The purpose of today's meeting is to consider the Revised Estimates for the finance group of Votes and the Office of Public Works. The draft timetable for the meeting was circulated with the agenda. Is the timetable agreed?
Vote 18 — Office of the Ombudsman (Revised).
I suspect the Chairman is allocating too much time.
The time allowed can be truncated.
There may not be a need for a break if we run through.
Apologies have been received from Deputy Ó Caoláin.
The first item on the agenda is the consideration of the finance group of Revised Estimates. On 24 February 2005, the Dáil ordered that the following Revised Estimates for Public Services, inter alia, be referred to the committee for consideration: Vote 1 — President’s Establishment; Vote 5 — Office of the Comptroller and Auditor General; Vote 6 — Office of the Minister for Finance; Vote 7 — Superannuation and Retired Allowances; Vote 8 — Office of the Appeal Commissioners; Vote 9 — Office of the Revenue Commissioners; Vote 11 — State Laboratory; Vote 12 — Secret Service; Vote 15 — Valuation Office; Vote 16 — Public Appointments Service; Vote 17 — Office of the Commission for Public Service Appointments; and Vote 18 — Office of the Ombudsman.
I thank the Minister for Finance, Deputy Cowen, and his officials for their attendance. I invite the Minister to make a brief opening statement.
I am happy to come before the committee to introduce the Estimates for the year 2005 for the finance group of Votes. Excluding the Office of Public Works, the provision for the remaining 12 Votes — that make up the finance group of Votes — amounts to almost €766 million in net funding. The three largest Votes in the group are: the Office of the Revenue Commissioners, amounting to €350 million; superannuation and retired allowances, amounting to €257 million; and the Department of Finance, amounting to €101 million. Members have been provided with background briefing by my Department on the Estimates, which are now presented to the committee for its approval.
Before dealing with the Estimates for the individual Votes, I wish to make some general comments about the economic background to the Estimates and, in particular, the measures put in place by the Government to manage and control public expenditure. The key elements underpinning the Government's approach to the 2005 Estimates are: to provide for spending on public services at a sustainable level into the medium term; to provide for growth in spending in line with the rate of growth in revenue to fund the increased investment in the public services; and, within this framework, to continue to give priority to the key areas of social welfare, health, education and capital investment. The 2005 Revised Estimates for Public Services published on 24 February 2005 reflect changes in voted expenditure which I announced in the budget, together with some adjustments to voted expenditure in the interim.
Total gross voted expenditure in 2005, inclusive of spending from the social insurance fund and the national training fund, will be €45.7 billion, almost €4.5 billion or 11% more than in 2004. Reflecting the priority being given by Government to areas of social need, an increase in expenditure on social welfare of €951 million or 8% is provided for in 2005 compared with the 2004 provisional outturn. Health spending will increase by approximately €1.4 billion, excluding costs arising out of the reimbursement of charges for long-stay care in health board institutions following the Supreme Court decision on the Health (Amendment) (No. 2) Bill 2004. Provision for expenditure on the reimbursement of these charges will be provided later in the year by way of Supplementary Estimate.
The increased gross provision for health spending includes a number of adjustments related to the establishment of the new Health Service Executive and health services reform which do not impact on the net provision. Accordingly, the increase in net voted current expenditure on health provided for is actually €1.2 billion or14%. This continues the policy of facilitating real improvements to front line delivery of health services.
The allocation for spending on education in 2005 is some €7.2 billion or €574 million more than the 2004 outturn.
Public capital investment has been maintained for a number of years at or close to 5% of GNP, almost twice the EU average. The Government has provided unprecedented levels of capital investment in public services to tackle the infrastructural deficit and to promote sustainable development and growth. Over €36 billion has been allocated under the capital envelopes for 2005-09, of which €6.3 billion will be available in 2005, including capital carryover of €237 million from 2004.
It is important we obtain better value for money for the major levels of expenditure we provide. The introduction in 2004 of the rolling multi-annual capital envelopes will lead to improvements and efficiencies in the management of capital programmes and projects. The recent publication by my Department of revised guidelines for the appraisal and management of capital expenditure proposals in the public sector will complement the capital envelopes and strengthen the arrangements for ensuring that we continue to achieve better value for money from public capital investment.
A thriving economy has been created in Ireland during the past decade and we have recorded one of the best economic performances in the world. Between 1997 and 2003, Irish GDP grew by an average of over 7.5%, compared to an average of just over 2% in the EU. The fruits of this economic success have been put to good use and have benefited people the length and breadth of the country. The taxation system has been significantly reformed, public services have been improved and provision for the future has also been made with the establishment of the national pensions reserve fund. Our public finances have been put on a sound footing and the general Government debt level has been more than halved from 74% of GDP in 1996 to 31% in 2004.
We must recognise, however, that the unprecedented growth rates of the past decade can not be maintained indefinitely. We are now moving toward a more sustainable rate of annual growth of 4% to 5% — still more than twice the EU average. A key challenge facing us is to manage the transition to these lower rates of growth and to manage our expectations accordingly.
There are a number of key issues upon which we must remain focused. It is imperative to both our social and economic well being that we remain competitive. We must focus on competitiveness if we are to copperfasten the economic progress we have made so far and enhance our capacity to grow in the medium term. That is why we must ensure that wage developments remain moderate and in line with those negotiated under Sustaining Progress. Otherwise we will lose competitiveness and, ultimately, jobs. Maintaining the public finances on a sound footing is also essential. Our low debt ratio gives us room for manoeuvre in providing public services now and in the future. Lower growth rates mean lower tax revenue growth and we must adjust our expectations to this new reality.
These realities require us to make clear choices between present and future consumption. Inadequate infrastructural investment might provide funding for higher living standards today at the expense of economic growth and consumption in the future. Our ability to raise living standards will depend more on our success in raising productivity than it has in the past. We must, therefore, ensure that we have the infrastructure in place to promote Ireland as a key location for the establishment of leading edge companies.
I was proud to have the opportunity to present my first budget as Minister for Finance in December. It was framed with these key issues in mind and with an approach of continued fiscal prudence. The key challenge is to regain competitiveness and protect jobs by controlling our domestic cost base and by maintaining sound fiscal policies where the mixture of taxation and spending policies delivers long-term sustainability.
