Mr. David Moloney:

I thank the committee for inviting me. I will just briefly address each of main items on the agenda.

Turning to chapter 3 of the report, the total gross expenditure outturn for 2021 amounted to €74.5 billion. This level of funding supports the provision of a wide range of public services, infrastructure investment and income supports. There were a number of expenditure developments within 2021. Covid-related restrictions had a significant impact on the lives of Irish people, requiring a continued Government response. Some €13.5 billion was spent in 2021 on Covid-related measures. This level of expenditure reflects the funding allocated to support people, businesses and public services with the challenges posed by the pandemic.

There was capital carryover, or deferred surrender, in 2021 amounting to €819 million, sanctioned by the Minister for Public Expenditure and Reform for use in 2022. In addition, €1.7 billion was surrendered back to the Exchequer. These developments are due to a combination of factors, including slower than anticipated progress on capital projects driven by closures of the construction sector in early 2021 as a consequence of public health restrictions and supply chain issues, and also lower than expected uptake of core current services, for example, in the Department of Health, again, driven by the pandemic and public health restrictions.

Chapter 4 of the report refers to instances found in the audit relating to the practice of virement and raises issues as to whether, in some cases, Supplementary Estimates should have been used.

Virement between subheads in a Vote is possible because the Oireachtas, in appropriating money in the annual Appropriation Act, does so by specifying in the Schedule to the Act only the ambit of each Vote. The Act does not give legal effect to the various subheads, as to do so would almost certainly result in considerable overestimation and would disrupt the smooth working of the financial system. Accordingly, the Minister for Public Expenditure and Reform has discretion to vary the allocation for each Vote between its constituent subheads.

Public financial procedures recognise that the judgment of the Department in respect of virement is a wide power and provides guidance on instances where the Department may refuse virement, for example, where the additional expenditure: is on a new service, is novel or contentious; is large in relation to the original provision or although relatively small, likely to involve significant liabilities in future years; or arise from a major change of policy.

Within the overall financial parameters and where possible and appropriate, the Department is willing to consider the virement of sums from subheads to other subheads. The Department considers such cases in the context of the public financial procedures and where it is considered proportionate to facilitate a Department to deliver its policy objectives.

As outlined in chapter 3 of the Comptroller and Attorney General’s report, the Revised Estimates for public services provided for a total net fund of almost €67.7 billion across 45 Votes. After taking account of further Revised Estimates and Supplementary Estimates, this increased to €73.1 billion in the Appropriation Act 2021. This increase of €5.4 billion, or 8%, reflected decisions by Government to allocate significant additional funding for measures to respond to Covid-19. By way of comparison with the last pre-Covid financial year, the increase in net voted funding set out in appropriation account 2019 relative to that year’s Revised Estimates was €0.6 billion, or only 1%, of the difference. In these circumstances, with Government having presented significant additional sums for approval to Dáil Éireann in order to respond to Covid-19 and with savings emerging on core expenditure programmes and projects driven by the impact of the pandemic, the Department considered it appropriate and in line with public financial procedures to utilise the virement process to reallocate funding to facilitate delivery of priorities across Departments.

Decisions in relation to granting virement will always, as the public financial procedures make clear, rest significantly on the judgment of this Department. It would be counterproductive to the goals of both supporting the smooth operation of the Government financial system, and indeed to the operation of the Dáil, if artificial benchmarks were created in respect of the monetary thresholds which if exceeded would require Supplementary Estimates rather than virement.

Briefly on the format and content of the appropriation account, correspondence received by the Department from the committee in November 2021 highlighted a number of issues. In response, the Department made a number of changes as per the request from the committee in terms of the presentation of the legal

costs note in the 2021 accounts. We provided for the disclosure of the Accounting Officers salary scale or equivalent in a note to the account. In May, the Department committed to examining changes to the remuneration disclosure, but due regard was needed to the request for disclosure of actual remuneration of officers. Accordingly, my Department sought legal advice from the Office of the Attorney General. That advice has now been received and is being considered by the Department.

The Department is now reviewing changes that could be made in the appropriation account for 2022, including providing for the disclosure of the accounting officer gross salary and details of pay band analysis. The Department recently provided an update to the committee on these issues.

As the committee is aware, the Department is also progressing the financial accounting and reporting reforms programme for central government Votes. That will change the basis of the reporting of the financial statements from a cash to an accrual basis, in line with international public sector accounting standards.

Finally, turning to the value for money and spending reviews, the Department not only focuses on fiscal sustainability, but also the transformation of public services, supporting excellence in service delivery, strategic policy making and public governance structures. To achieve these goals, it is vital that public expenditure is managed in a planned, balanced and evidence-informed manner to support Ireland’s economic, social and climate goals. This is progressed in a number of ways, including through day-to-day management of resources and regular engagement with Departments throughout the year on their funding. It is also progressed through a range of important budgetary reform initiatives, including the spending review process.

Spending review is a key platform for the development and publication of evaluation output and the promotion of evidence-informed policy across the Civil Service. It works in tandem with broader initiatives, such as the establishment and development of the Irish Government Economic and Evaluation Service, to develop capacity and enhance the role of economic and value for money analysis in public policy making. It is with this more complete understanding that policy-makers can work towards the achievement of value for money, efficiency and effectiveness.

I thank the committee members for their attention. I look forward to our discussion on the agenda items.