Brendan Howlin (Wexford, Labour) | Oireachtas source

I will begin by congratulating the Chairman on his election to the Chair of this committee. We had a good working relationship with his immediate predecessor and I hope the Chairman has the same meteoric rise as he had, in a short period of time. I am glad to be here because what is happening today is an important step in developing a much more democratic system of scrutiny over the budgetary process. The current series of meetings between Ministers and various committees represent the first time that committees have convened hearings not just on expenditure outturns for last year, but on prospective Estimates for next year, which is very important.

The detailed Estimates allocation has not yet been settled and therefore it is timely that elected representatives, such as the members of this committee, should express their views on where the quantum of expenditure for next year should be allocated. This represents a step in the whole-of-year budgeting process that I announced in the comprehensive expenditure report last December and is a key element of the new medium-term expenditure framework. As part of this framework, multi-annual expenditure ceilings have been set out for every Minister and Department and these ceilings form the basis upon which Estimates are proceeding. As Members will be aware, on 28 September last, I published the Ministers and Secretaries (Amendment) Bill, 2012, which will put these ministerial expenditure ceilings on a statutory basis, which is one of the commitments made under the EU-IMF programme. I look forward to discussing and debating that legislation in the coming weeks.

After last December's announcement, I wrote to all committee Chairs inviting them to avail of this new opportunity to participate in the Estimates process in ex-ante fashion with Departments. We are all embarking on new territory and I am pleased to be part of that vanguard today. In this spirit, I am happy to engage with the committee on next year's Estimates for my Department and associated offices. I have no doubt that many constructive and thoughtful views will be expressed and upon listening to those views, which will have a bearing on the final Estimates allocation, I assure members that I will have due regard to all worthwhile suggestions that are made. When the 2013 Estimates are brought before the committee for examination in the new year, we could usefully return to some of the topics and themes that we have canvassed today. This is, in itself, an important new dimension of accountability and it will enhance the role and policy relevance of committees.

I wish to refer now to public expenditure policy even though, strictly speaking, it is not the purview of the work we have to do today, in terms of examining the Department's Estimates. My Department has the lead role in formulating national expenditure policy, both current and capital, within the context of the Government's overall fiscal policy. It is no exaggeration to say that this is one of the most challenging and demanding briefs in the Government as a whole and I am satisfied that my Department exercises its role in a skilful manner.

To begin with, there is the important dimension of helping me and the Government in the task of correcting the national finances. Ireland's plan for fiscal sustainability involves steady and measured progress on both the expenditure and revenue sides and my Department has been successful in guiding expenditure policy along the course we have charted. There is no doubt that the course on which we have embarked is difficult. It is challenging for the people and will be turbulent. So far during 2012 overall expenditure in gross terms has been kept to roughly €93 million of target. In other words, by the end of last month, we were within €93 million of the expenditure target. It is no secret that live register pressures of the order of €200 million are affecting the social protection budget for this year. Unemployment has remained stubbornly high. There are also pressures of a similar order of magnitude in the health area, owing in part to demographic pressures, including the demand-led costs of medical cards, and to the difficulties and delays in securing co-operation for important reform initiatives. All of these pressures are being actively tackled by the Departments concerned in close consultation with officials of my Department and I am confident that these problems will be overcome.

Looking to next year, the focus of today's discussion, my Department has the task of guiding the Estimates process to a successful conclusion in line with the overall fiscal targets the Government has agreed under the Stability and Growth Pact and the EU-IMF programme. Discussions are proceeding this week with our troika partners and the Minister for Finance and I met them yesterday for more than two hours. Discussions are ongoing between officials of both Departments. We will also discuss the Government's overall strategy as we move towards next year. I do not doubt that my Department will continue to provide an excellent service for me and the Government in this task. Of course, my Department was established not just as a Department of expenditure but as a Department of reform and nowhere is this more evident that in our budgetary strategy and structures. The very fact that we are engaging today is one of the fruits of the budgetary reform agenda. More generally, I remind the committee of the series of major budgetary reforms which are taking shape around us and which fundamentally restructure the way we shape our budgets.

