Oireachtas Joint and Select Committees
Wednesday, 11 February 2015
Committee on Finance, Public Expenditure and Reform: Select Sub-Committee on Public Expenditure and Reform
Estimates for Public Services 2015
Vote 11 - Public Expenditure and Reform (Revised)
Vote 12 - Superannuation and Retired Allowances (Revised)
Vote 14 - State Laboratory (Revised)
Vote 15 - Secret Service (Revised)
Vote 16 - Valuation Office (Revised)
Vote 17 - Public Appointments Service (Revised)
Vote 18 - Shared Services (Revised)
Vote 19 - Office of the Ombudsman (Revised)
Vote 39 - Office of Government Procurement (Revised)
We are considering the Department of Public Expenditure and Reform group of Revised Estimates for 2015. On 18 December 2014 the Dáil ordered that the following Revised Estimates for public services be referred to this select sub-committee for consideration: Vote 11 - Public Expenditure and Reform; Vote 12 - Superannuation and Retired Allowances; Vote 14 - State Laboratory; Vote 15 - Secret Service; Vote 16 - Valuation Office; Vote 17 - Public Appointments Service; Vote 18 - Shared Services; Vote 19 -Office of the Ombudsman; and Vote 39 - Office of Government Procurement.
I welcome the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, and his officials. The purpose of today's meeting is to consider the Revised Estimates and the supplementary performance information regarding the outputs and impacts of programme expenditure. Is it agreed to call on the Minister for an opening statement? Agreed.
I thank the Chairman. We are seeing a lot of each other today. I am pleased to have the opportunity to present the 2015 Estimates for my Department’s group of Votes. The group, as the Chairman said, comprises a significant number of Votes. It contains the Vote for the Department of Public Expenditure and Reform, the Vote for the Office of Government Procurement, the Vote for shared services, the Votes for a number of offices under the aegis of my Department, namely, the State Laboratory, the Public Appointments Service, the Valuation Office and the Office of the Ombudsman, 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, that for the Office of Public Works, is handled separately by the sub-committee.
In total, we are seeking for these Votes just short of €504 million. This represents an increase of €30 million, or 6%, compared with the original 2014 Estimate. Almost €19 million of the €30 million increase is due to the timing of the 1 January 2015 pay bill, which had the effect of creating an additional fortnightly pay bill in 2015. If we exclude this item, the actual increase is 2%.
The Public Expenditure and Reform Vote comprises two programmes, as sub-committee members will know, public expenditure and sectoral policy and public service management and reform. In regard to the first programme, the sub-committee will recall my appearance before it a fortnight ago, on 28 January, to discuss the Comprehensive Expenditure Report 2015-2017. My statement on that day dealt in detail with the areas covered by the first programme. In the circumstances, I do not think that it will be necessary to go back over the same territory today, but I am of course willing to answer any queries which might arise.
In regard to the provision for Vote 11 for my Department, we are seeking a net funding allocation of €40.61 million. This represents an increase of €4.7 million compared with 2014. The increase is required primarily for the second programme of my Department, public service management and reform, where additional funding is required to progress the ambitious targets set out in our recent public service ICT strategy. ICT has been recognised as a critical component for the successful delivery of many existing public services. The public service ICT strategy which has been approved by the Government will enable the public service to build on these successes and use ICT to operate in a more efficient, shared and integrated manner across all Departments. The increase will also support the implementation of the Civil Service renewal plan, which is a key programme for Government commitment.
As set out in the public service reform plan, public service reform has been, and will continue to be, a key element of the Government's strategy for recovery. I acknowledge that the level of reform we have delivered would not have happened without the efforts and commitment of public servants, and I commend all of them on their contribution to date. The Public Service Reform Plan 2014-2016 has a strong focus on service improvement and the delivery of improved outcomes for service users. In addition, it maintains the emphasis on efficiency measures which was a key element of our first reform programme published in November 2011.
Implementation of the reforms set out in the plan and in the complementary departmental and sectoral integrated reform delivery plans will facilitate ongoing service improvements and cost savings into the future. Substantial progress has been made on public service reform across a range of areas in terms of reducing costs, delivering better value for money and improving services. Details of this programme will be set out in the annual progress report on implementation of the reform plan which is due to be published next month.
Staff numbers have been reduced, as members know, by around 10% since 2008, and the pay bill has been reduced by more than 20% since the peak of 2009. Our programme of public service reform has delivered significant efficiencies and increased productivity. It has also enabled us to maintain and improve public services in the face of the necessary reduction in staff numbers and budgets while meeting increased demand for services.
Examples of measures to reduce costs include reforms in the areas of public procurement, shared services, alternative models of service delivery, ICT and digital government, and property management. A core principle of the reform plan is to use some of what I have classified as the reform dividend from increased efficiencies to reinvest in new or improved services. Savings made have already facilitated the recruitment of extra staff in key front-line public services, as I indicated to the House today.
Sub-committee members will be aware that, together with the Taoiseach, I launched the Civil Service renewal plan on 30 October 2014. This innovative plan incorporates a vision and a three-year action plan. It represents a fundamentally new direction for the Civil Service. Renewing the Civil Service is a key part of the overall public service reform programme. The plan has been crafted to build on the existing strengths of the Civil Service and to take actions where required to improve the capacity and capability of the Civil Service to meet existing and future challenges. All of the actions in the plan will support a higher performing and more open and accountable Civil Service.
The key themes of the programme are for the Civil Service to be unified, responsive, professional, open and accountable. The immediate focus now is the work involved in delivering on the six priorities for implementation by the summer. The priorities are: the establishment of an accountability board, which is well in train; the creation of a Civil Service management board, which has already been done; the establishment of the first performance review process for Secretaries General; identifying available options to strengthen the disciplinary code, in particular to address underperformance; to extend open recruitment in key areas to fill the skills gaps that are now emerging; and to undertake the first Civil Service-wide employee engagement survey. I am looking forward to overseeing progress in the implementation of the renewal plan this year and working with my colleagues across the Government to support the changes.
The reform and delivery office, or RDO, within my Department is overseeing and driving the reform programme across the Civil Service. It is, of course, often necessary to invest in the short term to facilitate change and ensure savings will accrue in the medium term. For this reason, the RDO has been allocated €1.99 million in 2015 from the reform agenda fund. The funding for the RDO will be used to support a number of reform initiatives and projects, including the implementation of the public service reform plan, as I said, implementation of the Civil Service renewal plan and funding for investment in the reactivation of the Irish non-profit knowledge exchange, INKEx, database.
