This part of the meeting has been convened to allow the select committee to consider the Revised Estimates for Vote 35 - Army Pensions, and Vote 36 - Department of Defence. I welcome the Minister for Defence, Deputy Shatter, and his officials to the meeting. I propose that we commence with a brief opening statement from the Minister and we will then take comments and questions from members. Is that agreed? Agreed.
Vote 36 - Defence (Revised)
I am pleased to appear before the select committee and I welcome the opportunity to engage constructively on all aspects of the Department of Defence and Army pensions Estimates for 2012. This represents the first year in which the defence and Army pensions Estimates will be evaluated within a performance budgeting context. I welcome this development, which is a cornerstone of the Government's overall initiative to transform and modernise the delivery of public services. The combined Estimates for defence and Army pensions for 2012 provide for gross expenditure of some €903 million. This compares with actual expenditure in 2011 of €927 million.
The Government's commitment to modernising the Estimates process has strengthened the focus upon performance and delivery. The Revised Estimates now include key output and context-impact information together with the normal financial and human resource inputs. This will improve transparency between strategy, programme outputs and costs. The defence organisation shares a single high-level goal, which is to provide for the military defence of the State, contribute to national and international peace and security and fulfil all other roles assigned by the Government. Strategies and performance indicators associated with delivering this goal are laid out in the Department of Defence and Defence Forces strategy statement for 2011 to 2014, which was published in April 2012.
The outputs of the defence organisation are encompassed in a single programme within Vote 36. This programme has three distinct but complementary strategic dimensions. These are defence policy, ensuring the capacity to deliver and Defence Forces operations. High-level performance information and targets are included in the Revised Estimates and detailed information regarding the outputs from these three strategic dimensions will be contained in annual reports. In line with the new approach to the Estimates process, the two context indicators shown in the 2012 Revised Estimates are defence expenditure as a percentage of GDP and the percentage of Defence Forces personnel serving overseas on peace support operations. The data published by the European Defence Agency, EDA, on an annual basis illustrate that the percentage of GDP Ireland spends on defence, that is, both the Army pensions and Defence Votes, has remained among the lowest of the 26 participating member states. The 2011 data will be available from the EDA later this year. Within the available resource envelope, Ireland has focused on continuing to meet its responsibilities in the international community through participation in peace support operations. Throughout 2009 and 2010, Ireland deployed a significant number of military personnel overseas while also maintaining a high level of operational activity at home.
The Defence Estimate for 2012 includes provision for the pay and allowances of more than 9,500 Permanent Defence Force, PDF, personnel, 670 civilians employed with the Defence Forces and 340 civil servants. It also provides for the pay of members of the Reserve Defence Force while on full-time training. The Army pensions Estimate provides for the payment of service-related pensions and disability related benefits to more than 12,100 former members of the Defence Forces and their spouses and children.
Arising from the Government's comprehensive review of expenditure, the strength ceiling of the PDF was reduced to 9,500 personnel. In response to this reduced strength, as members know, a major reorganisation of the Defence Forces was initiated. This will encompass a reduction in the number of Army brigades from three to two and will necessarily include the Reserve Defence Force. A three-brigade structure has been in place since the 1990s, when the strength of the PDF was set at 11,561. It was retained when the strength ceiling was reduced as part of the implementation of the White Paper in 2000. It is no longer viable to retain a three-brigade structure at a strength level of 9,500. I have requested the Secretary General and the Chief of Staff to prepare detailed proposals for my consideration, and work is ongoing in this regard. The aim of the reorganisation is to ensure the operational effectiveness of the PDF is prioritised within the strength level of 9,500 personnel. Pending the reorganisation, priority posts are being filled by promotion and recruitment. In addition, as the Defence Forces are currently below the agreed serving cadre of 9,500, I have recently approved the recruitment of general service personnel along with the induction of 42 cadets to bring the strength up to the approved level in 2012. The total strength of the PDF as of 31 March 2012 was 8,899, with 7,192 in the Army, 947 in the Naval Service and 760 in the Air Corps.
