Dáil debates

Tuesday, 4 October 2005

Report of Comptroller and Auditor General: Motion.

 

7:00 pm

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

I move:

That Dáil Éireann,

—notes with serious concern the Report of the Comptroller and Auditor General for 2004 which provided yet further evidence of wasteful overspending on a range of public projects as well as the ongoing recurrence of serious tax evasion;

—deplores the incompetence, mismanagement and failure to ensure that taxpayers get value for money, highlighted in the report, that has become the hallmark of this Government; and

—calls on the Government to bring forward proposals to improve the system of public expenditure decision making, to get better value for taxpayers money and to tackle the ongoing waste of public money.

I wish to share time with Deputies Bruton, Deasy and Shortall.

Séamus Pattison (Carlow-Kilkenny, Labour)
Link to this: Individually | In context

Is that agreed? Agreed.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

Since it came into office, this Government has spent a grand total of €301 billion. Can the Taoiseach, Tánaiste or any Minister claim with confidence that the people have got anything remotely like the equivalent value for this amount that has been raised from their taxes or borrowed against future tax returns? The Irish have a reputation the world over as a can-do people. Sadly, we are addled with a cannot do, will not do Government. The evidence is on every page of the Comptroller and Auditor General's report for this year, last year and every other year. This year's report is no aberration. Set against last year's report, it simply confirms that this Government has no sense of value and no commitment to change.

The Government can only offer a catalogue of excuses for this list of jobs not done, half done and badly done. There are 14 chapters in the Comptroller and Auditor General's report which deal with waste and mismanagement. Together they constitute a bill of indictment for systematic failure and unshakable incompetence. The list of failures could fall into the category of funny if they were not so expensive. They range from an underpayment of €2 million due from National Toll Roads for the M50 toll and, amazingly, never even spotted, to widespread tax evasion in the construction industry which makes the notorious Ansbacher schemes seem like very small beer. In between, there is the truly extraordinary, not to say breathtaking, tale of the money spent by the national treatment purchase fund on operations in the original hospital of referral although the same hospital could not apparently treat those patients as they were entitled to be treated in the first place.

Traditionally, Fianna Fáil has tried to claim a reputation for competence as its unique badge of pride. However, these annual catalogues of failure from the Comptroller and Auditor General prove that this reputation is now in shreds only to be regained when cleansed by a long, sustained spell in Opposition.

Were Ministers alone in overseeing this extraordinary bonanza of State spending? The answer is "no". To help them spend the money, they hired for each Department a small army of spin doctors, consultants, advisers and make up assistants and they still got it hopelessly wrong.

The enterprise strategy group in its recent report highlighted the need for Ireland to have "an effective and agile government" as has been said by its chair, Mr. Eoin O'Driscoll, on a number of occasions. One should note the word "agile". The report stated that: "The Irish public system proved itself capable of such responsiveness in the past, but many believe that Ireland has lost its former ability to respond quickly and flexibly to identified needs and that there is no longer a clear focus on enterprise as a key economic driver". Of course, the key economic driver requires necessary and competent infrastructure delivered properly and on time.

It is clear the Government system for managing public finances has comprehensively broken down. Much of the failure has been disguised by the fact that tax revenues have been so buoyant. However, despite the low tax mantra of this Government, we have some of the highest indirect tax rates in the European Union, for example, our higher rate of VAT. If this Government was competent and careful with it's spending, could we have knocked a percentage or two off that very high top VAT rate? Every citizen who buys goods or services and pays these exorbitant VAT rates is actually paying the price for these cost overruns and delays every time he or she goes to a shop or pays for gas, electricity or any other service which incurs VAT. These are not abstract failures lost in the detail of public accounts. They affect everyone. It is interesting that the Exchequer returns published a couple of hours ago show VAT surging ahead.

There are two areas of the report I particularly want to highlight. The first is the issue of taxation. The pursuit of tax evaders, whether Ansbacher account holders or others, has so far yielded an incredible €2 billion. The amount of money reported by the Comptroller and Auditor General to have been raised by the Revenue Commissioners through its programme of special investigations is truly breathtaking. However, despite these successes, figures in the report and confirmed by the latest list of tax settlements indicate that tax evasion continues to be a major problem and that there are those who are still prepared to take the risk of getting away with it. PAYE taxpayers, who have no choice but to pay on the nail every week, will also be disappointed to hear that almost €2.5 billion is outstanding in uncollected taxes, of which €692 million relates to the period between 1991 and 2002.

For me the most disturbing part of the Comptroller and Auditor General's report is the section in chapter 2.8 dealing with relevant contracts tax, RCT, and the tax system for the construction industry, forestry and meat processing. The Comptroller and Auditor General examined a series of sample cases in Fingal, Cavan-Monaghan and the construction business unit of the large cases division of Revenue. The findings of the Comptroller and Auditor General suggest the potential amount of tax fraud and loss of revenue in this area is highly significant and I understand from people who know the business and the construction industry well that losses in relation to these construction industry scams may be running as high as €200 million to €400 million per year in recent years.

The Comptroller and Auditor General found that 50% of the annual returns examined were late; no penalties were imposed for late returns; 12% of the samples included entries for many subcontractors without a payment card number and no RCT being deducted; and 7% had no tax reference numbers. In 1998, there was a special programme of site visits to contractors and as a result of that limited work 20% of subcontractors were properly reclassified as employees. As a result of these discoveries, the Revenue was supposed to carry out more checks. In fact, a special programme was supposed to commence in 2002 to highlight this type of fraud but it is not clear if it has ever been completed, although the loss of tax and, more importantly, PRSI may be hugely significant.

Against a background of continuing evasion, it is worrying that the number of planned audits undertaken by Revenue has remained virtually static over 2003 while no random audits were undertaken in 2004. In 2004 the Revenue Commissioners carried out just 16,000 audits. Only some 1,500 of these were in respect of building contractors. This is striking when one considers how much the construction industry constitutes national economic activity. The compliance rate for the monthly returns from January 2005 is only 52%, far below the compliance rates for PAYE and PRSI. Up to 12 cases of RCT fraud have been investigated by the Revenue Commissioners in recent years. Two cases involved collusion among large numbers of individuals and companies, 97 in one case and 24 in the other, including principal contractors. While these cases were referred to the Garda, to date only one has resulted in a court conviction with the defendant sentenced to 240 hours of community service. The main weakness identified in these frauds was the fraudulent issue by principals of deduction certificates in respect of work never carried out and payments that were never made.

The serious compliance problems that RCT was introduced to tackle still exist. They are compounded by the highly competitive nature of the industry where non-payment of tax debts is seen by some as a way to gain competitive advantage. Honest builders and contractors are being undercut by the continuing of major scams in the construction industry. Is the failure to resource the Revenue Commissioners to carry out adequate audits and oversight of the building industry essentially a political decision to go softly-softly on building industry scams? We know how long it took to get inquiries into Ansbacher, DIRT and other tax frauds under way. We also know the former Minister for Finance, Mr. Charlie McCreevy, claimed there was no pot of gold in uncollected taxes. It would be a scandal if Fianna Fáil's cosy relationship with the building industry were to continue to facilitate tax fraud at the cost of higher taxes for workers in the PAYE sector and high rates of VAT for consumers.

Chapter 15.1 of the Comptroller and Auditor General's report contains a strong signal of fundamental problems of fraud in the personal public service numbers, the PRSI and tax reference number for every person in the State. It appears there is a significant fraud in the falsification of numbers. The report indicates levels of fraud running as high as 10% in certain categories. Even more worryingly, the report showed fraudulently obtained PPS numbers cannot be deleted, flagged or rendered unusable. The system name check facility to establish whether a PPS number had not already been allocated to a client was not applied to non-nationals because the system did not recognise foreign names. The use of bogus PPS numbers is giving their holders entitlements to welfare benefits with estimated losses at €25 million to €50 million per annum. This is a serious threat to the integrity of our social welfare system which will lead to high cost levels in the future. Added to the climate of fraud in a significant sector of the construction industry, the two together require immediate action by the responsible Ministers.

The words "shock and awe" gained widespread currency from events in Iraq. They can also be used in this case but in a different context. Shock to describe the amounts of money lost by sheer waste with no value at all to the taxpayer and at the amounts spent with little or no meaningful return or value. Awe, to describe the dearth of results and the failure of so many projects. Members will recall the Taoiseach's spending of €36 million on Media Lab Europe, now gone with the wind. Awe at the indifference of those elected to manage the funds entrusted to them. Awe too at the refusal of the Taoiseach, as the one with ultimate responsibility, to sack the most flagrant offenders.

