owners and the taxpayer from biases through more rigorous appraisal and the consideration of appropriate cost forecasting and benchmarking, including external perspectives and experience from previous projects.

Using the code effectively provides for a sound approach to addressing issues that arise in project development in the right way and in a timely way. Through the life cycle stages, it provides for opportunities to re-evaluate and update projects. Therefore, project agility can be provided so that adjustments can be made to current conditions.

Capital appraisal guidelines were initially introduced in the mid-1990s, alongside criteria for the drawdown of EU structural funds, which focused on value-for-money appraisal. In 2013, the first public spending code was published, which clarified the minimum standards of appraisal to apply to capital project development across all sectors. The latest public spending code was agreed by the Government in 2019. This guidance was the product of a programme of analysis and validated by stakeholder engagement with Departments and agencies.

The 2019 public spending code sharpened the focus on risk and cost management, reduced the compliance burden on low-risk projects and brought Ireland into line with leading international approaches to major project delivery. Before 2019, major capital project assurance in Ireland had focused on business assurance, looking at whether proposals aligned with strategic policy goals, had creditable objectives and were supported by robust demand analysis and whether sufficient financial and economic options analysis had been conducted. However, project and programme assurance, including looking at the robustness of planned delivery, the accuracy of cost forecasts, the consideration of risk and the appropriateness of procurement strategies, had not been undertaken in a consistent way. The introduction of the external assurance process and the establishment of the major projects advisory group in late 2021 further improved the governance and oversight arrangements for major projects by providing a standardised vehicle to support both business and project and programme assurance. This has been seen in the scrutiny that has been afforded by these processes in advance of significant NDP projects such as MetroLink, BusConnects and the elective care centres in Cork and Galway being approved by Government.

We consider that the process since 2019 has bedded in well. There is solid engagement on the application of the code and a range of Departments and agencies have developed sector-specific arrangements within the parameters of the overall code, for example, in the health sector.

A high-level review among Secretaries General in key capital spending Departments was commenced in April 2022 to review the requirements of the code. This review had a particular focus on whether the additional review processes introduced in 2019 were causing unnecessary delays in project implementation and whether the code fully reflected the role of Accounting Officers in assessing risk and project implementation. This group set out a series of six key principles, which are appended to this opening statement. These were referred to a practitioner group of experienced public servants across Departments to consider with a view to amending the processes in the code. In March of this year, recommended amendments were considered and approved. These were published as part of Circular 06/23, which is included in the supplementary material provided to the committee. It is expected that these changes will reduce the administrative burden for Departments delivering capital projects while allowing them greater autonomy to pursue the delivery of their priority projects while still complying with overall value-for-money principles.

The particular process changes that are expected to reduce the length of time taken to achieve project approval are as follows. First, the removal of the formal approval gate and technical review by the Department on completion of the strategic assessment report. Departments have indicated to us that the process of gaining approval at this point was taking three to four months based on internal approval processes and the four- to six-week turnaround timeline for our technical review. The second is the removal of the external assurance review and major project advisory group review at pre-tender stage. The timeline expected for an external assurance review is in the region of six to eight weeks, and the major project advisory group typically takes a further six weeks to review and return its report. Therefore, the removal of these reviews at pre-tender stage should reduce the time taken to gain approval by a minimum of a further three to four months.

These reforms, the 2019 update to the public spending code, the introduction of the external assurance process and the major projects advisory group and the most recent updates outlined by the Minister in March 2023 were informed by a number of different factors. These included recommendations arising from a number of different reports, including the 2017 IMF report, the independent review of escalation in costs at the national children’s hospital and a consultation process involving key stakeholders.

Finally, the Department is finalising a set of infrastructure guidelines which will replace the public spending code. As I indicated, Circular 06/23 outlines the updates to the code on the requirements for evaluating, planning and managing public investment proposals.

I hope this statement provided a helpful summary of the reforms. We look forward to discussing these issues.

Deputy Rose Conway-Walsh

I thank Mr. Conlon for attending and for his opening statement, which gives us a lot of detail. The public spending code which became effective in January 2020 is a step forward, as Mr. Conlon said. As he outlined it was the first time there was a systematic approach to project assurance cost, forecast, risk, procurement and the other areas we needed to tackle. Three months ago, the Minister announced a new reform plan, just over three years since the implementation of the spending code. A core part of the reform proposal is to remove the public sector spending code and to replace it with a set of infrastructure guidelines. When will the new infrastructure guidelines be published?

Mr. John Conlon

We have an advanced draft. As we speak, we are doing consultation with some users across the Civil Service and some of the agencies. We will have a formal consultation process with them, hopefully in the next five or six weeks. We hope to publish the guidelines some time in September.

Deputy Rose Conway-Walsh

Will the public spending code be in place until the guidelines are published or have the reforms that have been announced already come into effect?

Mr. John Conlon

The public spending code stays in existence, updated by Circular 06/23. We envisage the infrastructure guidelines will effectively be a replacement for the public spending code. They will encompass much of what is in the public spending code so this will not be a new framework. It will include many of the principles and objectives in the code that we have discussed. It will be a good bit shorter because we found the public spending code had become a long document and we wanted to make it more streamlined. We will put much of the guidance and many of the good practice notes up on our website. It will be a far tighter document but much of what was in the original public spending code will remain as guidance in the notes which we will continue to update on our website.

Deputy Rose Conway-Walsh

Under the 2019 spending code, the Department was required to undertake a technical review of any major capital projects at three stages, namely, the strategic assessment report, the preliminary business case and the final business case. Can Mr. Conlon confirm that the Department's technical reviews of both the preliminary and final business cases were replaced in 2021 by a private consultant-led external assurance process, as outlined in Circular 25/21?

Mr. John Conlon

I will ask Mr. Meaney to address that question.

Mr. Kevin Meaney

Yes, for the preliminary business case stage and the pre-tender stage, as it was at the time, we replaced the technical review carried out by the Department with the external assurance process. In the circular released in March, we are retaining the external assurance process at the preliminary business case stage for major projects but at pre-tender stage the external assurance process requirement has been removed.

Deputy Rose Conway-Walsh

Can Mr. Meaney confirm that the new reforms announced remove the last technical review from the Department of major capital projects at the strategic assessment stage?

Mr. Kevin Meaney

That is correct, yes. At strategic assessment stage, we have subsumed those requirements as part of the preliminary business case. When a Department or agency comes forward at preliminary business case stage, we will ask to see the strategic assessment completed as part of the wider preliminary business case. That should then go to an external assurance review and then to us and the major projects advisory group.