The second annual progress report on the Croke Park agreement was submitted to the implementation body on 2 May 2012. The main achievements were as follows: continued flexibility to ensure delivery of tasks assigned by the Government within the restricted resource envelope; the redeployment of 1,080 serving military personnel across the organisation; the introduction of new merit-based promotion systems for generals, officers and enlisted personnel; the delivery of additional services, that is, the deployment of personnel to UNIFIL in Lebanon and the taking over of command of the EU training mission in Somalia by the Defence Forces; a reduction in the number of personnel on acting and substitution allowances from 350 in March 2009 to 101 in March 2012; and the completion of a comprehensive review of medical services in June 2011.
This year has seen the closure of four barracks, an initiative which will maximise the effectiveness of the Defence Forces by removing the burden imposed by manning and maintaining unnecessary installations. The closures will facilitate the release of personnel from security and support functions to enable the operational capacity of the Defence Forces to be maintained, notwithstanding the fall in strength.
Promotions recommenced in the Defence Forces in 2010 to fill key positions in the organisation. There were 139 officer promotions in 2011 and a further 120 to the end of April 2012. A total of 219 enlisted personnel were promoted in 2011, followed by 27 to the end of April 2012. Promotions are ongoing within the officer ranks, and following agreement on the introduction of a revised non-commissioned officer, NCO, promotion system, interviews have now commenced to fill NCO vacancies.
The defence organisation was encompassed by the Government decision of 14 November 2011 which required additional pay-saving measures to be undertaken to achieve further efficiencies this year. All Departments were required to submit to the Department of Public Expenditure and Reform before the end of January 2012 a business case in respect of each allowance and premium paid by them. Business cases were submitted by my Department by the closing date, and the Department of Public Expenditure and Reform is deliberating on those business cases.
The acquisition of new equipment for the Defence Forces is a matter that is constantly under review. The prevailing economic climate dictates that prudence be exercised in the upgrading and acquisition of all defence equipment over the coming years. The priority this year and in the coming years will be to maintain the capability of the Defence Forces to deliver effective services across all the roles assigned by Government. Investment in new equipment for the Defence Forces is provided for under various subheads of the Defence Vote relating to defensive equipment, transport, aircraft, Naval Service ships and stores, and information and communications technology equipment.
If I can interrupt the Minister for one moment, I propose we go into private session briefly.
The select sub-committee went into private session at 3.16 p.m. and resumed in public session at 3.17 p.m.
We have agreed we are going to take the rest of the Minister's speech as read and it will be available on the committee's web page. We are moving on to Vote 35 - Army Pensions. I propose to take programme A, subheads A3 to A6, and if members have questions for the Minister on this, we can take them now.
I am not fully sure of the subheads, so the Chairman might give me some latitude. I will focus on the reorganisation of the brigades.
We are talking about Army pensions, Vote 35. This covers wound and disability pensions, payments to dependants of veterans of the War of Independence, compensation payments, medical applications and travel and incidental expenses. Are there comments or questions on that Vote? No. We will move on to Vote 36. Are there comments on programme A generally?
With regard to subhead A21-----
We are taking the Votes one at a time. We are moving on to Vote 36 - Department of Defence. That goes from subhead A1 to subhead A25. Deputy Calleary is in order to ask questions on any of those subheads.
What about subhead A21, compensation and associated costs?
Yes.
Could the Minister give a breakdown of these compensation and associated costs? I have lost the sheet. What is the breakdown in terms of actual awards versus legal costs that have been paid to legal representatives? Can the Minister outline how many compensation cases are on the books?
I ask the Deputy to go a little more slowly, so I can take a note and come back to him. The first question is the breakdown of actual awards versus legal costs.
Yes.
We will deal with that first and then we can come back to the second question.
The Deputy wants to ask a series of questions.
I would prefer if we did one question at a time.
We may need to check the figures. There are different categories of compensation. The Deputy is seeking a breakdown of the 2012 figures.
Yes, and the 2011 outturn as well.
I have the outturn here. In the context of compensation for damage or injury in case of accidents in which military vehicles are involved, there is an estimate of €1.5 million for 2012. For compensation in cases where personnel are killed or injured during training, including compensation for personal injuries to members of the Army Reserve and Naval Service, there is an estimate of €2.882 million There is an estimate of €1 million for employment cases, and a sum of €100,000 for miscellaneous damage or injury. That provides a total of €5.482 million.
