Mr. John Moran:

I hope it is-----I thought it appropriate to share with the committee some more detailed observations about changes and improvements we have been making in the Department and, therefore, engage in a conversation about why we felt they were necessary. There will be no specific issues raised on the accounts by the Comptroller and Auditor General, so perhaps this is an area where a discussion today might help people to understand some of what we have been doing. For me, it is a question not so much of looking at individual policy issues and the result of our handling of them, but of using those policy issues as a way to test whether we have in fact managed to change the Department so that it can identify issues into the future, perhaps come up with strategies to avoid risks and, if things do occur, as they often do, actually have a strategy and a way of dealing with them.

Many have questioned in the last two or three years the failings that occurred in our system. I think it would be useful for me to explain what we have been trying to do over the course of the last number of years to fix those problems. We believe that new processes which embed better governance, more effective communication and a culture of open challenge and encouraging questioning among staff in the Department will go a long way towards addressing the problems we have seen in the Department in the past. Therefore, I am grateful for the time to explain some of the things we have been doing in respect of that.

First, I would like to talk about this issue that keeps coming up with regard to management teams and managing change. The right combination of management change in an environment such as we have had draws on the skills and knowledge of the past and supplements them with new skills and new perspectives, while coaching the entire team as a unit and training the whole team. In that way, we can build a new cohesive unit to actually tackle the problems. It is probably appropriate for me to say, as I have said in the statement, that it would be foolhardy to believe that somebody can land into a complex situation and not draw on the best experience of the people found in that Department. With that combination of experience, which is what we had, we have now got a new set of views in the Department about the problems we have had to address. Inevitably, there are changes of personnel as people move on to new challenges. Like myself, two other senior managers will be leaving the Department, one for a shorter period of time and another in retirement. I would like to thank both of these in particular - Jim O'Brien and Michael McGrath - for their efforts, particularly on the international framework in Europe in the last couple of years.

We have seen the physical reforms in terms of the economy and the banking sector, but what has perhaps not been so obvious to the public is what we have been doing to live up to our statement of strategy and try to build a more modern, professional and forward-looking Department, and to introduce new principles and values into that, which are the principles of equity, partnership, leadership, challenge and integrity, and, of course, openness and transparency. In many ways, when people reflect on what is described in the statement, they will understand that the challenge we have set ourselves in terms of change has actually gone beyond the recommendations of the Wright report in respect of the Department. At the time, in 2012, we had a Department with three policy areas but, quite frankly, less attention had been directed towards the support and control function, and many of the changes are actually reflected in what we have done there. We continue to work away quietly on this. The job is now well mapped out among the team in the Department and we are well under way, but we have not finished everything that needs to come into place.

We have, as we set out in 2012, taken the decision to reunite the budget and tax policy areas so that they work together, and we have also reunited the banking and financial services areas, for reasons that will become obvious if we get into the issue of funding the economy, where we see those two as being much more interconnected. Our newly created international division has actually opened up the Department to the world a lot more than before, and I will come back to that later. Our last important policy area is the building of our new economics division, which was possible following John McCarthy's appointment as chief economist.

We have tried to move the focus of the Department away from just short-term forecasting to a much more robust discussion of broader economic areas and an engagement with the external world in respect of developing our thoughts. In the next few years, we would like to move towards a system under which we can have additional economic modelling capacity over and above what we have had in the Department in the past and, more importantly, to integrate what is being done in the economics area with the important work that has been developing in the risk and financial stability capabilities.

Most importantly, what we think has been the change in the Department is a completely different focus on what support, risk functions and control functions mean. We have changed our internal structures to better facilitate a culture of greater challenge. We have new risk, legal and compliance functions and a completely different way of carrying out peer review of policy directions and advice to the Minister, which are now central pillars of the way we work. The State's accounts are now produced by a team led by Greg Dempsey, who is on my right and who is an accountant with 20 years' experience. We have a team of risk officers led by Neil Ryan, who has more than 20 years of legal and banking experience. We now have a new policy committee under the direction of Ann Nolan, who is one of our most experienced civil servants and who has an unparalleled knowledge of each area of practice within the Department, in order to encourage cross-discipline and cross-unit debate. We have established a legal and compliance unit under Antoine Mac Donncha with a newly recruited experienced compliance officer added to that team, along with other recruited lawyers, to facilitate the legislative process. Our management advisory committee is operating in a way that looks more like an executive-style management board. Under Mr. Dempsey's direction, we have also added a new corporate office to support the function in the first instance of the management committee and the new sub-committees - the risk committee and the policy committee. More importantly, it houses a project management office which now runs quarterly business planning processes and has weekly updates to the management as well as training for all staff in project management techniques. We have also set out to reinvent how we communicate with the outside world in terms of sharing information both within and outside Ireland. I think people will have seen the first half of this. We are also continuing to change the way we communicate internally in the Department.

