Office of Public Works Projects

Ceisteanna (6)

Éamon Ó Cuív

Ceist:

6. Deputy Éamon Ó Cuív asked the Minister for Public Expenditure and Reform the timetable for the completion of Dublin's cultural quarter project around Parnell Street which is being supported by the Office of Public Works; and if he will make a statement on the matter. [29675/13]

Amharc ar fhreagra

Freagraí ó Béal (5 píosaí cainte) (Ceist ar Public)

The Deputy is aware Dublin City Council is planning to develop a cultural quarter in the environs of Parnell Square. The Commissioners of Public Works have engaged with Dublin City Council on property asset transfers to facilitate this specific development.

Any further information required on this key cultural project is a matter for Dublin City Council.

I asked this question specifically because of the role of the OPW. Perhaps the Minister does not have the full details but Dublin City Council announced a proposal on a new cultural district in Dublin city that involves the construction of a new and innovative library on the site of Coláiste Mhuire on Parnell Square, which is owned by the OPW. This new library and the existing spectacular Hugh Lane Gallery will be connected by a civic plaza. During the launch of that project, some of which has already been funded from philanthropic sources, Dublin City Council stated it is looking at arrangements with the OPW for the transfer of the Coláiste Mhuire site to the council to enable it to do it. Other than the transfer of the title of the property, has the OPW any other ongoing role in the project? Will it make any investment in it or will any other Department invest in it? It is a fine project for the city and the area needs this development. Private funding has been made available and the OPW is directly involved so I would like to see the Office of Public Works having slightly greater involvement.

The OPW has no more involvement than the involvement I have outlined. I have seen the presentation and it is an exciting project for that part of the city. Whether it might be subject to other funding would fall within the general capital expenditure plan and if it made sense, perhaps on a co-funded basis if philanthropic money is available, it would be eligible to be considered for funding under the stimulus plans we have announced.

Can the Minister confirm that €2.5 million was donated by Kennedy Wilson? Perhaps the Minister will ask his OPW officials to have another discussion to see if there is any mechanism for funding as a capital project through the Department of the Environment, Community and Local Government, the Department of Arts, Heritage and the Gaeltacht or the Minister's own Department to see if the Government can give any further assistance on this project.

The capital budget of the OPW is quite rigid, with a large chunk of it now going to flood maintenance. It might be a cultural project to be supported by the Department of Arts, Heritage and the Gaeltacht, or an environmental project supported by the Department of the Environment, Community and Local Government. I am writing to every Department to look for projects that might qualify for future stimulus plans. I am not guaranteeing any of them will be advanced but the more competition there is for good ideas, the less we will fall into the trap of looking to the old reliables to do this.

Public Sector Staff Issues

Ceisteanna (7)

John Halligan

Ceist:

7. Deputy John Halligan asked the Minister for Public Expenditure and Reform if he intends, in the interests of efficient expenditure of public money, to conduct a study of the cost of outsourcing in the public sector as against the cost of direct employment in the public sector; and if he will make a statement on the matter. [29688/13]

Amharc ar fhreagra

Freagraí ó Béal (5 píosaí cainte) (Ceist ar Public)

The public service reform plan sets out a commitment to evaluate alternative models for the delivery of non-core services in a more cost effective and flexible approach, with a focus on customer service improvement. In July 2012, the Government agreed a range of actions aimed at achieving a focused and integrated approach to external service delivery of non-core processes with the objective of reducing costs and focusing staff resources on priority areas.

Public services vary in their suitability for outsourcing. Some are best provided by the private sector, some by the public service and others when shared between the two. Any study of the merits of outsourcing would have to consider each function carried out by every public body on a case by case basis.

For this reason, a rigorous appraisal process will be applied to any functions considered suitable for external delivery. It is expected that each such appraisal will evaluate the existing in-house service and the external delivery option, and compare both. As part of this evaluation, consideration will be given to whether the service can be retained in-house but with business process improvements. Any final decision to change how a service is delivered will take account of a number of factors, including overall cost, quality of service provided, effectiveness and the public interest.