I will happily give more details about the database because it is a very exciting project. We will also provide support for external service delivery projects and seed funding for new shared services projects.
Overall, I am satisfied that the progress we have made on public service reform is very significant. Of course, I am very conscious that we need to maintain a strong focus on the delivery of reform to ensure that we continue to have a sustainable and flexible Civil Service into the future. To this end, my Department will continue to work with all Departments and offices, particularly with larger sectors, to ensure that services are delivered efficiently and that outcomes for services and service users are improved.
I shall now discuss public service pay. The Haddington Road Agreement forms the cornerstone of pay policy up until 2016 when it is due to expire. The recovery in the economy is in no small part due to the contribution made by public servants in keeping the cost of the public service pay bill at a sustainable level.
The public service gross pay bill was reduced from its peak of €17.5 billion in 2009 to an estimated €13.8 billion net of the pension-related deduction last year. The cost reductions and the substantial productivity increases, including additional hours worked, which the Haddington Road Agreement and previous public service agreements have facilitated, have allowed the Government the scope to reinvest in key front-line services such as education, health and policing by recruiting additional staff to deliver those services. This is a reform dividend that will help sustain the public service reform agenda by reinvesting some of the efficiency savings we are delivering into improved services.
Effective management of our fiscal affairs also requires us to plan for and address the public service pay and pension reduction measures which are based on emergency based legislation. I refer to the so-called FEMPI legislation. As our fiscal position improves, the emergency basis on which the financial emergency measures are singularly based no longer forms a secure legal basis for the continuation of the legislation in its present form.
Nevertheless, I have made it clear that public service pay rates will continue to be frozen this year. It is the seventh successive year in which there will have been no pay increases for public servants. As we know, there have been two or in some cases three cuts in wages.
While there have been some comments on the issue of increases to public service pay, it is important, as I have said this morning, that expectations in this regard are realistic. I have identified that at a minimum, my preference is to have the first quarter Exchequer returns available to me to inform any response to pay claims submitted by public servants and their unions which will form part of discussions in coming months. Any such discussions on pay will take place in the context of the State's fiscal position and the pace of financial recovery for this year and next. The current financial stability, which was hard won, will not be jeopardized.
One of the most notable features of the Croke Park and Haddington Road agreements is that both the Government and the public service unions strove to find a negotiated solution in very difficult circumstances, where public servants were being asked to contribute so much both financially and in terms of real and genuine reform. I expect that future negotiations, including any discussions that might take place this year, will also be carried out in good faith and in accordance with the industrial relations machinery in place.
In addition to progress in public service reform, we have been pursuing a wide ranging political reform programme – the other strand of my Department's second programme of work. This is aimed at delivering open, accountable and ethical government underpinned by a transparent, efficient and effective public administration system to help rebuild trust in government and in the institutions of the State.
Many of the commitments in the area of political reform, set out in the programme for Government and in the public service reform plan, are now in delivery phase and real progress has been made on a number of fronts. These include, for example, the Houses of the Oireachtas (Inquiries, Privileges and Procedures) Act 2013, which was enacted in July and commenced in September of that year; the Protected Disclosures Act 2014 which is now the law of the land; the Freedom of Information Act 2014 which was enacted last year; and the Oireachtas (Ministerial and Parliamentary Offices) (Amendment) Act 2014 which was enacted last year.
Turning to other Votes in the PER group, I am aware that the chief procurement officer in my Department, Mr. Paul Quinn, briefed the committee in recent weeks regarding the reform of procurement across the public service and the development of the Office of Government Procurement. The development of such an office is an important innovation.
The procurement reform programme is an important element of Government's overall reform programme. The procurement reform programme is tasked with delivering increased value for money, more accurate and timely data, and an improvement in the capacity and capability of procurement across the public service.
The net funding allocation for the Office of Government Procurement in 2015 is estimated at €18.974 million, compared with €12.431 million last year. That is a significant increase. A portion of this funding reflects budget transfers from the national public procurement policy unit and national procurement service, functions that previously resided on my own Department's Vote and on the Vote of the Office of Public Works. They have migrated into this consolidated Vote. Further budget reductions will be achieved, across the wider public service, as procurement functions migrate to the centre. That means there will be savings in a number of other Votes that will be added to the Office of Government Procurement Vote over time. Procurement of supplies and services represents a very significant portion of overall Government spending. It is essential that the public service achieves economies of scale and maximum value for money that it expends.
We have talked about shared services many times. Shared services is an innovative business model and a key element of the reform plan that takes advantage of the latest technologies to drive better value for money. It frees up departmental staff to focus on more strategic areas and core services. It reduces complexity and duplication across organisations and greatly improves efficiency. Shared service centres typically take two to three years to become established and stabilised.
The national shared services office, within my Department, is leading shared service strategy and implementation of shared services projects within the overall reform and renewal context. The new office is directly responsible for overseeing shared service projects within the Civil Service. As part of its wider leadership role, it provides expert guidance and support to other public service sectors in progressing their shared service commitments such as local government.
Solid progress continues to be made across all aspects of the shared services transformation agenda. PeoplePoint and the Civil Service human resource and pensions shared service now service more than 26,000 employees across 21 different public service bodies.
The payroll shared service centre services 20,000 payees across 21 bodies. It is envisaged that the financial management shared services project will be progressed further this year. Shared services projects are also being advanced across the wider public service. As Deputy Fleming will know in particular, Laois County Council is leading the roll-out of a payroll and superannuation shared service for the local government sector which is known as My Pay. Payroll and financial management shared services for theeducation and training boards are proceeding as a priority in the education sector.A feasibility study and business case for a single integrated financial system isadvancing in the health sector, together with work on e-invoicing.
A provision of €39 million is sought for Vote 18 - Shared Services. The increase, compared with 2014, reflects the ongoing migration of transactional human resources, pensions and payroll processing within the Civil Service to the shared services Vote, together with the advancement of the financial management shared services project. A significant portion of this increase is mirrored by offsetting reductions on the votes of the originating Departments. These projects, by their nature, require a certain amount of upfront investment but will yield economies and efficiencies in the medium term.
PeoplePoint will become fully operational this year. The transitioning of payroll shared services will reach a conclusion next year. The financial management project will return to Government for final decision during the course of this year.
