Opening Statement to the PAC of Secretary General Watt
Ó An Roinn Caiteachais Phoiblí, Seachadta ar an bPlean Forbartha Náisiúnta, agus Athchóirithe
Foilsithe
An t-eolas is déanaí
Teanga: Níl leagan Gaeilge den mhír seo ar fáil.
Ó An Roinn Caiteachais Phoiblí, Seachadta ar an bPlean Forbartha Náisiúnta, agus Athchóirithe
Foilsithe
An t-eolas is déanaí
Teanga: Níl leagan Gaeilge den mhír seo ar fáil.
Check against delivery
Thursday, 6th July 2017
Public Accounts Committee
Opening Statement by Mr. Robert Watt, Secretary General
Thank you Mr. Chairman. I would also like to thank the members of the Committee for the opportunity to make an opening statement.
Before I give an outline of the matters to be examined today, I would like to set out the Department’s strategic objectives and the progress we have made in delivering on these in recent years.
The Mission of the Department of Public Expenditure & Reform
The Department of Public Expenditure & Reform pursues two key strategic goals:
(i) To support economic and social progress by managing public expenditure on a long term, sustainable basis; and
(ii) To improve the effectiveness of the Public Service by making it efficient and responsive to the needs of the citizen and open and transparent in the manner it conducts its business.
These goals complement each other in delivering on our mission to serve the public interest by supporting the delivery of well-managed, well-targeted and sustainable public spending through modernised, effective and accountable public services.
Prudent management of expenditure has played a significant role in the stabilisation of the public finances with a reduction in the underlying deficit from 11.5% in 2009 to less than 1% in 2016.
Economic conditions have improved markedly in recent years and it is against this backdrop that the Government has been able to allocate targeted increases to public services and capital investment in the last three Budgets. Nonetheless, expenditure increases have been prudent and sustainable, averaging just 3% per annum over the 2015-2017 period, with capital spending increasing at a faster rate.
A suite of reforms to the budgetary process have been implemented over this period to allow the Public Service to become more effective in managing expenditure and to enhance budgetary engagement and oversight by the Oireachtas.
The most recent initiative in this respect was the publication of the first Public Service Performance Report in April this year. This Report strengthens the focus on what is being delivered with public funds by building on elements of the performance budgeting initiative that are already in place and creating space for enhanced dialogue and more effective parliamentary engagement.
The Minister will shortly publish the 2017 Summer Economic Statement, which will set out the broad parameters for macroeconomic and fiscal growth and constraints over the medium term and facilitate discussion about options for the October Budget and Estimates.
This will be followed by the Mid-Year Expenditure Report. The Mid-Year Expenditure Report will set out the pre-Budget position for the Budget 2018 Estimates and will reflect the impact on the medium term expenditure position of the fiscal strategy set out in the Summer Economic Statement.
The Mid-Year Expenditure Report will also provide an update on the Spending Review, which is also underway, setting out a broad overview of the redesigned process and key messages. This update will be accompanied by a paper analysing input/output trends and drivers in key sectors, and a series of analytical papers evaluating programmes across Departments.
The Spending Review has been re-designed to shift the focus from the need to reduce overall expenditure, to a need to prioritise between competing demands. This is the first year of a rolling system of annual reviews that will examine all day-to-day spending by 2019.
As the Committee is aware, we are in the process of reviewing our overall capital spending policy. Addressing key infrastructural needs can increase Ireland’s competitiveness, growth potential and its attractiveness to increased flows of foreign direct investment.
The Capital Plan, published in 2015, set out the Government’s commitment to around €42 billion in State investment in capital projects over the six-year period 2016 to 2021. The mid-term review of the Capital Plan is underway and will be published on Budget day.
The mid-term review will set out how the Government will allocate an additional €5.1 billion available for capital investment over the period 2018 to 2021. €2.2 billion of this has been committed to housing and, factoring in other commitments made in Budget 2017, this leaves €2.6 billion for allocation in the mid-term review.
Submissions, including proposals for additional funding, have been received from Departments and are being evaluated. A public consultation process has also been completed and the evaluation of the submissions received is ongoing.