I also have the breakdown for legal costs for awards and settlements. In 2011 there was €2.5 million for personal injury claims other than hearing loss. I will come back to the hearing loss claims, which are separate. Legal costs came to €2.02 million. The total came to €4.52 million. Legal costs are about two thirds to three quarters of the claims. At the end of 2010, there were 605 claims outstanding in the non-deafness area, but only 353 claims at the end of 2011. That obviously is of interest. As of the end of December 2011, 36 claims alleging bullying and 11 alleging sexual harassment in the Defence Forces had been received by the Department. Of these, 17 bullying cases and seven sexual harassment cases have been disposed of.
Awards for hearing loss in 2011 were €100,050.
Are they existing------
I believe they were residual cases that were dealt with. For example, awards for hearing loss in 2002 came to €20 million and by 2004 the figure had dropped to €2.374 million These cases are substantially resolved now. The legal costs would have been €182,000 in 2011 for those claims.
I do not know whether there is any more information sought by the Deputy on clams that have been made.
Subhead A25 deals with the Irish Red Cross. The organisation was the subject of a rather critical report at the Committee of Public Accounts last week but I know it has made huge changes in the past 18 months. Is the Minister satisfied with the current arrangements within the Red Cross in May 2012, as opposed to previous arrangements?
Substantial reform has been effected in the Red Cross. When I took office as Minister for Defence I knew that the background of events was in the accountancy area. I must emphasise that this was not in respect of dishonesty of any description, but there was a level of disorganisation and dysfunction where moneys seemed to be held in accounts in different branches across the country on behalf of the Red Cross, and were not always delivered to the central Red Cross, nor were they always utilised for the purpose for which they were raised. An outstanding job has been done to address much of the dysfunction and difficulty that occurred. I welcome the acknowledgement within the Red Cross that there is a need to have a change of personnel right at the top. We cannot have the same individuals in the top positions of the board for 15 or 20 years. New blood has to be brought into leadership positions and such people should be allowed to contribute, not just based on their commitment to the Red Cross, but on their business knowledge of how best to run the organisation, maximise its resources and maintain its reputation.
Very substantial progress has been made. I understand the annual general meeting of the Red Cross is next week, for which elections to the council will take place. I am happy that progress has been made. I will wait and see how matters proceed during the course of this year. I have had meetings with the Red Cross, expressed concerns about issues at a very early stage following my appointment, and I believe those concerns have been taken seriously. I understand the Deputy is familiar, from his own work, with the background and the changes that have been made.
The appropriations-in-aid section contains receipts from rations on repayment, which is intriguing. Can the Minister outline what that is?
When members of the Defence Forces eat in barracks, they make a small contribution towards the food, and that is the accumulated annualised contribution for 2011 and the estimate for 2012.
No receipt is expected in 2012 for fisheries protection from the EU. Is that because we have not got a figure or is it that we will not be paid anymore for fisheries protection?
I gather that this is not an annual rolling payment. The sum for 2011 was for upgrading and equipment, and that issue will not arise this year.
Deputy Calleary pretty much covered things, but I have one additional query on the compensation heading. I know that a number of claims were paid out for accidents involving military vehicles. When I asked a parliamentary question on the issue, it was indicated that we were installing a piece of equipment on military vehicles which would allow us to record how fast they were travelling and so on. Is there any provision in next year's Estimates to roll that out beyond the current amount? I understand up to 80 vehicles currently have it installed.
I do not have that information but I will give it to the Deputy when I get it. I do not want to do so off the top of my head; I want to make sure that I give him the accurate information.
There is a saving of about €1.5 million for barracks expenses. Is that the savings from the barracks which have now closed? Are these the only savings we will accrue from the closure?
Those savings are due to people being more efficient with utilities, as well as savings on utilities, which would include savings on barracks closures. However, there would have been initial expenditure on the movement of soldiers from the closed barracks to their new locations in Athlone, Limerick or Kilkenny. As I have always said to the Deputy, there are a whole range of savings that emerge from this. Some of them relate to utilities, while others relate to the continuing maintenance and refurbishment of barracks that would have been necessary. There are savings due to better utilisation of our resources. The reassignment of members of the Army to duties other than security and administrative duties in barracks has resulted in savings estimated at approximately €5 million per annum. There is what I describe as the readily identifiable cash savings, but there are also efficiency savings, which are particularly important at a time when the maximum number of Defence Force personnel is 9,500, compared with 11,500 just a few years ago.
