Martin Mansergh (Tipperary South, Fianna Fail)

The last 21 years have been a remarkable period of economic and social progress which has been sustained for longer than anyone dared to hope. In his previous capacity as Minister for Finance for the past four years, the Taoiseach shares the credit for this with his colleagues, predecessors, the social partners and the Irish people as a whole.

Employment now stands at 2.1 million compared with a figure of 1.1 million 20 years ago. Net general Government debt has decreased in that period from some 122% to 12% of GDP. Living standards, quality of infrastructure and social provision have all greatly improved. However, we have not abolished the economic cycle. Like Ireland, many countries are experiencing economic turbulence. The challenge is to adjust our sails in time so that we can protect and consolidate our gains and be ready for when conditions improve.

The Office of Public Works, which is attached to the Department of Finance, is making capital savings of €75 million, or 11%, from a total gross budget of €680 million. Some €35 million of this will come under the heading of purchase of sites and buildings. This saving has been identified from within the €82.5 million allocation for that purpose. Some €25 million will be saved from the allocation for capital projects. In the normal course of such a large building programme, some projects will be delayed because of the planning and tendering process. Recent examples include the headquarters building for the Department of Community, Rural and Gaeltacht Affairs at Knock and the Leinster House refurbishment project. In addition, a saving of €15 million will be achieved under the flood relief works programme. My officials are examining appropriate measures to meet the Government's targets of achieving savings on payroll of 3% by the end of 2009. I have also asked them to examine other areas of expenditure such as consultancies, advertisement and public relations to identify opportunities for savings this and next year.

Yesterday's announcement by the Minister for Finance that there will be a pause in the acquisition of accommodation for decentralisation is a prudent step which provides the Government with the opportunity to consider in detail two forthcoming reports on the implementation of the programme. The Government recently agreed to an examination by the decentralisation implementation group, DIG, of the feasibility of phased moves by the State agencies. This report is being finalised and is expected to be available shortly. The Government also asked the implementation group of Secretaries General to examine the governmental and cross-departmental issues arising from the need to provide facilities for Ministers, Ministers of State and officials while in Dublin on business. This report is being finalised and is also expected to be available shortly. It is likely that further implementation of the programme will be done over a more extended timeframe. The precise implications will be clearer when the reports to which I referred are to hand.

Commitments already entered into in regard to the provision of permanent accommodation under the decentralisation programme will be fully honoured. Where the building of property has commenced or where contracts to build are in place, work on such properties will be advanced and the programme of decentralisation in regard to those properties will continue. Commitments already entered into in terms of the provision of advance or temporary accommodation will also be fully honoured. The decentralisation implementation group has a sanctioning process in place to consider the case for the provision of advance parties and will continue to assess each proposal on its merits.

It is not widely understood that there has been a positive net financial return from decentralisation and other related property transactions. Capital expenditure to date by the OPW in the purchase of sites and procurement of buildings is in the order of €215 million. Against this, in recent years, the OPW has realised in the order of €575 million for the Exchequer. Sales of surplus property on the market amounted to the sum of €375 million. The OPW has also entered into several joint venture deals with owners of adjoining properties to unlock the value of the combined properties concerned in time for the next commercial property upswing. The net present value of these deals so far totals a minimum of €125 million, which is far in excess of the value of the properties had they been sold outright. Similarly, the value of property transferred to the affordable housing initiative was in the region of €75 million. The OPW has always sought to capitalise, where it can, on the rising property values of the last few years and we will continue to maximise the State's interest in obtaining excellent value for taxpayers' money.

The Minister for Finance has asked me to establish a joint public procurement operation between the Office of Public Works and the Department of Finance. I will be progressing this as a matter of urgency. We will be bringing together officials from both organisations to drive a programme of reform and to produce a business plan to meet the Government's targets in the areas of procurement. My intention is to bring this innovative plan with specific concrete proposals for savings to Government in the autumn.

The Minister for Finance has asked that I target a minimum saving of €50 million for 2009. In this regard, I will be looking critically at public expenditure on procurement across a wide range of sectors. The range of categories is quite large involving €15 billion to €17 billion per annum including some €8 billion to €10 billion per annum on goods and services. This will present a serious challenge to all concerned in this process. Current levels of expenditure present us with serious opportunities to effect substantial savings in procurement through applying more efficient techniques, through a process of aggregation and a more effective approach to procurement methodologies.

All areas will be critically analysed to ascertain where savings can be achieved, mindful of the need to maintain a high level of service across the sectors involved. I will ask the group to develop proposals in the areas of IT, hardware and software, fleet purchase and fleet management, energy, fuels, stationery, consultancies, uniforms and furniture.

My review group will actively consider and bring forward proposals for the improvement of the public sector approach to specialist and general procurement. There must be a strong qualified cadre of staff dealing with this function, with detailed market knowledge and with the ability to employ hard-nosed techniques and approaches in this competitive market. I have no doubt that at least €50 million of savings will be identified by the autumn. The group will also progress the development of a business plan to reform public procurement and to assist other Departments and public service bodies in delivering further savings over the longer term.

Following a comprehensive review of progress to date on the various work elements provided for flood relief, I now anticipate that the actual expenditure for the year will be €35 million, or a saving of €15 million. This reduction in the predicted outturn generally reflects small delays in the progress of projects rather than the postponement or abandonment of any scheme. These delays arise for a variety of reasons including the complexity of some projects, more time required for the assessment of tenders than anticipated and compliance with approval procedures.

Contractors are already on site constructing flood relief schemes in Clonmel, Ennis and Mallow. Subject to the completion of tender and approval procedures, works will commence in Carlow, Fermoy and Waterford later this year. The single most significant saving of €4.5 million to €5 million arises from the fact that a project, which OPW was investigating with Ordnance Survey Ireland, to develop a digital terrain map of large areas of the country, is not now considered viable.

No one should be in any doubt about the value of the arts as an integral part of the economy and society, not an optional or expendable extra. Funding to the Arts Council has increased by over 70% and now stands at €82 million over the past six years, while spending on the whole range of arts and culture, including film, national cultural institutions and the capital arts infrastructure, amounts to over €220 million.

Substantial employment, community participation and a strong tourism and educational dimension are involved. All this should be borne in mind when assessing the support that this Government continues to give to the sector in more challenging times. Overall, the bottom line is to keep moving forward where we can while limiting any avoidable damage. Our resilience is undoubtedly being tested but I have no doubt that we will pass the test.

Some comments were made by Deputy Broughan on the number of Ministers of State. I am sure he was in the House when the numbers were expanded at the request of the Labour Party which also, for the first time, employed a full complement of programme managers and advisers. I always find such comments to be more credible if they are a pledge by the party concerned about what it will do on the subject when it next finds itself in Government.

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