The Government is committed to sustaining economic growth and social progress and promoting continuing employment growth. Our priorities include allocating resources to where they are needed, while seeking to ensure that value for money is obtained for the tax payer, addressing future costs of an aging population through investing in the national pensions reserve fund and continuing to address remaining infrastructural deficits.
Our public finances are on a sound footing. The debt-GDP ratio is forecast to decline further to 29.5% at end-2005, with a general Government deficit of 0.7% of GDP as the high levels of infrastructural investment seen in recent years are continued.
It is essential that the public finances remain healthy. I wish to emphasise a number of issues in this regard. While tax revenues were strong last year, this was largely due to once-off receipts from the Revenue Commissioners' special investigations and stronger than anticipated economic growth. We cannot expect these favourable conditions to be repeated and expectations must adjust to this reality. As I have said, lower growth rates will mean lower tax revenue growth. Public expenditure cannot exceed the sustainable growth in resources. Any increase in public expenditure must, therefore, be carefully managed. Apart from helping to keep taxes low and thus help competitiveness, our low debt ratio will continue to give us room for manoeuvre in providing public services in the future.
I referred to the need to re-examine the budget policy formation process and I am looking at a number of options for change which could be implemented in the short and medium term. I will discuss the possibilities for change with my colleagues in Government and, at that stage, I will bring forward proposals which the House will have an opportunity to discuss.
I will now turn to the details of the finance group of Votes. Vote 6 covers the office of the Minister for Finance. The Estimate for the Department of Finance for 2005 amounts to €101 million, a net increase of just under €11 million on the 2004 outturn. The Estimate will provide the financial resources which will contribute to the delivery of the Department's statement of strategy 2005-07, which will be published shortly. The Department's 2004 progress report will be available in late summer. While policy work remains the core activity of the Department, programme expenditure accounts for over half the expenditure on the Vote, with the balance accounted for by salaries — over 30% — and other administrative costs — over 10%.
Within the Estimate, there are major programme expenditures in the Department for 2005. Some €16 million is provided to meet expenditure on EU co-funded programmes. In addition to these co-funded programmes, €1.5 million is provided in subhead N3 for the special EU programmes body. Just under €14 million is provided for programmes relating to public service modernisation, including €10 million to support the transition of the Irish public service to an information society. Of this, €9 million is provided under subhead P in respect of information society expenditure. This subhead provides a central mechanism to support Civil Service-wide e-Government requirements and to respond to opportunities under the Government's new action plan for the information society, New Connections, approved in March 2003. Subhead P represents 21% of overall information society funding of €44 million — which is allocated across 12 departmental Votes for major projects, primarily in the areas of e-Government and e-business. Just over €1 million is allocated under subhead R, which deals with procurement management reform, to provide funding for a range of public procurement management reform projects and initiatives, including electronic procurement which will modernise the public procurement environment and deliver better value for money.
In addition, €2 million is provided for the change management fund. Held centrally in the Department of Finance, the fund is used to co-finance the cost of implementing initiatives arising from the SMI-Delivering Better Government programme of change in individual Departments and offices.
A total of €1.9 million is provided for the Civil Service child care initiative, which provides funding for a scheme of capital grants for the development of a number of Civil Service crèches in 2005. In addition, €10.5 million is provided under subhead E for Ordnance Survey Ireland's grant-in-aid. OSI was established as a body corporate under the Ordnance Survey Ireland Act 2001 with effect from 4 March 2002.
Subhead L includes €7.7 million for payments to the promoters of certain charitable lotteries which are national lottery funded. The scheme is a focused initiative which is intended to address the circumstances of those private charitable lotteries which have products in the market place in direct competition with the national lottery.
The net Estimate for the Office of the Revenue Commissioners at €350.155 million is up €22.838 million, or 7%, on the 2004 outturn. Payment of salaries is by far the biggest single item of expenditure and is responsible for most of this increase. Outside salaries, the main area of spending is information technology. Revenue is at the forefront in exploiting technology to enhance customer service and drive productivity. One major project ongoing at present is the redevelopment of the PAYE system which will be completed by the end of the year. The redeveloped system will improve the services provided to PAYE taxpayers and the efficiency of Revenue's internal processes. Key improvements in customer service will include PAYE customers being able to deal on-line with Revenue and a reduced turnaround time for reviews and repayments.
Another major project involves the complete redevelopment of the computerised customs system which, among other things, will see it incorporated into Revenue's integrated taxation services framework and will provide customers with a comprehensive picture of their dealings with Revenue.
The Estimate also provides specific funding for the continued support of the Revenue on-line service, commonly known as ROS. ROS provides for the electronic filing and payment of 21 taxes and duties. Although ROS only went live in September 2000, last year over 50% of self-employed income tax returns and some €8.5 billion in taxes were made through it. These figures are set to increase significantly over the next few years.
I thank the Committee for its attention and I commend the Estimates to it. I will try to supply any further information or clarification that members may request.
I welcome the Minister on this, the first occasion he has presented Estimates to the committee. That, however, is the only positive note I will sound.
This is the eighth occasion on which the Government has presented Estimates and every year I have said that the quality of information being presented to the Oireachtas for debate on the Estimates is woeful. It is a disgrace to the Department of Finance, which must take the lead responsibility for forcing the pace of change in this area.
While I welcome the Minister's commitment to changing the system of budgetary presentation, the performance of his predecessor in tackling this left me suspicious about the extent to which there will be any change. No effort is made to link the allocation of money to the performance of programmes. They bear all the hallmarks of the system that has long been in place, of a horse-trading exercise conducted towards the end of the financial year where Departments make a grab for the amount of the money they had the previous year and add on any moneys they can get on top of this. This impression is reinforced by the expenditure review initiative which was presented to the committee last week.
In 1997 the Government set out the worthy target of a three year rolling programme of assessments of the quality of public spending. In the second programme for the period 2002 to 2004 only one quarter of the promised reports were completed, a disgrace in itself. The Department of Finance decided that key Departments, including the Department of Health and Children and the Office of Public Works, need not do anything in the assessments. In collusion with the Department of Finance, vital studies were abandoned in critical areas such as the schools building programme, the investment in education to tackle disadvantage, and the quality of the young offenders programme. The study also showed no evidence that any of the few research projects undertaken on the quality of public spending had had any impact on the subsequent budgeting and programme expenditures. The steering group admitted that after seven meetings in two years it was only recommending that the recommendations of these spending reviews would be tracked. After eight years of a programme, more than one quarter of the evaluations cannot be delivered and now the Secretaries General are told they should consider tracking whether the recommendations that emerged should be acted upon.