I thank the Minister for his answer. I raised this issue with him on a number of occasions.

It would be useful to conduct an overall study of this. In the first year I got into the Dáil I asked about the relative cost of direct labour as against outsourcing to agencies, consultants or whatever. I submitted one question but got more than 50 answers - a considerable thick file spread over weeks. I would have to do the same again every year. It is difficult to get an overall picture of the value for money or otherwise from outsourcing.

However, the former Federated Union of Government Employees, FUGE, branch of IMPACT which deals with cleaners, porters, attendants, service officers, etc., has indicated to me that, for example, with the €2 million the Department of Social Protection spent on outsourcing cleaning work last year it could have directly employed 96 full-time cleaners, and that with the €1 million spent on private security which was outsourced instead of having directly employed service officers, the Department could have employed 70 service officers. This IMPACT branch contests that outsourcing in all Departments in its area covering such grades added up to approximately €16 million whereas the same number of staff could have been provided for €9 million - a difference of €6 million. In my own investigations, I have certainly found several examples. How representative these are is difficult to say for the reasons I mentioned but it looks as if it would be much cheaper to employ staff directly rather than outsource the work to agencies, consultants etc. Should we conduct a comprehensive overall study and analysis of this because we are looking for savings everywhere and workers would prefer, if they can make an argument that it provides value for money, for there to be directly employed secure employment rather than the more casual outsourced work which, obviously, is not as favourable to them?

I have an open mind on how we provide services. As I stated, the criteria are what provides the best service to the public on a cost-effective basis, complies with all legal requirements and is efficient. Sometimes that will be an in-house service where there are significant skills built over time. Sometimes it will be a bought-in service because there are large private companies which have skills developed that it would not make sense to replicate. For example, for years every hospital had its own laundry where the unit cost of doing laundry in some of the hospitals was phenomenal whereas there are now very large industrial-scale laundries which are merely much more efficient. It makes no sense to replicate scores of laundries as opposed to using one large commercial one. There are horses for courses.

Deputy Boyd Barrett spoke about individual skill sets like cleaners or security staff. In many instances, it makes sense, because of the uniqueness or isolation of a place, to have full-time staff members do that sort of work. On other occasions, if they are in a city, one has competent firms doing it. As long as there is robust and transparent evaluation, we can make rational decisions. In my Department where we do the evaluations, we would be open to test any analysis done by a trade union or anybody else.

I welcome the Minister's openness to looking at this. On the specific examples I cited, I hope he would engage with the former FUGE branch of IMPACT. They have compiled an analysis, the facts of which I have given the Minister, in which they maintain the Department could get the same services for considerably less money. Obviously, they would favour full-time staff employed in these low-paid jobs. Often it is thought that IMPACT represents higher-paid workers. In fact, IMPACT represents a substantial number of low-paid workers in the Government service.

I agree with the Minister that there must be robust scrutiny of these matters. One cannot generalise too much, but it has been acknowledged that we had a problem, for example, with hygiene in many hospitals. A case at least has been made to me - it must be looked into - that part of the decline in hygiene standards in hospitals is because there are outside contractors which do not have the same allegiance to the hospital. They are in and out and the company or agency picks up its money. They get the job done in the minimum time possible, whereas directly employed staff would have a real feeling, passion, loyalty for and an association with the hospital on a fixed base. There is a case for looking at whether there is a connection between those two issues because we are seeing a much greater degree of outsourcing of such services in the health service. For example, is there a connection with MRSA?

I agree that the issue of quality is important. It is a matter not simply of the cost, but of the quality and product one gets.

I have other explanations as to why the hygiene standards might not be as robust as they used to be. From my experience in Wexford General Hospital when it was run by a matron of the St. John of God Order, I shall simply say that a tight ship was run and you could eat your dinner off the floor. That is the truth of it. That level of oversight no longer exists. Maybe it is not possible or there should not be the level of oversight that existed in those days, but certainly a tight ship was run. Maybe that is an explanation of it.