Under the leadership of Niall O'Ceallaigh, who joined the Department shortly before my appointment, we have outsourced operational HR to the shared services function established by the Department of Public Expenditure and Reform. This has freed up our HR function to become what one would expect to see in a professional HR function - focusing on issues such as how we recruit people, how we carry out learning and development, how we carry out flexible resource management, with a biannual exercise that involves looking at our resources and priorities and, more importantly, how we carry out performance management integrated fully with our business planning process. It is worth saying that we believe we are now managing both the good and bad performance of our teams. We started this process with a 32% compliance record on performance management systems but we completed that exercise in 2013 with 100% compliance. Therefore, every staff member in the Department had a full process of evaluation of their performance and the objectives set for them into the future.

We have begun what will, unfortunately, be a very long process of enhancing the IT systems in the Department, starting with a new external website for clearer communication but, equally, using that and other methodologies for better internal communication, document sharing and working while we are on the road and out of the office. As I mentioned to the committee last year, during the course of last year we redirected our internal review and audit committee to look not just at specific issues but much more at the vulnerabilities in the way we tackle strategic areas and help us to scope what the remedial action should be. This year, we have also begun the process of taking the best of what we have learned from the troika management team and integrating that with our medium-term economic strategy team into a unit to focus on driving economic development and growth.

The reputation of the Department, like that of Ireland, took a very significant beating. I believe things are now quite different on both levels. People recognise the changes that we are trying to make in the Department. Back in 2012, statements made abroad about being Irish were treated in the same way as working at the Department of Finance was treated. It was something people avoided volunteering to others. I can say that this is not a comfortable place from which to drive policy, innovation and implementation. It was not a comfortable place for our management team to begin the important task of rebuilding morale, our reputation and the belief in delivery that our team need in order to be able to achieve its objectives. Many members of the team in the past were just diligently doing what they had been asked to do. Many of them then jumped in with extraordinary efforts once the crisis hit to try to solve the problems facing the country. It was not a comfortable place for me when I joined the Department in terms of the task and reputational risks that were being put in place. More importantly, given that the Committee of Public Accounts is a committee that looks across the entire system, it is not a comfortable place in respect of discussions around hiring people whom we are trying to persuade to come into the public sector. They all have the same worries about reputational risk. The Department and, in some respects, the broader public sector had gone from being a place where one would want to work to being a place that people preferred to avoid. That is a task that I would ask the committee, along with other colleagues that remain in the system, to continue to think very seriously about. We also ask the committee to do what it can to support ways in which we can continue to improve the system, to be innovative, to be brave in setting our targets and to attract the best talent to the public sector.

On the plus side, as with the economy of Ireland, we found that the fundamental foundations of the Department were the right ones for a rebuilding exercise. The staff had a deep commitment to the job at hand and a willingness to go beyond the call of duty to devote time and energy to their task. There was, however, an acknowledgement that it was necessary to deploy more investment. There was an equal acknowledgement that there was a need for additional skills. Over the course of the past few years, we have now recruited more than 100 new people into a Department of 300, a statistic that may surprise some people who believe that things have not changed. Many of our team members have refocused, are being trained, are coaching and are being mentored so that they can compete for new positions and prove that sometimes people who are already in the Department are the best people for the job. To prove that point and to reinforce it, we have also been operating in the past year or two a rule that is unique to the Department. We will only fill positions at the levels of assistant principal and above through a competition that is open to the public, including internal staff.

We have been changing the way we do business to put stakeholders first. I have identified a number of issues in the statement that go towards the various stakeholders. I will not necessarily go through them in great detail other than to point out that we believe that for the Government and Oireachtas, we have changed very significantly the way we interact to allow ourselves to be open to fair challenge of our own thoughts and, more importantly, not be afraid to change our own advice if new perspectives or arguments are brought to our attention. However, we needed to change quite dramatically the way in which information is handled and stored in the Department. This job will be costly and it will take a lot of time to achieve best practice. While there has been much improvement in recent years in the quality of information on which we must base our daily decisions, it is still very much below what I would consider to be the optimal level for policy decisions to be made on a national basis. It will require considerable further investment of technology and time. We are not yet where we need to be to data-mine the wealth of information that must be present across all Government organs of State so as to make the best decisions. This should be a priority across the entire system. We need to continue to break down silos and improve communication flows, to be more efficient and to use technology to do that. One of the small successes that is of particular importance as a starting point for us is that after processing 5,866 parliamentary questions using a paper-based system in 2013, we now have an electronic system, so moving physical files around the Department will no longer be a feature of our work in 2014.

