Dara Calleary (Mayo, Fianna Fail)
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58. To ask the Minister for Finance the reason for the €6 million in capital underspend in his Department as outlined in the fiscal monitor for December 2017. [2493/18]

Paschal Donohoe (Dublin Central, Fine Gael)
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The underspend the Deputy is asking about refers to the Finance Vote Group. There are 4 Votes in the Finance Group: The Department of Finance, the Office of the Revenue Commissioners, the office of the Comptroller and Auditor General, and the Tax Appeals Commission.

A sum of €25m (rounded to the nearest million) is profiled as Capital for the Finance Vote Group in the December 2017 fiscal monitor.  Allocations were made under two Votes; €23m to the Office of the Revenue Commissioners and €2.3m to the Department of Finance net of any capital carryover from 2016. The €19m outturn included in the fiscal monitor relates to Revenue’s expenditure. Of the €6m variance, €4m applies to Revenue and the €2m to the Department of Finance. The reasons for the variances are set out below:

Vote 9 - Revenue Commissioners: 

Total expenditure by Revenue on Information and Communications Technology (ICT), Capital and Current, amounts to €54.2m or 46.4% of Revenue’s total non-pay costs in 2017. Continued investment in ICT has been a major driver of productivity growth in Revenue, as well as enabling better service levels for the public and enhanced governance.  Every year Revenue needs to develop and implement a series of urgent ICT projects that ensure Revenue’s ICT infrastructure can support budgetary and legislative changes as introduced by the Government or the EU, very frequently within tight timeframes.

The information in the fiscal monitor is based on data available as at 18 December 2017. Revenue’s Capital expenditure largely relates to expenditure on ICT. A considerable lead-in time for final classification between Capital and Current ICT expenditure is required; as such issues as the timing of the roll-out and operationalisation of ICT products are factored into the classification process. Following a number of end year adjustments and re-classifications, Revenue’s Capital expenditure amount was subsequently increased from €19m to €20.3m. This has reduced Revenue’s variance to €2.7m. Some €2m of this amount was spent in 2017, but was classified as Current expenditure. However, in line with standard practice relating to the timing of final classifications between Capital and Current expenditure on ICT projects, it is anticipated that further re-classifications from Current to Capital expenditure will be completed by end Quarter 1, 2018.

Revenue’s total administrative budget expenditure in 2017 amounted to €408.7m, or 99.8% of Revenue’s administrative budget allocation. 

Vote 7 – Department of Finance

Regarding the underspend in the Department of Finance vote, a capital allocation of €2.3m was made, €0.7m for IT related capital spend, and €1.6m for Facilities related capital spend.

Funds originally allocated for fitting out a premises the Department was going to locate some staff in specifically to provide new ICT hardware, however as the Department will not now be re-locating staff to those offices these funds were not spent.

There was an underspend on the capital allocation made for eDiscovery as the project concerned started later than anticipated.

There was an underspend on the capital allocation made for the Print room as some items were not considered essential given the functionality of machines actually procured. In addition, the actual cost of the machines procured came in below the capital allocation made.

In total there was an underspend compared to budget of €0.6m on IT related capital spend.

A Capital allocation for 2017 of approximately €1.6m was made to the Facilities Management Unit. Spending in 2017 amounted to €0.2m resulting in an underspend of €1.4m.

The underspend in relation to the Facilities Management Unit of the Department is due mainly to the fact that progress on projects planned for 2017 was slower than expected.

Three projects in particular accounted for bulk of the underspend broken down as follows:

An enhancement of physical security arrangements in South Block Government Buildings, which was estimated to cost in region of €0.3m, and originally planned for Q3, 2017 will not be completed until 2018.

The relocation of circa 120 staff from the Departments of Finance and Public Expenditure and Reform to new accommodation in Miesian Plaza, Lower Baggot Street, Dublin 2 did not take place as expected in Q4, 2017 due to delays in preparing the accommodation for occupancy.  An amount of €0.4m in respect of outfitting of the new accommodation had been included in the 2017 estimate.

Activity aimed primarily at addressing heating and ventilation issues at 7-9 Merrion Row, Dublin 2 did not advance at the rate originally expected in 2017.  An amount of €0.6m had been allocated towards the planned works in the 2017 estimate.

In addition to the foregoing, delays in a number of smaller projects originally planned for commencement in the latter end of 2017, e.g. enhancement works to off-site document storage facilities, meant that the related spending did not materialise in 2017.