This year's Comptroller and Auditor General report has 150 pages devoted to horror stories, large and small, on waste and mismanagement. Last year it was e-voting and the Punchestown Event Centre. Waiting in the wings for next year is the story of the €60 million spent on the National Aquatic Centre, the failed computer system in the health service and the fiasco of nursing home charges. It is time for the Taoiseach to take a long break.

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

In the past eight years the Government has increased spending by an incredible amount, some 142%. This represents an increase of €17,000 in spending for every household in the State. The crux of the issue is do people see the value for that extra increase? The blunt answer is no. It is not just political opponents who claim this. Real indicators such as access to primary health care show this to be the case. A person on the minimum wage is now deemed to be too wealthy to be given a medical card. Fewer people attend accident and emergency departments, but those who do face greater chaos in the service. More people are on waiting lists for affordable housing, as those on low incomes simply cannot get on the housing ladder. Garda detection rates and drug seizures are down. Rates for violent assault and crime on the streets are up dramatically. The proportion of students dropping out of school is at the same persistently high level it has been for years. The standards of care for the elderly have not improved. No services are improving to match the huge scale of spending people are asked to come up with.

By contrast, the public sees a chronicle of overruns, waste, ministerial pet projects going sour and poor efforts to protect the taxpayer when deals are struck. We need to get to the bottom of this. A system that protects the taxpayer must be developed. There is no doubt that waste has surged because in the good years, those two years up to the last election, spending controls went out of control under the then Minister for Finance, Mr. McCreevy. The systems to protect the taxpayer became rusted. Basic principles were abandoned.

One can see patterns in how this happened. Budget day glamour announcements were one of the main factors with items such as the over-70s medical cards, the pre-1953 pension provision and, most notably, the decentralisation programme. The latter was to cost €20 million but tomorrow we will hear more a figure of €900 million. It is a deception to present projects that have not been properly costed, analysed or evaluated.

Political pet projects, driven by ministerial ambition have been another problem. We have seen the Media Lab case of €36 million spent with nothing to show for it. We have seen the Campus and Stadium Ireland project with much work done but nothing to show for it. We have seen the Punchestown Event Centre, a pet project of the former Minister for Finance, Mr. McCreevy, barged through every procedure that any responsible Minister for Finance ought to respect and protect. We have seen bad deals negotiated with no regard for the taxpayers' needs. The West Link bridge negotiations, recently analysed, showed taxpayers were not protected against the downside risk. We have seen poor project evaluation time and again.

When infrastructure projects came up for evaluation a rosy picture of the benefits and wildly optimistic impressions of the costs were given. However, designers changed their minds halfway through because many projects were not properly designed. This has happened on major road and other projects. Right across the board, those same mistakes have been repeated. It is not just good enough for the Government to shrug and say these are confined examples of projects going wrong when, overall, it is achieving wonderful projects and to stop the begrudgery. This is money that costs the taxpayer dear, putting people on ordinary incomes to the pin of their collars to pay, mainly in spending taxes.

The Comptroller and Auditor General's report highlights, time and again, computer systems, clearly designed without a proper understanding of their clients' needs. The designers did not consult the hospital, prison service or special needs users but ploughed ahead with a computer system that fell flat on its face.

Tax breaks have been introduced without any proper evaluation of their benefits or costs and we know that many of them have been used solely for the great benefit of a few very wealth taxpayers. The Revenue Commissioners estimate that €200 million goes in property based tax benefits and 100 individuals took €74 million of that sum in each of the years evaluated. No intention of that kind was ever intended by the Dáil. The measures were never properly designed to protect the taxpayers' interests and this constitutes waste of the worst kind.

Currently, the Dáil does not have the capacity to get to grips with the task of handling public spending and tackling the waste that occurs. The Dáil must be reinforced. Budget day is a charade or a political bearpit that has allowed projects to pass that should never have been presented in such a way because no evaluation had been carried out on them. Estimates are passed without any indication of the impact they might have on key performance indicators. The horse trading exercise of the Estimates process is not designed to reward efficiency. The opposite is the case and under the current Estimates process, crises and bad management are more likely to deliver more money to the spending Department than good management. That is ridiculous. It happens because there is no demand that money must follow performance. This must be changed.

In the document, Who Cares?, Fine Gael has already tried to set out some of the changes we will make. With the Labour Party, we have begun the process of identifying the many changes that must be made. For instance, the Estimates process must be changed so that performance against key targets drives spending allocations. No one should get extra money without performing to commitments.

The Comptroller and Auditor General's mandate must be changed. It is not good enough simply to report on money that has gone astray. The Comptroller and Auditor General must change the corporate governance in Departments and agencies so that it does not happen again. The Government must give him a mandate to strengthen corporate governance. We must have an independent unit in the Department of Finance to provide technical support and perform stress tests on the rosy evaluations coming from departmental and ministerial pet projects. It is not good enough that the Minister for Finance steps back and declares that it is a delegated responsibility. We have an interest in seeing that the proper systems are in operation.

Deputy Deasy, who travelled with the Committee of Public Accounts to the United States, will deal with the issue of giving the Dáil greater access to more impartial information of the type that is routinely available to members of Congress. We must also examine our tax breaks and must have a system of annual scrutiny with the actual costs and benefits listed. I hope and am confident that the Minister will do something in that regard. We must have responsibility pinned on individuals, be it Ministers or senior managers. One cannot produce major policy initiatives without standing over the analysis underpinning them. Clearly, in the case of many ministerial projects, the analysis was not performed. People flew by the seat of their pants and then shunned responsibility when things went wrong. That is not acceptable. It is not being accountable in accordance with the mandate given by the electorate. We must see those sorts of changes and I hope we get the opportunity in Government to make those changes if the Minister does not respond.

Photo of John DeasyJohn Deasy (Waterford, Fine Gael)
Link to this: Individually | In context

Deputy Bruton has given an idea of my theme, namely, dealing with bad legislation, but always dealing with it after the fact or historically. All Governments have been obliged to deal with this issue over the last 20 or 30 years and it has come to light more frequently recently, particularly because of the Comptroller and Auditor General's reports. In many cases, while a Minister might bring a proposal to the Cabinet, no financial assessments are performed on much legislation. Although this should happen it does not and in many cases this has cost tens and hundreds of millions of euro in waste.

My favourite example is the Official Languages Act. A council official threw a memorandum across my desk and asked how could the cost of translating every communication into Irish be paid for. He had a point, which goes to the core of the problem, which is that the House passes legislation, signs regulatory measures and budget measures are rammed through. However, no second-guessing is carried out on the Estimates put forward by Departments. In many cases, that is a big mistake and costs much money.

When one compares our system to those in other countries, it comes as no surprise that we end up with tenfold overruns. In some cases, officials in Departments have no clue as to what a particular measure will cost when it is introduced in the House. They figure it out as they go along. In other countries, the cost of such measures is second-guessed.

This was the reason for the Committee of Public Accounts's trip to the United States and the committee has been considering this matter for some time. The delegation met bodies like the Congressional Budget Office, boutique lobbying associations like Taxpayers for Common Sense, the Congressional Committee on Government Reform and the Auditor General of the United States. In California, the delegation met the director of finance for the Governor, as well as the state comptroller, the state auditor and people like that. We found the model we were looking for in the California Legislative Analyst's Office, in that it had a system whereby in some cases it would strongly contradict the financial estimates of the Governor and the executive office. It worked very well. Their system has evolved over 60 years and while we would not copy it, after 14 or 15 meetings — as the delegation had — one gets the idea. It became clear to us that the Oireachtas needs a second entity that produces estimates on a purely non-political and bipartisan basis for all Members and parties. That was the essential idea behind our trip to the United States.

The committee will produce a report in the next three or four weeks, which will include a paper by Deputy Rabbitte. I am hopeful, although I am not holding my breath, the Government will look upon this constructively. I can make a good argument for Ministers to consider having an entity like that to help them with long-term planning within their Departments. If Ministers have a second Estimate, they could do so more constructively. In some of the meetings, people could not believe and were amazed that we had a parliamentary system lacking this feature. We found some models — one was a state auditor's office in California — where we were surprised to hear that on occasion, the legislature actually requested estimates from the state auditor's office. We were given a number of examples where this was done and the legislation subsequently folded immediately, because the person sponsoring it did not have a clue as to how much it was going to cost in the first place. That was a good lesson for us. If we look at this constructively and examine the cost to central and local Government of the legislation passed in the House in the last year or two, we will be getting somewhere as far as Government waste generally is concerned.

