Oireachtas Joint and Select Committees

Thursday, 23 November 2017

Joint Oireachtas Committee on Social Protection

Money Advice and Budgeting Service Restructuring: Discussion (Resumed)

10:45 am

Photo of Alice-Mary HigginsAlice-Mary Higgins (Independent) | Oireachtas source

On page 13, in respect of the assignment of premises, a figure of €727,545 is given but it does not really address the concern that Deputy Carey rightly raised that there are cases where the organisation is not paying a market value rent and a very significant example is the extraordinary high value that is given in the discounted level for the premises in Dublin for the Dublin citizen information services, and in particular the very high profile property in O'Connell Street. There is a concern there about whether the board assume these favourable and preferential rates and costs for property will be carried through in the new structure. This seems to be an assumption. If this was not the case it will be a further significant cost in set up. I do not want to spend too much time on that.

I will now turn to the running and operational costs. The operational costs are estimated in the report at €7.47 million over eight years. That is €1.25 million additional operational costs every year. Added in is the €9.4 million cost for the proposed restructuring. It is not an inconsiderable amount. It is quite reasonable that this committee - and perhaps other committees in the future such as the Committee of Public Accounts - would want to know how this money is being allocated and spent. This €1.25 million is the cost of the proposed restructuring, but the board has previously told the committee that a compliance unit, which would do the minimum, would cost €433,000. The board's proposed restructuring is costing three times the cost of introducing a compliance unit that would satisfy governance concerns.

When we consider the costs that are not figured, with regard to the 16 new regional managers the report states "it is assumed ... that no travelling or other expenses would arise". Will these regional managers never visit local offices? Is it good governance if we have no travelling expenses and no assumption of travelling from these regional managers to all of the local offices? Can we say that is good governance? Will the board members of these companies not travel for longer distances?

The section of the report that deals with the cost, to reduce the €1.25 million, we see a very extraordinary assumption. I need to know about this because it is a very unusual move. On figures for the HR bill, which may be a certain amount, we see that income tax, PRSI and USC are to be taken out. Is it the case that miraculously, these items that go from payroll are suddenly no longer costs, that they are in fact benefits as it goes back to Revenue and the Exchequer? We do not know what tax reliefs or tax allowances people are using. It is a very unusual practice to take a direct payroll cost and just try to subtract it from the equations. This is very important because it appears a number of times in the report; costs become benefits, benefits become costs and they are swapped around. This is what I meant by doubling up on how things are calculated.

In the final calculations the report puts a compliance unit, not required, in as a saving but it is not happening at the moment. If we remove that cost, and do the calculations properly, and even allowing for the savings on board member expenses, audit fees, legal and professional fees, this restructuring is still costing €923,000 per annum. This is still more than twice the cost of a compliance unit.

There are a number of concerns but I want to move to the section of the report on the benefits of the restructuring. It is extraordinary, highly unusual and not normal economic practice that when the report looks at the benefits it switches to an entirely new economic frame. The report looks at the reorganisation from a socio-economic frame. It is an extremely unusual practice to have two completely different methodologies for each half of an equation. I wonder if Ms Mangan can answer this when we come to it. It is extraordinary. If the report was to use this socioeconomic frame when it looked at the costs I imagine that there would be many, many socioeconomic costs - which this committee has heard outlined and raised as concerns - that could be brought through. The report looks at three key figures within this socioeconomic frame. I refer the committee to page 25. The three key benefits under the socioeconomic frame, and the case being made for value for money and the cost benefit, are extraordinary. Ms Mangan was asked about volunteers. A reference to volunteers does appear in the report because the time given by volunteers - which anybody can see is a benefit to the organisation in respect of board members - is now flipped around. The report says it will be a benefit to society in not having volunteers and by losing all these volunteer hours. There is absolutely no capacity to say - and the report authors are in no position to say - what may happen to the people who are volunteering when they go out in to the world, freed from the arduous duties of contributing to the important work they do. We do not know what they will do and they may, for example, never volunteer again because they may be disheartened by their experience. That is not the main concern. It is, however, useful that the report quantifies the value of board members' voluntary contribution. That quantified value is €4.92 million, which is lost. We need to go right back to the section of the report on costs and say that now there is a cost - the loss of €4.92 million - in voluntary contributions by volunteers board members. It might not be as full as that because there will potentially be some board members in the new boards. If we leave it, however, at the €4.92 million per annum - or even €5 million - we are suddenly right back to a situation where the restructuring is costing us close to €2 million. In that case we would nearly be at four times the cost of a compliance unit.

I will address my final two points. It is crucial because we are here to discuss the cost benefit analysis.

Comments

No comments

Log in or join to post a public comment.