In regard to Vote 12 - Superannuation and Retired Allowances, sub-committee members will have received a short summary briefing note on the Vote and its various subheads. As recorded in that note, the Vote primarily provides for pension and retirement lump sum costs for civil servants, including prison officers, and pension payments for dependants. The sub-committee will recall that there was a Supplementary Estimate for this Vote last year. As I emphasised at the time, this is a Vote that is particularly difficult to estimate year on year as expenditure is primarily driven by the variable numbers of individuals who will opt to retire before reaching their compulsory retirement age, and whose years of service and grade-pay level will determine final payment which is variable and uncertain.
The majority of persons covered by the Vote, once they reach the age of 60, may opt to retire at any stage before reaching compulsory retirement age, which is generally 65 years of age. Eligible persons may opt to retire even earlier than 60 years under the terms of the cost-neutral early retirement scheme, CNER. In addition, there will be levels of retirements due to ill health as well as persons becoming eligible to claim preserved pension benefits arising from previous employment within the Civil Service.
These are people who are already out but did not qualify for the age until this year. To illustrate the volatility of personal decisions to voluntarily retire before reaching minimum pension age, in 2012 more than 600 persons opted for CNER, cost-neutral early retirement, while in 2013, just under 80 persons did so. Approximately 130 persons did so in 2014.
Members of the sub-committee will be aware of the announcement yesterday of an extension to June 2016 of the period within which public servants can retire under the terms and conditions which they held prior to the pay reductions under the Financial Emergency Measures in the Public Interest Act 2013. As I stated in my press release, the main considerations for the extension relate to workforce planning and impact on services. This Estimate, involving a net provision of €370 million, represents a decrease of €14.8 million or 4% on the 2014 net Estimate.
The sub-committee has been supplied with a detailed briefing by my Department’s officials on the various Votes in the Public Expenditure and Reform group, including those for the sub-offices of the Department. The Vote for the Office of Public Works is handled separately by the sub-committee.
I thank the Chairman and members for their attention. I commend the Estimates and am happy to answer any questions which may arise.
On subhead A9, consultancy and other services, and subhead A10, Office of Regulator of the national lottery, there is a reduction in the consultancy fees because the national lottery was tendered and the cost is not coming in on this Estimate. What were the specific savings on that? The lottery regulator is answerable to the sub-committee and this is the first opportunity we have had to discuss this issue. The Estimate has a figure of €150,000 for the office. The Minister stated it is anticipated that the new licensee, Premier Lotteries Ireland, will be in a position to commence funding the office in 2015 and, therefore, a relatively small budget is required to cover the early costs of the office. This sub-committee has been asked to provide funding for that office as part of this Estimate.
It is extraordinary, however, that as soon as we give the new licence to Premier Lotteries Ireland, for the first time in 30 years the lottery did not take place due to some problem. What is the role of the lottery regulator in the process? Will the Minister give us a report from the lottery regulator’s office as to when it became aware of the difficulties before the recent €10 million draw had to be postponed? On the day it occurred, what actions did the lottery regulator take? Was the office informed of all procedures? Was the decision not to carry out that Wednesday night lottery taken by the regulator or by the operator? Whose function is it to make that decision? I want to know the power of the regulator. We have seen right across the Oireachtas regulators established which then have become just poodles. We have seen this with the communications regulator. The energy regulator has control over Irish Water. However, when the Government made a decision on water prices, the regulator heard about it just like everybody else. We have established regulators but ensured they have little power because we have circumscribed their functions. If the lottery regulator’s office is to be funded through this Vote, we need to know why a draw was not held for the first time in 30 years.
The Minister stated the State assets disposal programme was brought to completion in 2014, yielding special dividends to the State from the sale of assets of Bord Gáis Éireann and the ESB of €350 million in 2014 and approximately €1.4 billion in total over 2014 to 2016. Will the Minister inform us what funding is expected to come through in 2015 and 2016? If the programme has been brought to a conclusion, does that mean there will be no decision to sell the Government’s 25% shares in Aer Lingus?
There has been a significant increase in subhead B5, consultancy and other services, from €100,000 last year, with an outturn of €102,000, to €450,000 this year. The increased allocation in this subhead reflects several new expenditure pressures including legal costs. The budget has been allocated in respect of costs awarded on foot of a legal challenge taken by the Garda Representative Association on the inclusion of gardaí in cuts to sick leave entitlement for public servants. Will he explain the background to this case? Why is this Vote being used to pick up the costs? Whose decision was it to take this challenge to the courts? Was it necessary to defend it? Could common sense not have prevailed before getting into these legal costs? Are we paying costs for both sides? What is the practical outcome of this? Did the Attorney General have a role in this case? Is that the same Attorney General that the Oireachtas was meant to rely on yesterday? If it was, the Attorney General may have got this badly wrong too. We want some details on this particular issue.
On the reform agenda, the outturn last year was approximately €700,000 but this year the Minister is looking for €2.4 million. What reforms will happen this year? Why is the reform agenda three and a half times more expensive this year compared to other years?
Under the National Lottery Act 2013, the full cost of the lottery regulator is to be borne by the licensee. Obviously, when we were preparing the Estimate in October, we had to make a provision for €150,000 to cover the operation of the regulator in the course of 2015. I am advised that it is unlikely that any of these moneys will be used because the full cost of the regulator, including the provision of premises and support staff, will be borne entirely by the licensee in accordance with the Act.
We have made a provision in case of a carryover of a few thousand euro from last year. We need a subhead, but I am advised it is unlikely it will amount to the €150,000 being provided.
With regard to the role of the regulator during the difficulty experienced in recent weeks when the lotto draw was delayed for a day, I understand the regulator of the national lottery has requested a full report on this outage, to include the reasons contingency measures did not work and the lotto had to be postponed. Apparently he has asked for measures to be taken by Premier Lotteries Ireland, PLI, which is the licensee, to avoid a recurrence. He has also demanded details of testing and any other measures taken to provide assurances. All of this is being done, I am advised, by the regulator. The Deputy will recall that during the passage of the Act last year we made the regulator amenable to the House, so it may be worthwhile when the full investigation has concluded to invite him before the committee to go through it in detail and give reassurance, because it is important that people have confidence in the operation of the lotto as it is a very important national institution
The State asset disposal programme was brought to a completion last year, yielding special dividends of approximately €350 million last year to the State from the sale of assets of Bord Gáis Éireann and the ESB. I am advised approximately €1.4 billion in total special dividends is expected from last year, this year and next year. I can go through this in some detail if the Deputy wishes, or I can give him a document on Bord Gáis Éireann and the ESB with regard to the sale accrued and the dividend profile. Would the Deputy like me to read it or will I provide the detail to him?