Deputy Rose Conway-Walsh

Does that mean the Department will no longer be providing any technical reviews of major capital projects?

Mr. Kevin Meaney

We will not be providing stand-alone reviews but we are part of the major projects advisory group. For the purpose of advice to our Minister, we sought a broader skill set than ourselves. Other members who have experience of project delivery sit on the major projects advisory group and they will carry out that review at the preliminary business case stage.

Deputy Rose Conway-Walsh

According to the opening statement, the formal approval of gate zero and the technical review by the Department on completion of the strategic assessment stage were taking four to five months in total and that the external review process and major project advisory group takes another three to four months. What time saving is anticipated to result from the recent reforms that were announced? Will it be eight to nine months?

Mr. John Conlon

Collectively, that is correct. It will be six to eight months with the two separate changes. As regards the strategic assessment stage, at which there is no formal decision point and no technical review by us, the evidence shared with us from agencies and Departments is that it takes a minimum of three to four months at that point. We know from the time it takes to get an external assurance process and major projects advisory group reports completed at pre-tender, that will add a further three to four months. Collectively, therefore, it will be a saving of six to eight months.

Deputy Rose Conway-Walsh

There will be a time saving. In January 2022, the then Minister, Deputy Michael McGrath, said the timelines associated with public spending code compliance were a fraction of the time required for compliance with the range of statutory requirements. H also noted that many public spending code steps could be undertaken in parallel with other project development phases. What research or event led to the Department less than a year later deciding that compliance with the recently introduced public spending code was too burdensome? What evidence was there for that?

Mr. John Conlon

It was based to a good degree on feedback we were getting from Departments. To return to the previous issue for a minute, the timelines are also conditioned by the complexity of projects. We cannot state that the timelines to each and every project will be the same. It will depend on how complex they are. Sometimes new projects will take longer than projects that have been completed before. I want to put that caveat on timelines. Each project can be different and can have a different timeline depending on the complexity.

Deputy Rose Conway-Walsh

There will always be a time saving. Is that correct?

Mr. John Conlon

We would hope so. It is subject to the Department and agencies putting resources into that work.

Deputy Rose Conway-Walsh

That is a very broad caveat.

Mr. John Conlon

On the Deputy's second question, we had a lot of consultation, some of which Mr. Meaney was involved in, involving interaction with Departments on the ways in which practitioner groups and the Secretaries General group I mentioned were getting feedback from them and how the processes could be speeded up. There was regular engagement and we have regular engagements with Departments to learn from those processes.

Deputy Rose Conway-Walsh

Are some Departments better than others?

Mr. John Conlon

Some Departments are bigger, do more projects and have better expertise than others.

Deputy Rose Conway-Walsh

In 2021, the Department introduced the external assurance process. What was the rationale for replacing the Department-led assurance process - the technical reviews - with the private consultant-led assurance process?

Mr. John Conlon

An increasing volume of work meant that the team in the Department was under more and more pressure to get this done.

Using consultants from outside the Civil Service can help that process given that increasing pipeline of projects to come. Does Mr. Meaney want to add to that?

Mr. Kevin Meaney

Beyond that, particularly coming out of the independent review into the cost estimation in the children's hospital, there was a very strong recommendation about central assurance processes that did look at a broad period of project delivery that went well beyond, as I said, the business assurance and value-for-money case. It also looked at the complexities of project delivery and managing risks at that very early stage of design but then, obviously, in contract management, how the project is procured and broader governance.

As part of the thought in how we will deliver centrally on that, we felt a better skill set and availability of skill sets could be available on the market. We made a commitment that as part of that, an external assurance process would be a useful aid to Departments and agencies in developing projects. Similarly, we provided a document to the committee today on some research that was done in 2019 on international approaches. We saw that a couple of other countries used that model of an external assurance beyond the public sector at key points in a project's life cycle. The Norwegian example in particular is a case in point. It is that influence or thinking that maybe an external insurance process would be a useful aid to Departments and agencies.

Deputy Rose Conway-Walsh

What is being done build capacity within Departments, and not only Mr. Conlon's own Department? We should also discuss his Department in terms of not having to contract out everything and just bring in the expertise. What is being done? Does the Department have internship programmes or graduate programmes? What is being done to get the brightest and best into the Department to get value for money and manage these projects? Are those types of internships and graduate programmes within the Department?

Mr. John Conlon

We have them on a broader scale for recruitment through the Irish Government Economic and Evaluation Service, IGEES. Some of those people would work in the areas in which Mr. Meaney works and also related areas throughout the Department.

We do not have technical skill sets employed in the Department with regard to engineering, quantity surveying and stuff like that. They are skill sets we like to see employed in agencies and Departments rather than ourselves. We just focus on the economic and evaluation service to give us assistance with that type of work.

Deputy Rose Conway-Walsh

The Department brings graduates directly in from colleges for the IGEES. What I am trying to get at is whether the Department competing with consultants or being completely reliant on consultants for answers and problem-solving. What are we doing inside Departments to break away from that reliance, or to not be so reliant?

Mr. John Conlon

There are two way of looking at that. We have been building up the IGEES for quite a number of years. I do not have numbers with me but we can show the Deputy how that has evolved over the years in a separate note.

With regard to the broader capacity, not just in my Department but in the Departments that are involved in much of the major project delivery, we have written to all Departments to get their views on the capacity they have to deliver on these national development plan, NDP, priorities. We feel that them having that capacity is important in project management and project delivery. We are going through some of their responses at the moment and we are going to do an evaluation of those responses to ensure that we can, insofar as possible, augment that capacity throughout the key Departments, in particular, that are delivering on a range of these infrastructure projects.

Deputy Rose Conway-Walsh

Are there graduate programmes within that? I always hear about graduates going to the big four and other consultancy firms. Does the Department have means of getting them directly?

Mr. John Conlon

Our director of HR is not here, but in terms of the Civil Service recruitment, for example, we do a lot of work through the Public Appointments Service to have an annual intake into that service every year with the skill sets required for IGEES.

Deputy Rose Conway-Walsh

It is something I am looking in to. How many people are in the service?

Mr. John Conlon

We have approximately 200 staff in IGEES across Departments at the moment. That has been building up. As the Deputy knows, we are competing with the big four and other employers as well. It is a very tight labour market out there.