I mentioned the medium-term expenditure framework under which, for the first time, all Ministers and Departments have a clear sense of their actual expenditure allocation, not just for one year but for the next year and the year after that. It is completely unrealistic to expect Ministers and Departments to plan for the future when they do not know what the future looks like. That is the old system from which we are moving away. All that the old system achieved was to create an incentive for Departments to hope for the maximum possible allocation, plan without a sense of constraints and lobby hard each to get more money the following year. In fact, Departments regarded unspent money as failure. That has been done away with. That is what I mean when I argue for an end to the traditional budget day surprise. We need a mature debate from early on in the year about the resources available and how they are to be prioritised. Such a debate must involve our elected representatives and that is the rationale for this structured dialogue in committees. I hope the whole-of-year budgetary process will prove to be constructive and positive.

In similar vein, 2012 sees the introduction of performance budgeting for almost all Departments and offices. The Book of Estimates presents the spending allocations grouped by strategic programme. These are the same as the high level objectives in the departmental statements of strategy and bring a new streamlining and clarity to the overall processes within each organisation. Alongside the spending allocations we have performance indicators - outputs and outcomes - set out clearly for members to see. It is important that we focus on performance and results; in other words, not just on how much we are spending but on what exactly we are achieving with the money in question.

Next year my Department will build on performance budgeting still further. For next year it plans to move this performance information to a public-facing web platform to make it easier for the public and Members of the Oireachtas to see how well the system of government is delivering public services. This new system, to be called Ireland Stat, will be launching shortly in pilot form. I saw the pilot presentation last week. The system will also allow for a far richer and deeper level of information to be presented than is possible in printed form. The initiative is one part of the Government's overall narrative of performance, delivery and results. I will be interested to hear the feedback of committee members on this initiative once the pilot has been launched.

My Department is responsible for ensuring we receive value for money for every euro spent. This year it developed a new public spending code which set down definitive new criteria for appraising and evaluating all forms of public expenditure. This year, for the first time, the traditional methods of ex anteappraisal have been refined and applied to current as well as capital programmes. In support of this initiative, my Department has launched a new Irish Government Economic & Evaluation Service, IGEES, bringing in world class economics graduates to supplement and upgrade specialist capacity across the service as a whole. I will be very glad to give members of the committee details of this service.

I have spoken about the public finances. Turning to public service reform, my Department has been engaged on a wide variety of issues. Committee members will be aware of the comprehensive and ambitious public service reform plan. I have written to the Chairman offering to give the committee an update on what we are doing on it. I had a chance to do so with the Committee of Public Accounts and some members of this committee were present at that meeting. There will be greater use of shared services which will increase integration and efficiency. As part of our overall shared services strategy, last May we approved the establishment of a human resources shared service centre for the Civil Service. It is estimated that this will reduce the human resources headcount by 17% and costs by 26%, with annual net savings of €12.5 million. The first transitions to the new centre are expected in March 2013, with all in-scope bodies to be transitioned by the end of 2014. We have accelerated our plan for a pensions administration shared service. This was to come after the human resources shared service, but we are dovetailing the services and the pensions service will integrate with the human resources shared service. We are also developing a business case for a payroll shared service and commencing a baseline exercise for a banking and financial management shared service. In addition, shared service plans are being prepared by each of the public service sectors of health, education, justice, defence and local government, with a range of priority shared service initiatives identified for each. It might be useful for me to give more detail of how this will be rolled out.

Earlier this year we agreed a range of actions aimed at achieving a focused and integrated approach to external service delivery, that is, outsourcing, of non-core processes. A short-list of potential major projects for priority implementation is being prepared and plans are being developed, again by the four main sectors, which will be evaluated for delivery by the private sector. In addition, all proposed new services across the public service will first be tested for external service delivery before being approved for provision internally. We are proceeding with a radical reform of the way in which public procurement is organised. I did not have the opportunity to see the presentation of the Minister of State, Deputy Brian Hayes, and do not know if he dealt with this area. We have had an external review of the way in which we procure in the public service. Our advice is that we could yield potential annual savings in the range of €250 million to €600 million over a three year period. This will involve a new national procurement office overseeing the integration of procurement policy, strategy and operations and greater aggregation of purchasing.

We are also developing proposals to drive reform in how we manage the property portfolio of the State. This has been largely explained by the Minister of State, Deputy Brian Hayes.