With regard to subheads A19 and B9, I take it these figures relate to costs and income from property the Department owns. I would like the Minister to elaborate on the expertise within the Department in managing its own property portfolio and the relationship it has with the State's property arm, the Office of Public Works. The reason for my question is that I am aware of a property owned by the Department, a former Reserve Defence Force facility in Macroom, which has lain in splendid isolation for many years and is in a state of dereliction. I am not aware of any effort by the Department to dispose of the property actively, which is an eyesore in the town. I suspect it is a listed building. I am not quite sure the Department - this is no slight on anybody in particular - has the necessary skills and capabilities to manage a property portfolio actively, which, in terms of the State's expertise, would probably best be done in consultation or liaison with the OPW.
With regard to subhead A19 and the appropriations-in-aid under B9, is this with regard to the Army barracks that the Department is in the process of disposing of? Maybe the Minister could give us an update on that. How extensive is the Department's property portfolio around the country? Are there opportunities to increase the income of the Department? I recall from some years past that the Department of Defence, as a sweetener in respect of its rationalisation programme on the Army side, was allowed to keep the proceeds to reinvest in defence. Is that why there is a reluctance to hand over the management of the property portfolio to the OPW, which probably has the range of expertise necessary to sweat those assets as much as possible for the State?
There is substantial expertise within the Department in this regard, which has been used to the great benefit of both the State and the Defence Forces. Approximately €84 million has been raised from the sale of properties, including the various barracks that have been closed in recent years, which, pursuant to a Government decision made a number of years ago, has been reinvested in providing essential resources for the Defence Forces. This has saved taxpayers' money by preventing the use of current expenditure from the central Exchequer, and has been a way of ensuring resources are utilised with maximum efficiency, but it also provided an incentive within the Department to secure the best prices possible for properties that were put on the market. There has been substantial success in this regard. In the context, for example, of the four barracks that were closed, a deal has now been agreed for the sale of Castlebar barracks to Mayo County Council for €600,000, in instalments of €150,000 per year. I was in Longford only this week. A portion of Longford barracks was disposed of some years ago, but there was a substantial portion remaining, which was sold to local councils for €450,000; this money will be reinvested in the Defence Forces. We are actively engaged in discussions with regard to two of the three other barracks that have closed, in Cavan and Clonmel, and I am optimistic that proposals that are under discussion will be brought to finality in the coming months, allowing us to realise value for the Defence Forces. There is substantial expertise in dealing with individual properties. If there is a difficulty with the property in Macroom, I will have that followed up.
If the Deputy wishes to talk to Mayo County Council about how to do it, I will put him in touch.
I was unaware there was a difficulty with the site in Macroom but I will follow it up with the Deputy.
Consultations are undertaken between the Department of Defence and the OPW with regard to certain usages. For example, in Longford barracks there is provision for a Garda station. In the context of the conversations that are taking place now about Clonmel, there is the possibility of a site being reserved for the benefit of the OPW for a Garda station in the future. There is connectivity, but the Department is able to take a focused and direct approach by having discrete numbers of properties that it can put on the market. It has been very successful in this regard. For example, the barracks in Kildare has not yet been sold, but there is a long history with regard to its usage in years gone by. This is an issue on which Deputy Calleary, Deputy O'Brien and myself have exchanged questions and answers with some regularity during Question Time, so I will not go back into that. I believe the way the system works at the moment is beneficial to the public, because the Department is providing a service with limited expenditure attached. It is an effective service, and the Defence Forces are benefiting because we are ensuring they are really well equipped as a consequence of the manner in which we are managing the property portfolio. The only unfortunate thing is that properties held by the Department today, like those around the country, are of far less value than would have been the case five or six years ago, so we generate less funding than may have been possible in the past.
I thank the Minister for his reply, and I am glad to hear that in his opinion such expertise is available within the Department. I am aware that in Macroom a search for a new location for a Garda barracks has been ongoing for some time, and I understand this is winding to a successful conclusion with a greenfield site. Simultaneously, the Department had this property, a four-storey listed building with opportunity to extend, renovate and acquire adjoining property, which would have facilitated a central location for a new Garda barracks in the town. Given that it will be difficult to dispose of this property, using it for the Garda barracks would have been the right thing to do. However, it is probably too late now, as the horse has bolted. I believe it was considered, but the conclusion was that everybody would like a new building, even though it would have been possible to renovate that one. I will not labour the meeting with further details.