Deputy Rose Conway-Walsh

Yes.

Mr. John Conlon

The Civil Service offering is very attractive. it offers a huge range of work and it offers mobility. We use all those tools to promote our offering through the Public Appointments Service. As far as I am aware, some of our HR colleagues in the Department and across the Civil Service engage in milk rounds and activities like that to try to get people in. As the Deputy indicated, we are competing very strongly, and not just with the big four. As I said, the labour market is quite tight.

Deputy Rose Conway-Walsh

I know. We might talk about that a bit more another time. At the time the external assurance process was announced, the previous Minister said that this reform was to meet a recommendation of the International Monetary Fund's, IMF's, public investment management assessment of Ireland. As Mr. Conlon said, the document has been provided to us in the meeting and there are many good recommendations in it. Which recommendation in the report was understood to have called for the introduction of a private sector-led assurance process? I could not see that in the report. Is it in it?

Mr. John Conlon

I am taken with the Deputy's focus on the private sector.

Deputy Rose Conway-Walsh

I am just trying to get a better understanding; that is all.

Mr. John Conlon

The private sector is where we have to go to get the skill sets we do not have ourselves or, more importantly, to augment the skill sets that are available across the Civil Service. That is an important point to make. There are quite a number of skill sets in project management, project appraisal and cost evaluation within the Civil Service and within the relevant agencies such as Transport Infrastructure Ireland. However, we use the private sector to augment that.

Deputy Rose Conway-Walsh

The Minister said specifically that it was to meet a recommendation of the IMF's public investment management assessment of Ireland. I just wondered where in the report it said this.

Mr. John Conlon

Can we get back to the Deputy on that?

Deputy Rose Conway-Walsh

That would be great. In 2021, the Department also commissioned the consultancy firm Ernst & Young to do a report on a capital delivery project. Did the Supporting Excellence: Capital Project and Programme Delivery Capability Review that was produced by EY recommend an external consultant-led assurance process?

Mr. Kevin Meaney

I can talk about the supporting excellence review. No, it did not. It did not really focus on the public spending code in particular. It set out recommendations of key offices or skill sets that Departments, agencies and delivery entities should consider. Following on from that, we had an action plan ourselves with 34 specific actions. Mr. Conlon referenced this earlier when we were discussing looking at the capability and capacity of delivery entities and Departments. Three of those actions were specifically referenced. That was for Departments themselves to first engage in a gap analysis to see what skill sets they have identified as gaps in their Departments.

Deputy Rose Conway-Walsh

Leading on from that, did that influence the Department's decision to introduce the external assurance process?

Mr. Kevin Meaney

No, it would not have really. As I said, it did not go into the details of the public spending code in great detail. That would not have been in the background documentation really.

Deputy Rose Conway-Walsh

However, the report was carried out. Mr. Meaney can see what I am getting at. Were any concerns raised within the Department that it was relying on recommendations from private consultants to give a greater role to private consultants?

Mr. John Conlon

The emphasis I would like to put on that is that we would use the scope and expertise available in the private sector to augment what is available to us across the public service. That is the way I would like to look at it rather than use it as a replacement.

Deputy Rose Conway-Walsh

I would like to think it is until such time as we build up further capacity.

Mr. John Conlon

Which is going to be, quite frankly, an ongoing challenge.

Deputy Rose Conway-Walsh

Yes, indeed. I just think there needs to be a greater focus on it. What information and feedback would the Department have typically provided to the approval authority following the technical review of the strategic investment?

Mr. Kevin Meaney

We produce a report. Usually there is a four- to six-week turnaround time. We provide a fairly structured report of between ten and 15 pages setting out compliance with each of the steps we have detailed in the strategic assessment stage. This is returned to the Department for its own information. It is also retained for the information of the Minister of Public Expenditure, National Development Plan Delivery and Reform in case it should be brought to the Government for a decision or if views or observations were sought.

Deputy Rose Conway-Walsh

It will reduce the administrative burden. Is that what is being said?

Mr. John Conlan

It is also a compliance check issue. It is to ensure the provisions in the code are being abided by. It gives assurance that the body involved is doing things in compliance with the code. That is where our review focus is.

Deputy Rose Conway-Walsh

What feedback does the Department of Public Expenditure, National Development Plan Delivery and Reform provide from the technical review at the preliminary and final business case stages?

Mr. Kevin Meaney

Typically on receipt of the technical review, the Department sets out the steps to be rectified immediately in the business case prior to going for consent from, or a decision by, the Government. Alternatively, there could be issues that could be clarified at the next stage, particularly if the project is at an early stage of development. Typically it sets out to us how the recommendations could be addressed. Some measures can be taken immediately and some may be for the following stage with regard to being clarified or cleared up.

Mr. John Conlan

The objective is to make the life cycle very clear so people know when to address issues and when to carry out actions. It is a life cycle issue.

Deputy Rose Conway-Walsh

What are the anticipated trade-offs in terms of oversight from the perspective of the Department with regard to removing the technical review phases? Is there a trade-off?

Mr. John Conlan

This goes back to our previous discussion on ensuring the accounting officer in particular carries out these checks under his or her supervision rather than sending them to us all of the time. It will become a compliance issue for the accounting officer in charge of the project to make sure these checks and balances are in place.

Deputy Rose Conway-Walsh

In his opening statement Mr. Conlon said the recent reforms to the public spending code were informed by a number of reports. He mentioned the IMF report and the PwC report on the escalating costs of the national children's hospital. The PwC report on the national children's hospital states that significant failures occurred during the crucial planning and budgeting stages of the project which created a situation in which the approved project could never be delivered within the financial parameters agreed. Mistakes seem to have been made very early in the process and this had significant knock-on effects for the costs later. How would the recently announced reforms have impacted the outcome in the case of the national children's hospital?

Mr. John Conlan

I will ask Mr. Meaney to add to my response on this. I want to be clear that major projects, such as that which Deputy Conway-Walsh has just mentioned, still require fairly intensive involvement of the external assurance process and the major project advisory group at an early stage. That remains in place. This is a key response in particular to the report Deputy Conway-Walsh just mentioned. There has been no change to this since the recent announcement we made.

Mr. Kevin Meaney

The changes since 2019 include the addition of an external assurance process and the involvement of the major project advisory group at the relatively early preliminary business case stage. This is with regard to key external assurance and the major project advisory group challenge to a project. Prior to 2019, the focus of a business case was very much centred on business and economic appraisal.

