Thursday, 14 November 2019
Ceisteanna Eile - Other Questions
Public Expenditure Policy
9. To ask the Minister for Public Expenditure and Reform the extent to which he remains satisfied that good practice in terms of public expenditure and reform remains in place and capable of dealing with possible overruns throughout the public sector throughout the course of 2020; and if he will make a statement on the matter. [46864/19]
It continues to play a big role. As we look at the debate on where we are in expenditure and changes that are happening there, I continually hear calls, both inside this House and elsewhere, for additional capital investment and additional spending of money to deliver new homes and better public transport. I understand why those calls are made but we should also acknowledge that from 2016 and as we move to 2020, the level of capital spending in Ireland will move from €4.2 billion per year to just over €8 billion per year. For this year alone, the amount of capital investment in our country will have increased by 22%, which is playing a role in allowing our economy to continue to do well while we are seeing change and the so-called headwinds - a dreadful phrase - of things changing elsewhere or getting more difficult. It is like the idea that risks are always tilted to the down side. Things are shifting elsewhere and we are beginning to see some economies slow down in Europe. So far, our economy continues to perform well. The additional capital investment we are making available for this year is playing a role in that. I have already had an exchange with Deputy Pearse Doherty where I have gone through the kind of reforms we are making. I make the case to Deputy Durkan, which he might be sympathetic towards, that we are doing well in making and delivering many projects across the country but of course things happened with the national children's hospital that should not have happened and that we do not want to repeat. This is why we have the work on the public spending code under way and this is why decisions have been made to put individual capital projects back out to tender to try to get better value for the Irish taxpayer.
I thank the Minister and I acknowledge his response. Taking the children's hospital for instance, I am a member of the Committee on Health and we have gone over that in detail. In some cases are Departments working on old figures that have not been revised? That is how it would appear to me because some of these projects have been on the horizon for a long time. Is the update on costs done on an annual basis or is it forensically tested with a view to ascertaining if the figures being presented at any given time represent a new evaluation of a particular project or if some alternative method is being used?
That question cuts to the heart of a number of the challenges we have. On the question of whether they are using old figures, I would refer to the degree of cost inflation taking place in our economy with all the pressures that are there to deliver more homes while there is huge private sector investment under way. A business case can be put together with figures that are right at a point in time. Those figures can be done with best practice and done professionally but because of how quickly things change within our economy, for some big projects those figures can no longer be reflective of what is happening in the economy quite soon afterwards. That is the reason why we have work under way in the public spending code. In particular for projects above €100 million, we need to work to make sure the business case and the cost of these projects continue to be realistic and accurate.
I again seek to ascertain the degree to which direct curtailment and supervision of costs on the one hand versus reform play a meaningful role in the context of containing expenditure within the projections. Some of the projects we are talking about have been 20 to 40 years old and they would have had to be updated on a regular basis, presumably on an annual basis but I have doubts about that. Is there a tendency in a project that has been in the offing for a long period for figures to be offered up as if they were already established and tested? I would like to be assured whether or not sufficient stringency tests are put in place to challenge this tendency, particularly in long-awaited projects.
The answer is "Yes" but clearly we have to continue to look at our public spending code to make sure it is in line with best practice. I emphasise again that for so many projects across the length and breadth of our country we are able to deliver them in a timely way in line with the costs we have for them. One of the issues I have been grappling with is the situation where we have a major project coming up, for example, and Deputy Durkan and the communities he represents want to see it delivered. An understandable question the Deputy would then ask the Government of the day or the agency charged with the project is how much the project will cost. The Deputy would want to know what the cost of that project would be. An agency or a Government Department would supply that figure to the Deputy in good faith and they would supply it to him because as a Member of the Oireachtas he has a right to know what the figure is. However, the length of time between a project being agreed and then going to tender can be many years. It happens then that a project ends up being evaluated against a figure that was shared in good faith but the economy has changed, which means the tendering process delivers another price. That is the issue we have to grapple with in the public spending code.