The only reservation I have about this kind of system for our style of government is that in a couple of cases, the auditors intervened in policy formulation and seriously contradicted the executive branches. That would not suit our style of Government and would cause elections every six months. However, one could at least begin to think of putting together a separate entity within the Oireachtas that would create simple estimates for some legislative proposals, particularly the budget measures that are passed every year.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
Link to this: Individually | In context

I welcome the opportunity to highlight again this Government's negligent use of taxpayers' money. I wish to concentrate on chapter 13 of the Comptroller and Auditor General's report which deals with the West Link toll bridge. I commend the Comptroller and Auditor General and his staff for their ongoing work. In his latest contribution, Mr. John Purcell has found €2 million for the taxpayer arising from the accounting discrepancies in respect of the accounts of National Toll Roads which resulted in the company's underpayment of royalties due to the State. That such a finding is no longer shocking says much about the prevailing attitude in the Government. It is an attitude that treats Government funds like loose change in a Minister's pocket.

This reckless attitude has been particularly true of the transport area. It would be more of a shock had the report not included a transport issue of some kind. Already, we have seen over-runs on roads projects of billions of euro, a €171 million over-run on the port tunnel project and a major accounting discrepancy in the Department of Transport in 2002. Now we can add a serious accounting error in respect of the West Link toll bridge. It is incredible that neither NTR's internal audit function, nor KPMG, the firm's external auditors, nor the National Roads Authority nor the Department of Transport, including its internal audit function, spotted an accounting error which would have resulted in €2 million of taxpayers' money ending up in the pockets of NTR. Let us face it, when NTR is sitting on a nest-egg that will have netted it €434 million, it hardly needs a €2 million tip from the Government to help it along.

The failure by KPMG to spot the underpayment is particularly disturbing in light of the fact that according to the Department's Accounting Officer, the provision of a certificate from NTR's auditors confirming the accuracy of the payment is an important part of the control system for the validation of the licence fee. It would seem that KPMG was extremely negligent in its auditing responsibilities in this case. The real question is how did this happen. KPMG is one of the largest accounting firms in the country, with a wealth of experience in auditing. I note from last weekend's Sunday Independent that there is likely to be an investigation into the firm by the Institute of Chartered Accountants in Ireland. This is the least that should happen in the circumstances and I look forward to hearing the outcome of that investigation. However, I ask the Minister if there is a role for the newly established Irish Accountancy and Audit Standards Authority in investigating this shoddy and negligent auditing.

The two State parties involved are the National Roads Authority and the Department of Transport. Both parties have already had wake-up calls in recent years. In particular, it would appear that the Department has learned nothing from its embarrassing accounting error in 2002. The 2002 annual report of the Comptroller and Auditor General pointed to a serious error in the appropriation accounts for that year due, in part, to a failure to carry out monthly reconciliation between bank records held by the paymaster general and the Department's accounting records. The correction of that mistake was meant to have heralded a new corporate governance regime in the Department where senior staff would have a greater monitoring role in financial control, with clear reporting lines.

I am not sure how far that new corporate governance regime extended but surely it should include its roads section and the National Roads Authority. It is not unreasonable to expect it to investigate whether the taxpayer or motorist is overpaying NTR for the privilege of being ripped off at its toll bridge. The Minister needs to explain to the House how it is that for the second time in three years serious accounting errors went unnoticed by his Department. He now needs to outline what level of monitoring the NRA applies to such compensation payments and how that is monitored by his Department. He should thank the Comptroller and Auditor General and his staff that many more millions did not go down the drain under his watch as it was caught early due to a level of vigilance clearly deficient in his own Department. However, there is a danger that the discovery of this €2 million will distract from the real story in the report. The real revelation from the report is just how big is the rip-off at the West Link bridge. The report tells us that for every €1 it costs to construct and run the bridge, the ordinary motorist pays €4.76 in tolls. In other words, the first 38 cent of the €1.80 toll charge will cover the costs of constructing and maintaining the bridge, while €1.42 is taken in profit by the company or in taxes by the Government. Motorists are paying almost five times the cost of providing the bridge, a rip-off in anyone's language.

What the report clearly demonstrates yet again is that PPPs are not the Holy Grail of infrastructure procurement and provision. Recently, the Minister heralded a new form of contract, the so-called fixed price contract. However, fixed price contracts relate only to the original specification and changes, additions, changes of mind and so on are one of the main features of the shambles that is the Government's record on project cost overruns. We can have all of the fixed price contracts in the world but where professional competence is lacking and political accountability dodged they amount to no change. There is another even more fundamental point. Traditional government borrowing is likely to be the cheapest source of State funds. In other words, old-fashioned borrowing is likely always to be the cheapest source of funding for investment. So what is the point of PPPs? They may have a role in some circumstances but Government and ministerial proposals need to be benchmarked and evaluated, always against the traditional borrowing test. In addition, while cost estimates for projects procured through a PPP may seem more attractive initially, when 30 years of tolls are taken into consideration they are anything but attractive. PPPs are a Government accounting wheeze and a gravy train for consultants, accountants and bankers.

The West Link bridge deal was one where the contractor took all of the construction risk, but without a formal tender process of the kind that is legally required today. The NTR West Link procurement was of the old kind. One had to be inside the tent and once inside, all the old faces and friends were there — people like Pádraig Flynn, George Redmond, Tom Roche and so on. Due to a ready-up of toll revenue between the State and NTR, the West Link will end up costing the taxpayer and motorist €1.1 billion, while the cost to NTR was a mere €231 million in today's prices. If this is the sort of sweet-heart deal allowed by PPPs, then they are costing the taxpayer dearly. There is a long way to go before PPPs can be trusted as a value for money solution to transport problems. I sincerely thank the Comptroller and Auditor General for his work, and commend the motion to the House.

Photo of Brian CowenBrian Cowen (Minister, Department of Finance; Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

I move amendment No. 1:

"To delete all words after "Dail Éireann" and substitute the following:

—notes the annual report of the Comptroller and Auditor General on the 2004 Appropriation Accounts in the context of a gross expenditure by central Government of more than €41 billion in 2004 and that in line with normal procedure it will now be passed for scrutiny to the Committee of Public Accounts;

—acknowledges the need to pursue best practice in the management of public expenditure to ensure value for money for the taxpayer and in this regard:

—commends the initiatives taken by Government in recent years to promote more efficient and effective management of expenditure including:

—the introduction in 2004 of rolling multi-annual capital envelopes for better management and control of public capital programmes and projects;

—the publication this year of new guidelines for the appraisal and management of capital expenditure proposals in the public sector; and

—the Minister for Finance's plans to introduce targeted reforms to the procurement of public construction contracts and reform and modernisation of the system for employing construction related consultants;

—notes the measures taken to improve tax compliance; and

—acknowledges the major improvements in public services since 1997 arising from the very significant level of resources allocated by Government over that period."

I commend the work of the Comptroller and Auditor General in his role as external auditor of Government expenditure. The Comptroller and Auditor General is a constitutional officer who performs a highly important function, not just in his general audit of expenditure but in the value for money audits he performs that are the subject of specific reports. It is important to note that the subject of this motion is the annual report of the Comptroller and Auditor General on the 2004 Appropriation Accounts. There is a statutory requirement on the Comptroller and Auditor General to report annually to Dáil Éireann on his audit of departmental appropriation accounts. This report is accordingly not some major new report on Government waste but simply the Comptroller and Auditor General discharging his annual function. As is normal, the report focuses on certain issues that have come to his attention.

Poor management of public expenditure and occurrences of wasteful expenditure are not acceptable at any time. This Government is as determined as any other Government in the past to redress problems that come to light. For example, the corresponding report in 1996 highlighted more than 40 issues of concern with the management of public expenditure across a range of Departments and agencies. This included cases where expenditure in excess of the Estimates on various programmes was incurred prior to the approval of local authorities and numerous incidences of unfunded balances on capital works. It also included separate instances of concerns with cost overruns on a number of local authority swimming pools and a number of national school projects.

The 2004 report of the Comptroller and Auditor General must be put in the context of gross annual spend by central Government. In 2004, gross expenditure by central Government on public services, including the social insurance fund, amounted to about €41 billion. Of this, some €14 billion was in respect of pay and pensions, €11.2 billion in respect of social welfare, €10.1 billion in respect of health and €6.6 billion in respect of education. The items of expenditure mentioned in the Comptroller and Auditor General's report represent a small fraction of the total expenditure, probably less than 1% of the gross spend in 2004. I am not calling into question what the Comptroller and Auditor General reports and the need to follow up on his conclusions but we must keep this in that overall context.