Deputy Rose Conway-Walsh

Did the national children's hospital go through all three technical reviews in the Department at the strategic assessment, preliminary assessment and final business case stages?

Mr. Kevin Meaney

The requirements prior to 2019 when the national children's hospital was approved did not have as many stages or have the same depth and rigour of external review. That has changed. The new code since 2019 is a different process from that which the national children's hospital went through.

Deputy Rose Conway-Walsh

Would the recently announced reforms have given the Department greater oversight of the national children's hospital project compared with public spending as it was originally? Are the witnesses saying the situation we have with the national children's hospital would not have happened if we had then what we have in place now?

Mr. John Conlan

The 2019 reforms were the key response to the report the Deputy referenced on the national children's hospital. They have been in place since 2019. The emphasis is on bringing in the expertise of the major project advisory group at a very early stage in the process to challenge a project. That was not in place prior to 2019. This is the key reform in the evolution of the code in recent years. It is with regard to major projects. The recent reforms would not have made a big difference. The important point, with regard to big projects which are highly complex with high-value involving many inputs, is with regard to the reforms made in 2019. This is why we require the expertise of the major project advisory group to challenge a project at an early stage.

Deputy Bernard J. Durkan

I welcome the witnesses. I have just come from a long meeting of the Joint Committee on Health, which was debating the national children's hospital so it is fresh in my mind. We could speak on this subject for at least two days on the basis of the information we have available. Much misinformation prevails with regard to the national children's hospital. People fail to realise the scale of the project. Once upon a time, it was described as the most expensive hospital in the world. It is not but the scale is very considerable. Given the scale and multiplicity of technical suppliers, including for electrical and medical requirements, the variations and the uncertain period between the signing of the contract and now, do the witnesses think there could have been any great deviation from what we are dealing with now in terms of cost? A firm of accountants said that some procedures were not followed. I have my doubts as to whether there would have been a different outcome if procedures were followed differently. It is a very big project. It is popular for everybody to say the State was the loser because certain procedures were not followed, it was inefficient and the hospital is in the wrong place which, incidentally, is not and cannot be an issue with regard to costs because it is already there.

People rake over the coals again and again, saying the outcome could have been different. I do not think the outcome could have been different. In the opinion of the witnesses, could the outcome have been vastly different from what we have if the codes of conduct we have now had been in place? Initially only an guesstimate of a cost of €650 million was available. Then we had the actual contract price, which was allegedly an increase on what was a guesstimate. A guesstimate is still only a guesstimate. It does not carry any weight. We now have a situation where we are coming towards the end of the project and consideration will have to be given to the various factors that have affected the delivery, such as Covid and the war in Ukraine, with regard to supplies and transport. Some components have increased in value by up to 45% because of inflation and for other reasons.

I therefore ask, where everybody has his or her own opinion as to what the project represents, that we should be careful not to damage the concept of the project by downgrading it on the basis that it was a failed project from the start.

Mr. John Conlon

I thank the Deputy. I am not sure as to how to frame my answer because this is a very complex project. I will frame it in the context of what we are to discuss which is the public spending code and the way in which it has evolved. Part of that evolution has been in response to the cost escalations in that project. There are two emphases I wish to make by way of my response to the Deputy’s question.

My first is that the involvement of a group like the major project advisory group at an early stage brings that key challenge using the expertise it has, which could have improved the planning of that project at an earlier stage. Again, I deliberately use the word “could”, but that process could have added benefit to it.

The second part in which the public spending code has evolved is a better focus on cost forecasting. The Deputy mentioned very many good reasons cost can go awry, such as Ukraine, construction inflation and supply chain difficulties, and these are all factors which impact on any contract, some of which are quite unforeseen. Any contractor or sponsoring agency must adapt to that throughout the lifecycle. It is important to do that in a very visible and coherent way throughout that lifecycle process but I believe costing information at the right time to feed into decisions at an early stage is probably stronger now in the public spending code than it was then, being aligned to the development of a major project advisory group.

Those are the two parts of the revised public spending code which I would like to see as a quite positive response to the difficulties identified.

Deputy Bernard J. Durkan

I thank Mr. Conlon for his response. What precise difference would it have made, which is where I believe we have a problem, where it was not possible to ascertain what the difference would have been? People speculated about it. If X, Y, or Z had been done, the following would have been the outcome, but would it have changed dramatically from what the outcome has been so far?

For instance, there was a debate about vents, air conditioning and so on. Why and when did that become a problem? Was that not identified at the design stage? Was it not pointed out? Was the design not followed by the contractor? That is something we are not able to find out, despite all of the fun and games. We will be following up on this again but I am concerned that on the one hand, we need to have strong safeguards to protect the taxpayer and the State in general. However, if we increase the strength of invasiveness to such an extent that it becomes impossible to proceed, then we are at a net loss. That is one of the allegations made against the various public contracts over the past number of years, that is, that we have increased the control to the extent that it is impossible to comply or, if having complied and having gone to great deal of trouble and cost to do so, we then arrive at a situation where the actual cost is back to where it started because of all the inputs we have made to ensure adequate protections were there for the taxpayer. I am not saying that that should not be done but the outcome of it is what it is.

Mr. John Conlon

Again, I believe the only approach I can take here, as I was not party to the committee hearing this morning but I understand it was quite detailed, is from a public spending code perspective where the emphasis is on cost forecasting and benchmarking. The Deputy mentioned cost inputs a great deal there. Cost forecasting must have a tight focus on what the inputs into a project are. It is then a question of managing scope creep.

Deputy Bernard J. Durkan

That is correct but there is an important point there. Mr. Conlon is absolutely right in that cost forecasting is a very integral part of the arrangement. If we are wrong in that area, we are wrong all over, like the ripples in a pool. However, if we were right in the beginning and we increased the cost forecast to a level which would have been realistic, the project might then not have gone ahead at all. Where do we go then, not only in respect of the children’s hospital but also in other cases?

We, as Members of the Oireachtas, hear regularly a complaint that bureaucracy and red tape is holding up major projects for years. The problem then is that if something holds up a particular project, whether it be the western rail corridor, the Derry road or whatever, and if it is held up for years until something else happens, then it ends up being held up for a very big reason and it cannot go forward at all. I question the wisdom of where we try to achieve the best but we do not always get it at the end of the day and it is then more costly. Let nobody tell me that the Derry road, if it had been done 15 years ago, would not have been better value for money than when it will be done. This is a fact of life.