I suggest this because of time constraints.
The Deputy asked about Aer Lingus. As I answered in reply to a parliamentary question this morning, Aer Lingus was on the list of assets available for sale but it was heavily conditioned in the announcements made at the time by me and the Minister for Transport, Tourism and Sport. An approach has been made by the parent holding company of British Airways to acquire not only the State shareholding but the entirety of the shareholding in Aer Lingus, and this is a matter being pursued by a group involving the Department, led by the Departments of Transport, Tourism and Sport and Finance. It will come to the Government in due course. As of now, I have not made any provision for returns or dividends from any such sale. It will be a matter to be determined in due course.
The Deputy asked particularly about Vote B5, the legal costs from the Garda case. The advice of the Attorney General was sound since we won the case. I do not want to be discordant about it, but I must say it was rather unusual to win a case on all grounds, as we did, and not have costs awarded for us. We have decided to appeal this and it is before the Supreme Court.
Provisional costs are allowed until we see what is determined. We are seeking costs but that will be a matter for the courts to determine.
The GRA initiated the case, as it was entitled to do. We introduced primary legislation to change the sick leave arrangements and we debated it at some length. I gave a period of time because further matters had to be determined by the Labour Court. This was at the end of 2013. We introduced regulations by statutory instrument, and they were entirely upheld by the decision of the High Court.
The Deputy also asked about the detail of the reform.
The Minister's documentation echoes the objective of controlling public service pay and sticking with the financial emergency measures in the public interest, FEMPI. Given that the Minister has set out his stall, that he intends to carry out what he described this morning as a scoping exercise with the public sector unions, I presume he envisages a deal in time for the budget. He is committed to ratcheting down or unravelling FEMPI but he also stated here that he is committed to implementing it and sticking with the current formulas. I am confused. These are confusing messages. I ask the Minister to clarify this.
The Deputy is asking a very pertinent question. We have made very substantial reductions in the pay bill of the order I indicated, from a peak in 2009 to last year. The anchor of much of these reductions is financial emergency legislation, which is unique legislation because we have not in the past by law reduced the pay and conditions of any set of workers.
They were necessitated by a financial emergency because we could not continue to pay that volume of money and maintain public services at the front line. This was the trade-off I negotiated with the public sector unions.
I am conscious, and the advice I have from the Attorney General is, that FEMPI legislation is not a permanent feature. It is predicated on there being an emergency axiomatically, and I must make this determination and report to the House annually underpinning it. Rather than simply sailing to the day when demonstrably an emergency no longer exists - God hasten that day - and have the entire underpinning of these reductions and pay sustainability undermined, I propose to open discussions. I have stated that once I receive the third quarter figures I will begin the process of discussing with the public sector unions their priorities, because there are a number of subsets in the issue. I want to maintain, and I have indicated this in the questions I answered this morning, the productivity gains we have achieved. I do not want to undermine them, and issues such as reformed sick pay are now permanent features of the Civil Service code. I want as far as practicable to give the best support to the most vulnerable and the lowest paid, but I want to engage with the unions on their priorities. It is my intention, if at all possible, to have an agreement that can be balloted by the public sector unions before we get into the final phase of budgeting, which will be September, so that when I present the budget in October we will have clear understanding of the amount of money to be paid, perhaps on a multiannual basis. I do not want to show too many cards, but as the Deputy knows, the budget horizon is now on a three year multiannual basis.
I thank the Minister very much for this. I am conscious of time. In April the Minister will commence the scoping exercise with a view to having something on paper, if not balloted, by September. He used very particular language with regard to rolling back, phasing out or scaling down FEMPI but in his opening statement he made it clear that public service pay rates will continue to be frozen in 2015.
I am aware of the year we are in, thank you Minister. When we spoke this morning in the Chamber, the Minister envisaged a scenario where there might be a pay claim in advance of the April meeting.
The Government has created an expectation that there will be some move on pay in 2015 with all of its talk about recovery, the Minister's rhetoric around opening discussions with the public sector unions and so on. It will come as news to many public sector workers that whatever is discussed and agreed, there will be no movement in 2015.
It should not. From the beginning of my utterances about wanting to engage with the public sector unions, I made it clear that Haddington Road would be expected to run its course. Haddington Road is a three-year agreement from the summer of 2013 to the summer of 2016. We need to have an agreement not simply to run into that but to understand where we are going beyond that. Certainly, when I produced the budget and Estimates for 2015, the maintenance of the Haddington Road agreement was explicit in all my utterances publicly in the House and outside.
The Minister has also extended the pension deadline for public service workers. Am I right in saying this is the third deadline? The original one was August 2014, which was then extended to June 2015. The Minister has now extended that further out to June 2016. What was the rationale for that?
I am required to specify a date under the Act. What is envisaged here is that if someone retires in the shadow of the grace period, his or her pension calculation can be determined at the pre-FEMPI cut. The most recent FEMPI cut was in the 2013 Act. I have obviously had a great deal of discussion with colleagues, particularly in both the health and education sectors, who want to give certainty to people. I have been contacted by individual unions on extending the grace period to facilitate people to continue in work up to the normal retirement age who are within a year or two of retirement and would like to continue working but feel obliged to retire early to take advantage of the grace period. On balance, that was the right thing to do. I gave consideration to extending it permanently so that there would not be a deadline per se, but I would have to change primary statute to do so.
If a deadline keeps getting moved back like that, it renders it null and void. I have raised with the Minister before the statute law revision programme in subhead B9. This has been going on since 2002. I understand the Minister can confirm for the committee that he has used JobBridge interns to carry out some of this work, if not all of it. He might just refresh my memory on that. He might tell me if he is continuing to use JobBridge interns and whether any have been offered full-time contracts at the appropriate rate.
