David Cullinane (Waterford, Sinn Fein) | Oireachtas source

I commend the Bill to which Sinn Féin gives qualified support. It will be supporting its passage to Committee Stage. There has been little public commentary on the Bill since it was first announced by the previous Minister for Public Expenditure and Reform, Deputy Brendan Howlin, in January 2016. This always gives cause for concern, especially when dealing with a Bill which potentially has significant implications for the operation of several services across Departments and public bodies. On the face of it, it seems benign. In policy terms, its context is the reform of the public sector and who could be opposed to reform of the public sector? The objective stated in the action plan for public sector reform is “to continue to envision, launch, grow and transform public value through shared services programme”. How can anyone be against a plan which sets out to grow and transform public value? Of course, we would support such a move. I welcome this and any measure which will bring clarity to employment levels in the public service, as well as wage levels.

When I was appointed Sinn Féin spokesperson on public expenditure and reform, I met the Minister in the first week. At that meeting I asked him if he could assist me in getting costings for returning the public service to a single tier pay structure. He helpfully set up a meeting for me with the Secretary General of his Department who was able to provide me with the costings for restoring allowances. However, he was unable to provide me with costings for returning to a single tier pay structure. He then referred me to several officials in his Department whom I met in my office and who were also unable to provide the information. They said it was because different Departments operated different payroll systems and were unable to obtain the data which would enable them to provide the answers to my questions. The answers were important because they had an impact on policy. We wanted to know how much it would cost to return all those on 1 January 2011 who were stuck in a two tier parallel pay structure back to a single tier pay structure. However, it simply could not be done and to this day we have been unable to get the costings. If shared services were able to deal with these issues and enable Departments to get data because we had simplified shared systems, we would be supportive of it.

I recognise that having shared services does not mean a concentration of services in one office, but it does fall into the overall principle of improved analysis and service. Deputy Dara Calleary referred to Departments operating in silos, of which we all have experience. We often hear phrases trotted out such as “cross-cutting” and “interdepartmental” which are often just a cover for the fact that Departments are operating in silos in shared services and policy terms. I agree that it is important that we move away from the silo mentality to a much greater sharing of services to achieve efficiencies.

International studies tend to show there are five attributes of shared services. They comprise distinct governance, namely, a distinct organisational structure with a dedicated management team delivering the operational aspects of corporate services for one or more organisations; standard processes, namely, processes are standardised and streamlined; economies of scale, namely, scale is achieved through combining processes previously executed independently; customer driven, namely, that a culture of service delivery is ingrained within the shared services centre. They also mean that resources are committed to key account management, monitoring key performance indicators and the achievement of service-level agreements. There is also continuous process improvement, with dedicated project teams managing process change to drive improvements in both efficiency and levels of service. These are all fine objectives and hard to argue against, especially in a large public service which covers different Departments and large expenditure which could potentially lead to duplication.

As the Bill is from the previous Administration, however, we should not take everything at face value. On the proposed office, its function is to enter into contracts for the procurement of goods and services required for the provision of shared services. The Government intends to give the office “all such powers as are necessary or expedient for the performance of its functions” and that “the office shall be independent in the performance of its functions”. The Bill will allow the shared services office to enter into agreements with public service bodies and draw up the terms and conditions on which shared services are to be provided for these bodies. It will make payments to and communicate with persons on behalf of public service bodies for the purposes of providing shared services. It will receive and process personal data provided for it by public service bodies for the purpose of carrying out its functions. It will develop and implement policies on the manner in which shared services are to be provided. It will provide guidance, where appropriate, in the public sector on the provision of services comparable to shared services. That is quite the transfer of power to an independent body.

What does the Bill mean by a shared service? It states:

“Shared services” means common or combined services provided to more than one public service body, the provision of which (to the public service bodies concerned) enables, assists or facilitates the carrying out of any administrative task or process necessary for or incidental to the performance of a function, specified in Schedule 2, of those public service bodies.

The areas of responsibility which will be transferred cover employment contracts, wages, pensions and financial accounts. The office will cover 40 public bodies, including An Garda Síochána, the Houses of the Oireachtas, the Courts Service, the Office of the President, the Revenue Commissioners, the Defence Forces, the Road Safety Authority, the State Laboratory and the State Examinations Commission. That means that a lot of sensitive data will be put out to tender. This has to be a concern, especially the information on personnel within the legal and judicial system.

