Mr. Robert Watt:

Ms Buckley's team has been involved in a series of reforms over the period. This year, the Government decided to begin to unwind some of these measures under the Lansdowne Road agreement. The agreement will provide for a continuation of enhanced productivity measures while securing an industrial relations framework that will foster and support industrial peace. Other reforms worth mentioning include the new public service sick leave scheme introduced to reduce the cost and incidence of sick leave for the public service. I know the committee debated the scheme previously. The scheme has had an immediate and positive impact. Approximately 260,000 extra days were worked by public servants in 2014 in comparison with 2013, saving an estimated €51.5 million. We hope to see further savings from the implementation of the scheme over the next few years.

Between 2008 and the end of 2014, the number of staff working in the public service was reduced by 10%. As a result our success on expenditure consolidation and driving public service reforms, we can now consider on a strategic basis the allocation of extra staff to critical public services. Since 2014, there has been increased staffing in the following areas. We have appointed an additional 3,000 teachers and more than 1,300 new special needs assistants. The HSE has hired 1,000 nurses and there will be an increase in the number of gardaí. Without public service reform and the savings it produced, including those underpinned by agreements negotiated with staff, it would have been impossible to increase staff levels in these critical areas.

The Minister, Deputy Brendan Howlin, has introduced a number of significant reforms to ensure taxpayer money is allocated to the maximum benefit of society. The wide-ranging reforms to the budgetary architecture support the efficient use of public funds to deliver effective services for citizens. The implementation of a medium-term budgetary framework and the introduction of comprehensive reviews of public expenditure allow for greater debate about key expenditure challenges. The revised public spending code, which sets out the economic appraisal requirements for new current and capital expenditure proposals, brings together in one place all the elements of the value for money framework. Departments and agencies proposing expenditure are responsible for undertaking the required appraisal for each new spending proposal or project. The public spending code provides that appraisals and detailed assessments should be carried out before Exchequer resources are committed. In July 2015, the Government agreed a new three-year value for money review programme for each Department. Under the programme, Departments will review expenditure across a number of programme areas. This programme, which is reviewing 40 topics, is aligned with the multi-annual budgetary cycle and the comprehensive review of expenditure process.

The Oireachtas and its committees play a central role in overseeing expenditure of State resources. Last week the Houses of the Oireachtas Commission launched an OECD report, Review of Budget Oversight by Parliament: Ireland. The report takes account of the parliamentary and budgetary environment within which we all operate. Its recommendations have the potential to engender more meaningful and constructive dialogue around the efficient and effective use of public resources and the role of the Oireachtas in overseeing these issues. This is a key concern of this committee. While the OECD's report is of course a matter for the Oireachtas and the Executive, the Civil Service is ready to assist in any way we can in augmenting Oireachtas oversight of the Irish budgetary process.

Of critical importance to implementing budgetary and expenditure management reform is building the institutional capacity to do so. Our Department has been enhancing capability within the public service and Civil Service to appraise, evaluate and monitor public expenditure effectively, ensuring the focus remains on value for money. Of particular note is the establishment of the Irish Government Economic and Evaluation Service, IGEES. IGEES is an integrated cross-Government service which enhances the role of economics and value for money analysis in public policy-making. IGEES members have a particular skill set which has improved the analytical capacity of the Civil Service. They operate in designated economic evaluation units and engage widely with other Departments. Their expertise further strengthens the focus on evidence-based policy-making within the public service.

The effective use of data is also critical to a more integrated and efficient public service. The publication of official non-personal data in open format has the potential for significant economic, social and political impact. Our open data initiative aims to enhance the value and utility of public service data. Such data can be shared within and between public bodies and with the public as a whole. Open data can become the raw material to drive more effective decision-making and efficient service delivery within public and private bodies. It can spur economic activity in the development of new products and services and empower citizens to take an active role in improving their communities. This is an area where we will strive to do more over the next few years. It has enormous potential to improve the operation of the system.

A better trained, more integrated and more effective Civil Service will support better delivery of services and a better return to the taxpayer. Published in October 2014, the Civil Service renewal plan sets out a vision and three-year action plan to achieve it. It outlines practical actions that will create a more unified, professional, responsive and accountable Civil Service. Since its publication, significant progress has been made. An accountability board has been established to oversee Civil Service performance and develop a better framework for holding senior civil servants to account for performance. A Civil Service management board has been established to create a more integrated and cohesive whole-of-Government executive management team. It is a great surprise that before now senior leaders across the Civil Service did not meet regularly to consider the strategic and delivery issues faced by the system. There is now a performance review process for Secretaries General to ensure high standards are maintained. Open recruitment campaigns have been held for positions across different grades for the first time. This will ensure there is a consistent stream of talented professionals with different backgrounds, experiences and capacities entering the Civil Service at every level. The new structures are helping to strengthen accountability and performance by introducing greater oversight of delivery across the Civil Service.