As Deputies are aware, the Comptroller and Auditor General's reports are transmitted to the Committee of Public Accounts and form the basis for the questioning by the PAC of the Accounting Officers of each Department. The report of the PAC is in turn remitted to me for comments. My comments are relayed to the PAC after I have consulted the relevant Departments. This process enables the points made by the Comptroller and Auditor General and the PAC to be fully followed up and the introduction of necessary changes introduced in practice to remedy any shortcomings identified.

I acknowledge that all efforts must be directed at ensuring as far as possible that value for money is gained and waste is avoided before the intervention of the Comptroller and Auditor General. I will outline the series of measures which the Government has taken in the recent past to improve value for money, especially in the area of capital investment. I will also outline the excellent achievements of the Government at both a macro-economic level and in the improvement of public services. The issue of the appropriate context for considering the Comptroller and Auditor General's report is readily illustrated by, for example, gross spending on the Education Vote in 2004 which was over €6.5 billion. As far as I can see none of this is commented on at all in the Comptroller and Auditor General's report, but there is a reference to the somewhat technical issue of the status of certain pension schemes.

The €6.5 billion was money well spent, investing in our children, the future generators of economic activity and prosperity, and paying the salaries of over 50,000 teachers, together with myriad other costs. I am sure that improvements can be made in the way it is spent, but the entire education system, from the Minister right down to the individual teacher and through to parental involvement, is focused on delivering a top quality education system. I must conclude that the €6.5 billion spent in this area is a very positive investment on behalf of taxpayers.

In the case of the Department of Social and Family Affairs, the Comptroller and Auditor General's report raises a number of important issues in regard to fraud and overpayments, issues that will always arise given the scale of the operation and these will no doubt be pursued by the Department and the Minister. Gross expenditure by this Department in 2004, including the social insurance fund, was €11.25 billion. This was expended on payment of pensions and other social welfare benefits which are so crucial to the welfare of many of our citizens. Is the Opposition motion suggesting that this expenditure does not represent value for money or is being incompetently administered? I do not think so and I doubt if the beneficiaries of these payments would agree.

I do not deny that there have been instances where better management of expenditure could have been displayed. I note the public comment today in regard to the HSE computer system for managing human resources. The overall cost of this project, estimated at €165 million since 1998, must first be seen in the context of total expenditure on the health service in that period since 1998 of over €61 billion during the development of the system. We are talking about a quarter of 1% of total health spend over the period. It is clearly a ludicrous proposition to suggest that the spend on this project has adversely affected overall health investment. The Tánaiste will speak on this issue in the debate tomorrow evening.

What has emerged in regard to this particular project raises concerns in the Government and the wider public and I look forward to the forthcoming report of the Comptroller and Auditor General on this matter. The board and management of the HSE will have to reflect carefully on this report and take appropriate action. It is crucial that the board has in operation a modern and efficient management information system to underpin effective delivery of health care services. Through the Department of Health and Children, my Department has requested the HSE to review the approach to the implementation of this system and to seek less complex approaches to completing its implementation and subsequent ongoing operation. I understand that such a review is now under way within the HSE. My Department is also ensuring that the approach that was adopted for this project will not be used in any of the large health IT delivery systems being proposed by the HSE.

The Comptroller and Auditor General's report refers to tax evasion in the construction industry. I have consulted the Revenue Commissioners in the matter and wish to advise the House of the major activity being undertaken by Revenue in this area. I do not understand Deputy Burton's point of questioning the independence of Revenue.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

Does the Minister consider 35 site visits in Dublin to be enough?

Photo of Brian CowenBrian Cowen (Minister, Department of Finance; Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

I did not interrupt what I am sure was a very positive contribution from Deputy Burton.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

There was a total of 35 site visits in the Dublin area.

Photo of Brian CowenBrian Cowen (Minister, Department of Finance; Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

At a general level the Revenue Commissioners——

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
Link to this: Individually | In context

The Minister never contacted Revenue.

Photo of Rory O'HanlonRory O'Hanlon (Cavan-Monaghan, Ceann Comhairle)
Link to this: Individually | In context

The Minister should be allowed to speak without interruption. The Deputies were afforded the courtesy of making their contributions without interruption and they should allow the Minister the same courtesy.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

The Minister should read it out.

Photo of Brian CowenBrian Cowen (Minister, Department of Finance; Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

It makes more sense when it is read out.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

It is a list of shame.

Photo of Rory O'HanlonRory O'Hanlon (Cavan-Monaghan, Ceann Comhairle)
Link to this: Individually | In context

Deputy Burton.

Photo of Brian CowenBrian Cowen (Minister, Department of Finance; Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

If it is okay, a Cheann Comhairle, I will make a contribution. At a general level the Revenue Commissioners recognise the tax compliance risks which arise in the construction industry and they have carried out an extensive programme of checks, audits and investigations in the industry in 2005.

Revenue has reorganised itself along regional lines, with each Revenue region containing a special compliance district specifically set up to combat evasion. During 2005 to date, both mainstream Revenue auditors and special compliance staff have carried out substantial investigations of tax evasion in the construction industry. The extent of these activities is evident when we consider that Revenue's east and south-east region devoted 50% of its available audit resources to a special investigation of the construction industry, in the first half of the year the region completed almost 500 audits of principal and subcontractors yielding approximately €12 million so far and the region carried out a further 360 compliance checks, 37 site visits and 92 visits to subcontractors newly issued with certificates of authorisation, colloquially known as C2s. By the end of the year, this region alone will have completed over 1,000 construction audits, 800 compliance checks and 70 site visits. Similar activity is taking place throughout the country. Those are the facts.

The Dublin region's special compliance staff carried out 35 site visits and 1,650 compliance checks in the first six months of this year.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

On a point of information, is there an error in the Minister's speech, that the Revenue carried out 35 site visits in the Dublin area?

Photo of Rory O'HanlonRory O'Hanlon (Cavan-Monaghan, Ceann Comhairle)
Link to this: Individually | In context

I ask Deputy Burton to resume her seat and to allow the Minister the same courtesy she was afforded.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

Should that figure be 350 or 3,500?

Photo of Rory O'HanlonRory O'Hanlon (Cavan-Monaghan, Ceann Comhairle)
Link to this: Individually | In context

I ask the Deputy to resume her seat. Deputy Burton is being disorderly.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

Will the Minister clarify the matter?

Photo of Brian CowenBrian Cowen (Minister, Department of Finance; Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

Dublin also has a Revenue district specifically dedicated to dealing with high-risk construction industry cases.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

A total of 35 visits.

Photo of Brian CowenBrian Cowen (Minister, Department of Finance; Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

That district alone completed 80 audits so far this year with a yield of €4.5 million in tax, interest and penalties. This activity is being replicated in Revenue's other regions.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

They can rest easy.

Photo of Brian CowenBrian Cowen (Minister, Department of Finance; Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

Revenue is now planning how to build on these activities in 2006. I am informed that the construction industry will form a major part of Revenue's compliance and audit work in 2006.

In recent years, 12 instances of relevant contract tax fraud were investigated by Revenue. Because of the particular circumstances of two instances, it was considered appropriate to refer these to the Garda for further investigation. One alleged fraud identified collusion among 97 persons, including nine principal contractors. A Garda inquiry is ongoing into this abuse and also the abuse of C2 certificates. The second fraud involved 24 identified persons and companies, including eight principals. Garda inquiries are ongoing.

The remaining ten cases where serious suspected abuse of the relevant contract tax system was identified were referred for investigation by Revenue's investigation and prosecutions division with a view to prosecution. To date, one of these cases has resulted in a court conviction and the defendant was sentenced to 240 hours of community service. In two other cases, the defendants failed to appear in court and bench warrants were issued for their arrest. The remaining seven cases are under active investigation by Revenue's investigation and prosecutions division.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

Big deal. There were 500 social welfare prosecutions.

Photo of Brian CowenBrian Cowen (Minister, Department of Finance; Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

Revenue has made significant investments in regard to its computer systems by integrating relevant contracts tax into its main computer systems. This allows for the better monitoring of compliance behaviour of principal contractors and for Revenue to more effectively police the operation of the C2 certificate of authorisation system.