Mr. John Conlon

With respect to the Deputy, I believe he is conflating a number of issues there with respect to delays which give rise to cost escalation because of the inflationary aspect of the time, if it is a movement from one time period to another. One of the approaches there, from a public spending code point of view, is to then revise one’s benchmark rather than go with the previous benchmark. That is the approach I would like to see taken where if there are delays in projects over a period of time, where one revises the benchmark to have a better view of what one’s value-for-money benchmarks are and to then review one’s cost inputs.

The Derry road has not proceeded and it will cost much more now than it would have then. However, we will do a revised business case for it to give one a current benchmark, from that point of view.

Deputy Bernard J. Durkan

The odd thing about it is that I always believed the Derry road should have gone ahead at the time and that there was always the strongest possible case, having, like everybody else, travelled on it on numerous occasions. It is a very dangerous road with much heavy traffic. It has growing vehicular traffic with heavy goods vehicles bumper-to-bumper on some occasions. No matter what case can be made afterwards to say that we saved money there, we did not. We lost money. That is a fact.

Mr. John Conlon

That point is the somewhat outside the remit of what I am here to discuss. I travelled that road quite-----

Deputy Bernard J. Durkan

I know but I am just running that point past Mr. Conlon and he can handle it as he wishes.

Mr. John Conlon

I travel that road quite regularly and I am aware of the dangers on it. If the project is to go ahead, it needs a revised plan and benchmark.

Deputy Bernard J. Durkan

What does Mr. Conlon say to the accusation that we have too much red tape and too many obstacles in the course of public procurement? How do we deal with it? Do we have too much, too little or is it of no consequence?

Mr. John Conlon

We announced reforms in March try to address some of what I will not call red tape but rather some of the delays which we had received feedback on. That was a response which I believe is quite effective. That process of engagement with the Department is where it has learned those lessons in review. The public spending code should be seen as a document that is subject to review on an ongoing basis for some of the reasons the Deputy has just mentioned, as has Deputy Conway-Walsh.

I would not view it as red tape but as a way we can review, consider and respond to those issues. Let us be frank, however, as the public spending code is there for a reason. It is to give a better appraisal function so that we can achieve value for money in those projects. If the resources are put into doing that right, then one will get better outcomes. I would not call it red tape but would call it doing it the right way.

Deputy Bernard J. Durkan

I was only calling it red tape because of some other things which came up at the previous meeting last week on this committee. One of the things which was brought up was an application form for a grant, a service, housing in the local authority, a health service or whatever the case may be, where the applicant had to make an application consisting of about 26 or 27 pages followed by accompanying documentation. I remember being in this committee quite a number of years ago when it was decided by the politicians that there were far too many pages to be dealt with and hoops to be jumped through.

It was delaying the system and costing more because it took more people more time to assess the pages that were added to it, as an example. The fact of the matter is that the politicians were right. The thing moved ahead much more smoothly and quickly, and was able to respond much more quickly to the burning issue at that particular time, which was housing. Some of the same issues remain to this day.

Mr. John Conlon

I am not sure I can respond to that but I will make the point that, as I discussed with Deputy Conway-Walsh, the public spending code is quite a complex and lengthy document. We are evolving it into a set of infrastructure guidelines, which will be shorter. We will be able to direct people to the website for notes and guidance, etc. The infrastructure guidelines will be a much more coherent and shorter document. Hopefully, that will be of some help in terms of working with the system in that way. I am not sure that responds to the Deputy's point, but it demonstrates how we review what we are doing on an ongoing basis.

Deputy Bernard J. Durkan

Is there no danger of people, with the same object in mind, criss-crossing the same paths several times?

Mr. John Conlon

It depends on where the journey starts.

Deputy Bernard J. Durkan

I know.

An Cathaoirleach

Mr. Conlon's Department is now known as the Department of Public Expenditure, National Development Plan Delivery and Reform. It is quite a lengthy title and there is a lot in there. He has set out what he is expecting to be done immediately in each Department relevant to these projects. What happens when it is not done? What happens when a Department consistently overruns on its budget? What happens when a Department has a number of agencies that are being investigated by the Comptroller and Auditor General or the Committee of Public Accounts or, indeed, about which the public has concerns? What sanctions can be imposed on Departments for not adhering to the requirements set out in Circular 06/2023?

Mr. John Conlon

The circular does not provide for any sanctioning process. Most of the discussions we have with Departments can involve discussions on both underspending and overspending on their capital budgets. In terms of the way we review budgets on an annual basis, there will be a sharper focus on what can be delivered within those budgets. For example, this year the Department of Education has a certain budget and will probably overspend on that. To be frank, I do not see that in a bad way, because it is delivering more output for that in terms of the number of schools and classrooms it is delivering. We will see an enhanced budget for that delivery. I am not sure if the Cathaoirleach has any example in mind in relation to the overspends to which he has referred. Any sanctioning process will be discussed in the negotiation of future budgets to make sure that it is delivered

An Cathaoirleach

I can provide an example. The Department of Health is the most obvious one. Horse Sport Ireland is being examined by a committee in this House today in terms of how it spends its money as an agency of a Department being operated by the State. You can go down through the rest of the Departments. All you have to do is to look at the report of the Comptroller and Auditor General every year. There is a disgraceful loss of money to the State because of inefficiency and the fact that a Department - not to name any one in particular - has simply not spent its money in a prudent way and in a way that would give the taxpayer value for money. To be quite honest, I do not see the Department of Public Expenditure, National Development Plan Delivery and Reform doing anything that would convince me that it is on top of its game in relation to keeping a control on each Department relevant to the spend and what has been set out here. It is down to the Accounting Officer and associated agencies to ensure compliance, manage capital budgets overall and manage budgets at individual project level. There are too many examples of failure. I do not see any sanction provided for in the circular. I do not see any provision for the Department of Public Expenditure, National Development Plan Delivery and Reform to intervene. It is like a sheriff with no sidearm.

Mr. John Conlon

I appreciate the point the Cathaoirleach is making, but as he will be aware from his extensive experience with the Committee of Public Accounts, we have-----

An Cathaoirleach

The Department has what? Sorry, I did not hear what Mr. Conlon said.

