Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I thank the Chairman. When I appeared before the committee earlier in the year, I agreed to return for a discussion following the publication of the mid-year expenditure report. Members will recall that my Department’s group of Votes comprises a significant number of Votes, as follows:

(i) The Vote for the Department of Public Expenditure and Reform, the Vote for the Office of Government Procurement and the Vote for the National Shared Services Office;

(ii) The Votes for a number of Offices under the aegis of my Department, including: – the State Laboratory, the Public Appointments Service and the Office of the Ombudsman; and

(iii) The Votes for Superannuation and Retired Allowances (which covers civil service pensions) and Secret Service.

The Vote for the remaining element of the Department of Public Expenditure and Reform, that is for the Office of Public Works was handled separately by the committee this morning.

The structure of the Vote for the Department of Public Expenditure and Reform remains unchanged in 2016 from last year, with two strategic programmes focused on public expenditure and sectoral policy and public service management and reform.

The allocated resources for each programme, in terms of staffing and funding, are set out in Part 3 of the Estimate. A total gross estimate of €45.9 million is provided for 2016. The statement I gave to the committee in June dealt in detail with the areas covered by these programmes. I am not going to cover the same ground again, but I am willing to answer any questions which might arise on these matters today.

I would like to discuss some of the key strategic challenges currently faced by my Department and to listen to the views of members of the committee on these matters. I will begin with public expenditure policy and make a few comments in the context of budget 2017. I have already set out in some detail at the Select Committee on Budgetary Oversight the key points that are relevant for this committee.

The Government is very supportive and is engaging with the Oireachtas in respect of an enhanced input into discussions on budgetary priorities and it is for this reason that I published the mid-year expenditure report. This follows on from the Summer Economic Statement, which sets out the Government’s medium-term budgetary strategy. The Summer Economic Statement envisages that day to day spending on public services will increase by €1.3 billion to €53.1 billion in 2017.

We also expect that capital investment will increase by €400 million to give a total capital spending of €4.4 billion. This is to provide for continued investment in our schools, health care facilities and transport network. It also allows us to invest more in housing to address the serious pressures that exist there.

The State now employs more than 66,000 teachers, 10,000 doctors and 41,000 nurses in our education and health sectors, all figures up on 2013.

This targeted investment in front-line staff has come hand-in-hand with real reform and a focus on excellence in public service delivery. For example, linking the provision of additional funding in the health sector this year to an accountability framework for the acute hospital sector will help to ensure sustainability for our health system in future years.

The main aim for budget 2017 is to deliver sustainable public services that are fiscally prudent or affordable while looking to make improvements. There are many competing demands for scarce resources but if the main challenges and priorities are to be addressed, it is not enough to look at the incremental increases to services. We have to look at how we are effectively spending what is available to us at present.

I would like now to touch on the issue of public service pay. Control of the public service pay bill is vital to the overall sustainability of the public finances. This means responsibility on the two core drivers of the pay bill: the numbers of public servants employed and their rates of remuneration. Thankfully, we are making progress in this area.

The Government has allocated funding for extra Garda, doctors, nurses, teachers and special needs assistants in order to support essential front-line services. This increase in resources has been accomplished in tandem with real pay restoration under the Lansdowne Road agreement, LRA. This agreement provides certainty and predictability to the management of the public service pay bill. It allows for strong fiscal planning with resources ring-fenced for sustainable pay restoration, balancing the competing claims for additional Government expenditure within the resources available. It provides a framework for negotiating on issues that matter to public servants – a good example of this is the recent agreement with the INTO and TUI on new entrant teacher pay.

A final development worth noting is the agreement in principle by the Government to establish an independent Public Service Pay Commission. Its role will be to provide evidence-based analysis on pay matters to assist officials and the Government in discharging their negotiation function on behalf of Government. The Commission will be advisory in nature and will report initially by the middle of next year. A consultation is currently underway on the role and structure of this body and I intend to bring a memorandum to Government shortly.

Moving on to the broader reform, effective management and sustainable pay policy go hand-in-hand with meaningful reform of our public services. The importance of efficiency cannot be overstated, it has significant consequences for finances and job creation. Most important, the public service provides essential services for our people when they need them most.