Turning to the issue of better management of public expenditure, I wish to remind the House about the important measures which have been taken by the Government in the recent past, at the initiative of my Department, notably in the area of capital expenditure. The Government is acutely conscious that we must get optimal return for the significant levels of capital investment to which we are committed. Currently, we are spending close to 5% of GNP on capital investment funded by central Government. This is around twice the European average and it will amount to over €36 billion in the period 2005-2009.

The Government accepts it has a clear duty to promote a framework that will deliver value for money for this investment. In doing so the Government is resolved to learn from past inadequacies in some instances, including any highlighted by the Comptroller and Auditor General. It is my strong contention as set out in the Government motion that we have been proactive in this regard and that the fruits of this action are already visible. In budget 2004 my predecessor Charlie McCreevy introduced major reform of the system of allocating capital investment resources. Five-year funding plans for each ministerial area were agreed. Provision was made, for the first time, to allow for carrying over to the next year unspent allocations up to a maximum of 10% of these capital provisions. The objective of the new system is to introduce relative medium-term financial certainty for Ministers and implementing agencies so they can better plan and execute their capital programmes. This is particularly important given the scale and timeframe of many of our modem infrastructural projects. The carry-over system allows agencies to move away from the tendency to rush end-year expenditure, as was the case under the old system.

The multi-annual framework is underpinned by requirements designed to ensure that the substantial financial commitments in the envelopes are complemented by a commitment by Departments and agencies to implement all the guidance laid down by the Department of Finance regarding the appraisal, procurement and management of capital projects. In essence, the new system is promoting better management of capital expenditure. It provides relative financial certainty and underpins best practice in the management of programmes and projects. The response to the new system has been uniformly positive.

Earlier this year I announced revised guidelines for the appraisal and management of capital expenditure proposals in the public sector. These are testimony to the Government's commitment to maximising value for money from capital expenditure. They complement the multi-annual capital envelope system.

The new guidelines are designed to encourage a better approach to appraisal and management of capital programmes and projects and to reflect best practice. Key features of the new guidelines are that all projects over €50 million must undergo a full cost-benefit analysis and all capital programmes with an annual value in excess of €50 million and of five years duration, or more, will, for the first time, be required to be evaluated over the course of each five-year cycle.

Those who state that another layer of ex ante approval may be necessary before capital projects proceed should acquaint themselves with the guidelines. The new capital appraisal guidelines contain all that is necessary to assist proper costing, appraisal and efficient execution of projects. For example, they explicitly state, in reference to the appraisal process, that "the cost of the project should be the expected outturn cost, including construction costs, property acquisition, risk and contingency" and that "the cost of possible future price increases and variations in project outputs should be factored into the calculation of project costs".

On public procurement, the Government has announced measures designed to ensure that there will be a much closer alignment between the agreed tender price and the final outturn cost of construction projects. We want to achieve much greater cost certainty in construction projects generally. To achieve this outcome, the Government has decided to introduce changes in the operation of public sector construction contracts. We intend, following consultation with the industry, that public sector construction projects will be tendered competitively on the basis of a fixed-price lump sum contract in which appropriate construction risks are identified and transferred to contractors. Under this system, the amount of variation or "extras" will be limited to the greatest extent possible. There will be a higher up-front capital cost with greater certainty for the Government as client and the contractor as provider. The final outturn cost will be much closer to the contract terms.

We are also modernising the system for employing consultants, including engineers and architects, for example, to decouple professional fees from project costs. The existing system, which sees consultant costs increasing as project costs increase, is not the way we want to do business in future. We are proposing a new system which will involve movement away from the practice of paying consultants a percentage fee based on the final cost of a project in favour of requiring professionals to tender for fees on a fixed lump sum basis. Competitive fee bidding is being introduced in a way that should not compromise design quality.

The construction industry is being consulted about the way these changes will be implemented. It is high time best practice followed in the private sector is implemented in the public sector also. I am satisfied that both the Government side and the contracting side will benefit from the certainty introduced under the targeted arrangements.

We are already seeing evidence of significant improvement in management of capital projects. In the key transport area, for example, major projects are now coming in on or below budget and on or ahead of schedule. The Monasterevin, Cashel, Ashford-Rathnew and Ballincollig bypasses comprise some more recent examples. In this regard, the relevant yardstick for measuring cost overruns on capital projects is the contract price and not the original pre-tender estimate that may have been drawn up many years previously and that may bear no relation to the specification of the project tendered for or completed.

On expenditure Estimates, I agree in principle with the proposition that there should be more accountability in this House for outputs achieved for the financial inputs approved by the House. I am in consultation with my Government colleagues on that matter. The objective will be to facilitate early examination by the House and its relevant committees of the macro-economic and fiscal background to budget policy formation and promote a more informed debate on the various Estimates for each Department.

Since 1997, the Government's economic policies have greatly increased employment and prosperity. The resources generated by this prosperity have been applied in a way that has benefited all sectors of society. In the area of transport, there was virtually zero Exchequer capital investment in public transport in 1997. We have invested a cumulative €2.3 billion since then and this has led to major increases in capacity, especially in the greater Dublin area. These include the introduction of the Luas which has a capacity of 20 million passengers per annum and a major expansion of the DART. We have halted the neglect of our railway network generally by increasing capacity and making our railways safer. Further improvements are under way and much more will be done in the years ahead.

In the health service, since 1997 total discharges for 2004 in the inpatient and day care categories have increased by more than one third; the number of day care treatments has doubled; the number of consultant posts has increased by almost 50%; there has been a 145% increase in the number of occupational therapists; there has been a 75% increase in speech and language therapists; and the number of physiotherapists has almost doubled. These large increases in medical personnel are delivering more treatment across a whole range of areas. Nobody should suggest the work these personnel do represents a waste of resources.

There have been improvements in services at all levels, including education, since 1997. The pupil-teacher ratio has fallen from 22.7:1 to 17.4:1 at first level and from 16:1 to 13.6:1 at second level. There are 7,000 more teachers employed. There are almost 6,000 special needs assistants, which number rose from a base of virtually zero when the Government took office. The number of students taking up third level education has risen from 95,000 to almost 140,000. There has been a massive increase in capital investment in our schools and colleges. It has more than quadrupled, from €120 million to almost €540 million this year. Just last week, the Minister for Education and Science and I announced a major new round of PPP investments in 22 first level and second level schools. Having listened to Deputy Shortall, I am interested to hear about the policy formation process that exists between the Labour Party and Fine Gael.

I could refer to other services such as social welfare, services for the disabled, housing and many more in respect of which there have been major service improvements. Any objective overview would conclude that, since 1997, the Government has presided over the greatest ever advance in the quality of our public services while reducing the burden of personal income tax, and dramatically reducing debt levels.

The Government has a good record of achievement in delivering results. We are resolutely committed to value for money. As I have outlined, we have put in place a robust framework for appraising and delivering capital programmes and projects that will reduce the risks. I intend to ensure, as Minister for Finance, that we will continue to manage the economy in a way that delivers increased prosperity for all our citizens, that allows increased resources to be used for improved public infrastructure and that allows for improved social services aimed at addressing the needs of both the less fortunate in our society and those of the ordinary citizen.

Photo of Noel DempseyNoel Dempsey (Minister, Department of Communications, Marine and Natural Resources; Meath, Fianna Fail)
Link to this: Individually | In context

It is true to say the report of the Comptroller and Auditor General serves different functions for the Government and the Opposition. For the Opposition, it presents an opportunity to jump up and down and start blaming individual Ministers for every flaw in our system. This is all very predictable and petty and proves the square root of nothing.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context

There is plenty of cause for jumping up and down.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

Does the Minister even know what the square root is?

8:00 pm

Photo of Noel DempseyNoel Dempsey (Minister, Department of Communications, Marine and Natural Resources; Meath, Fianna Fail)
Link to this: Individually | In context

For the Government, the report proves that the vast majority of projects that are transforming the nation have been undertaken professionally and cost-effectively. As my colleague said, it also directs us to areas that require more rigorous attention.

The Government has presided over an era of unprecedented growth. The Opposition has obviously no experience of this kind of growth. It is more practised at recession and stagnation and talking this country down. Owing to its lack of experience, it failed to appreciate that massive unprecedented growth provides inevitable challenges to any system. It is important that the checks and balances are built into the system to highlight errors and prevent them happening. More bureaucracy, which will stifle initiative and lead to further delays on much-needed projects, is not required. The key function of the Comptroller and Auditor General's report is to provide vital information to the Government for the improvement of the management of the taxpayers' hard-earned money.

It is very easy for the Opposition to move from data to blame.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context

We have plenty of ammunition.

