Leo Varadkar (Dublin West, Fine Gael) | Oireachtas source

We are.

I was asked about multi-annual budgeting. I believe that as a principle multi-annual budgeting makes a good deal of sense. It is something I would like to move to across Government and not only for health. Again, a practical difficulty arises. We actually set out the budget for each Department, and not only for next year. We publish a table regularly - we will probably publish it as part of the summer economic statement in a few weeks time. It sets out how much each Department is getting not only for this year but for the next two or three years. These are called expenditure ceilings. They get adjusted at budget time, generally upwards, but we do set out this information. In health, in particular, extra money is factored in each year for demographic and other pressures. Perhaps this is not done adequately, but it is there.

The difficulty we have with health is the consistent inability to stay within the budget ceilings. We can have any budget we like, whether multi-annual, annual or half-annual, but if we are unable to stick within our budget ceilings then they are not of much value. The temptation in a multi-annual budget system is always to take money for next year. That can potentially make the problem worse.

We are proposing to change several things when it comes to procurement. One may sound obvious but it is serious. We should not proceed with a project until we know the full cost. That sounds blindingly obvious; of course we should not proceed with a project until we know the full cost, but this can actually give rise to difficulties. For example, I am a big supporter of projects like the M20 to link Cork and Limerick and a big fan of projects like MetroLink for Dublin. However, we never actually know the full cost of anything until we go to market or to tender. That is true whether we are building a small house or a massive project. Enforcing that new policy will be difficult because we may find ourselves at a point where we have spent €30 million or €40 million getting to the point of tender only to find out the real cost. Then, we have to decide that we are not going with it after all and then justify how we have spent €30 million or €40 million on a project that did not proceed. That has happened before. Thornton Hall is one example under a previous Administration. There are other examples but it is not a perfect solution either.

The other thing is to look at the balance between cost and non-cost factors when it comes to how we weight a tender. Part of the advice we have from our legal people and experts in the field is that we are far more likely to face a legal challenge if we do not go for the lowest-cost tender. There have been challenges when we have not given the tender to the lowest bidder. That is a risk and it can delay projects. It is not simply a matter of cost and quality. Submissions have to reach a minimum level of quality standards first and then there are cost and non-cost factors. We run the risk - it is a real risk - that if we do not go for the cheapest tender then we could find ourselves challenged. Maybe it is a risk that we should simply face, but it is a risk and we need to bear it in mind.

There is one thing I am keen to change. I have the Attorney General looking at this for me. I do not accept this cannot be done under European procurement law even though that is what some people say. I believe we should have some weighting around past form. I am not referring to any one company because I do not mean any one company. There are several in several fields that have not done a good job in the past. I do not like to see them getting public contracts again. If a candidate was going for a job in any of our offices, we would look at the references of the candidate. Any normal person going for a job anywhere gives references. The employer rings up the former employer and asks whether the former employer was happy. Is that not an obvious thing that we should have in our public procurement process? We should have some sort of star rating based on the past form and performance of a contractor when it came to other public contracts.