Phil Hogan (Carlow-Kilkenny, Fine Gael) | Oireachtas source

The estimate of €420 million in savings on full implementation of the reform programme is comprised of a number of components including savings arising from structural reconfiguration, implementation of the recommendations of the Local Government Efficiency Review Implementation Group, local authority workforce planning and savings arising from agency rationalisation.

Direct savings identified in the Local Government Efficiency Review due to efficiency measures in local government are estimated at €345 million, comprising some €195 million achieved in the period 2010 to 2011 and estimated further savings of €150 million to be achieved in the period up to the end of 2013. These savings have been achieved to date primarily from areas such as staffing and procurement and I expect that further efficiency savings will continue to accrue in these areas and also into the future following the examination of a shared services approach across a number of programmes, particularly on treasury management, transactional human resource issues, shared payroll systems, and ICT back-office functions. This estimate does not include any reductions in expenditure due to reduced activity.

It is estimated that payroll savings of €20 million will be achieved in the period to the end of 2014. In this regard, a workforce planning process is in progress to determine optimum local authority organisational and staffing requirements. Significant rationalisation of State agencies in the local government sector is also under way which has achieved savings of €10 million to date.

Potential cost savings due to structural reform will arise from local authority mergers and the integration of county and sub-county operations and structures, resulting in elimination of duplication, economies of scale and removal of the need for separate back-office and support units. While more definitive assessment of costs and savings will become available as implementation proceeds, it is considered that total savings in the range €40 million to €45 million relative to 2010 expenditure are achievable through the various structural reforms.

The changes in local government structures will have some implications, both for local authority revenue and costs. On the revenue side, savings will be used to reduce commercial rates and harmonise the levels of other charges. Some one-off costs associated with the transition to the new arrangements, including IT costs to implement revised service arrangements and retirement gratuities, can be expected to arise, but should be quickly recovered through savings.

I am confident that significant net savings will result from the structural reforms and these will have enduring effect in the budgets of the local authorities.

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Moreover, it is important to note that the benefits of the proposed changes cannot be measured adequately in terms of financial savings alone. The measures contained in the action programme are designed to promote both increased operational efficiency and value for money through more integrated administrative and implementation arrangements, and also to enhance the capacity of local authorities to achieve their broader role of promoting the sustainable development of their areas, the welfare of local communities and the quality of life of individual citizens by virtue of the effectiveness with which they perform their range of regulatory, representational and service delivery functions.

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