It comes as no surprise that the Department of Health and Children has been exonerated by the Department of Finance for many expenditure reviews. However, it has serious questions to answer on the quality of its public spending. The Minister's predecessor did not put a tooth in it when he claimed he did not understand where the money in the health budget went. He wondered whether there was a boiler in the Department that simply burned money. In 1997 gross spending on health stood at €3.6 billion. In 2005 it stands at €13.36 billion. Spending has increased by approximately 300% in the space of eight years but what have we got to show for it?
I agree that 30,000 extra staff were recruited to the health service. However, the majority were not at the frontline. The capacity of the hospital system was not increased. The proportion of the population with medical cards was not expanded. We provided for the extension of medical cards to those over 70 years of age but it proved to be six times more expensive than the Department claimed it would be. However, the Department of Finance is now saying the Department of Health and Children need not conduct expenditure reviews as it is so good at spending money and undergoing radical reforms. That is nonsense. If we are to have meaningful debates on the quality of spending, we have to take this issue seriously but there is no evidence that is the case.
Last week the Secretary General of the Department of Finance admitted that there was no way to enforce the obligation on Departments to comply with expenditure reviews demanded of them. I suggest if they do not do so, their administrative budgets should be docked by 5% until they comply. The Department of Finance must make a more meaningful effort to drive the strategic management initiative which has been derailed. There is no effort by spending Departments to link set rhetorical objectives. Many Departments are not delivering on what are described by them as key targets.
The Department of Finance sets out its key strategy statements. The Minister claims the key indicators of progress will be the success of the expenditure review process, a strong emphasis on value for money and improved service quality and performance measurement. None of these objectives has been delivered. The Minister will have to admit that no matter how partisan his views on public spending, he cannot say we have been successful in the expenditure review process. We have failed dismally with less than one quarter of the work done. There has not been a strong emphasis on value for money which was only grudgingly driven into the system after a series of adverse reports on the quality of public spending. Improved quality of service has not been delivered. For example, accident and emergency departments, with a smaller workload now than in 1997, cannot deliver an adequate or acceptable level of care. A casual glance at the revised Estimates shows there are no performance measurements.
What is the committee asked to do with the revised Estimates? Is it being asked to approve them in terms of the way in which the money is being directed and confirm it is delivering results? When it does not have the evidence, it cannot rubber-stamp them. Some of the Estimates highlight enormous increases in public spending. On the first page of the briefing document the Office of the Comptroller and Auditor General requests an increase of 60% in spending. Increases stand at 70% in the Office of the Appeals Commissioner, 103% in the State Laboratory, 125% in the Secret Service, 71% in the Valuation Office and 465% in the Public Appointments Commission. The Minister is looking for a nod to approve massive increases in public spending. He will probably explain that there has been a cut in the audit fee of the Comptroller and Auditor General. He will also explain that the State Laboratory is seeking funding for equipment as if it was current spending rather than capital funding. Meaningful figures and debate are required as to what the different programmes are trying to achieve.
In the past eight years the number of staff in the Department of Finance has increased by 1,500. Spending has increased by 124% against a CPI of 31%. However, there is no evidence as to what the Department is achieving better now than it was in 1997. It has an obligation to provide more meaningful reports on its strategy statement. The progress report on the statement is a highly selective document. The objectives include reducing the number on the standard rate of tax. However, when that figure did not go down, it was not even mentioned in the progress report. These strategic management initiative reports are often highly self-serving. More objective and independent reports are needed. There must be independent performance verification in order that the reports presented to the Oireachtas can be dovetailed.
I welcome the fact that the Department is willing to look at new Estimates procedures. However, this year's Estimates will follow the familiar pattern of the committee scanning hundreds of pages of figures, trying to come up with the odd intelligent question. This is in no way a meaningful debate on the quality of public spending. Why should the committee agree to a massive increase in public spending for the Department of Finance? There is no basis on which we can put up our hands and agree the money is well spent and that the Oireachtas should give its stamp of approval. The Minister must make it his prime target to ensure meaningful spending for Estimates are presented to the House. This will allow us to have a meaningful debate about alternatives, the quality of programmes and their delivery and the context of spending. Such an achievement will represent a job well done by the Minister and I hope he will devote his energies to that end.
I anticipated Deputy Bruton would focus on the report, about which he issued statements last week. When the rest of us were going on holidays for several days, the Deputy was engaged in promoting——
The Chairman asked me to be here. It was not a voluntary endeavour.
The hard-working Chairman, my constituency co-worker, has enabled Deputy Bruton to major on this matter. My Department is engaged in an examination of the question of how best to ensure meaningful debate. This is something I fully support. The economic debate in the Oireachtas must be much more informed than it has been in the past and the public will be better served if there are some changes in this regard. I cannot anticipate Government consideration of these matters but I assure the Deputy the issue is in hand and will be considered shortly by the Government.
As I observed at budget time, there are many reports, strategy statements and an entire range of documents and procedures which Departments are obliged to produce. In many respects, however, the Dáil consideration of these matters is ex post facto rather than prior to the decision-making process. We must devise a method of presentation for these strategy statements and reports through the committee system in a manner that is more meaningful for Deputies and which will foster greater debate. In this context, I will consider within my Department some of the issues raised by Deputy Bruton.
I welcome the Minister to the meeting. Has work been done in estimating the cost to the Exchequer of the reimbursement of charges for long-stay patients in health board institutions? If so, what is the most up-to-date figure in this regard? What are the proposals for dealing with this cost and has the Minister a view in this matter? Some estimates indicate a possible liability of up to €2 billion for the State.
Some constituents to whom I spoke last week view nursing home reimbursements as akin to the payments they will receive when their deposits under the special savings incentive scheme mature. There are individuals and families who did not envisage such a bonus landing on their laps. What services or Departments will suffer as a result of the State's exposure in regard to these individuals?
We should commend the Revenue Commissioners on the manner in which they have streamlined their operation in recent years. Increasing numbers of taxpayers contact them through their website which offers an efficient and effective Internet service. The Minister's observation that the Revenue Commissioners are increasing their investment in information technology is welcome. The benefits of such expenditure is evident in the quicker turnaround of taxpayers' queries.
