It would appears it is the wish of the committee that I read my script. It gives me pleasure to appear before this committee to present a number of Supplementary Estimates on the Department of Finance group of Votes. I look forward to discussing them with the committee.
With regard to the Supplementary Estimate sought for Vote 10, the Office of Public Works, the gross excess over the revised Estimate for the Vote is expected to be £3,656,000, but this will be partially offset by savings of £2.574 million elsewhere on the programme subheads, giving a net requirement for a Supplementary Estimate of £1.082 million.
The main component of this Supplementary Estimate is in respect of subhead F3, rents, rates, etc., on Government accommodation. The original 1997 allocation was £28.576 million, but expenditure is now expected to reach £29.7 million. The excess on this subhead is attributable to two main factors. First, rent reviews have resulted in higher than expected increases due to the buoyant property market. Second, costs of some newly acquired rented accommodation were higher than projected.
Rent reviews in 1997 are expected to result in an increase of £1.422 million for the properties concerned. Reviews are resulting in somewhat greater increases than was experienced in recent years. However, I am satisfied the general level of rental payments by the State remains competitive.
In managing its property portfolio, the Office of Public Works needs to maintain a balance between purchases and rentals. Overall, some 50 per cent of the portfolio is owned and the balance rented. It is generally more economical to own rather than rent property and the Commissioners of Public Works avail of such opportunities as arise to increase the proportion of owned properties. It is right, however, that a proportion of the portfolio should be rented as this allows a high degree of flexibility, in particular the ability to respond quickly to evolving requirements.
The second main cause of the expected excess on subhead F3 is the higher than anticipated cost of new rentals. During 1997, the Office of Public Works entered into new leases for space in the Irish Life Centre, Abbey Street for the Valuation Office, the Department of Education and the Office of the Director of Telecommunications Regulation as well as accommodation in Fitzwilton House for the Revenue Appeals Commissioners. The total rental cost in 1997 for newly acquired rented accommodation is expected to be £1.35 million which is higher than planned.
Vote 15 is a Supplementary Estimate of £1,000 for the Valuation and Ordinance Survey Office. An increase in gross expenditure of £141,000 is offset by additional appropriations in aid of £140,000. The Supplementary Estimate is necessary to meet the costs incurred to date in relocating from Ely Place to Block 2 of the Irish Life Centre. The Valuation Office is currently located at 5-7, Ely Place, Dublin 2. These buildings are leased for the Valuation Office by the Office of Public Works. The lease on two of the buildings expired in October 1997 and, accordingly, new accommodation was sought to house the Valuation Office. Block 2 of the Irish Life Centre became available and it was decided it should become the new headquarters for the Valuation Office. Extensive internal renovation is required before it will be suitable for use. While the renovation costs will be borne by the Office of Public Works the furniture and fittings cost must be met by the Valuation Office. It was envisaged that payment for furniture and fittings would take place in 1998. The contractor, however, is ahead of schedule so part payment for the work completed to date fell to be paid in 1997. The Supplementary is now required to pay the moneys due to the contractor for the cost of the fittings work completed to date.
Vote 17 is a net Supplementary Estimate of £36,000 for the office of the Ombudsman. While the total gross excess on the Vote is £84,000 savings of £48,000 on certain sub-heads reduce the net requirement to £36,000. The bulk of the supplementary stems from additional expenditure incurred because of the extension of the functions of the Public Office Commission in relation to the Electoral Act, 1997. An additional sum is also required to meet the cost of IT equipment which will enable the office of the Ombudsman to utilise the existing computer network cabling in the new premises to which the office will move in 1998.
The 1997 Revised Estimates Volume included a figure of £68.37 million for Vote 45 but an additional £65 million is now being sought in the Supplementary Estimate. This Vote covers the net cost to the Exchequer of PCW local bargaining increases in the Public Service. It acts as a central contingency provision to cover local bargaining which may not have been finalised at the time the Estimates are published and which cannot, therefore, be included in individual Departmental allocations. The cases being covered in 1997 include teachers, paramedic grades in the health services, non-consultant hospital doctors, prison officers, clerical grades in the Civil Service, medical consultants and Public Service pensioners. The cost of the nurses' settlement is not covered by this Vote as the settlement was finalised in time to allow funding to be transferred to the Health Vote in the 1997 Revised Estimates Volume. The main reasons for the additional funding requirement of £65 million are the higher than projected cost of certain local bargaining cases such as those involving paramedics, prison officers and Civil Service clerical grades and the earlier than expected resolution of the cases involving medical consultants and retired public servants. Normally, before a draw from Vote 45 is required any savings which arise in the Vote concerned are first utilised to meet the cost of any such pay increases for the Department or Office. The precise amount of such savings often may not become fully apparent until the very end of December. While every attempt is made to identify savings it is necessary to make a prudent provision at this stage in Vote 45 for the possibility that sufficient may not materialise on other Votes. As far as the cases involving medical consultants and Public Service pensions are concerned it had originally been assumed that these cases would not be finalised until 1998. The earlier than expected conclusion of these cases means that additional funding has to be provided in 1997 but this funding would otherwise have had to be provided next year. The higher than expected level of certain local bargaining settlements under the PCW is clearly a cause for concern because these settlements will result in on-going additional cost to the Exchequer. This year saw a number of high profile settlements which exceeded the PCW cost norm beginning with the nurses' settlement and followed by settlements with paramedics, prison officers and clerical grades in the Civil Service. We cannot allow this assault on the cost limits agreed in the PCW to continue. The Minister has already emphasised the need for any remaining PCW local bargaining case to be resolved within the PCW cost norm and for strict adherence to the 2 per cent limit on local bargaining in the Partnership 2000 pay agreement.
As the Minister announced in his Budget Statement the Government has decided to introduce new arrangements for the management and control of Public Service pay under Partnership 2000. Briefly, these will involve giving each Department an annual allocation to cover the cost of all the Partnership 2000 increases including the 2 per cent local negotiations increase and making it clear to them that these allocations will represent the total funding available to each organisation for all improvements in pay and conditions during the period of the partnership. These arrangements are designed to avoid a repeat, under Partnership 2000, of the cost drift which occurred under the PCW. Failure to adhere to the PCW and Partnership 2000 limits would threaten the future of national partnership agreements and the benefits which these have delivered to all sections of our community in recent years. The best way to control Public Service pay is for all the parties to the national programmes to honour the terms of these agreements. This Government has already demonstrated its commitment to implementing the terms of Partnership 2000. It is entitled to expect that the other parties involved will keep their part of the bargain.
I thank the Committee for its kind attention. I will be happy to answer any questions on the Supplementary Estimates I have just outlined. I commend the proposed Supplementary Estimates to the Committee.