Wearing my hat as Minister for Justice and Equality, we are in regular communication with the OPW with regard to the need for Garda stations. There is limited funding available at the moment to build new Garda stations, but sites are being considered for the future which may not be appropriate now. I am not familiar with the history of the Macroom site. If the OPW had an interest in that site, with a view to acquiring it for the purpose of a Garda station, it would have engaged with the Department of Defence, and if the site was vacant, the Department would have been happy to engage with the OPW. I presume it was a listed building; an assessment may have been made that it was not appropriate or that the type of Garda station needed could not be constructed in a financially effective manner; perhaps it would have been overly expensive or would not have fulfilled the particular requirements. If the OPW or a local authority has an interest in a site that is vacated, the Department is happy to engage with either of them. There is no difficulty in that context.
I am sure the Department is aware of its obligations under the Derelict Sites Act to maintain listed buildings in habitable condition. There will be costs associated with that.
Under subhead A21, on compensation and associated costs, the Minister mentioned a substantial figure for legal costs and further indicated that they account for two thirds or three quarters - I am not sure which - of expenditure under this subhead. Before this meeting we had a briefing from representatives of the Mediators Institute of Ireland. Does the Minister envisage a role for mediation in any of these cases and has it happened in the past?
These cases are dealt with on behalf of the Department by the State Claims Agency and, in that sense, we do not have control over the legal costs. In other words, we meet the financial obligation that arises but it is the agency which deals with these matters in practice. As I have indicated on several occasions, I am very much in favour of attempts, where applicable, to resolve disputes through mediation and thereby reduce legal costs. However, it is for the State Claims Agency to make decisions in individual cases as to whether that is the appropriate way to proceed. The Department cannot second guess it in regard to individual claims.
Are there other comments on programme A generally?
The Minister and I had a brief discussion last Thursday on the reorganisation of Army brigades. Given that this measure was announced on budget day, one assumes there is an intention of monetary savings. However, they seem unlikely to be achieved this year on the basis that it will be late autumn, as I understand it, before the programme of reorganisation is published. Is there a requirement for a change to the Department's Estimate to reflect the delay in this process?
It was always anticipated that the implementation of a reorganisation programme would take a considerable time, and we are not significantly behind time in this regard. As I understand it, the expectation is that we will have the final proposal for restructuring by the end of June. I appreciate that when these types of discussions are taking place people may need space, with the result that it may end up being July rather than June before the plan is completed, after which an implementation programme must be put in place. It was never anticipated that implementation of the reorganisation plan would commence immediately following its agreement in the middle of this year. I would hope to see implementation steps being taken at some point during the second half of the year, but it is more likely, given the planning that is involved, to be in the last quarter. As I said to the Deputy at Question Time in the Dáil last Thursday, I do not want to prejudge or second guess the exchanges that are taking place involving the Secretary General of the Department, the Army Chief of Staff and the officials working with them on the reorganisation programme. As far as I am aware, matters are proceeding in a constructive way. We will have a greater insight as to the architecture of the reorganisation in the coming months.
With the Chairman's permission, will the Minister undertake to come back to the committee when the report is available?
I will certainly do so once the reorganisation plan is finalised and we know the structure to be put in place. It is a matter to which consideration should be given by the committee and I will be pleased to discuss it with members at the appropriate time.
I have a final question for the Minister. Under the 2012 output targets there is reference to a consultation process in respect of a Green Paper on defence. How does that feed into the reorganisation programme?
The Green Paper will deal with the broad range of future policy approaches in the defence establishment. The objective is that the Green Paper will be ready by the end of the year, after which I anticipate it will be discussed in this committee. I further hope it will be a focal point for discussion and debate in the wider community. I anticipate that the White Paper will not be published until towards the end of 2013. Ireland assumes the Presidency of the European Union for the first half of the year, during which staff in my Department will be under significant pressure in organising meetings of European defence Ministers at which we will be the principals. The first six months of the year will allow time for considered public debate on the Green Paper, before we get to a point in the second half where work can proceed on the White Paper.
Thank you, Minister. That concludes the select committee's consideration of the Revised Estimates for public services in respect of Votes 35 and 36. I propose that we suspend briefly to prepare for the next matter on the agenda.