Mr. John Conlon

The Cathaoirleach will be aware, from his extensive experience with the Committee of Public Accounts, that the Department has public financial procedures in place. We have Accounting Officers who are in charge of their own budgets. They are the people responsible for the delivery of the projects and their agencies. I cannot see how the Department of Public Expenditure, National Development Plan Delivery and Reform can step in as a kind of sanctioning agent other than through the review of budgets on an ongoing basis.

An Cathaoirleach

Where they fail, what does the Department do? There are obviously failures in each Department. Some can be explained, whereas others cannot, and we just do not know what is happening in the Department. What mechanism is there within the Department of Public Expenditure, National Development Plan Delivery and Reform to apply the Circular 06/2023 and any other reforms that it might have in mind where the instruction from the Department fails?

Mr. John Conlon

The effective way we do that is through the Vote management process. Each of the Departments works through a particular section in the Department, which we call a Vote. Where there are overspends or underspends, whether on the current or capital side, there is regular engagement between the Department and the line Departments in relation to how they are spending money. We have fairly regular meetings with the big Departments. They submit expenditure management reports to us to explain how they are procuring and spending those moneys. I must emphasise that the responsibility as to how they do that is with the relevant Accounting Officers. It is their responsibility to explain, both to the Oireachtas and to us, why they are overspending, and whether it is for good or bad reasons, as the Cathaoirleach has said. We do not impose a particular sanction to punish them, if that is what the Cathaoirleach is asking.

An Cathaoirleach

The Department is the Department responsible for public expenditure and reform, and now it has the added responsibility of national development plan delivery. If a Department fails in the delivery of the national development plan, the Department of Public Expenditure, National Development Plan Delivery and Reform fails. If a Department fails in terms of public expenditure, the Department of Public Expenditure, National Development Plan Delivery and Reform fails. In terms of reform, in learning from failures or from a risk that was taken that did not pay off, is it Mr. Conlon's Department that learns from that and then strengthens the circulars that are issued to different Departments? Quite frankly, the public is fed up looking at report after report and seeing the State losing what now amounts to millions and billions of euro very easily.

Mr. John Conlon

I think the response we have made in the public spending code, particularly in respect of the national children's hospital, is evidence of how we respond. We strengthened the process in the public spending code after the overspend on the national children's hospital, by bringing in what we have discussed in the last half hour or so. We engage with the Departments, Ministers and Government in strengthening those processes. That is part of our mandate. I think the evidence is in the output.

An Cathaoirleach

That amounts to closing the gate when the horses are gone.

Mr. John Conlon

It is learning lessons as well. We had a good focus on that, and we are keeping that focus as we further evolve the public spending code. In terms of our mandate to deliver the national development plan, it is part of what we are trying to do in relation to these reforms. We are trying to ensure that we are listening to the Departments and challenging them. We challenge them on a regular basis on their capital expenditure projects. We brought in reforms such as the establishment of the major projects advisory group, MPAG, to help us in that way. Whilst I appreciate and accept the Cathaoirleach's points, we are responding in that way. I think the evolution of the public spending code is a very good example of that.

An Cathaoirleach

Did the Department consult with the Comptroller and Auditor General about those reforms?

Mr. John Conlon

Not directly, no.

An Cathaoirleach

Why?

Mr. John Conlon

We engage with the Comptroller and Auditor General through our Government accounting unit. We take on board all of the Comptroller and Auditor General's reports each year, including the special reports. The Office of the Comptroller and Auditor General is not advisory group for us in the Department, because it is-----

An Cathaoirleach

I can understand that, but he, his office and the people who work there are at the coalface every day.

Surely they might have some suggestions regarding how one might structure a particular Government contract or, generally, a Government contract, or not, and how would one achieve value for money. That is his job.

Mr. John Conlon

I have worked with the Office of the Comptroller and Auditor General in the past. They have always been quite clear that they are not an advisory body in the way the Chairman stated.

An Cathaoirleach

I understand that.

Mr. John Conlon

We take on board all their reports, and their special reports. We work, through our Government accounting people, on updating our own rules and regulations, in particular, on public financial procedures in their output. That indirect engagement is always there and we always are quite conscious of and work with it. However, they do not see themselves as advisers to us and we do not see it that way either.

An Cathaoirleach

I am not saying they are advisers. Let me be clear about this. I am not saying they are advisers and I am not having a go at Mr. Conlon or his two colleagues here. I am simply trying to find things out.

The Comptroller and Auditor General and his staff do the counting in each Department. They look at governance issues. They look at failures. They look at successes as well. I am not saying that the Comptroller and Auditor General would advise Mr. Conlon. I am saying that, out of that experience, the Comptroller and Auditor General might actually have something to add that would be of importance and would perhaps offer a greater control. I would always ask my accountant. The Comptroller and Auditor General is the Department's accountant.

There is a bigger picture here which can be taken up with the Minister in due course because I believe it is a failure of this Government and every other Government that they have not brought in the appropriate reforms to instill some sort of confidence in the general public that they have a handle on the type of expenditure, for example, that Mr. Conlon is talking about this year which is €12 billion this year. It is extraordinary.

For me, what gets counted gets done and I would suggest we are not counting it very well. I will be suggesting to the Minister that some form of sanction has to be introduced where there is clear failure in a Department to handle the taxpayers' money in a way that one would expect. I have always said this. One has to apply the same diligence to spending that money as Revenue does in collecting it. As a self-employed person, I can tell Mr. Conlon it is not easy to make that kind of money. When one is paying one's taxes, one wants to have some confidence that at least they will be respectful about where they got that money and diligent about how they spend it. The State does not do transparency, accountability or that diligence in terms of spend very well. That is not blaming Mr. Conlon or his colleagues. It is more of a political comment than one that Mr. Conlon can deal with it.

Mr. John Conlon

I appreciate that.

An Cathaoirleach

It disgusts me to see, year in, year out, billions of euro just sifting away. There is a big row about it on day one, a big row about it when the Comptroller and Auditor General publishes the big report and then it just drifts away, and there are no governance processes improved and nothing done to scale up the State to ensure that it does not happen again.

Mr. John Conlon

I appreciate the Cathaoirleach is making a political point. Can I make one quick response, not directly responding to that? In terms of the Comptroller and Auditor General's experiences, through his annual reports and through special reports, we engage through our Government accounting unit. We are doing some work on how we can adapt the public spending code into our public financial procedures in a better way. That work is ongoing. That might help in the case of some of the criticisms the Cathaoirleach has in that respect.

In terms of the amount of money we spend on the national development plan, NDP, and there are cost overruns and there are some bad experiences, I have to make the point that from that €12 billion this year there will be a lot of good output as well.