Photo of Noel DempseyNoel Dempsey (Minister, Department of Communications, Marine and Natural Resources; Meath, Fianna Fail)
Link to this: Individually | In context

An inexperienced Opposition does this all the time. However, it is a little more difficult to move from data to analysis and this is where the problem lies——

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

The Minister should talk about e-voting and tell us all about it.

Photo of Rory O'HanlonRory O'Hanlon (Cavan-Monaghan, Ceann Comhairle)
Link to this: Individually | In context

Allow the Minister continue, please.

Photo of Noel DempseyNoel Dempsey (Minister, Department of Communications, Marine and Natural Resources; Meath, Fianna Fail)
Link to this: Individually | In context

It is more challenging to take that extra step from analysis to ensuring that the bad practice is eliminated. The Government faces up to the more challenging process every day which has radically improved many things——

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

Did e-voting challenge the Government?

Photo of Noel DempseyNoel Dempsey (Minister, Department of Communications, Marine and Natural Resources; Meath, Fianna Fail)
Link to this: Individually | In context

If the Government adopted the "data to blame" route every time there was an air crash or a near miss, the pilot or the airline would be blamed by all.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context

That is what happens.

Photo of Noel DempseyNoel Dempsey (Minister, Department of Communications, Marine and Natural Resources; Meath, Fianna Fail)
Link to this: Individually | In context

As is always the case for the Opposition, we would have the fleeting pleasure of finger-wagging to get headlines but this would not lead to much improvement in air safety.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

What about e-voting?

Photo of Noel DempseyNoel Dempsey (Minister, Department of Communications, Marine and Natural Resources; Meath, Fianna Fail)
Link to this: Individually | In context

We analyse the data——

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
Link to this: Individually | In context

And shirk responsibilities.

Photo of Noel DempseyNoel Dempsey (Minister, Department of Communications, Marine and Natural Resources; Meath, Fianna Fail)
Link to this: Individually | In context

——and develop the new guidelines for the future. We do this because we are a good Government.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context

There is no accountability or transparency.

Photo of Noel DempseyNoel Dempsey (Minister, Department of Communications, Marine and Natural Resources; Meath, Fianna Fail)
Link to this: Individually | In context

We take the data provided by the Comptroller and Auditor General's office, analyse it and put methods in place to address the problems identified. We do this within a very particular framework. This is the difference between good government and micro-managing.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

The Minister is taking responsibility.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context

That Government is a very bad Government.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
Link to this: Individually | In context

Is it the Minister or Deputy Cullen then?

Photo of Noel DempseyNoel Dempsey (Minister, Department of Communications, Marine and Natural Resources; Meath, Fianna Fail)
Link to this: Individually | In context

It is very difficult for the Opposition Members to listen to the truth. I ask them to afford me the courtesy because I did not interrupt any speaker tonight.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

We are just talking about e-voting.

Photo of Noel DempseyNoel Dempsey (Minister, Department of Communications, Marine and Natural Resources; Meath, Fianna Fail)
Link to this: Individually | In context

The key difference between good government and micro-management is that a good Government does not and should not meddle in the operation of those bodies set up to execute policy on a day-to-day basis.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

The Minister should go fore-voting.

Photo of Noel DempseyNoel Dempsey (Minister, Department of Communications, Marine and Natural Resources; Meath, Fianna Fail)
Link to this: Individually | In context

My Department has a wide-ranging and complex economic remit. It makes a key contribution to growth, competitiveness and balanced regional development. In the context of such a diverse remit, my objective has been to commit and deploy available resources to programmes which contribute to economic competitiveness, sustainability and social and regional balance.

My Department's overall capital investment envelope for 2005 amounts to approximately €128 million. In the lifetime of this Government, investment has funded major successful projects in areas such as fishery harbour infrastructure, coast protection, broadband infrastructure, marine research, port infrastructure and energy conservation.

A particular example of successful project and financial management is the new €50 million development at Killybegs fishery harbour centre. This development represents the largest investment in fishery harbours since the foundation of the State. Killybegs is now a world class fishing harbour with considerable potential in the commercial sphere. The Government's investment in Killybegs is creating new opportunities in support of development in the north west region, an area requiring continued investment.

My Department's capital investment programme also funded the state-of-the-art research vessel, Celtic Explorer, which was delivered within budget and on schedule. This Government's commitment to developing our national marine and maritime research capability has been unparalleled. These achievements demonstrate the public sector's ability to efficiently and effectively manage and deliver on large capital projects, on time and on budget.

Both the Government and I as a Minister welcome the scrutiny of public expenditure by the Comptroller and Auditor General. I fervently believe in the imperative on all of us to secure value for money. The annual report focuses on a small number of projects and programmes within my Department. Voted expenditure as a whole was over €40 billion in 2004. My Department's programme areas referred to in the report account for approximately 1% of departmental income and expenditure. The majority of projects provide value for their money to taxpayers and quality delivery, on time and within budget, in all public infrastructure projects.

Government Departments and the public sector generally do not operate in a vacuum when it comes to the management of public expenditure and the delivery of investment programmes. As outlined by the Minister for Finance, detailed guidelines exist for the appraisal and management of capital investment projects. Rigorous appraisal of capital projects is the key to assuring the Government and the taxpayer that our investments are delivering value for money. The evidence of this value for money is all around.

The Government has introduced significant improvements in respect of budgeting for capital investment. It has established a new system of multi-annual capital budgets designed to improve the allocation and management of such expenditure. The new system provides certainty about funding over a multi-year time scale and has helped increase efficiencies. It underpins better planning, sharper decision making and tighter management of budgets across programmes over the medium term.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

From a brown envelope.

Photo of Noel DempseyNoel Dempsey (Minister, Department of Communications, Marine and Natural Resources; Meath, Fianna Fail)
Link to this: Individually | In context

Given its large capital projects portfolio, my Department welcomes the planned reform of public sector contract procurement. My Department has for some time applied fixed price contracting to projects in the fishery harbour and broadband programmes. Despite the criticisms currently being levelled at this methodology, the projects have worked well from the point of view of the Department, the taxpayers and the companies. Because of a lack of experience and probably an over-riding need for easy headlines, the Opposition may misuse——

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

Was it a lack of experience about e-voting?

Photo of Noel DempseyNoel Dempsey (Minister, Department of Communications, Marine and Natural Resources; Meath, Fianna Fail)
Link to this: Individually | In context

——the Comptroller and Auditor General's report. On the other hand, the Government must use it positively.

Photo of Jan O'SullivanJan O'Sullivan (Limerick East, Labour)
Link to this: Individually | In context

It is a very high pedestal.

Photo of Noel DempseyNoel Dempsey (Minister, Department of Communications, Marine and Natural Resources; Meath, Fianna Fail)
Link to this: Individually | In context

The Deputy sitting on those benches should not refer to high pedestals. I could talk about glasshouses and people in them if I wished.

The Government uses the report positively. The overwhelming majority of State projects are being run to vigorous standards and are delivering value for money. The Comptroller and Auditor General's report demonstrates that unprecedented growth carries with it the seeds of error and or miscalculation. These are never acceptable to a Government committed to delivering to the citizens the conditions and services to which they are entitled.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context

To which they have become accustomed.

Photo of Noel DempseyNoel Dempsey (Minister, Department of Communications, Marine and Natural Resources; Meath, Fianna Fail)
Link to this: Individually | In context

The report has caused the Opposition to indulge in cheap point-scoring in a typical effort to——

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
Link to this: Individually | In context

It is very expensive point-scoring.

Photo of Noel DempseyNoel Dempsey (Minister, Department of Communications, Marine and Natural Resources; Meath, Fianna Fail)
Link to this: Individually | In context

——jump on any passing bandwagon. The Government will use the report much more constructively than the Opposition parties, which is why they will remain on that side of the House.

Photo of Jan O'SullivanJan O'Sullivan (Limerick East, Labour)
Link to this: Individually | In context

I wish to share time with Deputies Howlin, O'Shea and Durkan.

Séamus Pattison (Carlow-Kilkenny, Labour)
Link to this: Individually | In context

That is agreed.

Photo of Jan O'SullivanJan O'Sullivan (Limerick East, Labour)
Link to this: Individually | In context

Having listened to the contributions of the two Ministers, Deputies Dempsey and Cowen, they have shown blithe disregard for the unfortunate taxpayers, the majority of whom are hardworking and must engage in micro-management because they do not have sufficient money to run their households. Yet the Minister, Deputy Dempsey, blithely tells us that these millions of euro overspent on programmes and of under-collected tax are matters about which we should not worry. He has told us that we have a wonderful Government and governance and that these large sums of money do not matter.