Progress has also being made in other actions in the plan. This week we published a corporate governance standard for the Civil Service. This is the first time that such a standard has been produced. It will set out how each Department and office does its work and operates to deliver on its mandate and functions. To bring greater individual accountability, we will also ensure the statutory official assignment of responsibilities in each Department down to the level of principal officer are publicly available. Effective leadership is crucial to deliver Civil Service and public service reform. The senior public service has been established, initially within the Civil Service, to support high performance and a more integrated approach to leadership development at senior levels. It supports executive coaching and provides for mobility at senior levels in the Civil Service.

Shared services is one of the largest cross-cutting change programme the Civil Service has ever introduced. The national shared services office, NSSO, in our Department is responsible for establishing and providing shared services to the Civil Service and, as part of its wider leadership role, for setting standards for shared services in other public service sectors. Earlier this year, the Government approved the drafting of a Bill to establish the NSSO as a separate Civil Service office. Work on the Bill is being advanced with the Office of the Attorney General. I thank Ms Hilary Murphy Fagan and all her staff for their hard work in bringing this about.

Established in March 2013, PeoplePoint provides HR and pensions administration services for 35 organisations with approximately 30,000 employees. By the end of next year, it will be fully established and serve 33,500 employees across 40 departments. The payroll shared service centre is in three locations and administers payroll for 34 organisations and 43,000 employees and pensioners.

This will rise to 80,000 by the end of this year. In addition, the evaluation of tenders for a single financial management solution for the Civil Service is now nearing completion, and we expect to return to the Government shortly to proceed to implementation. Strong oversight and governance frameworks exist to oversee and monitor the performance of these centres against service level targets and customer satisfaction. Cost savings and significant improvements in service delivery in PeoplePoint have been made throughout this year and we are striving to improve service delivery for all our clients.

ICT has a critical and increasing role in delivering better public services. Earlier this year, the Office of the Government Chief Information Officer published the new public service ICT strategy. The strategy will create a new model for ICT delivery. The central aim of the strategy is to deliver better value for money by creating efficiencies through integration, consolidation and data sharing. The strategy will ensure ICT infrastructure and systems are shared across the Civil Service and public service, achieving greater efficiencies in the use of resources.

Progress has also continued on introducing more external delivery of services. Examples include the use of private call centres for administration of the water conservation grant and local property tax. These contracts leverage private sector expertise and innovation to deliver cost savings and better services for citizens. JobPath, the new employment activation programme, also uses private sector expertise to assist the long-term unemployed back into the labour force. There is much more scope to use the external delivery of service in other areas of administration and service.

The Department is working with other Departments on the issue of commissioning. The commissioning model will embody a more strategic approach to the delivery of services by the community and voluntary sector than the traditional block grant funding model. This model aims to assess and identify the needs of a population and release funding in return for achieving the identified outcomes on foot of evidence-based evaluations.

Another example of how the Department is driving a culture of value for money is the issue of Government grants, which I know is the subject of a separate chapter in the most recent report of the Comptroller and Auditor General. In September 2014, the Department issued a new circular setting out a revised framework for management and accountability arrangements for grants. The overarching principle of the new circular is that there should be transparency and accountability in the management of public money. There is also a new statement of principles for grantees. The statement outlines four principles that apply to those in receipt of grant funding, namely, clarity, fairness, governance and value for money.

A related initiative has been the establishment of Benefacts. This will provide a single repository of regulatory data on the entire not-for-profit sector. The sector is estimated to encompass 20,000 entities which receive €4.4 billion in Government funding annually. The objectives of Benefacts are to deliver a single view of all not-for-profit entities in Ireland, to facilitate better decision-making in the Government’s funding of the sector and to rebuild donor confidence and provide for increased investment in the sector.

A key aspect of the reform agenda has been the area of public procurement. Over many years concerns have been raised in reports of the Comptroller and Auditor General about weak procurement practices and we have sought to address them. The Office of Government Procurement, OGP, now procures common goods and services across the sector. The procurement reform programme is gaining increasing traction in delivering a more joined-up approach for procurement. The OGP is progressively putting in place sectoral or whole-of-Government arrangements in areas such as professional services, ICT, facilities, travel and HR services.

