Simon Coveney (Cork South Central, Fine Gael)
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I fully support performance budgeting and the development of clear and transparent output reporting. I believe this will assist the Committee in better considering the high-level outputs and provide a solid basis for examining what has been achieved. I will set out the Department's key considerations in framing output targets, but first I would like to provide some context for the current position.

The alignment of expenditure programmes with output targets and their publication within the Revised Estimates volume was an important development, and I am pleased to note that the committee may have some useful suggestions as to how these output targets may be improved. My Department has been engaging with the committee secretariat to set out the context for the current indicators and discuss possible future developments. The expertise on defence matters rests within the Department of Defence and the Defence Forces, including the identification of appropriate output targets. I understand that the pros and cons of possible approaches were discussed at length. However, I will not enlarge upon these discussions beyond what may not have been fully reflected in the brief that the committee received from the secretariat.

The Department of Public Expenditure and Reform has responsibility for publishing the Revised Estimates volume, and my Department has had extensive engagement with that Department in framing the current measures. This built upon the work that was previously undertaken in preparing annual output statements. The space made available for output targets and associated reporting within the Revised Estimates volume has informed the approach used by the Department and has required a reduction in the amount of information that was previously provided. However, this information is still reported within the annual report of the Department of Defence and the Defence Forces, and my Department has provided much of this information for inclusion in the Department of Public Expenditure and Reform's publication Ireland Stat, although this has not been activated by the Department as yet. In this context, there is a significant amount of performance information produced and publicly available. The output targets currently in use reflect those factors as well as the nature of defence provision and critical success factors that must be considered.

Security is the bedrock on which a State's economic, political and social well-being is built. Security challenges require a whole-of-Government response, and there are a range of Departments and agencies with security responsibilities that contribute to the State's overarching security framework. The defence contribution encompasses defence of the State from external armed aggression, which is a contingency; the defence contribution to domestic security; and the defence contribution to international peace and security. In addition, defence capabilities are used to provide a broad range of non-security supports which maximise the value for money of defence expenditure and reduce duplication of service delivery across the State. The recently published White Paper provides a useful framework for considering those outputs which are critical to the successful delivery of the defence mission, which is "To provide for the military defence of the State, contribute to national and international peace and security and fulfil all other roles assigned by Government." The White Paper sets out a comprehensive assessment of the security environment and any threats that arise. The ongoing monitoring of the security environment is a key requirement that has a major influence on the defence policy response, operational requirements and associated capability planning.

As outlined in the White Paper, Ireland continues to strongly support the multilateral system of collective security represented by the UN and the primary role of the UN Security Council in the maintenance of international peace and security. The EU is also a major player on the international stage, with an increasing capacity to influence the international security environment using all of the instruments at its disposal, including economic, diplomatic, political and military instruments, known as the "comprehensive approach". Within the framework of multilateralism and collective security, and in support of international peace and security, the White Paper states that Ireland will continue to contribute to a range of comprehensive and collaborative security arrangements within the EU, the UN and the OSCE, and bilaterally with other states. This ongoing policy development represents a key defence output that contributes to Ireland's security. Domestically, the continued refinement of the State's emergency planning framework and further development of defence capabilities in support of other Departments and agencies are also key policy areas for the Department.

As set out in the White Paper, the role of the Defence Forces reflects the Government's policy requirements and the operations that the Defence Forces may be required to undertake. The roles have been updated to take account of new developments or those which have acquired an increased importance. Many of these operations are demand-led and reflect the contingent nature of many defence operations - those that are dependent on need, or those that are subject to Government requirements, such as overseas missions. As such, the target is to meet demand when required. This is the nature of defence business and defence outputs.

The general approach within defence is to develop memorandums of understandings with those Departments and agencies that may require defence assistance. In many cases, this provides a means to clarify call-out procedures and the availability of defence assistance. However, due to the demand-led nature of most of these services, they do not contain specific targets for numbers of operations. The exception to this is the annual control plan agreed with the Sea-Fisheries Protection Authority, which sets out Naval Service fisheries patrol day targets and Air Corps fisheries patrol flight targets. The committee will see from the figures that we have some challenges in terms of outputs as regards Naval Service fisheries patrol days this year, for understandable reasons. I will go into those later.

