Ciarán Cannon (Galway East, Fine Gael) | Oireachtas source

I would like to commence by saying how pleased I am to have this opportunity to address the House in respect of the Public Service Management (Transparency of Boards) Bill 2014 brought forward by Senator Quinn. At the outset, I would like to say that policy proposals from our colleagues to further improve the effectiveness of corporate governance in the public service are greatly welcomed.

By way of outlining the context to and current developments at Government level on the important issues raised in this Bill, I can inform the House that a revised version of the code of practice for the governance of State bodies, last issued in 2009, is due for publication shortly. The guide has been revised to take account of general developments concerning both the supervisory and monitoring regime between Departments and the State bodies under their aegis and guidelines to be observed by the boards of State bodies in matters of internal governance. More specifically, the code of practice will include, for example, a checklist so that boards of State bodies can ensure compliance with the code on accountability for public money, reporting, audit, roles and responsibilities and standards of behaviour.

This Government has been pursuing a wide ranging political reform programme aimed at delivering open, accountable and ethical government underpinned by a transparent, efficient and effective public system to help rebuild trust in government and in the institutions of the State. Many of the commitments in the area of political reform set out in the programme for Government and in the public service reform plan are now in delivery phase and real progress is being made on several different fronts. This includes, for example: the extension of the Ombudsman's jurisdiction and powers; provision of a detailed legislative framework for parliamentary inquiries; the regulation of lobbying; extensive reform of freedom of information, FOI, legislation; and the introduction of legislation protecting whistleblowers.

I would further like to inform the House that an overhaul of the ethics legislation is now in hand in the Department of Public Expenditure and Reform aimed at supporting and promoting ethical conduct, creating an environment in which ethical issues and conflicts of interest are managed effectively and corrupt and unethical conduct are severely discouraged. Based on the work already done, it is clear that it is necessary to modernise the existing framework to make it simpler to understand and to administer. There is a need also to ensure that a consistent approach is taken to ethics related processes and duties, right across the public sector as a whole.

In this context it is of interest to note that the World Bank has stated that a key lesson from experience in tackling corruption is that it needs to be addressed simultaneously on two fronts, prevention and enforcement. Income and asset disclosure systems are gaining prominence as a tool in the fight against corruption and have the potential to support efforts in both prevention and enforcement. This contribution is recognised in the United Nations Convention against Corruption, UNCAC, and other international anti-corruption agreements. The World Bank has noted that a wide variety of approaches might be taken and a wide variety of challenges are faced by different disclosure systems. It is of interest that its main finding is that there is no single optimal approach to design and implementation. Context is essential and effectiveness depends on the right questions being asked and addressed at the right moment.

In terms of where this Government is currently at in addressing these critically important governance issues I can say that work on draft heads of a Bill to strengthen, modernise and reform the existing ethics framework are at a very advanced stage in the Department of Public Expenditure and Reform and it is hoped to bring proposals to Government in the coming weeks. While the amendments required are much broader than those provided for in the Bill before this House, the thinking behind certain of the proposals in the Bill will invariably have a bearing on them.

The intention is to refer the proposals to reform the ethics framework to the Oireachtas Joint Committee on Finance, Public Expenditure and Reform to request the joint committee's views. This will provide the joint committee with an opportunity to consult with civil society groups, advocacy groups and individuals with expertise in ethics. It will also enable the joint committee to provide input and to contribute to the development of the revised framework as envisaged in the Dail reform announced last September.

Turning attention to the Bill entitled the Public Service Management (Transparency of Boards) Bill 2014, I note that the central objectives of the Bill are: to preclude persons who serve on the board of a public body from being paid for their membership of that board; to ensure that persons who serve on the board of a public body will only be entitled to be employed or engaged by that public body in circumstances where they file a declaration with the Standards in Public Office Commission detailing payments received; and to ensure that persons who serve on the board of a public body will only be entitled to seek to be reimbursed for vouched expenses in circumstances where they file a declaration with the Standards in Public Office Commission detailing payments received. Expenses that are not vouched will not be reimbursed.

The Bill defines a public body as an entity that is wholly or partly funded directly or indirectly out of moneys provided by the Oireachtas or from the Central Fund or the growing produce of that fund and in respect of which a public service pension scheme exists or applies or may be made. The Bill includes subsidiary companies where the latter pension provision may exist. The list of bodies coming within the purview of the Bill would therefore include commercial State companies and non-commercial State bodies which are already come within the Ethics in Public Office Acts and the Standards in Public Office Act. The Bill also proposes to bring those not for profit organisations in receipt of public funding and having public service type pension schemes within its scope.