Earlier today I attended the launch of the Revenue Commissioners' strategy statement for 2005 to 2007. It was an instructive meeting which gave an overview of what is a succinct and focused document. The Revenue Commissioners have set out exactly what they wish to achieve with a particular focus on risk analysis and the devotion of resources to tackling areas of non-compliance rather than using resources less effectively against those who are generally compliant. Mr. Seán Connolly who has been in charge of the IT division and is soon to retire has done tremendous work in improving the Revenue's Internet service.
The Revenue Commissioners have been to the forefront in using partnership committees and ensuring everybody works together. The operation is a credit to all concerned and indicative of an office of State which is ably led and well administered. The ability to secure the correct level of tax at the right time from its 2.3 million customers is a testament to the advancement and change that has taken place in the organisation. The recent rate of change is greater than anything that has taken place since the Revenue's foundation in 1923.
This is an example to other Departments of how best to engage in change management by securing the co-operation of all concerned to create a more effective and efficient operation. The moneys I ask the Oireachtas to approve relate to organisations the job of which is to provide a quality service. As Deputy Nolan observed, the Revenue Commissioners are exemplary in this regard. They ensure everybody pays their fair share of tax while giving fair treatment to all concerned in return. They are to be commended on their work and I hope other Departments will take a leaf from their book and consider their achievement as a benchmark for the type of change, innovation and reorganisation that can and should take place if we are to have flexible, results-oriented and customer-friendly public services which perform their functions effectively.
The matter of reimbursement of nursing home charges is under consideration by a Cabinet sub-committee which includes myself, the Taoiseach, Tánaiste and Attorney General. Issues under consideration in terms of the implications of this decision include the question of who should receive repayments in regard to illegally raised charges, whether and in what circumstances the Statute of Limitations should be invoked, the nature of the administrative arrangements to apply in respect of repayments and whether implications arise in regard to the nursing home subvention scheme under which the State offers certain individuals support towards the cost of private nursing beds.
Work has been done by the Health Service Executive to estimate the numbers involved since 1976. The Tánaiste has mentioned in the House figures totalling up to 300,000, which include elderly, disabled and psychiatric patients. Of these, in excess of 20,000 are estimated to be still alive. I do not wish to enter into any speculation about the costs until they have been ascertained. Many figures are being bandied about but, as Minister for Finance, I have no intention of giving credence to a spectrum that goes from €500 million to €2 billion. These are sizeable sums of money and are clearly guesstimates given the nature of the disparity.
Any costs arising this year will be handled by means of a Supplementary Estimate, while costs arising in subsequent years will be dealt with in the Estimates context. These are matters under urgent consideration by the Cabinet sub-committee, and the advice of the Attorney General and others form part of that consideration. The Tánaiste will make an announcement on this matter as soon as decisions are taken.
It has been widely suggested in the media that many medical card holders who were unable to obtain public nursing home care were forced to enter private nursing homes in which they were obliged to pay significant charges. Some had to sell their homes to meet these costs. It seems they have a strong legal case under the Health Acts to seek some type of compensation in the same manner as that available to those who availed of care in public nursing homes. Did the Minister, or the Cabinet sub-committee of which he is a member, seek legal advice on this issue? It clearly widens the problem and there have been many sad cases of this type where people have been obliged to sell everything. Has the Minister received advice on this issue?
I have questions regarding some of the categories within the Estimates presented to this committee. The net Estimate for superannuation and retired allowances shows an increase in public service pensions of 33%, which appears to be an extraordinarily rapid rate of increase for one year. Will the Minister give an indication as to the cause of this increase? Similarly, the increases in the net Estimates for the Office of the Comptroller and Auditor General, the State Laboratory and the Valuation Office are massive at 60%, 70% and 103%, respectively. Why are the increases so enormous? It seems to be partly due to spending increases and partly to a collapse in the revenue sources of these agencies.
I welcome the Minister's plan to secure the presentation of more meaningful performance indicators to match public spending. In his Department's sphere, can he indicate what kind of performance indicators he has in mind for some of the bodies we have mentioned in this committee? To take public service recruitment as an example, it seems there are good points of comparison between the cost of recruitment in the public service and the private sector which may shed some light. Will he develop that sort of indicator? Regarding the State Laboratory, some private laboratories perform work that is not dissimilar. Will we see the development of performance measurement indicators such as waiting times? There are serious problems with waiting times for some of the State Laboratory's services, such as the service to coroners. The Minister should provide a flavour of what he has in mind for his own Department, leaving aside bigger spenders such as the Department of Health and Children where we hope to see some serious performance measurement.
Does the Minister anticipate that his former colleagues in the legal profession will bring a case forward to the courts involving a person in a private nursing home with documentary evidence of having been refused admission to a public nursing home bed? Has he anticipated the likely outcome and is he preparing for any contingencies? The Minister has stated that 20,000 living people are entitled to this repayment. He previously informed us that there were approximately 13,000 public beds available. Does the figure of 20,000 suggest that some of the extra people are in private beds in private nursing homes? Where are the additional 7,000 beds?
Deputy Bruton referred to the issue of superannuation. All civil servants pay 6.5% superannuation, which we all pay in anticipation of receiving a pension on retirement. In the Department of Finance, the only Department for which the Minister can answer, what is the deficit between the amount received from superannuation payments of 6.5% and the payments made on pensions. Does the Department nearly break even or to what extent is it subsidised? Is there a multiplier effect of three, four or ten? The Minister should give the committee an indication of the position.
I understand that in some sections of the Revenue Commissioners there are long delays in dealing with PAYE queries. There have been delays of six to ten weeks before correspondence is examined. The Minister has stated that much of his discretionary funding is being devoted to technological improvements and to improving the service to PAYE taxpayers. Has the Minister come across this issue and has he put mechanisms in place to change the situation?
I do not want to say anything in anticipation of the Government's consideration of issues relating to the nursing home situation. The matter is still being processed. I do not wish to either heighten fears or to say anything that would be taken as being definitive because the Government and the sub-committee have yet to finalise their consideration of these matters. The Attorney General is examining all aspects of the situation and will provide comprehensive legal advice to the Government. It serves no purpose to speculate beyond the fact that the matter is in train, that the Government is considering all issues and that we must ensure compliance with the Supreme Court judgment, while also protecting taxpayers' interests. We must do so in a manner that meets our obligations under the judgment, while being in a position to defend the State against the opening of further avenues by others. Such an approach would be incumbent on any Government. I am not being coy with the committee but it is a matter of such complexity and seriousness that one should await the Government's final consideration of all the issues, at which stage the Tánaiste, as the line Minister, will put all relevant facts into the public domain. The Oireachtas can then consider those matters further.