In terms of the general issue Deputy Boyd Barrett raises, it is important that we conduct robust analysis of the outcome. I am conscious that we constantly measure the inputs into education and other areas, but we seldom measure the outputs. With the new budgeting system, we try to establish what we get for the inputs. We all must ask constantly because our response to every issue is to seek more resources as opposed to asking what we are getting for the resources we are putting in.

Consultancy Contracts Expenditure

Ceisteanna (8)

Pádraig MacLochlainn

Ceist:

8. Deputy Pádraig Mac Lochlainn asked the Minister for Public Expenditure and Reform if he will provide details and the projected monetary value of the savings in consultancy contracts his Department expects to make. [29565/13]

Amharc ar fhreagra

Freagraí ó Béal (7 píosaí cainte) (Ceist ar Public)

My Department was established in 2011. A large part of the work of my Department is associated with the reform agenda plan and, as such, we have a rolling programme of work which will vary from year to year and require varying degrees of external consulting support. In the current year, this includes a number of shared services projects, in payroll, in banking, in financial management reporting and in procurement, together with work on the statute law revision project, support for the implementation of procurement reform and the re-tendering of the national lottery licence.

In the context of this environment, a targeted percentage cost-base reduction is not an appropriate approach to budgeting. We have instead adopted a zero-based budgeting approach to consultancy costs.

In other words, provision is only made for defined projects which have the Government's approval. We continue to seek to minimise these costs and projects, and projects are only progressed when there is a clear business case to do so.

In the Haddington Road agreement we just discussed, there is a paragraph on the use of external consultants by public bodies which states:

The staff side have expressed considerable concern at what they believe to be excessive use of external consultants in the public service. The Government, for its part, shares these concerns ... The recent procurement reform programme to achieve between €250 million to €600 million of savings is welcomed. It is expected that savings in consultancy contracts will be a key element of this programme.

As it is obviously envisaged that this will be a substantial chunk of the savings, will the Minister shed some light on them? What is the total annual cost of external consultants to the public service?

I do not have that figure with me and the Deputy should table a question on the matter. To get a figure would mean trawling across all Departments and well beyond my own Department or area of responsibility. If the Deputy tables a question, I will see what we can do to get that figure.

There was a tendency, which may sometimes have been a default position, to have consultants do work rather than line Departments, but in so far as it is practicable, we should have line Departments do the work. Often when complicated work is being done, we may need particular expertise that does not exist in the public service and we have to buy it in. I am trying to have an economics evaluation service within the public service, and we recruited last year a range of young economic graduates trained in my Department who will be allocated across line Departments to provide expertise. There are other skill sets required in the public service that should be recruited and embedded on a permanent basis and I hope, over time, that will mitigate the need to hire consultants. There will always be some issues so we should consider matters case by case. Where there is a robust business case to engage consultants, we will continue to hire them.

My intention is not to enter into a debate on the merits or otherwise of the use of consultants but very substantial savings are envisaged in the order of €250 million to €600 million, according to the agreement. It is also indicated in black and white that savings in consultancy contracts would be a key element of the programme, and the Minister does not contend the fact. I am very surprised that the Minister does not have a figure for the overall cost of consultancy services across the public sector. Is it just that the Minister does not have the figure with him or has the figure not been calculated? I cannot imagine how a Minister could argue that a substantial chunk of the savings would come from consultancy contracts if he has not established the cost of those consultancies across all Departments.

As I indicated, it is not a uniform annual sum and much depends on what issues are being dealt with each year. Last year we hired consultants and, for example, Accenture examined procurement generally across the public service. The report was published and it indicated a sum of between €200 million and €600 million that could be saved through better procurement. Part of that procurement will be in the consultancy area, although we will make savings in other areas of procurement as well.

If I were to ask a parliamentary question citing a particular year, would the Minister be in a position to provide us with the figures?

I will do my very best.