Photo of Noel DempseyNoel Dempsey (Minister, Department of Communications, Marine and Natural Resources; Meath, Fianna Fail)
Link to this: Individually | In context

I did not say that. The Deputy should not misquote me.

Photo of Jan O'SullivanJan O'Sullivan (Limerick East, Labour)
Link to this: Individually | In context

That is basically what the two Ministers said.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
Link to this: Individually | In context

The Minister, Deputy Noel Dempsey, might defer commenting until the end of the debate.

Séamus Pattison (Carlow-Kilkenny, Labour)
Link to this: Individually | In context

Order, please, allow Deputy O'Sullivan to continue without interruption.

Photo of Jan O'SullivanJan O'Sullivan (Limerick East, Labour)
Link to this: Individually | In context

What the Ministers said displays their arrogance.

Photo of Noel DempseyNoel Dempsey (Minister, Department of Communications, Marine and Natural Resources; Meath, Fianna Fail)
Link to this: Individually | In context

The Deputy should not misquote me.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
Link to this: Individually | In context

The Minister should wait until the end of the debate.

Séamus Pattison (Carlow-Kilkenny, Labour)
Link to this: Individually | In context

Deputy O'Sullivan to continue without interruption.

Photo of Noel DempseyNoel Dempsey (Minister, Department of Communications, Marine and Natural Resources; Meath, Fianna Fail)
Link to this: Individually | In context

I have not interrupted up to now but I am entitled to retaliate.

Photo of Jan O'SullivanJan O'Sullivan (Limerick East, Labour)
Link to this: Individually | In context

The Minister said he has not interrupted up to now, but he is interrupting my contribution.

Photo of Noel DempseyNoel Dempsey (Minister, Department of Communications, Marine and Natural Resources; Meath, Fianna Fail)
Link to this: Individually | In context

I am entitled to retaliate as I had to put up with interruptions from the Deputies opposite for the last five minutes of my contribution.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
Link to this: Individually | In context

The Minister should wait and listen to our contributions.

Photo of Jan O'SullivanJan O'Sullivan (Limerick East, Labour)
Link to this: Individually | In context

The majority of ordinary taxpayers——

Photo of Noel DempseyNoel Dempsey (Minister, Department of Communications, Marine and Natural Resources; Meath, Fianna Fail)
Link to this: Individually | In context

I had to listen to a fierce amount of rubbish before I spoke.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
Link to this: Individually | In context

That is terrible.

Photo of Jan O'SullivanJan O'Sullivan (Limerick East, Labour)
Link to this: Individually | In context

The majority of ordinary taxpayers are scandalised by the waste of such large sums of money.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
Link to this: Individually | In context

The Minister should not run away from this debate.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context

He is running away.

Photo of Jan O'SullivanJan O'Sullivan (Limerick East, Labour)
Link to this: Individually | In context

There was the money spent on the e-voting system, the €150 million we heard about today and the millions of euro referred to in this blue document. This is taxpayers' money — apart from those liable for tax from whom the Government has not collected tax — but this arrogant Government seems to have forgotten that. It is interesting that there are more than 500 social welfare frauds documented but only two tax frauds in the building industry. This is a good example of the Government's priorities. It does not care about big people not paying their taxes but it cares a great deal about the little people who it can catch for breaches under the social welfare system. That is the attitude we have heard from the Government representatives.

I refer to the way in which Exchequer revenue could be well spent in the education system. The Minister, Deputy Cowen, correctly said there is no wastage in the education system. That is true except for the wastage on school projects built under public private partnerships, which was the subject of a separate report by the Comptroller and Auditor General. It showed that such projects cost up to 13% more than if the schools had been built in the normal way. Yet an announcement of further school projects to be built under public private partnerships was made last week. Apart from such wastage, there is not an overspending of Exchequer resources in the Department of Education and Science. That is mainly because the school principals try to spend small amounts of money that are not sufficient to cover insurance and other costs they have to meet. The majority of parents try to cope with the cost of paying for school uniforms and books. We have the second largest classes in Europe and school buildings that are in need of repair. An example of the inadequacy of school accommodation was given on a radio programme today when it was highlighted that the door to a classroom cannot be opened because the teacher has to sit behind it as there is not sufficient space to accommodate the teacher and the pupils.

There are a litany of areas in education where money could be well spent. As a percentage of GDP or GNP among the member states of the EU and members of the OECD, Ireland has one of the lowest levels of expenditure on education, as shown by recent figures. Furthermore, our level of expenditure on education as a percentage of our national wealth is decreasing. Investment in education, if we had the necessary resources, is an area where we could see results. Instead, large amounts of money are being wasted which could be invested at the coalface in areas such as education. That is what is scandalous about such wastage and overspending, which annoys members of the public. That is an example of a bad Government. The Government has considerable Exchequer resources, according to the litany we heard from the Ministers who spoke. Other Ministers will probably tell us about all the money the Government has spent on various projects tomorrow night, but it has not spent such money well. Highlighting expenditure is the purpose of this document. The Government has not spent money in the provision of smaller classes and better school buildings which would make a real difference to people's lives. That is what is shameful about such wastage.

We need to remind the Minister, Deputy Cowen, that when the finances were handed over to this Government by a former Minister for Finance, Deputy Quinn, and his colleagues, they were in good order in terms of the inflation, the national debt and other indicators. The Celtic tiger was well on its way to being established at that stage. What the Government has done with the finances since then is what is covered in this and other such documents. The Government has wasted Exchequer resources and not invested them in areas such as education where such resources could have been properly allocated for the future of this country. That is the real scandal about which we are talking.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
Link to this: Individually | In context

I wish to test the Leas-Cheann Comhairle's patience under Standing Orders by taking the liberty of congratulating him on 44 years membership of this House today. It is a unique and singular achievement that should be acknowledged in the House.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
Link to this: Individually | In context

Hear, hear.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context

That is a good run.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
Link to this: Individually | In context

I want to comment on this important debate. I listened with incredulity to the comments of members on the Government side. It is clear they have been too long in Government. They have no notion of the public attitude and anger to the profligacy that is now the hallmark of the way the Government conducts its business. Waste is of no importance. We saw this attitude displayed again by the Minister, Deputy Dempsey. His response was effectively to say "so what" and on other issues "aren't we able to do it and isn't there pucks of money anyway." That is the subliminal message. It is the grossest of all ironies that the partner in Government is the Progressive Democrats whose reputation was made on the notion of fiscal rectitude and minding the public purse. It is a partner in this profligate Government that has no regard for the public purse or public money.

What has angered people who are struggling to cope with everyday living, particularly in an area such as health, is that the Government promised faithfully 30,000 additional full medical cards, but not one of those has been delivered. Fewer people now have a medical card than the number who had a medical card prior to the last election. The Government promised 100,000 doctor only cards, but again due to the Government's incompetence in the delivery system the announcements are made——

Tom Parlon (Minister of State, Department of Finance; Laois-Offaly, Progressive Democrats)
Link to this: Individually | In context

The number is 200,000.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
Link to this: Individually | In context

Whatever number was promised, not even two, never mind 200,000, have been issued. Such announcements are made and the date for the issuing of these cards is moved forward and then moved forward again. Not one of them has been delivered.

People from my home town and from other regions who have to travel long distances for cancer treatment are angry when they see hundreds of millions of euro wasted. Yet we tell them we cannot afford to provide cancer treatment in the regions. There are so many ways in which such money could be properly spent that such wastage annoys people. There is never an accounting for such wastage. Nobody is responsible for the e-voting fiasco or the opening of Media Lab that were announced with great fanfare and then disappeared, so to speak. The attitude is that nobody is responsible and so what. Nobody was responsible for the National Aquatic Centre, the roof of which blew off. We are the only country in the world where our National Aquatic Centre is an outdoor pool. Nobody is responsible for the computer systems which cost multiples of the original estimated cost and which simply do not deliver, but the attitude of Government is "who cares". It uses the Bart Simpson style defence, "Nobody saw me, you cannot prove it and it was not me."

