From Department of Public Expenditure, NDP Delivery and Reform
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Paschal Donohoe TD, Minister for Public Expenditure & Reform
9th March 2017
Check Against Delivery
Good morning all. I am pleased to have the opportunity to present the 2017 Estimates for my Department’s Group of Votes.
The Group comprises a significant number of Votes, as follows:
the Vote for the Department of Public Expenditure and Reform, for the Office of Government Procurement and for the National Shared Services Office;
the Votes for a number of Offices under the aegis of my Department – the State Laboratory, the Public Appointments Service and the Office of the Ombudsman;
and, lastly, the Votes for Superannuation and Retired Allowances (which covers civil service pensions) and the Secret Service.
The Vote for the remaining element of the PER Group – that for the Office of Public Works – is handled separately by this Sub-Committee.
The structure of the PER Vote remains unchanged in 2017 with two strategic Programmes focused on Public Expenditure and Sectoral Policy and Public Service Management and Reform.
The requested resources for each Programme, in terms of staffing and funding, are set out in Part III of the estimate.
Regarding the objective of the first of these Programmes, the Committee will be aware of the timetable envisaged by the Government with regard to the 2018 Estimates process which will now include a spending review in advance of the Budget.
While moderate, sustainable, expenditure growth is now planned over the medium-term, there are emerging and competing public service demands.
The intention is that the spending review process will help to broaden the Government’s options within the budgetary process by creating fiscal space to fund new policies from within existing ceilings through a systematic review of the existing cost base.
In parallel with this process, my Department is continuing its work on planning the Capital Review, the outcome of which is expected to be published later this year.
The objective of the Capital Review is to provide a focused analysis of capital spending and outline what can realistically be delivered over the remainder of the Plan utilising the additional resources now available.
An increase in Gross Spend on the PER Vote for 2017 will bring total gross allocation to €56 million. This additional allocation is to provide for cross-Government measures and is driven by a number of factors such as:
Turning now to the issue of Public Service Reform, and having come to the end of the Public Service Reform Plan 2014-2016, it is timely to reflect on the future of public service transformation and development, so that we can keep focused on improving public services.
Two successive Reform Plans delivered by my Department over the past five years have enabled us to maintain and improve public services in the face of a necessary reduction in staff numbers and budgets.
Between 2009 and 2014, the Exchequer pay bill was reduced by over 20% and staff numbers were reduced by 10%.
These reforms were implemented at a time of increased demand for many essential public services such as welfare payments, medical cards, school places and pensions.
In December last, I was pleased to see many positive messages about how our public services perform compared to other countries, in the IPA’s Public Sector Trends 2016 report.
Our public services continue to improve and deliver quality services.
My Department is currently engaging across the public service on the preparation of the next phase of reform to cover the period 2017-2020.
The draft plan will then be informed by a period of public consultation in the Spring, with a view to publication by mid-2017.
In addition, I published a second progress report on the Civil Service Renewal Plan last July which highlighted significant progress in implementing the programme of reform to create a more unified, professional, responsive and open and accountable Civil Service.
I would like to take this opportunity to invite Committee members to provide input into the development of the next Public Service Reform Plan.
I would also like to invite your views on the ongoing implementation of the Civil Service Renewal Plan.
I now wish to turn to the issue of public service pay.
I announced late last year that the Government would take a two-phased approach to public service pay.
We have now completed phase one of this process: the additional spending arising from the Government Decision in relation to the anomaly payment for those staff within the Lansdowne Road Agreement, aside from the Gardaí, is a one-off cost of €120 million in 2017.
The required funds will need to be met from available public resources taking into account the scope for reallocation of expenditure while also ensuring that core public services are not adversely impacted as a result of this decision.
The Government will monitor the position closely and will consider how best to meet any additional funding requirements where the need arises.
We are now beginning phase two, during which we hope to negotiate a successor to the LRA.
Before we begin those negotiations, we await the report of the Public Service Pay Commission.
The Commission’s role is to provide evidence-based objective analysis on pay matters to assist Department of Public Expenditure and Reform officials in discharging their negotiation function on behalf of Government.
The Government strongly believes that a collective approach to public service pay is vital to our national interest as it provides for the stable industrial relations environment which has been a pillar of our domestic recovery and restored international reputation.
During this time of international volatility, domestic stability is even more essential.
Collective agreements deliver public service reform, secure productivity improvements and allow for strong fiscal planning – where pay increases are negotiated fairly and budgeted for on a multiannual basis.
This allows us to balance pay increases in the public service with other societal priorities like education, housing and health care.
In addition to progress in public service reform, we continue to pursue a wide ranging reform programme aimed at delivering an open, accountable and ethical government underpinned by a transparent and effective public system.
Real progress has been made with a number of significant legislative and public governance measures being delivered on several different fronts, building on legislation enacted in recent years and progressing several new pieces of important legislation throughout 2017. These include the General Scheme for a Data Sharing and Governance Bill and the Public Sector Standards Bill 2015.
In addition, my Department has undertaken the first review of the operation of the Regulation of Lobbying Act 2015 and of the system for State board appointments.
I expect to submit both of these reports to Government shortly.
Office of Government Procurement
Turning now to the other Votes within the PER Group, I would like to discuss the Office of Government Procurement, or OGP.
Members will know that the Procurement Reform Programme is an important element of the Government’s overall Reform Programme and is tasked with delivering increased value for money, more accurate and timely data, and improvement in the capacity and capability of procurement across the Public Service.
In this regard, the net allocation for the OGP in 2017 is estimated at €19.960m, compared to €19.982m in 2016.
In the four years to the end of 2016, the OGP and its partner sector sourcing organisations in Health, Education, Local Government and Defence had enabled cost reduction procurement savings estimated in the order of €300 million.
Targeted cost reduction savings for the 2017 are between €80 and €100 million for the programme as a whole.
Procurement of supplies and services represents a very significant portion of overall Government spending.
By putting in place procurement arrangements, the aim is to achieve economies of scale and maximum value for money while balancing other requirements including social considerations and SME access.
Members will be aware that the National Shared Services Office within my Department is leading the Shared Services strategy within the overall Reform and Renewal context.
Solid progress continues to be made across all aspects of this reform agenda.
The Civil Service HR and Pensions Administration Shared Service Centre, PeoplePoint, now provides services for 34,500 Civil Servants from 39 Public Service Bodies.
The Payroll Shared Service Centre, the PSSC, has 103,000 payees, of which 57,000 are pensioners, from 43 Government organisations.
The Financial Management Shared Services project has begun the development of a new finance technology solution for Government. The introduction of this single finance technology platform will replace 31 existing finance systems across Government departments and offices, and facilitate transaction processing in the Finance Shared Service Centre.
A provision of €45.173m is sought for Vote 18 and these projects, by their nature, require a certain amount of upfront investment but they will yield economies and efficiencies in the medium term.
Vote 12 – Superannuation and Retired Allowances – primarily provides for pension and retirement lump sum costs for civil servants – including prison officers – and pension payments for dependents.
Year-to-year variation in expenditure on this Vote is primarily driven by the number of individuals who will opt to retire before reaching their compulsory retirement age, and whose years of service and grade/pay level are variable and uncertain.
The estimate I am proposing today – involving a net provision of €359.9m – represents a decrease of some €32 million or an 8% drop on the 2016 net estimate.
This decrease in provision is largely attributable to an increase in contributions from the Single Public Service Pension Scheme.
The Committee has been supplied with details of various other votes, but I will leave it at that for now. I commend the 2017 Estimates to the Sub-Committee and I will be happy to answer any questions which may arise.
ENDS