Public Private Partnerships Cost

Ceisteanna (9)

Niall Collins

Ceist:

9. Deputy Niall Collins asked the Minister for Public Expenditure and Reform the reason he is proposing to make compensation payments to unsuccessful tenderers for public private partnership projects; the estimated cost to the taxpayer of this provision in 2013 and 2014; and if he will make a statement on the matter. [29654/13]

Amharc ar fhreagra

Freagraí ó Béal (9 píosaí cainte) (Ceist ar Public)

In July last year, I announced the Government's €2.25 billion infrastructure stimulus package, which included €1.4 billion for the first phase of a new public private partnership, PPP, programme of projects in key areas of infrastructure. Given the very limited PPP activity in the preceding few years coupled with the difficult recent period for the financial and construction sector, it was clear that a range of supporting measures were needed to help reactivate the Irish PPP market, which was moribund, and instil market confidence in the new PPP programme so as to ensure maximum potential participants, both domestically and internationally.

Following advice from the National Development Finance Agency, NDFA, the State's centre of expertise for the specialist procurement of PPP projects, in December 2012 the Government decided that on a temporary and exceptional basis, provision would be made for some reimbursement of bid costs for accommodation projects in the new PPP programme to ensure competitive tension in the tendering process. Competitive tension is essential to ensure we get best value for money for the State. The Government agreed that compliant tender fees would be issued to two unsuccessful final stage bidders. In addition, in the unlikely event that it was decided not to progress any of these projects, payment would be made to the three short-listed tenderers.

The NDFA advised on the level of reimbursement of costs required to deliver market engagement and achieve the results required. Payment amounts will vary from project to project, reflecting the capital value and complexity of the project, as well as the level of any inputs provided by the sanctioning authority, with a cap on the maximum amount to be paid.

That background is a summary of what was in the press release on 5 June, which spoke about investing in infrastructure jobs. The paragraph caught my eye and the Minister can understand why I tabled the question.

This is for total transparency.

This is my third time asking about the cost of this and-----

-----my third time to stand up without getting an exact answer. I understand this is potentially commercially sensitive but to the extent that it is possible, will the NDFA supply a briefing note as to how its advice came about? I know of companies that lost much money on previous PPP arrangements having gone as far as being the preferred bidder. They had gone through the final planning stage at their own cost before the bottom fell out of the market and the projects did not proceed. They did not get a cancellation fee despite speaking to the Office of Public Works and different people who were involved.

The Minister has indicated there are two issues, with one being a cancellation fee. I understand this is for people who have travelled a road but will the Minister address the preferred bidder issue? A cancellation fee could be higher in some respects, and when one narrows the selection to a preferred bidder and the project is into outline or detailed planning and specification, the costs can mount for them. Will the NDFA provide further information to give us more of an understanding of the issue? Will there be an element of retrospection or will this only apply to new projects?

I am afraid retrospection will not be possible as this is to stimulate future interest in PPPs. I do not want to open a can of worms and have people come after us for projects that have been cancelled, particularly when the construction industry collapsed. It looks forward rather than back. I am anxious to get PPPs moving and it was a cause of great frustration that for nearly two years, we did not have PPP projects despite robust PPPs being on offer. We had no takers because people such as architects, designers and construction companies had been burned, having spent good money in making applications for projects that did not go ahead. We needed to bring confidence back to the market, and the strong advice I had from the NDFA was to introduce these measures. I will ask the NDFA to contact the Deputy and perhaps give a direct briefing on the matters, as it might be worthwhile to ensure he understands exactly the rationale and reasoning behind the NDFA's recommendations on the matter.

I appreciate it and I am happy to take up that generous offer. The Minister might comment on why some of the PPPs collapsed, as my understanding is that this happened because of a lack of financing arising from credit market conditions. The projects were good, well priced and ready to go but all of a sudden when the companies tried to borrow money over 20 or 25 years, the international financial market withdrew credit and the cost of finance went through the roof.

In that context, can these projects be given some funding through the European Investment Bank or a similar institution so that finance could be freed up for commercially-viable projects for the private sector which would also be of benefit to the public?