An Cathaoirleach

I am acknowledging that. It is a pity that the poor outputs overshadow completely the others and that the procedures in place are not tight enough. That is my view.

I call Deputy Conway-Walsh.

Deputy Rose Conway-Walsh

I thank the Chair for letting me in again.

Following on from that, we know that there was a €1 billion underspend in housing last year. Do we know where the Department is at this stage this year and what happens when the Department comes to Mr. Conlon and says that it has underspent by so much at this time? What is the process?

Mr. John Conlon

I do not have detail on the housing spend to date but we can get it for the Deputy. I do not have it with me. I understand that the underspend it is decreasing. Hopefully, they will be in a position to be able to spend a lot of their budget this year in terms of outputs, etc. I do not have detail with me here but we can get the Deputy something on that.

Deputy Rose Conway-Walsh

It is the outcomes. What I am getting back from local authorities is that they have not got a budget to fix a hole in a roof. That is the fact of it. The money seems to be held at a level. I find this across the board in different areas. The money is held nationally but it does not get to them.

Mr. John Conlon

I do not have that detail.

Deputy Rose Conway-Walsh

I know Mr. Conlon would not. I would not expect him to have it.

Going back to the EY report, the Minister specifically said that the EY report recommended developing an external assurance review process for major infrastructure projects. That recommendation specifically came from the EY report. Mr. Conlon will understand my concerns, notwithstanding the fact that we need a certain number of consultants, that if consultants are recommending consultants we need scrutiny of that.

Mr. John Conlon

I will go back to my previous response. The way I view that is it augments our internal capacity as well. I appreciate the point about consultants recommending consultants but the way I look at that is slightly different in terms of augmenting what we have.

Deputy Rose Conway-Walsh

Going over that, in Mr. Conlon's opening statement, he states that recent reforms to the public spending code were informed by a number of different reports. Mr. Conlon mentions the IMF report, where he mentioned the PwC report on the escalating costs of the national children's hospital. One of the other recommendations that were made in that report was to establish an infrastructure projects unit within the Department of Public Expenditure and Reform, DPER, to provide advisory services to the Minister on appraisal and selection of projects and to carry out studies of infrastructure bottlenecks, financing and evaluation of lessons learned. It was envisaged that the infrastructure projects unit would enhance the Department's role as co-ordinator and gatekeeper of the appraisal and selection process by mandating the infrastructure projects unit to be established to lead on the design and implementation of the improved business case model for the appraisal of major projects, to act as objective reviewer signing off on major projects for each business cases and a number of other things. Did that ever happen? Was that set up?

Mr. John Conlon

I will bring Mr. Meaney in on this. That, effectively, is the national investment office which Mr. Meaney leads. That does a lot of the work Deputy Conway-Walsh mentioned in relation to the process she outlined there.

Mr. Kevin Meaney

The IMF report was completed in September 2017. The new office was established in 2018. It was originally the infrastructure programmes and projects office, now called the national investment office. That office is still in charge of the public spending code and the wider frameworks. As the Deputy said, for a period of years it did the technical reviews at key stages. I might come back to the EY report and the mix. In 2019, we introduced the new public spending code. Even as far back as that, we were indicating an external assurance process and maybe supplementary processes, such as the major projects advisory group, were to be introduced over the lifetime from 2019 onwards. They subsequently were introduced in 2021. They supplemented the work of our office, the national investment office.

That was prior to the EY report being published. I wonder was EY aware that this was in the works and we had it planned and announced in 2019. It was supporting that recommendation.

Deputy Rose Conway-Walsh

I hope the Department did not pay them for that recommendation if it was already set up.

Mr. Kevin Meaney

In fairness, it was part of a wide range of recommendations in the report.

Deputy Rose Conway-Walsh

Is that where the expertise is held for large capital project delivery for the State? Is it located within that?

Mr. Kevin Meaney

The central location is more around the wider frameworks. I would say there are large pockets of expertise for different components of project delivery. For example, our colleagues in the Office of Government Procurement would have a particular expertise in construction procurement. Obviously, many of our delivery agencies, which are responsible for the delivery of the projects, would be the greatest experts in sectoral delivery for those particular sectors. It is spread across the different sectors.

Mr. John Conlon

It is an important point that a body like Transport Infrastructure Ireland would have that capacity and expertise on big transport projects, and it is important that it is well resourced from that perspective. Similarly, in terms of sectoral capacity being built up, which we spoke about earlier, it is also important to have upskilling and resourcing for those big projects it is delivering.

It is important to note that some of those evolutionary decisions, such as external assurance processes and, in particular, the major projects advisory group, MPAG, augment the national investment office and its role. MPAG works closely with the national investment office on some of those big projects in terms of their inputs.

Deputy Rose Conway-Walsh

Is there a variation across Departments in terms of the expertise and capacity to deliver the projects? Under the current structures, how are the Departments able to leverage expertise to other Departments? How much cross-departmental work is there?

Mr. John Conlon

They would all say they are very busy with what they are doing. In terms of practitioner groups and our Department hosting those meetings, it is a good way of sharing experiences, and creating those networks is very important. That is a good way of sharing experiences.

Mr. Kevin Meaney

There has been a particular emphasis around the Supporting Excellence work. We have relied upon expertise from other sectors, particularly delivery entities and the Office of Government Procurement, and we would be very closely involved with the Office of Public Works, which is a key delivery entity. On the big sectors that deliver a lot of capital projects, such as transport, health, education and housing, we would have regular engagement with the big delivery entities on different aspects around capacity, the guidelines and wider areas like that.

Deputy Rose Conway-Walsh

Another recommendation in the IMF report was to mandate the Irish Government Economic and Evaluation Service, IGEES, to develop sector-specific methodological guidance in collaboration with Departments. Has that been done?

Mr. John Conlon

That is part of what I spoke about earlier. We have continuously augmented IGEES capacity over recent years, particularly in some of those bigger Departments that had those big projects. IGEES is now staffed by a complement of over 200. We have a particular focus on applying those resources where they are most required in terms of those big projects and that is something we keep under ongoing review. With regard to the IGEES recommendation in the IMF report, that is being implemented and is kept under ongoing review.

Deputy Rose Conway-Walsh

It was said in the opening statement that a range of Departments and agencies have developed sector-specific arrangements. How many Departments have developed such sector-specific arrangements?