Some expenditure areas, such as legal costs and insurance, have never been procured on a whole-of-Government basis. For the first time, the OGP is looking at such services across the public service and is putting in place professional commercial arrangements that leverage scale, bring consistency and manage risk. The OGP is also committed to ensuring SMEs are fully engaged with public sector procurement. In March this year, the office produced a detailed analysis of non-pay expenditure in the public service, which was the first of its kind. The findings indicated that 66% of the State's procurement was with the SME sector. I commend Mr. Paul Quinn and his team on all their hard work in the delivery of this very extensive and ambitious programme of change.

Value for money is also important in our management of the State’s property portfolio. The OPW led the development and implementation of the property asset management delivery plan. Significant progress has been achieved in areas such as intra-State property transactions, communications and the Civil Service estate. More work is required, so we will continue to support the OPW in driving the implementation of the plan as part of the Government’s overall reform programme.

I have set out some of the changes the Department has introduced to improve the effectiveness of public spending. Of course, given total voted spend of more than €55 billion, it is inevitable that there will be errors, omissions and inefficiencies which do not meet the high standards we are setting. We are dealing in a world of uncertainty and increasing complexity. However, it is critical that we continue with and improve on these reforms. Specifically, we need to embed a very strong value for money culture which does not tolerate outdated practices or inertia. Achieving this will require a significant improvement in our leadership capacity. This is, to my mind, the single most important challenge we face.

I will now turn to some specific items on the agenda today. With regard to chapter 4, vote accounting and budget management, since the Department was established, significant progress has been made in reducing the fiscal deficit and bringing stability to the public finances. In 2011, the budget deficit stood at 12.5% of GDP. This year it will be below 2.1%. In 2016, it is forecast to reduce further to 1.2%. The Department’s two objectives of managing public expenditure and driving reform have made a major contribution to this improved fiscal environment. In 2014, gross voted spend amounted to €54.1 billion, which is €1.1 billion or 2.1%, ahead of profile. In net terms, net voted expenditure amounted to €42.2 billion in 2014 and was €1.1 billion or 2.6% ahead of profile. It is worth noting that nine of the 16 ministerial Vote groups were at or below profile. Ministerial Vote groups requiring Supplementary Estimates were in most instances able to obtain savings elsewhere from within the Vote groups to offset partially the Supplementary Estimate.

Turning to the Department's own Vote, the Estimate for 2014 was set at €35.9 million, a slight increase on 2013 levels. This reflects the addition of funds to provide for the establishment of the Office of the National Lottery Regulator and to provide for a widening of responsibilities in the Office of the Government Chief Information Officer. The audited surplus to be surrendered in 2014 was €3.8 million. The surplus mainly arose due to lower than expected progress on recruitment as set out in the report of the Comptroller and Auditor General and spend on North-South projects.

On Vote 12, Superannuation and Retired Allowances, the 2014 appropriation accounts for the Vote show a net outturn of €368.7 million compared with an Estimate plus Supplementary Estimate of €384.8 million, giving a surplus of €16.1 million. The surplus arose due to the timing of receipts from the single public service pension scheme.

Turning to Vote 18, Shared Services, the 2014 Estimate of €30.6 million represents a net increase of €9.6 million compared with the 2013 Estimate. This increase is largely driven by the migration of existing payroll functions from originating Departments to the centre. The net outturn for 2014 was €20.3 million, giving a surplus to surrender of approximately €10 million. The underspend primarily arose because of later than anticipated transitioning of staff to PeoplePoint and payroll.

With regard to Vote 41, Office of Government Procurement, the Estimate for 2014 was set at €12.4 million. The outturn was €6.2 million, leaving a surplus to be surrendered of €6.3 million. This surplus arose mainly due to lower than anticipated recruitment, as only two thirds of expected staff were on board at the end of 2014, and knock-on savings in non-pay.

I take this opportunity to express my appreciation to the staff of the Department for all their hard work. Since 2011, the Department has achieved much, none of which would have been possible without the commitment and expertise of the staff. As the country enters the next phase of our recovery, the Department will continue to make a contribution to public policy, budgetary management and the management and reform of the public service. I look forward to working with the committee on these issues in the future. I am aware this is likely to be our last meeting before the general election and I wish the members all the best in the upcoming contest.