I want to deal with the issue highlighted in the Comptroller and Auditor General's report on the national treatment purchase scheme. Chapter 14 of that report acknowledges that in 1993 I introduced the precursor of this scheme, the waiting list initiative. I wanted to introduce an emergency scheme to deal with the backlog of waiting lists by negotiating within the State and externally for operations to be done in order that procedures could be carried out. I negotiated for that within the State and as far away as Belfast, and people were helicoptered from Cork. That was a short-term initiative to tackle waiting lists while we built up the capacity in the public health service to deliver within this State. What the Government has done is to change that into a permanent scheme. There is a problem in doing that, and I wish I had more time to develop this point. The problem is in buying procedures from hospitals whose waiting lists are generating the demand. In the report the Comptroller and Auditor General asked how hospitals have a waiting list problem for a given procedure at a time when they have a capacity to undertake a substantial number of additional treatments funded by the national treatment purchase fund. There is an extraordinary dichotomy in trying to square that circle. That is an extraordinary and fair question.

In my last comment in what could have been a long speech on an important report, I wish to say the following to the Minister, Deputy Noel Dempsey. Unfortunately, I cannot say it to him face to face because he has left the House. Having delivered his salvo, he does not want to hear a response. He talked about all the harbour development and so on. I live a few miles from Kilmore Quay, where his decision has destroyed a community of scallop fishermen. When will they get compensation and when will the funding which he is able to slosh around with no accountability be available to give real relief to the people whose lives he has destroyed?

Photo of Brian O'SheaBrian O'Shea (Waterford, Labour)
Link to this: Individually | In context

I support the motion which calls on the Government to bring forward proposals to improve the system of public expenditure decision making to get better value for taxpayers' money and to tackle ongoing waste of public money. I want to focus on the expenditure on the Irish language in this context.

An Coimisinéir Teanga, Seán Ó Cuirreáin, in his inaugural report stated that during 2004 various public bodies had expressed their concerns to him as regards the lack of competency in Irish among their staff. An tUasal Ó Cuirreáin went on to state that the widespread lack of fluency in the language among so many public sector employees was of no little concern to him, especially in the light of the investment that had been made in the teaching of Irish and in the country's educational system. He says that hundreds of millions of euro are being invested, perhaps as much as €500 million annually in the teaching of Irish in the educational system, in line with English and other subjects. It is estimated, he says, that almost 1,500 hours of tuition in the language is provided to school pupils over a period of 13 years from the first day of primary school to the end of second level.

He comes to the kernel of the issue when he says this clearly raises the question as to whether the State is getting value for money from this investment, if it is true that so many are getting through the educational system without achieving a reasonable command of the Irish language — even students who succeed in getting a high grade in Irish in the final examination. An tUasal Ó Cuirreáin believes there is an urgent need for a comprehensive impartial review of every aspect of learning and teaching Irish in the education system. There is far more to it, however, than just a review of the education system. The fundamental flaw of State policy is the absence of a clear and attainable objective as regards learning the language, and more importantly, using it in an environment outside the school. There is widespread soft goodwill and support for the Irish language, but there is also apathy and even hostility towards it.

Too many people are not prepared to engage in any meaningful way with the language and salve their consciences by not questioning the status quo. Seán Ó Cuirreáin is right in saying there must be an urgent root and branch review of the education system, but there must be a clear context for it. It does not matter what happens in schools or colleges if there is not a universal sense of ownership of the Irish language among the people and an appreciation that it belongs to everyone and is a national treasure from a cultural heritage and responsibility viewpoint. Not only is there considerable money being spent on the language in the education system, but the Department of Community, Rural and Gaeltacht Affairs will provide €91 million for Irish and the Gaeltacht this year. It is reported that the number of Irish speakers in the Gaeltacht has collapsed from 250,000 to 20,000 since the setting up of the State.

The recent report of An Chomhairle um Oideachas Gaeltachta agus Gaelscolaíochta also gives cause for concern. It found that 54% of children in Gaeltacht schools use Irish as their usual form of communication, 35% speak more English than Irish, 15% speak mostly English and 4% speak English only. The real question is about not how much is being spent on the language, but how effectively and efficiently we spend it. Between 600 and 700 Departments and State agencies will come under the provisions of the Official Languages Act. This was enacted without any real costing being carried out as regards its full implementation. This is not the way to develop cost-effective policies. We are losing the war as regards the revival of the Irish language and we cannot allow this to continue. The Government needs to urgently decide what our attainable objective is as regards the place of the language in our community and how we can effectively and efficiently deploy resources to achieve it. There must be appropriate mechanisms to monitor progress and adapt where programmes are not working out. Wishing matters to be all right on the night in the face of decline is not good enough.

I have no real optimism that anything will be done by this Government. It has been in office since 1997 and matters continue to get worse in the context of the language. We must look at this area if we are not to lose this national treasure. I am afraid the Government is caught in a time warp, trotting out policies that belong to another age, which did not even work then.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context

I join with colleagues in congratulating the Leas-Cheann Comhairle on his fine record of service to the public and the people of his constituency.

Séamus Pattison (Carlow-Kilkenny, Labour)
Link to this: Individually | In context

I thank the Deputy.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context

I am at a loss where to start. I am amazed at the responses from the Government side of the House. I cannot believe that the Ministers who have so far spoken can say what they have said with straight faces. My only conclusion is that they are having a laugh behind the scenes and that they are laughing in the corridor. There must be a laugh somewhere. At no time in the history of this State has there been so many areas where public spending over target has been questioned and where there has been no accountability or attempts made to explain the reasons for such over-expenditure to the Oireachtas and the people.

The Minister of State, Deputy Parlon, is rushing around the country buying property with gay abandon like John Wayne on a binge. He is doing this because he has an agenda. He has to perform to this agenda as defined under "Parlon country". I wish him well because in two or three years time someone will ask serious questions as regards what he was doing, how he spent and what type of value he got for money. I guarantee that questions will be raised about it.

Tom Parlon (Minister of State, Department of Finance; Laois-Offaly, Progressive Democrats)
Link to this: Individually | In context

The Deputy can ask me. I can stand over everything and I can answer today.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context

We have heard this before, but let me give a few examples.

Tom Parlon (Minister of State, Department of Finance; Laois-Offaly, Progressive Democrats)
Link to this: Individually | In context

Put one down.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context

Reference has been made to the spending on Media Lab. We know where that went. Reference has been made to the original costings of the Luas. Why do projects cost so much more than was anticipated in the first instance? What has gone wrong? Are there no pocket calculators on the Government side that they cannot work it out for themselves? Can they not get some kid in first or even second class to work out precisely where they are going wrong? Why can they not ask the questions?

The toll on the M50 is a very interesting performance. If anyone wants to know the value to the public for money from the M50, they need only observe from the toll plaza for a couple of hours any Friday. They can compare the situation there with any other country. I do not know why that has not been done or why the motorists are being punished. I do not know what they have done wrong. I do not know why somebody has not told motorists why they deserve to be punished in this fashion by this Government.

Reference has already been made to the aquatic centre. Many questions were raised in the Committee of Public Accounts before it was built because of the manner in which it was being handled. Questions were also asked about the associated leisure centre. It was all washed away, however, swept to one side in an enormous welter of consultant generated positive publicity, which is what the Government lives on. We live in a society not governed by Ministers or the Oireachtas but by the reports of consultants, of which there are many on Government shelves. Doubtless, there are more to come, but they are very costly. They will be even more costly. The one fact to emanate from all that is that there will be no Minister accountable to this House at any time in the future.

The Dublin Port tunnel is surely the laugh of all time. Before the project got under way Deputies pointed out to the then Minister for Transport that something was wrong with the plan and the tunnel was not high enough for certain trucks. Sadly, no action was taken and the result has been the recent daft intervention of the Taoiseach when he called for a ban on all trucks which cannot be accommodated in it. The reason was his desire to avoid the embarrassment of being forced to admit we built the tunnel incorrectly. The submissions I and many Deputies made provided adequate technical information to enable the Government to address the issue in good time. The reason it chose not to do so was because it no longer cares.

Séamus Pattison (Carlow-Kilkenny, Labour)
Link to this: Individually | In context

The Deputy should conclude.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context

It grieves me that I do not have more time to discuss this serious matter. I will conclude on the issue of e-voting to which other Deputies also referred. If one were to rake over all the embers, one would not find a better example of daft expenditure by daft Ministers who had no intention of ever reporting on their antics to anyone. Instead, they hired firms of consultants to back up their decisions. The consultants duly complied because they were being paid large amounts of money for that purpose. The €58 million of taxpayers' money poured down the drain has been sidelined by the most recent waste of €170 million on another daft project in the health service. What has been the response from the Government? I am sorry to note we have heard nothing from the benches opposite, nor are we likely to see a Minister of the current Administration stand up and accept responsibility.

Debate adjourned.