As to the question regarding the 20,000 people who are still alive, the figure includes people in institutions other than nursing homes such as psychiatric patients and the intellectually disabled, as well as patients that have left the relevant institutions. There is a wide range of people affected, over and above the 13,000 elderly in geriatric care and this situation must be dealt with.
Would the category of patient make any difference to the extent of liability?
No. It is clear that the Statute of Limitations cannot be applied to people who are not fully compos mentis because they are not in a position to have knowledge. One cannot argue with this. It is our intention, therefore, to deal comprehensively with all those who are still alive. Some legal issues then arise regarding the applicability of the Statute of Limitations, in terms of the circumstances and indeed whether it should be invoked in other situations. In due course, this matter will be the subject of detailed and comprehensive legal advice from the Attorney General. He is working on the potential issues arising from all scenarios that are currently being aired. It serves no purpose for me to add to that speculation or to distort what might eventually emerge after full consideration by the Cabinet subcommittee and ultimately the Cabinet as I think the issue will become clearer in the weeks to come. There are performance indicator groups set up in the Departments to develop these performance indicators and these groups will ask the Department of Finance to see in what way it can incorporate these measurement tests as a means of improving accountability and giving clearer indications of what is expected in the context of the statement of strategy that it will bring forward.
The preparation of spending proposals by Departments must be completely overhauled. Outcome and performance indicators must become central to the approval of annual spending budgets and failure to meet targets should trigger a programme review. It is generally accepted that it is necessary to improve the development and use of performance indicators on foot of a Government decision in 2004 to maximise the benefits. Departments have put cross-divisional arrangements in place to develop and improve their use of performance indicators. It is also a requirement of the expenditure review initiative that any reviews identify indicators for the purposes of improving future management of programmes involved. The pilot project is under the chairmanship of the Department of Finance and involves the Department of the Taoiseach, the Department of Transport, the Department of Agriculture and Food and the Department of Social and Family Affairs. There will also be a pilot project to link departmental business planning, resource allocation and output reporting. The report on the pilot project and the pilot models is being finalised in light of the views expressed in September 2004 of the financial management subgroup of Secretaries General and they will be submitted to me shortly.
Can I clarify a point? What the Minister said initially sounded much more hopeful but he then drifted back into talking about two pilot projects that do not have a report attached to them.
We want to incorporate performance indicators into better strategic planning going forward. The results of the pilot project currently in place will be available shortly. We want to see what we can learn from that project in terms of widening the general application.
Is it the Minister's ambition to present the Estimates volume in a more meaningful way next year, thus providing performance reporting and triggering performance reviews in particular programmes where it is felt that a particular standard is not being reached?
Where we develop these performance indicators and bring them into the departmental process, there should be a means by which a programme review can be undertaken if certain indicators are not being met. That is the reason behind developing them in the first place. It is probably too ambitious to expect this to be developed in 15 Departments and agencies by this time next year. However, the point is made that we need to incorporate this kind of thinking in departmental planning to a far greater extent and having carried out the pilot project, to think about how we can progress further. We need to develop these performance indicators as a matter of principle on the basis that if they have been provided for unevenly up to now, the expenditure reviews that we have seen and the pilot project should enable us to bring much more momentum to that process.
Regarding the Comptroller and Auditor General, the increases are accounted for there by three main factors. The 2004 costs were reduced by an exceptional once-off inflow of audit fees due to the success of an arrears reduction drive by the Comptroller and Auditor General's office totalling €2.1 million. The 2004 costs were reduced by the deferral of a restructuring of the value for money function until 2005 and other savings. These savings have been rolled into 2005 and total €550,000. The balance is due to an increased provision. The detailed movements are set out in subheadings A.1, A.3 and A.4.
Regarding superannuation and retired allowances, the increase is mainly accounted for by the expected increase in the number of pensioners and the inclusion of provision for various wage increases which pass automatically to pensioners. These include the 2% general increase under the Sustaining Progress programme in December 2004, the 1% general increase under Sustaining Progress in June 2005, the remaining 25% of the agreed award for each grade under benchmarking and the 1% increase under Sustaining Progress in December 2005. In preparing the Estimate, account must be taken of the potential impact on spending if everyone eligible to retire and receive superannuation payments did so in the current year. For example, established civil servants can retire and receive pensions from the age of 60 but can opt to remain in employment until 65 years. It is difficult to estimate the number of pensioners who might die in any given year. Therefore, in preparing an annual Estimate, a conservative approach that reflects the potential expenditure as I have outlined is adopted. It is not unusual in these circumstances to have increases in the Estimate over outturn for the previous year that appear substantial. The estimated figures properly reflect the potential expenditure from the vote rather than the actual expenditure.
In the abridged Estimates that were published last year, the increase was €22 million in pensions, while today the increase is €63 million. That figure is three times greater than the figure in the abridged Estimates. It appears to be difficult to explain this discrepancy away by a few percentage points on headline pay rates.
The conservative approach that has been taken puts in a figure that would cover every civil servant who was eligible for retirement.
That did not apply when the Minister produced the abridged Estimates. Is this a new approach?
The actual outturn was much lower than the abridged Estimate outturn.
Maybe I could obtain the notes from the Minister.
It would suggest that there is a different approach being taken in the revised Estimates than in the abridged version.
Maybe a note could be circulated separately to explain this.
Regarding the Valuation Office, the Valuation Act 2001, which modernised an essentially Victorian code that was antiquated and difficult to administer, provides for a re-evaluation of commercial and industrial properties in order to bring fairness and uniformity to the distribution of the rates burden among rate payers. A re-evaluation unit has been established to conduct the re-evaluation. A report commissioned from Deloitte & Touche on the implementation of the Valuation Act estimated that the re-evaluation of the country would take approximately five years and cost €18.5 million. It advised that 30 additional valuers would be required for the duration of that project. We recruited 15 valuers on contract in 2004 and a further 15 will be recruited later this year. We are also developing new information technology systems, including computer-aided valuation models, to enhance the efficiency of the programme. The Commissioner proposes that the first re-evaluation order for a local authority should take place at the end of April 2005 and consultations as required under the Act are nearing conclusion with the local authorities concerned and the Department of the Environment, Heritage and Local Government. That explains the increased cost.