As the Deputy knows, I am always looking for sources of capital to invest in infrastructure in Ireland. The vice president of the European Investment Bank was in Dublin yesterday and I had a very long and fruitful meeting with him. The European Investment Bank has certainly been very helpful in this regard. It has a number of new schemes in progress. It wants to move away from direct lending into creating financial instruments, perhaps of the type the Deputy is talking about. We are exploring how a financial instrument that would leverage money - perhaps State money as well as European Investment Bank money and private capital - would be available to invest in projects in this State, either in the public or private sphere.

State Properties

Ceisteanna (10)

Thomas Pringle

Ceist:

10. Deputy Thomas Pringle asked the Minister for Public Expenditure and Reform if he will outline the roll-out of the next round of reforms aimed at streamlining the State’s extensive property management portfolio; the targets he has set regarding same; and the extent to which he aims to reform the property asset portfolio across the wider public service. [29686/13]

Amharc ar fhreagra

Freagraí ó Béal (1 píosaí cainte) (Ceist ar Public)

The Chairman of the Office of Public Works, OPW, is the senior responsible owner for driving reforms in public property asset management. The Chairman chairs the steering group established in October 2012, drawn from public service property stakeholders, to review existing property management arrangements across the public sector and develop a framework to drive efficiency and value for money from the State's property portfolio.

The group is finalising a property management delivery plan, which will set out how each of the elements identified in the Government's property asset reform programme will be managed in the short, medium and longer term. The plan will identify the planned changes, without impacting significantly on the ongoing service delivery of public bodies. The plan will focus on measures that maximise the efficient use of State assets, improving information sharing and decision-making capacity and streamlining arrangements for intra-public service property asset sharing and transfer.

The objective of the reform programme will be to achieve efficiencies through shared protocols, standards and policies around space allocation and more open-plan working. A cross-disciplinary committee within the OPW is developing a set of standards for office accommodation in accordance with international practice. These measures will be supported by a more effective communication process throughout the public service through the introduction of an intra-public service map-based property register and web portal. The map-based register is intended to facilitate intra-public service data sharing. The OPW is finalising a prototype with data from OPW's property holdings initially and this will be available to public service property holders shortly.

Sale of State Assets

Written Answers follow Adjournment.

Ceisteanna (11)

Joe Higgins

Ceist:

11. Deputy Joe Higgins asked the Minister for Public Expenditure and Reform when he expects the possible sale of State assets to be discussed at a meeting of the Government. [29692/13]

Amharc ar fhreagra

Freagraí ó Béal (6 píosaí cainte) (Ceist ar Public)

As the House will be aware, the Government has initiated a programme of State asset disposals as part of commitments made in the programme for Government and under the EU-ECB-IMF financial assistance programme, with a view to generating resources for additional investment in job creation initiatives in the economy.

Various aspects of this disposal programme have been discussed at Cabinet on a number of occasions since the Government came to office in February 2011 and Ministers had a further opportunity to discuss the Coillte harvesting rights aspects of the programme during the Government meeting yesterday. On foot of yesterday's meeting, I can inform the House that the Government has agreed with the joint recommendation of myself and the Minister for Agriculture, Food and the Marine that now is not the appropriate time to proceed with the sale of harvesting rights in Coillte. Instead, the focus needs to be on the restructuring of Coillte as a company to address the issues that were identified in the reviews undertaken. To that end, I wish to further inform the House that Coillte is to undergo a fundamental restructuring, to be overseen by NewERA and the relevant stakeholder Departments, which will include operational streamlining, financial de-leveraging and a critical examination of the disposal options for its non-core activities such as telecoms and wind. A robust analysis will also be carried out to evaluate how to give effect to a beneficial merger of Coillte with Bord na Móna to create a streamlined and refocused commercial semi-State company operating in the bio-energy and forestry sectors, as committed to in the programme for Government. A priority in this regard will be the annual delivery of a material financial dividend to the State by Coillte. Finally, we intend to fill the significant number of vacancies that will arise on the Coillte board this year by persons with relevant experience and commercial expertise to drive the restructuring process and the merger with Bord na Móna if this is approved by Government.

