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

I thank the committee for giving me an opportunity to attend today's meeting. I will speak briefly on my overall Vote before facilitating as many questions as possible. As the Chair has said, this Vote group comprises the Votes for the Department of Public Expenditure and Reform, the Office of Government Procurement and the National Shared Services Office; the Votes for the offices under the aegis of my Department, which are the State Laboratory, the Public Appointments Service and the Office of the Ombudsman; and the Votes for superannuation and retired allowances, which covers Civil Service pensions, and the Secret Service. The Vote for the remaining element of the Public Expenditure and Reform group - the Office of Public Works - is handled separately by this committee.

The structure of this Vote remains unchanged in 2017. There are two strategic programmes, one focusing on public expenditure and sectoral policy and the other focusing on public service management and reform. The requested staffing and funding resources for each programme are set out in the third part of the Estimate. With regard to the objective of the first of the two programmes, the select committee will be aware that the timetable envisaged by the Government for the 2018 Estimates process includes a spending review in advance of the budget. While moderate and sustainable expenditure growth is planned over the medium term, there are emerging and competing public service demands. It is intended that the spending review process will help to broaden the Government's options during the budgetary process by creating fiscal space to fund new policies from within existing ceilings through a systemic review of the existing cost base.

In parallel with this approach, my Department will continue to work on planning the capital review, which will be concluded later this year. The objective of the capital review is to provide a focused analysis of capital spending and to outline what can realistically be delivered over the remainder of the plan utilising the additional resources that are now available. The increase in gross expenditure on the Public Expenditure and Reform Vote for 2017 will bring the total gross allocation to €56 million. This additional allocation will provide for cross-Government measures and is driven by a number of factors such as the progress of the Government's commitments under the public service ICT strategy, the advancement of Civil Service learning and development, the facilitation of an electronic exchange of information between the State and the EU Commission, the implementation of the single public service pension scheme across the public service, the development of the Government's economic and evaluation service and the work of the Public Service Pay Commission.

I would like to reflect briefly on the future of public service reform so that we can continue to focus on improving services. Two successive plans have been delivered by my Department over the past five years. They have enabled us to maintain and improve services in the face of the necessary reduction in staff numbers and budgets. Between 2009 and 2014, the Exchequer pay bill was reduced by over a fifth and staff numbers were reduced by a third. These reforms were implemented at a time of increased demand for many essential public services, such as welfare payments, medical cards, school places and pensions. In December 2016, I was pleased to see many positive messages about how our public services are performing by comparison with such services in other countries. According to the Institute of Public Administration's public service trends report for 2016, our public administration is the most professional and least politicised in the 28 EU member states. Our public service is considered one of the least bureaucratic in Europe. We also scored highly for the quality of our public administration and in the rating of perceptions that Government decisions are effectively administered.

We are continually looking for ways to improve customer experiences. Last month, my Department published a survey of business customers of the Civil Service. The survey was carried out to meet a commitment in the public service reform plan. I am pleased that levels of satisfaction with the service received and the outcome of the business interaction have improved by over 15% since the last survey in 2009. It is not surprising to note that the way business engages with the Civil Service is changing fundamentally. Some 83% of businesses now interact via online services, compared to just 33% in 2009. This helps how we plan for the future.

Work is now under way on a survey of Irish public customers and will assess satisfaction with, and perceptions of, services provided to the public by the Civil Service. My Department is currently engaging across the public service on the preparation of the next phase of reform to cover the period from 2017 to 2020. The draft plan will then be informed by a period of public consultation in the spring, with a view to publication by mid-2017. In addition, I published a second progress report on Civil Service renewal in July. I again invite members to provide input into the Department's general plans on public service renewal.

I will now turn briefly to the issue of public service pay. I have outlined that the Government will take a two-phased approach. We have now completed phase one and the additional spending arising from the Government decision in respect of the anomaly payment for those staff within the Lansdowne Road agreement, aside from members of the Garda, is a one-off cost of €120 million in 2017. The required funds must be met from available public resources while taking into account the scope for reallocation of expenditure and continuing to meet the Government's commitment to core public services. The Government will monitor the position closely and will consider how best to meet any additional funding requirements where the need arises.

We are now beginning phase two, during which we hope to negotiate a successor to the Lansdowne Road agreement. Before we begin those negotiations, we await the report of the Public Service Pay Commission. The commission’s role is to provide evidence-based objective analysis and as I have argued this morning, I believe strongly that a collective approach to public service pay is vital to our national interest and never more so than at a time of international flux. Collective agreements deliver public service reform, secure productivity improvements and allow for planning. They allow us to balance pay increases in the public service with other priorities like education, housing and the issues debated in the House last night.

In addition to progress in public service reform, I continue to be committed to political reform and real progress has been made in this year. An area of current focus will be the general scheme for a data sharing and governance Bill and the Public Sector Standards Bill 2015, which I aim to bring to Committee Stage by April. In addition, my Department has undertaken the first review of the operation of the Regulation of Lobbying Act 2015 and of the system for State board appointments. I will publish both of these reports shortly.

Turning now to the other Votes, my colleague, the Minister of State, Deputy Eoghan Murphy, has responsibility in respect of the Office of Government Procurement, OGP. Members will aware that procurement reform is an important element of the Government’s overall approach to reform. In this regard, the net allocation for the OGP in 2017 is estimated at €19.96 million, compared with €19.982 million in 2016. In the four years to the end of 2016, the OGP and its partner sector sourcing organisations in health, education, local government and defence had enabled cost reduction savings of the order of €300 million. Total cost reduction savings for 2017 are between €80 million and €100 million and this represents a very significant portion of overall Government spending. By putting in place procurement arrangements, the aim is to achieve economies of scale and maximum value for money while balancing other requirements, including societal considerations and SME access.

Members also will be aware that the National Shared Services Office within my Department is leading the shared services strategy within the overall reform and renewal context. We are making good progress across all aspects of this reform agenda. The Civil Service HR and pensions administration shared service centre, PeoplePoint, now provides services for 34,500 civil servants from 39 public service bodies. The payroll shared service centre, PSSC, has 103,000 payees, of whom 57,000 are pensioners, from 43 different Government organisations. The financial management shared services project has begun the development of a new finance technology solution for the Government. The introduction of this single finance technology platform will replace 31 existing finance systems across Departments and offices and will facilitate transaction processing in the finance shared service centre. This is why a provision of €45.173 million is sought for Vote 18 and these projects which, by their nature, require a certain amount of upfront investment.

Vote 12, for superannuation and retired allowances, primarily provides for pension and retirement lump sum costs for civil servants, including prison officers, and pension payments for dependants. Year-to-year variation in expenditure on this Vote is primarily driven by the number of individuals who will opt to retire before reaching their compulsory retirement age and whose years of service and grade and pay level are variable and uncertain.

The Estimate I am proposing today, involving a net provision of €359.9 million, represents a decrease of some €32 million or an 8% drop on the 2016 net Estimate. This decrease in provision is largely attributable to an increase in contributions from the single public service pension scheme.

The committee has been supplied with details of various other Votes but I will leave it at that for now. I commend the 2017 Estimates to the select committee and I will be happy to answer any questions which may arise.