I have some questions regarding the multiplier for superannuation payments and revenue delays. Could the Minister circulate a note?
I will circulate a note.
I will not be as clinical as the Opposition Deputies in dealing with the Estimates and I recognise their importance and the progress and growth of the economy. The economy has grown by almost 5% this year.
I am concerned about health spending, which will increase by approximately €1.4 billion, disregarding the health problems arising from older people in recent years. Will the Minister inform the committee whether this level of spending on health can be sustained over the coming years? A bill of €1.4 billion is an exorbitant one. It may not be a fair question to ask but I am concerned whether we are getting value for money. Our population has increased by 500,000, the economy's rate of growth is 5% and 80,000 houses were built in 2004. This is a successful economy. Our level of unemployment is one of the lowest in Europe. When compared with Germany, the so-called king of the European Community with its unemployment levels of 12%, economic difficulties and need for change in the budgetary structure of the European Union, Ireland is a model country. I congratulate the Minister for Finance and hope this continues.
Another future concern is that of oil prices. At $50 or more per barrel, these prices will affect western economies. Matters such as this are the downside of what might happen. We have the lowest interest rates ever in this country. Rates are quoted at 2% and 1.5% of margins in many businesses, which must be welcomed. There is little fear that the continuation of these rates will help the economy to grow and expand but I am concerned about the Opposition's forensic dealing with this. Worrying about this matter in an economy that is growing at this rate and is so successful or talking about cutting back or adjusting would be alarming. We must expand. What has occurred is good for the country and for progress.
We should not have a debate at all. We should just have great confidence.
It is due to the Government's commitment that the economy and the country are doing well.
The Deputy is on the way back.
I must mention two areas——
There is growth of 5%.
——that concern me, those of health spending and oil prices. No one knows in which direction oil prices will go. I will not answer the question but there are indications that they will remain as they are for this year. Diesel at the pumps costs nearly €1 per litre while petrol is lower than this, but both are very high prices. This will have an effect on the economy but, by and large, I accept the Minister's Estimate as it is well prepared. He has excelled in his visits to the committee and I foresee further progress under his guidance.
When the Minister comes into his kingdom will he give the Deputy the call?
On the admission of the Opposition members, to cite their examination of the Estimates as forensic is something even they did not suggest. The Deputy should not be so charitable.
We could stay here all night for a forensic examination.
The Deputy has always had a much more even approach than I to these matters.
We have completed our consideration of the Revised Estimates.
May I ask a question? There was an issue raised——
To answer Deputy O'Keeffe on the health Estimates, there are no doubts that there are cost impacts in terms of technology on the delivery of health services. The cost of medicines, procedures and the universality of the availability of these procedures is an ongoing issue. The cost of a modern health care system is a matter that has attracted the attention of governments throughout the world. There are great pressures on many countries due to demographics and pension provisions with regard to how a modern health system is funded. As has been said previously and on cursory recall, over 25% of our total expenditure is in this area. A health strategy that is the result of the widest possible consultative process is being implemented. It is a matter for actors in the service to implement these changes in the interests of delivering quality services and enhancing the working environment, as it can be a pressurised system.
It is clearly the case that the health debate is too often about how the political system and former Ministers, including myself, discharged their responsibilities in terms of the allocations we made. Deputy Bruton made a point that we are now in a position to devote much more of our revenues to the health service than was the case previously due to the economic policies that have been pursued and the revenue that has been collected. I became the Minister for Health and Children in 1997, at which time the Vote was approximately €3.6 billion. It is not for want of increased money as far as the Government acting on behalf of the taxpayer is concerned, but there is a requirement for public attention to be focused on everyone working in the service to determine the commitment to change given the existence of powerful vested interests that may not want the changes envisaged or required to bring about the type of service levels sought.
We too often allow the debate on health to become a boxing match between politicians on different political sides when in reality we need to focus on those in the sector so that they work collectively and collegially to bring about the strategy's changes. This has all arisen as a result of a consultation process with the actors involved. It is important that the strategy be implemented. For example, as discussed last week with regard to the Irish Medical Organisation, the Government makes the decision to increase the provision of medical cards. This is the Government's entitlement and it is incumbent upon those who provide the service to co-operate in ensuring this service is made available. People can have their own views as to whether they like the decision but the Government, within its entitlements and rights, has brought forward proposals that will enhance the provision of this service for a certain number of people. It should be provided to them. I do not see why patients should be caught in the middle in respect of minor operational changes that could be discussed in the space of 30 minutes with goodwill on both sides. It is not right that we should see an attitude of "We do not agree with this and we will not implement it".
The Government has made this decision, as it is entitled to do, and those who represent general practitioners are entitled to work out the arrangements. People are not entitled to question the right of Government to make these decisions. It is time that common sense prevailed on this and other issues connected with the necessary reforms of the health service. We would serve our constituents much better by insisting that the many organised interests with responsibilities within the health service demonstrate goodwill. These changes cannot be brought about unless there is goodwill and a preparedness for everyone to recognise that the status quo will bring problems regardless of who is in Government. It is important that we, as the Oireachtas, ask for the implementation of a strategy involving a rate of change in the service and how it is organised and delivered. This strategy was not plucked out of the air. It was a result of an open and broad consultative process in which no one can argue that their opinions were not sought. We must develop a coherent set of proposals, which is now represented in the health strategy. It has been adopted by the Government and should be implemented. We must have the assistance of everyone to do this.
We would be better served working together rather than allowing vested interests to examine issues in their own compartmentalised ways without examining the broader picture. Given the amount of €13.36 billion of taxpayers' money spent on the health service, we are entitled to expect to work together to ensure that this service is provided in the best possible way. There will always be service pressures and difficulties. I served as the Minister for Health and Children and have an idea of the problems involved. We certainly will not solve all of them but we must have the assistance of everyone to ensure we minimise the problems that might exist and recognise that there has been a great increase in capacity.
The hospital capital funding programme involves the largest modernisation of capital in the history of the State. There is a requirement to support the elderly. I make these points because I believe the opposition have not taken the correct approach in recent weeks. The Government made a decision and its implementation must be ensured. That is the way the system works. Those who wish to effect change should stand for election and after entering the House with a democratic mandate may then begin further discussions.