I would like to begin by making certain comments on the issue of the payment of fees to board members. This House will be aware that considerable work has been carried out by the Minister for Public Expenditure and Reform in reducing the levels of fees paid to individuals for participation on the boards of State bodies. Currently the fees payable to board members depend on the size and complexity of the State organisations they govern. In order to determine what level of fee is appropriate, State bodies are divided into four categories, depending on the pay of their chief executives. This rationale is regarded as being the fairest in terms of determining the appropriate fee payment to State board members. Overall, the fees have been significantly reduced in recent years. These fees were reduced by 10% in 2009 and, in the case of those bodies covered by the Financial Emergency Measures in the Public Interest (No. 2) Act 2009, were reduced by a further 10% in 2010. The current arrangements in relation to the payment of fees to board members is that they have been reduced significantly in amount in the period since 2009 and currently average in payment at €18,788 for board chairs and €10,421 for board members. In general, for fees to be payable to the chairperson or members of a board an enabling provision in the legislation governing the State body concerned is required. Such a provision typically specifies that members may be paid such remuneration, if any, that the sponsor Minister, with the consent of the Minister for Public Expenditure and Reform, may determine. It is the position that the payment of board fees is tightly controlled and monitored at central level.

Regarding public servants who are members of State boards, the one person one salary, OPOS, rule applies and fees are not payable to them in respect of their board membership. There is however an exception to this restriction in that worker directors on certain commercial State boards are for legal reasons required to be remunerated on the same basis as other board members in respect of such board representation. Since 2012 formal provision has existed to allow board members the option to choose to waive their fee payment and many do so, forgoing personal gain in the interests of the State.

The benefits to public spending of reducing State board fees have constituted but a small element of the financial contribution in the overall scheme of other remuneration reductions affecting public servants and can be said to have ensured a degree of solidarity in this regard. It would be erroneous however to assume that such fee reductions may in some way imply that the payment of fees does not have a place in the provision of board members' services to the State. For the most part, while the fees that are paid to board members could only be regarded as a disproportionately small level of recompense for the work that they undertake, such fees nevertheless enable the State to continue to access a wider pool of candidates for State board appointments with valuable private sector expertise that may otherwise be unavailable to it.

It is unclear as to whether this range of candidate would be available for board appointments were the board fee payment to be removed.

The proposal in the Bill to abolish the fee payment would represent a major departure from current practice. It would constitute a move which has the potential over time to have an adverse impact on the economic profile of board members available for such State board appointments. This is because the personal circumstances of the individual involved could, in the absence of a fee payment, determine whether they may or may not go forward for State board appointments. The abolition of the fee payment is not in the long term regarded as being supportive of ensuring boards are composed of suitably qualified candidates drawn from a wide range of social and economic backgrounds. In addition, and as already alluded to, there are certain legal constraints in regard to removing fees from certain board members such as worker directors appointed under the Worker Participation (State Enterprises) Acts. Accordingly, for the reasons that I have outlined, it is not considered to be in the best overall interest of State organisations for the Government to support this Bill on the particular measure of its proposal to abolish the payment of fees to State board members.

I turn now to those provisions of the Bill that ensure that persons who serve on the board of a public body will only be entitled to be employed or engaged by that body in circumstances where they file a declaration with the Standards in Public Office Commission detailing payment received, or that persons who serve on the board of a public body will only be entitled to seek to be reimbursed for vouched expenses in circumstances where they file a declaration with the Standards in Public Office Commission detailing payments received along with the requirement that unvouched expenses would not be reimbursed. In examining the call in the Bill for a personal declaration with SIPO, I think it would be useful to outline the current statutory arrangements for State board members in this regard.

The Standards Commission has a supervisory role under three separate pieces of legislation: the Ethics in Public Office Acts 1995 and 2001; the Electoral Act 1997, as amended; and the Oireachtas (Ministerial and Parliamentary Offices) (Amendment) Act 2001, which will be replaced from 1 July 2014 by the Oireachtas (Ministerial and Parliamentary Offices) (Amendment) Act 2014 regarding the parliamentary activities allowance. The function of the Standards in Public Office Commission under the Ethics Acts in so far as members of State boards are concerned relates to the disclosure of interests by State board members, guidelines for State board members on compliance with the Ethics Acts, and complaints and investigations regarding contraventions of the Ethics Acts or alleged specified acts within the meaning of the Ethics Acts by State board members.

State board members are required by the Ethics Acts to make statements of interests to an officer of the body determined by the Minister and to the Standards in Public Office Commission. Such a statement is required where the board member or a connected person, such as a spouse or child, has a material interest whereby they might seek to influence the board member to benefit themselves.

The supervisory role played by the Standards in Public Office Commission does not extend to the proposals set out in the Bill requiring board members to file a declaration with the commission detailing payments received in respect of work that may have been carried out by the board member on behalf of the organisation or reimbursement of expenses that are vouched. While it can be expected that the generality of expenses claimed by board members will be, for example, for travel and subsistence payments, it is noted that the Bill draws particular attention to those payments that might arise from the conduct of business by board members with their respective State organisation and which are not explicitly addressed in current legislative provisions.

Taking into account the current statutory provisions set out in the Ethics Acts in respect of the declaratory requirements of board members, and having regard to the proposals in the Bill in respect of widening the scope of such declarations to include the detailing of payments received by board members on a vouched basis, I can assure the House that the proposals in the Bill will be fully taken into account in the context of the development of legislation to put in place a revised ethics in public office framework, which I referred to earlier. While the Government will not be proceeding with this Bill due to the fact that its own Ethics in Public Office Act reform legislation is pending, it is nevertheless the position that certain of the proposals in the Bill will be closely considered in the context of drawing up a revised legislative framework in this regard.