Seán Fleming (Laois-Offaly, Fianna Fail)
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120. To ask the Minister for Public Expenditure and Reform the reason examining the costs and the benefits is not an appropriate tool for considering the cost of reducing the number of staff in the public service compared with the ongoing benefits of cost reductions in the area; and if he will make a statement on the matter. [20586/13]

Brendan Howlin (Wexford, Labour)
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The Deputy has been asking about the appropriateness of cost benefit analysis (CBA) as an evaluation tool for appraising the Government’s policy on public sector reform and headcount reduction. CBA is a technical evaluation tool for appraising the merits of public expenditure projects. It is one of a number of appraisal methods – as outlined and explained further in the Public Spending Code – and its most common application is for evaluating proposed new investments in physical infrastructure projects and proposed new schemes of current expenditure. There are very clear rules and guidelines in this area set out in the Public Spending Code, which obliges all Irish public bodies to treat public funds with care and uphold value-for-money best practices. As the Deputy is aware, the programme of reducing the size of the public service is connected with reducing the cost of Government and reforming public services. It is clearly not a new spending proposal.

I expect that the Deputy’s interest is in assessment of the pros and cons of the Government’s policy on public service reform, including reduced staffing levels. A critical factor informing our policy approach has had to be the imperative of reducing our large deficit and bringing the public finances back onto a sustainable footing. Many of our choices have been difficult, but with public service pay and pensions accounting for over one-third of current Government expenditure, it is clear that this area has to continue to contribute to that effort, and headcount reduction has been a key element of our approach to containing and reducing these costs.

Nonetheless, while working to address the stark realities of the public finances and the unsustainable cost of the public service, the Government’s measured approach to the matter seeks to mitigate the potential disadvantages of reduced staffing levels. To this end, the numbers reduction policy takes account of priority areas, by allowing for replacement of key staff especially in the education sector and in key areas of health; gives sectorial and local management discretion in exactly how staff resources are allocated within an area; provides a framework for redeployment of staff across the public service; and includes introducing new streamlined services such as shared services, which allow functions to be maintained and indeed enhanced with reduced staff levels and at a lower cost.

Reform of the public service is necessary both because we need to reduce costs given our serious fiscal position, and because the quality of public services for the citizen needs to be continually improved and value-for-money for the taxpayer protected. The Government’s reform plan is comprehensive and ambitious. It captures a wide range of reform projects, including: ICT infrastructure projects to support enhanced automation, better online services and shared payroll and HR services; change management projects to support more effective work practices, redeployment, rostering and manpower planning; organisation restructuring, involving mergers of previously separate state bodies and of divisions and work areas within organisations.

These reform projects will allow the public service to function more efficiently and more cost effectively over the medium term. Crucially, they are facilitating the delivery of services while making headcount reduction. Of course, where once-off investment costs arise in these reform areas – such as new ICT platforms for example - there must be full compliance with the Public Spending Code, including where appropriate under the Code the need to carry out a CBA.