Mr. Kevin Meaney

Broadly, transport has well-established-----

Deputy Rose Conway-Walsh

If Mr. Meaney keeps saying “transport”, the people in the west of Ireland will just go crazy, given the lack of transport. If he keeps holding up the Department of Transport as a great example, we will be expecting the western rail corridor to be there in the next couple of months.

Mr. Kevin Meaney

There are a lot of delivery entities so the Department of Transport is putting in place sectoral guidelines that make sense for the types of projects that it delivers. Obviously, it is up to the agencies to bring cases forward under those sets of guidelines. Our colleagues in the Department of Health have progressed a lot of work, particularly in terms of the prioritisation framework that it has put in place for capital projects, which it did not have in place before 2019. That is new and a new team has been set up in the Department of Health to provide a greater challenge to its delivery agencies, in particular the HSE. The Department of Education, which was reviewed earlier this year, has a particular programmatic approach to school buildings, so it delivers a lot of similar-type projects.

Deputy Rose Conway-Walsh

With regard to transport, the Minister, Deputy Eamon Ryan, comes down to Sligo and says the N17 is halted and is off the radar, when a lot of money has already been spent on it, the land has been sterilised all around it and things like that. How is that decision reached?

Mr. John Conlon

I think that is ultimately a decision for the Department of Transport rather than my own Department. As to how it is reached, I do not have that information with me. As I would see it, that is really an issue for both the Minister and the Department of Transport, to be frank.

Deputy Rose Conway-Walsh

I thought it would be but I thought I would just ask in case Mr. Conlon had any enlightening comments.

I thank the witnesses for this session today. It was very useful and has given us an understanding of where things are at. I appreciate that the Department is evaluating this area and is looking to evaluate and improve it because, God knows, we need it.

Mr. John Conlon

That would be an ongoing challenge for us.

An Cathaoirleach

The circular, at point No. 15, states that all Government Departments, local authorities, the HSE, public bodies and all bodies in receipt of public funding must comply, as appropriate, with the relevant requirements of the infrastructure guidelines. In the case of State companies, the board of each must satisfy itself annually that the company is in full compliance with the infrastructure guidelines. Who would each one of these Departments, bodies or agencies report to? Are they obliged to give someone a report to say they have ticked all the boxes?

Mr. John Conlon

That is part of the Accounting Officer's responsibility in regard to-----

An Cathaoirleach

It goes back to the Secretary General.

Mr. John Conlon

Yes, because they are the accountable officers for compliance with these frameworks, as they are, for example, with the accounting frameworks.

An Cathaoirleach

Even though the Department of Public Expenditure, National Development Plan Delivery and Reform issues the circular and it is signed off by it, there is no mechanism to force them to come back to the Department of Public Expenditure, National Development Plan Delivery and Reform each year and say that, in accordance with point No. 15 of the circular, they have ticked all the boxes. We should at least have that much.

Mr. John Conlon

I think there is a “comply or explain” principle inherent in that.

An Cathaoirleach

A what?

Mr. John Conlon

The “comply or explain” principle for Accounting Officers means that where they do not comply, we can seek explanations. That is something we can review further.

An Cathaoirleach

How does the Department know they do not comply?

Mr. John Conlon

We would become aware, as the discussion has evolved, of projects that are behind or ahead, overspending or underspending. As I said, we challenge them through our Vote management system in regard to expenditure and costings.

An Cathaoirleach

I suggest that the Department of Public Expenditure, National Development Plan Delivery and Reform needs to put in a fairly robust challenge to some of the big Departments that are not spending their money as they should. I would love to see that expressed here. In answer to No. 15, I would love to see the Department of Public Expenditure, National Development Plan Delivery and Reform tell them to tick the boxes and to send back a short report to the Department so at least that person - he or she - is signing off on it.

Mr. John Conlon

I can assure the Chairman that we challenge-----

An Cathaoirleach

As politicians, when we are asked here by the Standards in Public Office Commission, SIPO, and other agencies, we have to sign off and confirm that we did this. However, Departments that are spending €12 billion this year do not even address point No. 15 by signing off something and saying to the Department of Public Expenditure, National Development Plan Delivery and Reform that they did it. The Department of Public Expenditure, National Development Plan Delivery and Reform has to wait for the Comptroller and Auditor General to do a report, which may be years down the road, and the error could be repeated year after year. I think the Department of Public Expenditure, National Development Plan Delivery and Reform should have some stipulation that requires the Secretary General or Accounting Officer to respond by way of confirmation. Our confirmation in terms of our sign-off here in this House is a legal confirmation. Until such time as someone is held to account, I think the Comptroller and Auditor General will always be busy.

Mr. John Conlon

I do not want to be cynical, but the Office of the Comptroller and Auditor General will always be busy because that is its focus and its job. I want to assure the Chairman that, as a Department, we challenge Departments on their expenditure on a very regular basis, particularly larger Departments. For example, the Department of Transport and the Department of Housing, Local Government and Heritage, which had underspends last year, are challenged by us on the outputs they are achieving for the expenditure, and that is a very regular challenge.

An Cathaoirleach

The Department has to get tougher. That is my advice to it. Departments are getting away with murder.

Mr. John Conlon

I hear other people say the Department of Public Expenditure, National Development Plan Delivery and Reform is too tough sometimes, but that is-----

An Cathaoirleach

It is not tough enough.

Deputy Rose Conway-Walsh

It is when it comes to the west.

An Cathaoirleach

Deputy Durkan, we are closing the meeting.

Deputy Bernard J. Durkan

I have one last question.

An Cathaoirleach

We are to meet again at 3 o'clock.

Deputy Bernard J. Durkan

Does the Department see itself making a major input into the delivery of the national development plan? How will the Department arrive at it? Will it select different schemes ad lib or evaluate them all and take the most important, fundamental ones?

Mr. John Conlon

The national development plan has been funded out to 2030 and allocations are being made. We have asked the ESRI to do some work for us on capacity and priorities to inform the coming years. As the earlier discussion with Deputy Conway-Walsh indicated, there are capacity constraints in the economy in terms of delivery, so we want the ESRI to do some work to help us to inform the evolution of the NDP in that way. We see ourselves working in that way, as the Deputy has questioned.

An Cathaoirleach

I thank the witnesses for attending and for the information given to us. The meeting will suspend now until 3.05 p.m., when we will resume with the Central Bank.

Sitting suspended at 2.54 p.m. and resumed at 3.06 p.m.