The White Paper also considers future capability requirements. It defines military capability as the ability to attain operational success in a given scenario, achieving desired effects under specified standards and conditions through ways and means. It consists of a conceptual component, a moral component and a physical component.

There are a range of actions across the Department and the Defence Forces which are required to develop and maintain military capabilities. These actions include, but are not limited to, investment in new equipment, education and training, maintenance and development of infrastructure, ongoing review of military doctrine, the development of appropriate human resources, HR, policies and the development of regulatory frameworks. These actions are internal processes that contribute to capability outputs but are not capability outputs in themselves. There is no universally accepted metric for military capability, which is a key output for Defence Vote 36. This is a challenge for all countries including those with well developed performance reporting mechanisms. The Department has closely examined the approach in other countries, such as New Zealand, which I know this committee has examined, where capability reporting is underpinned by a broad performance reporting framework including annual reports, with a view to identifying appropriate metrics.

Defence Vote 36 outputs are delivered through a single programme with three strategic dimensions which are interdependent. First, defence policy, which is policy outputs; second, ensuring the capacity to deliver, which is capability outputs; and third, Defence Forces operations, which is operational outputs. This provides a balanced perspective on defence outputs, all of which are critical to success. My Department has engaged with the committee secretariat in reviewing this categorisation and I am satisfied that this represents a solid approach to categorising defence outputs and is not inconsistent with the approach taken internationally.

The refinement of output targets remains a work in progress, and I particularly welcome the signals from the Department of Public Expenditure and Reform that more space will be forthcoming in the 2016 Revised Estimates to report on outputs. This will broaden the options for the Department in developing appropriate targets, and I intend to take this opportunity to expand reporting on military capabilities.

The current measurements of performance on Vote 35 Army Pensions are calculated to show the number of military pensioners in payment plus associated retirement, disability and dependants’ awards granted during the year and other related metrics. This reflects the overall annual caseload activity or throughput of the programme. Such performance measures are relevant and appropriate, bearing in mind the demand-driven and non-discretionary nature of the Vote and the fact that there are no goods or services provided to third parties.

Activity and output under the programme show an underlying upward trend reflecting the increased caseload arising from the continued rise in the number of military pensioners year on year, and a corresponding increase in related activity generally. In that regard, the Department’s military pensions output targets for 2013 and 2014, and for 2015 to date, were achieved and I am advised that the Department has no significant concerns around performance or service delivery of Defence Forces pension benefits to beneficiaries. Following its engagement with the secretariat, the Department is very much of the view that the two output measures currently in use have merit and should continue in use, subject to review in light of the imminent transfer of the military pensions payroll processing function to the Civil Service Payroll Shared Services Centre, which is under the aegis of the Department of Public Expenditure and Reform.

I am not suggesting that we are perfect. I believe we can and should work with the committee to try to modernise and change, where appropriate. If the members have suggestions, we are all ears. If we can produce better metrics that are effective at practically assessing improvements year on year, I am open to implementing them but I am not open to doing things for the sake of looking good.

We have a White Paper now. From a policy point of view the performance indicators for me will be related to how we deliver on the White Paper and the choices it contains. The nature of defence, which is very different from many other Departments, is demand led. We need to be ready to respond to an ask of Government or the State, whether that be at home or abroad, often in very difficult circumstances. What we do control are issues such as fleet replacement programmes in the Naval Service. We have a very good outcome from the capital plan announced yesterday where, over the next six years, we will see an increase in capital expenditure for defence of €65 million, which is the first increase the Department of Defence has seen for very many years. We are in a place now that can see the delivery of the ambition in the White Paper on Defence, and I intend on being proactive in terms of making that happen as soon as possible. The more we can engage with this committee in terms of measuring performance as we go along around efficiency, management and performance, the better but we must make sure that any system or metrics we are putting in place are real in terms of their measurement and that they are relevant to an Irish situation as opposed to simply replicating a New Zealand model, which is a country that has very different challenges from Ireland.

We had this discussion this morning in the Department of Agriculture, Food and the Marine, and they were also using a New Zealand model in terms of potential metrics for the future, despite the fact that New Zealand agriculture and Irish agriculture have fundamentally different challenges in terms of implementing rural development programmes and the Common Agricultural Policy. New Zealand does not have any of that. We should try to design together better metrics for Irish based challenges, and we are open to any suggestions members might have in that area.