The increase in oil prices since the beginning of the year is a cause for concern, although the appreciation of the euro against the dollar will mitigate the economic impact to an extent. Due to developments in the wholesale price of oil in recent weeks the potential for retail price increases remains a possibility. Any increase in inflation arising from petrol price increases is likely to be temporary. We have to be sure that wage negotiations recognise this.
While the limited availability of oil in markets and political instability in certain oil producing regions dictate the increase in price, thankfully we have a reduced dependence and the economy has made a greater adjustment than was the case during the 1970s. It is obvious that oil price increases are not enjoyed but the current price of oil remains cheap compared to prices at the nadir of the oil crisis of the 1970s.
I do not disagree with the Minister's comments on the health service but when €10 billion has already been spent it is late in the day to discuss the introduction of a reform package. According to an adage, it is a waste of money to spend resources without reform. This has been forgotten in the Government's helter skelter spending on health. I agree that people must take responsibility and that the latest move to block doctor only cards is unacceptable but the Government has not accepted responsibility for its cock-up on the extension of medical cards to those over 70 years of age.
Every Government was involved in this.
It involved a ministerial budget decision without a proper basis.
You were present in 1976.
The decision was not made in 1976.
That is not what the Deputy is discussing.
It does not stand up to scrutiny and was a crazy system. The Government negotiated a deal from a weak position because it had already announced concessions.
Two different rates are now payable to doctors for those over 70 holding medical cards. Almost €500 per year is paid for care in some instances while lower rates apply in others. Where is the logic in that?
The individual is saved €40 for each visit. That is a major reduction.
It saves the individual but not the taxpayer.
I support the Minister when he says we will have a serious programme for reform in the health area. However, I am not encouraged that the Minister for Health and Children announced a major restructure of the health service while giving her commitment to preserve the employment status of those involved. It is not possible to restructure as well as guarantee that no changes will be made. If reform is to occur it is necessary to focus on results. Despite the Minister's repeated assertions to the contrary we have not delivered the extra front line capacity in our health system with this extra €10 billion expenditure. The increase in hospital capacity is about 5% or 6%. Tonight each of the major northside hospitals will struggle to cope with the same level of accident and emergency business they managed eight years ago. They do not have the extra capacity. I will not believe in the existence of a reform agenda until the Government concentrates on delivering this capacity for the extra money so that there will be improved service for those in need. A stack of reports on health service reform do not demonstrate the Government's seriousness on this matter. The spending record in health does not convince anyone. The Government must improve its performance.
I did not understand the issues surrounding the advice on indemnity for the sale of ACC Bank. The Government intends to provide €2 million for this and made a similar provision last year of €2.6 million. What sort of advice entails these costs?
There has been an increase in health service capacity including greater productivity and in the region of 200,000 extra procedures.
If day surgery is excluded there is no increase in productivity.
Increasing capacity also involves capital programmes. I was the first Minister to introduce a multi-annual capital programme. My predecessors tried to fund capital programmes for health on the basis of yearly allocations. This is not possible and results in a maintenance programme. The capital programme for my predecessor in the Department of Health and Children was in the region of €110 million, which was 2% of the total capital valuation of more than €4 billion for our acute hospital service. This is the first Government to allow plans for hospitals, nursing units and accommodation for the elderly to be developed on a multi-annual basis. I do not claim personal credit for doing so but there is no alternative. Successive Governments asked their Ministers for Health to develop this country's health service on the basis of a yearly capital programme. Deputy Bruton knows in his heart and soul that this recipe was never going to result in——
That is not the point I am raising.
It is the point I am raising. Productivity has improved, including faster turn-over times and an increase in day cases over the past five or ten years. New hospitals, which we are currently building, are also required. The deputy is aware of the difficulty in commissioning hospitals and the issue of negotiations on staffing levels. This process has advanced since 1997 or 1998. Work has been done in St. James's hospital, Tullamore, Galway, Tralee, Waterford and Roscommon. New facilities are needed to increase capacity and improve work organisation. In recent years we have begun to provide the capital allocation for new facilities.
Strategies existed in the past. When I became Minister for Health and Children I inherited the final stage of the programme devised by my predecessor, Deputy Howlin, for the years 1993 to 1999. As Minister for Health and Children, Deputy Martin conducted a wide consultation process resulting in an agreed strategy that we must now implement. Managing a service that employs 100,000 staff involves devising and implementing a coherent outcome for the views of different strands. It is in the interest of all taxpayers and Members of this House to do so. It is widely known that this process will not be completed by the next election in 2007. People may suggest that it will be completed by that time but we know that will not be the case because it is an ongoing and evolving process.
We do not do ourselves a service by suggesting we are getting nothing in return for the extra €10 billion we put into the health service. That is not the case. Waiting lists have been reduced. As a function of total hospital activity, they account for less than 3%. When we debate the health service and access to it, however, we refer to waiting lists. We focus on 3% of hospital activity rather than 97% of it. The function of a debate on health in the House and nationally is a reflection of the wider economic debate we should be having here. It is not comprehensive, informed or placed in proper context.
The idea of the existence of a problem is regarded as ultimate failure of the provision of services but that is not the case. I accept there are problems but we are in the process of dealing with them. Whether it be this Government or the next one, we should be open and honest enough to say that we are putting a particular amount of money into the health service and that we have increased the number of people working there. This debate is not only about acute hospitals but about community care and other areas of activity. There is a spectrum of activity in the health service, while the debate in which we often engage on the health service relates to hospital services or what happened in a hospital on the previous day. That does not deal with the main issue in a comprehensive, rational and discursive way, which would add more light rather than heat to the argument. We need to be more honest about that.
The reason this does not happen is that——
The Deputy should allow the Minister to conclude.
Deputy Bruton can make that point because every political party falls into that trap. Opposition members believe that if they bash the Government over state of the health service, they will have a way of getting back into Government. The new Opposition will then be in a position to bash that Government. Such behaviour is puerile.
The real issue is how to bring about reforms with the existing interests. They are good professional people and I am not running any of them down. It is a huge health service but we need quality services. People are prepared to go down that road and that is what we are trying to do. We can have discussions and differences about this, that and the other but we should not continue to talk about the health service being in a crisis. The word "crisis" is used on a daily basis about everything. It is the most overused word in the political lexicon. There is a need for us to recognise that progress has been made in some areas and there is need for more progress to be made in other areas. I will take that criticism on the chin. We do not have a perfect system but it is improving. We need to recognise how we will bring about real and substantive change for the future. I will say no more about it. I do not want to prolong the argument on this matter but the comments I made are fair.