The statute law revision programme migrated into my Department from the Office of the Attorney General. It is an extraordinarily valuable programme involving largely either newly qualified or qualifying law students to give them first hand involvement, originally in the Office of the Attorney General and now in my Department. We have used JobBridge for that purpose and it has been a hugely oversubscibed programme which is regarded as an extremely valuable asset on people's CVs. Much of what we discuss here is rather dry and, as such, I note that the Government passed yesterday the latest tranche of legislation to be published on foot of the statute law revision module. The programme is about tidying up the old laws on the Statute Book. Deputy McDonald in particular will be glad to know that among the provisions we intend to repeal in the current batch is a proclamation of 1561 declaring Shane O'Neill to be a traitor, an order of 1590 prohibiting the sale of horses out of the Pale on pain of death, a declaration of 1654 ordering the removal of Irish Papist proprietors, their wives, children and families from the provinces of Leinster, Munster and Ulster and requiring them to go to Connacht-----
-----and a proclamation of 1817 reserving oatmeal and potatoes for consumption by the lower orders of people. Nearly 6,000 statutes are about to be abolished and it is extremely important work.
I do not doubt that there are some exotic matters on the Statute Book and I am not questioning the value of the exercise, but I have raised with the Minister before my concern at the use of JobBridge interns to do it. Can the Minister remind us how many interns carried out this work? Obviously, people were in a supervisory position and I understand they were not on JobBridge rates. Can the Minister tell me if any of the interns have been offered more permanent or full-time work or contracts?
We have completed opening statements and we will proceed through the Votes if that is agreed. Agreed. I will call out the individual programmes and the corresponding subheads for the nine Votes. The detail of Vote 11 - Public Expenditure and Reform is set out on pages 3 to 20, inclusive, of the briefing document from the Department and the administrative subheads are subheads 1 to 7, inclusive. Are there any comments on subheads A1 and A2, administrative pay and non-pay? Are there any comments on subhead A3, the Economic and Social Research Institute's administration and general expenses grant-in-aid?
It is in the note on page 5 of the document provided. A small saving has been applied on foot of the completion of the comprehensive review of expenditure. A particular cost arose in the course of 2014 to carry out the review that will not arise this year.
Are there any comments on subhead A3? Are there any comments on subhead A4, structural funds, technical assistance and other costs? Are there any comments on subhead A5, technical assistance cost of regional assemblies grant-in-aid? Are there any comments on subhead A6, peace programme Northern Ireland INTERREG? Are there any comments on subhead A7, special EU programmes body? Are there any comments on subhead A8, Ireland, Wales and transitional INTERREG? Are there any comments on subhead A9, consultancy and other services? Are there any comments on subhead A10, Office of the National Lottery Regulator?
I hope the regulator is listening or will get for his information a copy of the exchange we have had with the Minister on the Office of the National Lottery Regulator. While I will move on, I am not happy with the answer the Minister gave me. He says the regulator has asked for a report, but that is looking for a report on a horse after it has bolted. If a regulator is to be of any use, a clear line must be drawn between his office and the bodies he regulates. It appears from the Minister's answer that the regulated bodies did what they liked and told nobody. I do not know whether they informed the regulator and whether they had the authority to cancel the draw without the regulator's approval.
The idea of asking for a report when it is all over shows the regulator's role is possibly very minor. If the regulator is to be taken seriously, operators need to operate in fear of the regulator so that they will not want to cross the regulator. If they do not fear crossing the regulator, it means the regulator does not have much power.
We are here to talk about the Estimates of spending by the Department and not about the role of the regulator. To be helpful, can I suggest that in private session afterwards, we discuss whether the committee should send correspondence to the regulator outlining our dissatisfaction?
In fairness to the regulator, it is now a statutorily independent body, charged with monitoring and all the legal charges put upon him by the National Lottery Act. It is my understanding that there were extensive discussions-----
We will move on. Is A10 agreed? Agreed. We are on programme B - public service management and reform, key outputs, output targets, context and impact indicators. Members may comment on the following: B1 and B2 - administration, pay and non-pay; B2 - Institute of Public Administration, grant-in-aid; B4, Civil Service arbitration and appeals procedures; B5 - consultancy and other services; B6 - Office of the Government Chief Information Officer; B7 - reform agenda, B8 - employee assistance office and shared services; and B9 - statute law revision programme. Programme C is appropriations-in-aid. We are now on Vote 12 - the superannuation and the retired allowances.
This is more of an observation. I will not go back over the previous discussion but the Estimate last year for this Vote was €362 million. The Minister brought in a Supplementary Estimate in December for another €22 million because it is hard to predict the numbers. We are told the outturn was €368 million which meant the Minister required an additional €7 million, even though he came to us in December looking for €22 million. I know it is hard to predict but looking for €22 million with only a couple of weeks to go to the end of the year when only €6 million or €7 million was ultimately required seems a good bit off the mark. It is more of an observation and I acknowledge how difficult it is.
In regard to the Government announcement yesterday on the extension of the grace period in respect of retirements, to which Deputy McDonald referred, the Minister said he got approval from the Government to extend it to June 2016, which is fine and it probably makes common sense to extend it to the end of the agreement. I wish to ask about the modalities more than anything else. That deadline was in the Financial Measures in the Public Interest Act 2013. Will this require legislation or a statutory instrument?
The Minister said he was concerned there would be an exodus of senior staff if he did not make this change. He also stated that an exodus of senior staff would also carry with it the short-term financial effect of once-off superannuation costs. It is probably asking too much but given that the Minister said in his press release yesterday that a short-term financial effect would have arisen had he not made this change, was he able to advise the Government of what that effect may have been or of the lesser effect, having got that sanction? I presume that when he went to Government to ask for this sanction, he said it made sense and that there was a financial effect. What is the financial effect to which he referred in the statement?
To be very clear, and I am not being awkward, we will be very prompt as we go along but I never agreed to a ten minute slot for anything. It was not discussed with us. We will get through the business very promptly. We will fly through some of the other subheads. We might take another few minutes here but I will not be caught by a ten minute limit. I do not think the Minister would be happy the conversation was being curtailed.
In his press release, the Minister said that the pension is then subject to a reduction under the same legislation of between 2% and 5%, which reduces the benefit. That will not apply if this runs to the end of the agreement. That would have happened to people if they had gone this year. Under the Haddington Road agreement, they would have experienced the pension reduction of 2% to 5%. Now that this is being rolled out to the end of 2016, anybody going after that will not be caught by that cut in the Haddington Road agreement. Is that correct? The Minister might just explain those points.