We learned of the decision not to proceed with the privatisation of Coillte and its harvesting operations at the meeting of the Oireachtas Joint Committee on Finance yesterday. I really welcome the fact that the Government was forced to recognise the massive opposition that existed around this country to any moves in the direction of the privatisation of our woodlands. That message came through loud and clear to the Minister and the Government. I ask that the reform of Coillte referred to by the Minister be done in a different way from what reform and restructuring usually means for this Government, namely, downsizing, crude restructuring, job cuts, worsening of conditions and so forth. I ask that the Government reforms Coillte in a way that brings the workers in Coillte and Bord na Móna to the heart of the management of the process in these vital areas of national life and economic activity, to give them real democratic ownership of the valuable work they do. I ask that the Government also bring in the woodland devotees, those people who are genuinely devoted to the woodlands and all they represent for our people, into the process. In that way, we will get an entirely different approach.

I had to leave the committee meeting yesterday for duties in this Chamber and therefore I missed some of the Minister's further elaborations. The troika said that the Government had to raise €3 billion, 50% of which was to be used to pay off bondholders. What is the arrangement with regard to that particular demand by this dictatorship, in view of the Government's decision on Coillte?

During the negotiations on the programme for Government, one of the issues that arose from the Fine Gael side was that party's plan to promulgate a share-holding entity, NewERA, which mirrored what happened in a number of progressive countries, including all of the Scandinavian countries and Britain, to get better value from State assets. I must say it has been a very worthwhile exercise. One of the things we discovered, in the drilling down of the work done by NewERA, is the situation within Coillte, namely, that even with all of the commercial forests which the Deputy has lauded, Coillte has struggled to generate cash from its trading operations to date. A large portion of Coillte's profits and cash flow has come from the sale of land and from exceptional gains on the sale of immature forests. In other words, what Coillte has been involved in is selling not only harvesting rights, but also land, on a piecemeal basis. That has been generating such cash flow and profits as the company has. We must fundamentally restructure that company and must make our decisions rationally and on a commercial basis.

I do not know for certain but I believe that the synergies between Coillte, with its very significant land holdings across the State, and Bord na Móna, which has a great track record but whose core business - the production of turf - is running out, could be harnessed to develop a very important, new State bio-energy company. Our objective between now and the end of the year is to test that thesis commercially to ascertain the benefits, assets, liabilities and requirements to make that a reality. When we have that due diligence or analysis completed, I will return to the House and present the findings to Deputies.

People who I respect and who had many dealings with Coillte were massively critical of the leadership and management of the organisation. This was the fault of successive Governments which allowed them to do this. Bringing the Coillte workers, woodland devotees and people who appreciate our woodlands to the heart of the management of a reformed entity is the critical issue. The Minister did not answer my question on the €3 billion and the 50:50 divide demanded by the troika dictatorship to pay off the bondholders. What is the arrangement in this regard?

I should have mentioned it. Deputy Higgins is aware the original requirement for the troika was to use all of the proceeds from the sale of State assets to retire debt. I have spent considerable weeks and months trying to change this view with some success. After much negotiation the agreement was that 50% of the take could be used directly for job creation and would be rolled into the stimulus package. It will be part of the variety of elements we will use, including the new Irish strategic investment fund which will be created when we transfer the €6.4 billion from the National Pensions Reserve Fund into the new investment vehicle for Ireland. While it was originally agreed the balance of the money would be used to retire debt, after further interaction with me the troika has agreed for it to be used as a backstop in the first instance. It will eventually be used to pay down debt, but in the first instance it can be used as a backdrop to leverage funding including for public-private partnerships, because one of the problems we have had in getting these off the ground is no triple A rated bank in Ireland to partner banks such as the European Investment Bank. Other countries have used funds, either asset sale funds or structural funds, as a backstop. This is the type of model we are using. In the short term, all of the money from the sale of State assets in one form or another will be used in job creation.

The Minister should pull back from all privatisation.

Written Answers follow Adjournment.