Equally, we are aware of the leadership role that we need to play. In dealing with stakeholders we have been trying to engage somewhat differently with the wider public service by showing greater leadership and leading from the front. Mr. John Hogan has chaired two very important committees on mortgage arrears and SME credit to drive a cross-departmental piece of work. I commend, in particular, the way he has embraced the new management techniques we have been using in the Department and has allowed them to be used across a much broader system. We have also been responsible, under the direction of Mr. Paul Ryan, for a number of shared services projects which are key to making the public service more efficient. We have been involved in the Clearing House strategic group and have led the performance of the medium-term economic strategy, as well as supporting Action Plan for Jobs. We have also stepped up to the mark in Europe. My colleague, Mr. Aidan Carrigan, has been appointed vice chairman of the financial services committee in Europe, which has significantly increased Ireland's influence in respect of policy decisions coming out of Europe.

I have heard it said over the course of the past two years that the Department is closed to the views of industry and the social pillar, but this is not the case. For many years, under Mr. Derek Moran's direction, the tax policy unit in particular has been leading the way in terms of the way it consults outside stakeholders. However, we recognised that more could be done and that we could be more transparent. As a result, we have published diaries on our website to ensure people know who we are meeting and that we are available for meetings. We have also taken a break from tradition by identifying on our website - by name and photo - our management team in order that people understand who is responsible for what within the Department and to promote accountability for our actions.

The example that sticks out the most for me in terms of changes to the way the Department operates is the way in which we handled the preparation of the medium-term economic strategy. We consulted not just with people in the system, that is, the economists with whom we discussed the type of areas we should be examining as we developed a plan for the next seven years, but also with external stakeholders of an official type. More important, as we worked our way through the system, we realised that this is a country that has changed dramatically, and so we set up a young entrepreneurs event where we brought people of diversity into the environment. We invited young entrepreneurs under the age of 35, female entrepreneurs and people who did not grow up in Ireland to give their views, which assisted us in developing a path for the next seven years. The way in which we deal with academia has also changed significantly. We now think we are moving into an environment where the Department is able to produce papers and information which will help others to analyse the same policy issues with which we are struggling as we go through the various actions we have to do.

I have mentioned the way in which we have changed our engagement with the international world. Ireland does not live in a vacuum and we have commented on the need for a new engagement with respect to Europe and the outer world. By having a new international division, we have done that, not only by having our people visiting other areas but also by engaging in very significant bilateral secondments to other treasuries and to the European Commission as we build our team and have new people come to work with us.

The public, however, remains our most important stakeholder. Our Department is less public facing than others in terms of the delivery of our services. We are conscious, however, that every decision we make has a direct or indirect impact on all public shareholders. This means we are fully aware at all times of our responsibility not only to work to increase living standards but also to ensure we do the maximum to ensure sustainable growth for the future and avoid pitfalls that are inevitably lurking ahead. We have invested a lot of time in improving the communication channels we use for the public. I can also say that in the Department there is a greater recognition that we owe a particular duty to the public to ensure we do whatever we can to avoid falling into another failing in the management of the economy. For that job, the embedding of a new culture of openness, of internal and external challenge, peer review, risk management and robust and innovative policy formulation is key. This is not easy stuff, in case anyone thinks it is. It requires ensuring adequate investment to have access to the best talent and the best information. It also means learning to listen and embracing an environment - often lacking in organisations - of open, free and honest debate and mutual trust, where everyone's views are well received and cheap shots avoided. It means nurturing talent to create the leaders of tomorrow who need to be instilled with a sense of creativity to help to develop policies for a changing world and also a sense of conviction and of courage to be able to identify the next problem and shout "stop" when it is needed.

As I said earlier, I am proud of the team with whom I have worked. I hope this committee and our other stakeholders are happier with what we have been doing in recent years. Along the way I have had occasion to mention many of the senior managers of our team, but it is the other unsung members of the staff to whom real credit must go. They are the people who have made our results a reality. I thank the committee members for their attention and hope I have stirred some thoughts and ideas about what we might talk about. I welcome the opportunity to address the committee and look forward to questions from members.