It is worth noting that the public service managerial concept of the shared service office is relatively new. It began in the 1980s in the private sector and crept its way into the public sector from the mid-1990s onwards under the banners of innovation, transformation and efficiency. A 2013 International Centre for Local and Regional Development report stated, "Shared services working together for the common good have found that shared services offices do not always realise the planned benefits in terms of costs and efficiencies".

These studies have found issues such as higher costs, loss of focus on quality, problems associated with the use of technology and staff reductions, with a corresponding drop in public service standards.

The report also highlights the areas of interest for Governments in terms of where a shared service office can go once it is up and running. To date, shared services in the State have tended to focus on administrative services but that can change. In its 2013 report, the ICLRD wrote the following about the State:

With the emphasis on ‘back-office’ shared services to date, much of the collaborative working across central and local government has been in the spheres of Human Resources (HR), finance, procurement and ICT. The growing interest in exploring the options for a shored services agenda within front-line services is resulting in other services coming into play.There are a growing number of instances where local and regional authorities are pooling or sharing service provision in areas such as emergency services, health administration and inspection, water and waste-water, tourism and area promotion.

It went on to say:

Similarly, as part of the ICLRD Executive Training Programme (in 2011) with the ten Councils that make up the Irish Central Border Area Network (ICBAN), a working group was established on shared services. This was made up of senior management within local government, representing both jurisdictions on the island of Ireland - including Chief Executives, County Managers and Directors of Service. This group identified potential areas where shared services may be feasible; these included: emergency services/planning; training and capacity building; arts, heritage and culture; recreation services; and environmental and technical services.

What we have here is a high-level group being set up in 2011 to discuss the roll-out of a shared services programme in the State that will focus on back-room operations at first, as the Bill before us does, before eventually moving on to front-line services, including emergency services, tourism, health inspection and administration. As to where the Bill will lead us, we are not yet sure for certain, but we can clearly see that it lays down a structure that could easily allow for a more comprehensive and wide-ranging roll-out of shared services under the administration of this new office. There is no doubt in my mind that the ambitions of the Fine Gael Government, the Fine Gael Party and the Minister's Department do not end with the back-room operations presented in Schedule 2 to the Bill. This becomes clear when we look at the checks and balances or lack thereof.

In terms of oversight, the Bill allows the Minister to "give general directions in writing to the Office for any purpose in relation to the functions of the Office under this Act or for any other purpose in relation to the provisions of this Act, or any other enactment". I have a concern with the phrase "general directions". We know from NAMA and the Department of Finance that "general directions" is interpreted by the State as meaning, in effect, no direction. This is a hands-off approach where the board members of the shared services office will be given potentially free rein to implement policy as they see fit, with strategies drawn and put into place that involve public money but not public oversight. The board will be able to hire consultants and advisers as it sees fit. We know from past experience that they can very easily turn into a gravy train for private companies. There is no provision for a fee cap for consultants in the shared services office. Perhaps the Minister will elaborate on that. The board will be given a statutory power to pay consultants whatever it likes. The Bill says "Any fees payable to a consultant or adviser shall, having regard to guidelines issues from time to time by the Minister, be paid by the Office out of moneys at its disposal". Guidelines, as with general directions, are nothing when compared to the statutory powers of a board. Here, as with NAMA and Irish Water, to name but two, the board will triumph.

That leads us to another issue. The shared services office will be set up as a stand-alone company. The practice and precedent under Irish law is that when a public company has both a social and a commercial remit, the commercial side wins through. Even if the policy and direction of the shared services office ends up having negative social effects, it will not be taken into account as much as the narrow balance sheet view of the commercial side. This is the case with NAMA as well as Irish Water, which are both registered as stand-alone companies. Even as NAMA sits on unused rezoned land across the State and in doing so causes social damage to the tune of hundreds of millions of euro, as long as the board, in its wisdom, believes its commercial side is serviced by land hoarding, then as far as the State is concerned, the hoarding is justified. This is the type of logic that has been written into the National Shared Services Office Bill.

We have a Bill before us that is focused on establishing an independent office, which in the Irish State means little to no real public oversight. That has been people's experience of many of these so-called independent offices. It will be mandated to facilitate the contracting of shared services around traditional back-room operations such as salaries, pensions, and financial accounts. Once it is up and running, it could easily see itself dealing with more so-called front-line operations and moving into areas such as emergency services, health administration and inspection, water and waste-water, tourism and area promotion.

We are giving the Bill a cautious welcome and are taking a wait-and-see approach. We will be supporting the Bill and its passage through Second Stage. I look forward to the Minister's response to my contribution.

See this speech in context