The idea that no improvements are taking place is not true. There are many people whom I and Deputy Bruton and others meet who interfaced with the health service and are complimentary about the level of care they received. There are also others to whom we could point who have had difficulties. I am not blind to that but many people are happy with the level of service provided in the health service. However, the only public discussion is on the problems that exist. That is fair enough because that is the nature of the society in which we live. We should not fall into the trap of believing that no one is getting a proper service. That would be a poor reflection on the many thousands of professionals who work in the health service and who do a good job. We are not alone in regard to this issue. Every country in the developed world has an issue with how to provide adequate and good care for its citizens as they require it. This debate will continue, it will not end here.
On the issue of the ACC Bank and the relevant subhead, an indemnity was granted by the Minister for Finance to Rabobank Nederland as part of that bank's agreement to purchase ACC Bank. The indemnity relates to the costs associated with outstanding litigation against the ACC Bank in regard to its involvement with the Four Seasons Hotel project and its pension fund. The Four Seasons Hotel litigation relates to ACC Bank's role as lead bank in the syndicate that lent to the project. The ACC Bank is being sued by two other members of the syndicate. The pensions litigation relates to allegations by ACC Bank employees that they were badly advised by ACC Bank in regard to the choice that was available to them on how best to integrate the ACC Bank pension and State pension. Neither case has yet reached a hearing stage.
The budget allocation for 2004 in terms of the first subhead B was broken down as follows: €2 million — capital; and €684,000 — current. It was agreed that the Department of Finance would meet the legal costs of ACC Bank and that payment of fees would only commence once the amount owed by ACC Bank to Matheson Ormsby Prentice and Mason, Hayes and Curran reached €1 million. Provision was made for that in the 2004 Estimate but was not called upon. It is expected that the €1 million point will be reached in the first half of 2005. This relates to an indemnity that was given as part of the sale of the bank.
Will the Minister clarify that the total indemnity will be approximately €2 million? From the Abridged Estimate, it appeared that the indemnity would be €2 million every year.
It is an allocation. It is a provision that is made which was not taken up last year and which remains in the Estimate this year because a case has not been called.
I wish to make a final point on the health service before we conclude our deliberations on it. Unless the Government is willing to accept that it has made serious mistakes in the spending of the €10 billion, we will not have a serious debate on the issue. Furthermore, unless the Government has objective measures of what is happening in terms of productivity in our health service and moves away from selective quoting of the ones that are most favourable to its case, we will not have the sort of debate the Minister is seeking. As Minister for Finance, the Deputy must insist on comprehensive reporting — which we have not previously had — on performance by the health service. The debate on this issue has been meaningless because the Minister has not forced the agencies to deliver proper meaningful performance.
I will provide one example of the delivery of the health service in my area. Three new health boards have been created but not one extra hospital bed. Layers upon layers of new administrative structures have been put in place but there has been a reduction in the delivery of services. That is the product of the so-called reform delivered in my constituency. That pattern has been repeated across the board and is not isolated to one constituency. That is what people see. The Minister must face up to the fact that serious mistakes were made in the way in which administration was allowed to grow like Topsy at the expense of frontline services. I could take the Minister to offices where this has happened and if we had the time I could show him that this has been happening. It is not an illusion that the Opposition is dreaming up to abuse the Government; it happened. It was a mistake and it must be faced up to.
I will leave the Deputy with the final word. The Eastern Health Board was regarded as far too big and we divided it into three but that did not mean that we had three new health boards. We deployed the staff of the Eastern Health Board area to those three areas. That division was sought by the Eastern Health Board and by members on all sides. The reform of the health service has moved on since that division. The Health Service Executive is now the body with responsibility for acute hospital services throughout the country. That is a good move and I hope it works. We could have changed the structures as we desired. In the interests of social partnership, however, we require full co-operation to implement the necessary reforms in order to make a better environment for everyone working in the service and to ensure that people can obtain access to the service when they require it.
My question relates to the expenditure of €1.4 billion on the health service and whether we can sustain such investment. Expenditure of that level is possible when we have a 5% growth rate. The Minister dealt compassionately with the health service in his response. We must recognise that the service is expanding. Surgical procedures are now taking place that we never thought would be possible. Transplant surgery and many other procedures are performed to improve both life expectancy and the delivery of health services. That must be recognised but it also involves a cost factor.
I have been a member of this House for 20 years and I have seen great improvements in the health service in terms of the procedures and transplant surgery during that period. There will be an expansion in the improvement of such procedures and that will involve a cost factor. There has been a growth rate of 5% or thereabouts in the economy this year. I foresee a similar growth rate for the next few years while the Minister occupies his current position. I have no doubt he will remain in that position. How does he envisage the health service will operate beyond that timeframe if we have to continue to make that level of investment in it each year?
I take the Deputy's point. Increased levels of spending are dependent on increased levels of revenue growth. As he said, economic growth is the engine behind the provision of improved public services. There is no question about that. On the question of whether we can do that every year, we will always accord priority to the health budget. Regardless of the political composition of Government, health will be always a major and fundamental priority. It cannot be stated that a particular amount of money must be paid into the health service annually. Much depends on the background against which the Government is operating. Thankfully, revenues are buoyant at present. To maintain services, however, there is no point in investing significant moneys now and then, because of an inability to sustain growth rates, being forced to dislocate many of them in the future due to the fact that it was not possible to sustain them. Despite the difficulties involved, incremental sustained increases that can be continued into the future are the best method of guaranteeing improved services.
Organisational change within the system is clearly a requirement. We know from the evidence of the past eight years that it is not just a question of money. However, money is important. This is a very people-centred service. The 100,000 people who work in the health service have to be paid. They are professionals and they are well paid. Wages form a significant part of the budget. We must all be open-minded and accept the challenges which face us in order to ensure that the necessary changes are brought about to give the best value for money for the €13.36 billion being expended. In my opinion, this would be the view of every taxpayer and of everyone who works in the health service.
We will conclude our discussion at this stage. I thank the Minister and his officials for their attendance and for their assistance to the committee in its consideration of the Estimates.
We will suspend the sitting and when we resume we will deal with the Revised Estimate for the Office of Public Works.
Sitting suspended at 3.42 p.m and resumed at 4.08 p.m.