In April we published the e-government strategy 2012-15 which builds on Ireland's strong recent performance in this area. We have also published a cloud computing strategy. This is one of the first half dozen countries to have produced such a strategy. We have set out plans for significant further data centre consolidation.

These are just some of the examples of the many reform projects being progressed. Continued investment in the Government's public service reform agenda will yield medium and longer term cost savings, increase efficiency and facilitate the continued provision of services in a smaller and leaner public service where expenditure and staff resources are being reduced considerably.

I am committed to the delivery of the ambitious programme of commitments of political reform, also outlined in the programme for Government. The unifying theme running through these initiatives relates to securing greater openness and transparency and enhanced accountability leading to more effective governance. These measures represent a comprehensive suite of significant measures which have the potential to bring about an important shift for the political and administrative systems.

In July, the Government endorsed the principle that the Freedom of Information Act would be expected to apply to all public bodies consistent with the original objective of the Act to enable access to information in the possession of public bodies to the greatest extent possible. Subject to some specific conditions, freedom of information legislation will be extended to a number of high profile public bodies previously entirely outside the scope of the Act. Any limitations to its implementation will apply only in the most exceptional cases where there is a clear public interest in safeguarding particularly highly sensitive and confidential information. The Government has also agreed to significant reforms to restore freedom of information legislation that was debased or worsened, shall I say, in more recent times. The general scheme of the Bill has been submitted to this committee for its views and recommendations. The committee will have an important role in advising me in that regard.

It is planned to enact the Ombudsman (Amendment) Bill by the end of the year. It was passed in the Seanad today. This will lead to a significant extension in the remit of the Ombudsman by the addition of some 140 public bodies which are currently excluded from the remit of the office. Following the enactment of the Bill, the Ombudsman will have the legal authority to carry out administrative reviews on well over 300 public bodies.

The introduction of comprehensive whistleblower legislation is central to more effective management and early amelioration of risk both in the public and private sectors. In well-run and risk-focused organisations, whistleblowing should be encouraged and promoted. It is our ambition to have world-class whistleblower legislation in place.

I note that the committee is pressed for time. I will not dwell in detail on the other matters dealt with in my statement. However, political reforms include the statutory framework for ethics legislation, the legislation for the conduct of inquiries and the addressing of the commitment in the programme for Government to Civil Service accountability.

In my statement to the committee I provide an overview of the activities of my Department on a wide range of policy initiatives. Turning to the details of the relevant Votes and the material supplied to the committee, under the Public Expenditure and Reform Vote my Department was granted a modest increase to enable it to drive forward certain initiatives. We recruited a small number of staff with skills in economics and we are looking for experts in areas such as procurement and shared services, for example. While not envisaging an increase in funding, next year, as part of the Estimates process we are engaging in seeking to maintain our funding at 2012 levels. This would enable us to complete this reform work and to deliver savings in the medium term. An aspect which is unique to my Department is that we pull in work from other Departments and make savings in different areas.

I refer to the superannuation Vote and retirement allowances. Members will note that due to the nature of expenditure under the superannuation Vote, no reductions have been provided for with regard to pension-related payments to retired civil servants. This Vote is particularly difficult to estimate as the majority cf persons covered by the Vote may exercise an option to retire at any stage once they reach the age of 60 years.

The 2013 Estimate for Vote 12 proposes a gross provision of €466.6 million. That sum represents a decrease of almost 7% over the 2012 gross Estimate of €500.375 million. The 2012 Estimate was prepared having regard to the level of retirements envisaged to take place in January and. February 2012, when individuals availed of the grace period.

The committee has examined other Votes in the Public Expenditure and Reform Group of Votes such as the Vote for the Office of Public Works. I have provided information on the State Laboratory, the Public Appointments Service, the Valuation Office and the Office of the Ombudsman. The views of the committee on how expenditure might be reduced in these areas would be very welcome.

In summary, my Department is involved in a wide-ranging series of public service and political reforms within the parameters of the constraints on public expenditure which the Government has imposed on itself and the commitments in the programme for Government.

I am happy to record my appreciation of the work of my Department staff. Much work remains to be done but I remain confident of our ability to achieve the very demanding agenda we have set out. I welcome the greater engagement of this committee and I thank the Chairman for affording me the opportunity to attend today. I look forward to questions and I hope for positive suggestions from members.