Aideen Hayden (Labour) | Oireachtas source

I welcome the Minister of State.

I agree with most of the comments on the Bill made by Senator Darragh O'Brien and I am pleased the Government does not intend to oppose it.We all agree that public expenditure is critical to the national economy. A recent report by the Office of Government Procurement entitled, Public Service Spend and Tendering Analysis for 2013, stated:

Prior to the Government’s establishment of the Office of Government Procurement, the State had no mechanism for collecting, analysing and reporting on spend data across the thousands of State-funded bodies in the public service.

It continued:

We have €2.742 billion of non-pay expenditure data [which shows the extent to which public expenditure is important in this country] from the health, justice, local government and education sectors for 2013.

Given the economy has been improving since 2013, that amount of expenditure will have increased quite substantially. The data the office gathered “indicates that 93% of the State’s expenditure is with firms within the State [that is good news] and that 66% of the State’s expenditure is with SMEs [small and medium-sized enterprise sector].”

However, the report also stated:

The Office of Government Procurement, which commenced sourcing operations in 2014, has a clear remit to deliver sustainable savings for the taxpayer through centralising procurement.

No one will argue that we want State bodies splurging money unnecessarily. However, sustainable savings for the taxpayer may not necessarily be achieved through centralised procurement. There is a doubled-edged sword to this on which we need to reflect. It can be argued at European level, as I have done myself, that EU policy on investment under the Juncker plan should take into account regional disparities. There was a proposal that investment under the Juncker plan should be analysed on a profit basis, namely on the added value - words we all know and love - and profitability to the overall European economy. The difficulty for Ireland is that it is a small open economy on the periphery of Europe. If that is going to be the only basis on which investment under the Juncker plan is to be delivered, then it would not be in our particular interests. In such a system, expenditure would be sucked into the centre while countries on the periphery would lose out.

This is no less valid for Ireland’s procurement process. If public service contracts are centralised and preference is given to a centralised tendering process, investment in these contracts will start going to larger companies and inevitably will be sucked into eastern parts of the country. There is plenty of evidence to show that is the case. We need to be aware of the cost of unbalanced regional development, a cost which is difficult to quantify. I am concerned that we need to balance cost against social considerations but in a different way than that laid out in some of the documents I have examined.

I am also concerned by the language used. Value for the taxpayer must be considered in the broadest possible way. Take a job in a small town on its knees. The multiplier from one additional job to such a town will be much more significant to that local community than giving it, for the sake of argument, to Smurfit in Dublin 6. There would be significant additions to local communities by disbursing jobs across the country.

I am concerned we go too far in centralising State contracts. There was talk of centralising the arts and crafts supplies for all schools. Most schools would over-order at the start of the year to ensure they did not run out of supplies as they could not go down to a local supplier if they needed additional supplies. It would also mean small local firms would not have access to that business.

I accept the establishment of the Office of Government Procurement is a step in the right direction. However, the levels of insurance required for standard contracts, RFTs, request for tenders, are too high for some of the jobs tendered, such as those for the schools summer works programme. I do not believe reasonably small contracts, which should be going to local firms, should require high levels of insurance that have nothing to do with the contract tendered. I am aware of cases where State contracts have been put forward for small consultancy work which have required employee insurance when there were none. This needs to be examined. Being the best boy in the class in Europe when it comes to procurement is pointless because our small businesses are losing out. We had the benefit of the recent announcement of the summer works programme for schools by the Minister for Public Expenditure and Reform, Deputy Howlin. I want to see that business going to small local employers and the money seen on the ground, not the nonsense of €3 million worth of employment insurance being required. Will the Minister of State ask the Office of Government Procurement to look again at the requirements for insurance limits and ensure they are reasonable for the work commissioned?