In regard to the grace period issue, we have had various grace periods. I will not mention them by name but one RTE correspondent outside a hospital on the first grace period night was expecting Y2K to happen, everyone to down tools and a mass exodus of people. However, that did not happen. We have done something unique in terms of cutting people's pay. People have had 40 year careers with an expectation of a pension at the end of it. There was an immediate burden in regard to the actual take home pay they were getting and that we would reduce the impact of that on the pension into which they paid over 40 years. That is why we had the grace period in the first instance. I mention those who were not caught by the grace period but who were still caught by the Financial Measures in the Public Interest Act 2013. People within the grace period between now and 2016 will, if their pay is impacted - if their pension is more than €32,500 - be caught by the Financial Measures in the Public Interest Act 2013 on their actual pension calculation. That is fair because the Deputy may remember, we mirrored the reduction for those in salary of €65,000 with a proportionate reduction for those in pension of €32,500.
In terms of the legal mechanism to do it, I am empowered by the Financial Measures in the Public Interest Act 2013 to do so and it will be done by way of statutory instrument, which I will lay before the House.
In terms of the discussion we had before Christmas on the quantum of money – I know the Deputy is not making a big deal of it – in essence, it was not the numbers who retired that changed but it was the appropriations-in-aid we got. We did not have an exact calculation on the amount of net money that would come in from pension contributions under the single pension scheme. It was actually greater than we expected.
Since we had that last discussion, I have gone through, in great detail - we might do so on another occasion - the profile year-by-year of how different it is.
It is very difficult not only in terms of the numbers but in terms of the different grades. It can be quite different, so it is very hard to make an accurate assessment. Then there are different categories.
The categories are not only direct retirees but also people who are retiring for health reasons and need a preserved pension that suddenly becomes operable in a given year. All of these factors impact on the estimated cost of paying pensions.
Subhead A2 deals with payments under the contributory pension schemes for spouses and children of civil servants, members of the Judiciary and court officers. Subhead A3 deals with ex gratia payments of pensions for widows and children of civil servants, members of the Judiciary and court officers. Subhead A4 deals with additional allowances and gratuities in respect of established officers and payments in respect of transferred services. Subhead A5 deals with pensions, lump sums, allowances and death in service gratuities in respect of unestablished officers and their spouses and children, and other pensions and payments in respect of transferred services. Subhead A6 deals with injury grants and medical fees. Subhead A7 deals with fees to the Pensions Board. Subhead A8 deals with payments in respect of liability under Chapter 2C of the Taxes Consolidation Act 1997. Subhead A9 deals with pension liabilities of former public service bodies payable under statute.
I have questions on subheads A8 and A9. Perhaps the Minister will supply a detailed note to the committee on these subheads. The Estimates never before provided a figure for liabilities under Chapter 2C of the Taxes Consolidation Act 1997. Although nobody can predict the ultimate figure, the estimated figure is €1 million. The Act places joint liability for taxes due on the trustees of pension schemes where an individual's pension benefit from all sources exceeds €2 million. While this liability has not arisen to date, a provision of €1 million is being made for 2015. The threshold value for a pension scheme has decreased enormously from €5 million, to €3.5 million and now to €2 million. The pensions value for retiring senior civil servants is probably far higher than €2 million. Some people will retire on pensions of €100,000 - I am not saying that includes anybody in this room - and the ultimate value of that pension could amount to more than €2 million depending on the individual's life expectancy. We are into a new era in which legislation that rightly applies to people in the private sector is correspondingly applying to those in the public sector. However, the idea that the taxpayer should be liable for any tax due because an individual's pension is valued at more than €2 million is difficult to accept. Surely the liability for any tax due on an individual's pension fund should fall to that individual rather than the junior clerical officers who are paying for it through their taxes.
Perhaps I am misreading the matter but I ask the Minister to clarify why he is making this provision and the circumstances behind his decision. He is probably taking a prudent approach, and the liability might arise this year. I do not mind if he takes the time to prepare a detailed note on the matter. Has he estimated how many public servants in retirement have pension funds valued at in excess of €2 million? There must be some because this provision would otherwise not be necessary. I suspect he has information on the matter given that it is a new provision. I will take whatever cursory evidence he has available now but I also ask for a comprehensive note.
I will provide the committee with a comprehensive note on the matter. It sounds complicated but it is exactly as the Deputy has indicated. It is Government policy that significant pension pots shall be liable for tax. The threshold was very large under the former regime. People could accumulate an extraordinarily large pension pot on a tax-free basis, that is, subsidised by the taxpayer. We have reduced that substantially for the private sector and an analogous reduction has to be made for the public sector.
Under the Act, once the liability crystallises, it falls to the fund to pay. If, for example, Deputy Sean Fleming is entitled to a pension of that scale - please God, in due course - he could decide whether, in accordance with the Act, the fund should pay the tax and the tax would be rebated out of his pension entitlements over a period of 20 years.
In regard to the estimate of €1 million, it is not a token figure. I am advised that five individuals are anticipated to come within this category, and there is also contingency for three higher paid civil servants with chargeable excesses in or around €150,000. In each case, the individuals concerned would be opting to repay the relevant amount over the full 20-year period. If they take the option of taking a reduced pension payment over the qualifying 20-year period rather than paying the tax out of their lump sums, that is the sum of money for which the trustees - my Department in this case - are liable.
It is an extraordinary advance that people in the public service are covered by this provision. There are not many of them across the public service, and they are not all in the Civil Service. They would include members of the Judiciary, senior academics and senior gardaí.
This subhead provides for pension liabilities payable under law to former public service bodies that are now defunct. Currently, it involves only the pensions of three retired employees of the National Council on Ageing and Older People, who were former public servants. That body was dissolved under the Health (Miscellaneous Provisions) Act 2009 and, prior to its dissolution, the Department of Health provided for the relevant pension payments in its Vote.
We are so used to speaking about millions or billions of euro that when I saw the figure of 55, I took it to be €55 million but it is only €55,000. It is a long time since we have discussed thousands in this committee. We aim too high.
Do members wish to comment on key output targets and contexts, and impact indicators? Do they have comments on subhead B, appropriations-in-aid? We will proceed to Vote 14, which is the State Laboratory, and the administrative subheads are A1 to A7, inclusive.
I note that the State Laboratory is taking on the work of carrying out tests on behalf of coroners which was previously done in Beaumont Hospital. It is also assisting in the testing of a drug for horses and testing for petrol stretching. I hope the latter work will lead to prosecutions. In regard to the testing carried out for coroners, I ask for further information on the timescale.