We have made progress under the current public service reform plan to deliver better outcomes. Service users, whether citizens or business customers, are being placed at the centre of service design and delivery. We are working to achieve better outcomes for customers by prioritising the digitisation of services, as set out in the public service ICT strategy, to recognise how expectations for technology-enabled Government services have risen significantly in recent years.

Successful delivery of the ICT strategy will require a significant increase in the provision for the Office of the Government Chief Information Officer, within my Department, to be offset by savings elsewhere across the system.

We will fund much of this programme by combining our buying power, sharing our assets across Government and driving out and reducing duplication. This is a vital investment in modernisation, to reap substantial benefits across the system. We aim to streamline processes and enable citizens to transact wholly online with Government and access Government services digitally.

Elsewhere, implementation of the actions under the Civil Service renewal plan to improve capacity and capability are continuing. The plan is implementing important changes, strengthening governance, delivering and developing capacity and improving our approach to HR in the system.

However, while acknowledging we have made progress I firmly believe there is a need to build on this progress and maintain a strong focus on reform over the coming years. That is why, in addition to completing the current phase of the reform plan, I have asked my Department to initiate the development of the next phase of public service reform to cover the period 2017-19. I would be very pleased to hear the views of members on this next phase.

In parallel with this programme we continue to make progress in delivering more open, transparent and accountable Government with a number of significant changes, in areas including freedom of information, protected disclosures, regulation of lobbying and appointments to State boards. I am always mindful of more progress that we need to make. For example, work is well under way on Ireland’s second national action plan under the Open Government Partnership.

Significant progress continues to be made on the open data initiative. Ireland's open data portal,data.gov.ie, now contains over 4,400 datasets from 90 publishers and is growing all the time. A data-sharing and governance Bill is also being prepared to simplify data-sharing between public service bodies while also protecting the rights of individuals.

The Public Sector Standards Bill is designed to modernise, simplify and streamline the current framework for ethics, which is in urgent need of reform. Initiatives such as these are vital if we are to achieve fully the objectives of increased transparency, integrity and accountability underlying the Government's reform of our public life.

I will conclude by turning to some other Votes in the Public Expenditure and Reform group. The roll-out of shared services and the reform of public procurement are central in delivering the efficiency focused reforms set out in the public service reform plan. In this regard, the combined 2016 allocation for both the National Shared Services Office and the Office of Government Procurement is now €57.8 million. The 2016 allocation for Vote 2012, that is superannuation and retired allowances, is just under €527 million gross or €392 million net.

Each year there is a net increase in the number of pensioners due to retirements. It of course has the effect of increasing payroll cost year-on-year. In addition, Civil Service demographics means there has been an increase in the numbers eligible to retire in recent years. For these reasons I expect the gross expenditure Estimate for 2017 to be higher than the 2016 Estimate. There will be an offset in increase in the receipts to the Vote. The committee has been supplied with a detailed briefing by my Department's officials on the various Votes in the PER group, including those of sub-offices.

The final matter I want to address is the new statement of strategy. Members will be aware that the development of a three-year statement of strategy is a requirement for every Department under the Public Services Management Act 1997. Under the legislation a new statement of strategy must be submitted to a Minister within six months of his or her appointment. Therefore, the process to develop a new statement is under way in all Departments, including my own. This work will, of course, be informed by the priorities set out in the Programme for a Partnership Government and the overall economic budgetary and fiscal context.

The development of this strategy is extremely important for every Department in terms of their mid-term direction, their business planning, how they allocate resources and manage risk, and provides a framework for reporting on progress made during each year of the strategy. It will be a timely opportunity take stock, to look at what we have delivered, to look at choices, challenges and risks, to re-examine our values, our strengths and capacity to deliver on our strategic goals. I invite members of the committee to share their views on this matter and ask that they be good enough to write to me by the middle of October on this matter. I will benefit from hearing the views of the members.

While we have achieved much we are still borrowing to fund public services and debt remains high. The objective of delivering and improving public services within budgetary parameters remains a huge goals for all Departments and offices. I look forward to hearing the views of the members on how we can maintain public finances while meeting the needs of those we serve. I thank members for their time and look forward to answering questions.