Everyone gets upset about the length of time it takes in many cases to get a coroner's report depending on the nature of the death. The State Laboratory says that it has reduced the waiting period significantly since 2013. However, we are all aware coroners say it regularly takes a year to get a coroner's report. I have no problem if the State Laboratory or the Minister, through his office, want to send a note to the committee. However, the detail might be fleshed out a little bit further. The delay associated with coroners is a big issue for many people.
If it is all right with the committee, I will ask the coroner's office to expand on the briefing note. It was a fairly detailed briefing note, on page 38.
Programme A deals with the Government Analytical Laboratory and Advisory Service. Subheads A1 and A2 deal with administration pay and non-pay. Are there any comments? Are there any comments on key outputs, output targets and context and impact indicators? Are there any comments on appropriations-in-aid?
We will move on to Vote 15 - Secret Service, and this is dealt with in pages 40 to 42, inclusive, in the briefing documents. Are there any comments on the Vote provision for the Secret Service?
There is no particular reason other than they have never spent €1 million. Last year, they expended €593,000. The year before, it was €587,000, the year before that, it was €515,000, and the year before that, it was €568,000. In 2005, it was €358,000. We put in a figure of €1 million in order that we do not have to bring in a Supplementary Estimate for this in the event it might be required. However, it is a drawdown Vote. It is not an expenditure item until it occurs.
I have two queries. We could say a lot about the Valuation Office, but the valuation legislation will be dealt with in the Dáil Chamber tomorrow so I will reserve most of my views. It was also dealt with this morning during Question Time, so I will revert to my team tomorrow on it. There are two issues I wish to raise. I cannot be blamed for not wanting to pass the bottom paragraph on page 50 of the briefing document which deals with parts of its output targets for 2015. This was referred to this morning. It refers to the completion of the required asset valuations and global valuations. Global valuations concern the major State companies such as EirGrid, Bord Gáis and the ESB. They also concern the mobile phone companies which have antennae throughout the country. There is a global valuation divided by population per local authority. The Minister might ask the Valuation Office to send us a note on its proposals and methodology for the global valuation which it will be doing this year on Irish Water. I am sure it is not done yet. We will not discuss it now. We will wait for the note.
The second thing concerns a reference on page 54. The fees from appeals to the commissioner amounted to €258,000 last year. There is no provision for it for this year. What is the change in the system? What is that about? There must be some change in methodology. It is under appropriations-in-aid. What is the background to that big change?
This results from the change in legislation we expect to have enacted this year. In 2014, the office issued 271 first appeals from the ongoing revision programme. In 2000, 893 first appeals were processed and issued in respect of the revaluation programme in Dublin. Twenty tribunal appeals were processed by the Valuation Office last year, six of which were appeals relating to the valuation programme. The Valuation (Amendment) (No. 2) Bill, which is currently before the House, seeks to reform the appeals process and eliminate the first appeal from the commission.
I notice that the administration non-pay costs in subhead A2 are up 20%. Under travel and subsistence, there is a reference to the revaluation project being moved to Limerick. Perhaps this explains it. The figure under subhead A2(iii) dealing with training and development is up very substantially as well.
These are all very small sums of money. We are talking about the change of €67,000 in total. They are relatively small sums of money. We are revamping the revaluation programme under a lot of pressure, because people want it done. This will involve some additional travel and subsistence payments.
Programme A deals with provision of a State valuation service. Are there any comments on administrative subheads A1 to A7, inclusive? Are there any comments on subheads A1 and A2 dealing with administration pay and non-pay, subhead A3 dealing with fees to accounts and other legal expenses, and subhead A4 dealing with national revaluation projects?
It is up from €7,000 to €50,000. As the Deputy can see in the explanation, this subhead includes a provision to engage external reviewers to advise as necessary on issues relating to the valuation service programme in the Valuation Office. It also includes a provision for external expertise to advise on financial controls and best practice and financial management systems. The allocation in this subhead also reflects anticipated need for external supports during the transition period prior to the merger of the Valuation Office with the Property Registration Authority and Ordnance Survey Ireland.
Are there any comments on key outputs, output targets and context and impact indicators? Programme B deals with administration services for the Valuation Tribunal. Are there any comments on subheads B1 and B2 on administration pay and non-pay, and subhead B3 which deals with the Valuation Tribunal programme? Are there any comments on key outputs, output targets and context and impact indicators? Are there any comments on appropriations-in-aid?
We will move on to Vote 17 which deals with the Public Appointments Service. It is dealt with in pages 56 to 66, inclusive, of the briefing document. Are there any comments or questions on administrative subheads A1 to A9, inclusive? Programme A deals with the civil and public service re-employment recruitment selection. Are there any comments on subheads A1 and A2 dealing with administration pay and non-pay? Are there any comments on key outputs, output targets and context and impact indicators? Are there any comments on appropriations-in-aid?
We will move to Vote 18, which deals with shared services, and is dealt with in pages 67 to 83, inclusive, of the briefing document. Are there any comments on administrative subheads A1 to A7, inclusive?
Every year we speak about the shared services. The outturn last year was €20 million. For shared services, the note states the net Estimate last year was approximately €30 million and the net Estimate this year is €39 million. However, the outturn last year was €20 million. The outturn did not get anywhere near the Estimate last year.
Having spent €20 million last year, the Department is now seeking to double the amount this year. Why does the Minister believe there will be double the activity? The briefing note compares the 2014 and 2015 Estimates, but earlier in the document we were told that the 2014 outturn was only €20 million. Let us not compare this and last year's Estimates, as last year's was nowhere near achieved. Why must we double the money? We could go into the issue in detail, but will the Minister outline a general picture?
The budget reflects the pace of migration to shared services. Sometimes it does not progress quickly and we must slow the pace. We are consolidating a range of services while continuing to provide them across the public service. The incremental budget in 2015 reflects the migration of payroll services to the centre. Some €5 million of the increase is mirrored in the budget reductions in the originating Vote. As it migrates into a shared service, there is a saving in the parent Vote, with further budget transfers to be achieved and the migration of all payroll, for example.
Client Departments paid €2.5 million for the PeoplePoint service in 2014. It is intended that this charge will increase to the point where the cost of the service is fully recouped from each Department. Departments will be required to absorb this cost within their existing resources. This is something that they have achieved to date. The 2014 underspend that the Deputy pointed out was driven by a later than anticipated decision on the financial management shared service project, which in turn impacted on expenditure on licensing costs, combined with a later phasing of waves to the other shared services.
The provision in this Vote necessarily includes a one-off set of costs that will taper off once the various services become operational. The committee will see evidence of this in programme B3 on PeoplePoint and programme C3 on payroll shared services centres, PSSCs, where projects are processing at the set-up stage. Regarding external services and consultancies, the Estimate includes a provision of €7.5 million this year spread across current and capital budgets. This reflects the procurement of essential IT and project expertise across the three projects, namely, human resources, payroll and financial management transactional services. The number of staff also increased from 596 to 649, reflecting the redeployment of payroll staff from originating Departments.
To be blunt, we did not progress in 2014 as quickly as we would have liked, so we did not use the Estimate. Obviously, we will not use the money until we are ready to make the transactional change. We are confident that we will expend it all and have the consolidated shared services in place during the course of 2015. The completion of the second shared service round will happen at the end of next year, not this year. We must make a decision on the financial management shared service.
The Minister stated that parent Departments paid appropriations-in-aid. They have not lost staff, but the work is being done in the shared services office. Must the Departments carry the staff they always had as well as make the payments? How does it work?
Yes, that happened and is happening, but it is not the totality of the situation. We must also recruit beyond that number because we want to have a cohort of experts and must provide them with training.
In programme A on the National Shared Services Office, subheads A1 and A2 are on administrative pay and non-pay. Are there comments? No. Are there comments on key outputs, output targets and context and impact indicators? No.
In programme B on PeoplePoint, subheads B1 and B2 are on administrative pay and non-pay and subhead B3 is on the human resources shared services project. Are there comments? No. Are there comments on key outputs, output targets and context and impact indicators? No.
In programme C on payroll, subheads C1 and C2 are on administrative pay and non-pay and subhead C3 is on the payroll shared services project set-up. Are there comments? No. Are there comments on key outputs, output targets and context and impact indicators? No.
In programme D on other shared services projects, subheads D1 and D2 are on administrative pay and non-pay and subhead D3 is on the financial management project set-up. Are there comments? No. Are there comments on key outputs, output targets and context and impact indicators? No.
Are there comments on appropriations-in-aid? No.
Vote 19 - Office of the Ombudsman is listed on pages 84 to 99, inclusive, in members' briefing documents. Are there comments on administrative subheads A1 to A8, inclusive?
We could talk forever about this Vote, but I will ask just one question. There is a substantial increase in the Estimate. Given the new bodies, that is understandable. However, it came to light during the year that the office made a case concerning the troubling situation in nursing homes in County Mayo. That morning, the Ombudsman stated on radio that he had the authority to investigate individual complaints relating to the situation but also indicated that he had the legal authority to investigate complaints relating to private nursing homes. I imagine that, if he were to be busy in that regard, the amount of money we are providing his office would not cover it. Does this Estimate cover much in the health area? According to the Ombudsman's office, it receives few complaints in this regard. I am not referring to processing medical cards or other administrative difficulties, but to complaints about health services, in which regard the Ombudsman probably feels that people are reluctant to take on hospitals, consultants, doctors or nursing homes. Has the Minister an opinion on how many complaints are being made on that front? Is there anything that we can do to assist the Ombudsman or to remove the public's fear about making complaints?
That sort of question is probably more appropriate to the Ombudsman himself in terms of what he sees as being appropriate to his role and what he envisages doing in the course of 2015. There is a significant increase in the money because of the new legislative responsibilities that the Oireachtas is giving to the Office of the Ombudsman. In specific terms, this covers the full-year cost of additional posts sanctioned for the implementation of the register of lobbying legislation, which we anticipate will be enacted shortly; three sanctioned posts at principal officer level - a legal adviser, a head of IT and a registrar of lobbyists - that must be filled this year; two sanctioned assistant principal posts for the Office of the Information Commissioner, OIC; and three executive officer posts arising out of the additional bodies that came under the Ombudsman's remit, as referenced by Deputy Fleming. Money will also be provided for some consultancy work that the Ombudsman wants to carry out in respect of the development of a register of lobbyists during the course of this year.
I do not know whether the Deputy is interested in the salaries or staffing cohort of the Office of the Ombudsman, but I can quickly give him the details now or provide them in written form.
There is one director general at a salary of €136,496, six senior investigators at salaries of €103,976, 16 assistant principal investigators at salaries of €83,500, ten higher executive officers at a cost of €60,224 each, 15 executive officers at a cost of €49,837 each, two administrative officers at a cost of €60,224 each, one staff officer at a cost of €46,171, 21 clerical officers at a cost of €38,135 each and a services officer at €29,000. I am advised that these are the current maximum salaries and depend on the individual in each case. The office has a staff of 73 people.
Programme A deals with the function of the Office of the Ombudsman and the Office of the Commission for Public Service Appointments. Are there any comments on subheads A1 and A2, administration, pay and non-pay? Are there any comments on key output, output targets and context and impact indicators?
Programme B deals with the Standards in Public Office Commission. Are there any comments on subheads B1 and B2, administration? Are there any comments on key output, output targets and context and impact indicators?
Programme C deals with the Office of the Information Commissioner and the Office of the Commissioner for Environmental Information. Are there any comments on subheads C1 and C2, administration, pay and non-pay? Are there any comments on key output, output targets and context and impact indicators? Are there any comments on appropriations-in-aid?
We will move on to Vote 39 - Office of Government Procurement, which is pages 100 to 108, inclusive, in the briefing document. Are there any comments on administrative subheads A1 to A6, inclusive? Programme A deals with delivery of central procurement services. Are there any comments on subheads A1 and A2, administration, pay and non-pay? Subhead A3 deals with procurement, consultancy and other costs. Are there any comments? Are there any comments on key output, output targets and context and impact indicators? Are there any comments on appropriations-in-aid?
I thank the Minister and his officials for assisting the committee with its consideration of the Revised Estimates and programmes. As some members have requested that further information be sent to the committee, I propose we await that information before we complete our consideration of the Revised Estimates and before sending a message to that effect to the Clerk of the Dáil in accordance with Standing Order 87. Is that agreed? Agreed. The committee clerk will circulate the information when received and we will reschedule a meeting to complete the task.