Informed by the findings of the review, the Government will decide on how to allocate the additional funding available after the summer, for announcement in Budget 2018.
These additional funds for investment in infrastructure have become available, in part, because of the restraint we have shown in spending in other areas, including Public Service pay and pensions. Keeping the paybill affordable and sustainable is one of the biggest challenges in controlling public spending.
The Workplace Relations Commission has issued and commended to each of the parties to the recent pay negotiations, proposals aimed at delivering an extension to the Lansdowne Road Agreement. This follows on from the publication of the report of the Public Service Pay Commission in May, which formed the basis for this round of pay talks.
The proposed agreement will run from 2018 to 2020 and will cost
€887 million over that period. By comparison, the Lansdowne Road Agreement cost €844 million.
By the end of this Agreement, pay cuts will have been restored to all public servants earning up to €70,000, which accounts for almost 90 per cent of public servants.
The Agreement also provides that over 70 per cent of public servants will make a further permanent contribution to their pension. This measure represents a major contribution to the future sustainability of Public Service pensions.
The terms of the new Agreement must now be balloted upon by the public service unions. It is expected that this process will be completed in the autumn.
Over two Public Service Reform Plans, we have moved our reform efforts from a focus on efficiency and cost containment towards an overarching objective of better outcomes for stakeholders. The third and final progress report on the implementation of the second Reform Plan will be published shortly.
It is now time to move from a stage of reform to one of development and continuous improvement. The next phase of public service reform is being shaped with this vision in mind. A new plan, Our Public Service 2020, is currently being developed. It is designed around three pillars – Delivering for our Public, Innovating for our Future, and Developing our People and Organisations.
Work on the plan has so far involved a wide-ranging process of engagement with stakeholders in key sectors of the Public Service. There will also be a public consultation, with details to be announced in the coming weeks.
It is intended to publish the finalised Framework and accompanying Actions towards the end of 2017.
The Civil Service Renewal Plan was published in late 2014. The Plan sets out a vision and 3-year action plan to achieve a more unified, professional, responsive, open and accountable Civil Service that can provide a world-class service to the State and the people of Ireland.
The third Progress Report detailing the progress on implementation was published last week. This report shows that significant progress has been made in implementing the priorities during phase three of implementation and also captures the progress made across the full programme. However, there are major challenges still remaining around performance, absenteeism and governance.
The Department continues to pursue a wide-ranging reform programme aimed at delivering open, accountable government underpinned by a transparent, efficient and effective Public Service.
Ireland is a member of the Open Government Partnership (OGP), a multilateral initiative of some 70 countries that aims to secure concrete commitments from governments to promote transparency, empower citizens, fight corruption, and strengthen governance. A public consultation on the Implementation of Ireland’s OGP National Action Plan 2016-2018 is currently underway.
Publication of official non-personal data in open format is a core element of the OGP Plan. There are currently over 4,800 datasets from 97 publishers on our national Open Data Portal. Work is progressing on a new national Open Data Strategy 2017-2022 and a public consultation on the draft strategy closed for submissions earlier this week.
Better use and re-use of the data Government holds is a cornerstone of the drive for greater digital delivery of services, a key priority in our efforts to reform the Public Service.
The Office of the Government Chief Information Officer (OGCIO) was established in the Department in 2013 to maximise the benefits of ICT in improving the efficiency and effectiveness of public service delivery. The OGCIO is leading the implementation of the Public Service ICT Strategy, working with Departments and agencies across the Public Service.
One of the key objectives of the ICT Strategy is the digitalisation of key transactional services and the increased use of ICT to deliver improved efficiency within public bodies and provide new digital services to citizens, businesses and public servants.
Digital public services reduce the administrative burden on businesses and citizens by making their interactions with public administrations faster and efficient, more convenient and transparent, and less costly. Governments can also use eGovernment and Digital to help unlock economic and social benefits for society as a whole.
A full Public Service wide cataloguing of all public services that are, or can be, delivered online has taken place. This creates an up-to-date authoritative register of such services, supporting the Minister in policy formulation in this area, via a newly established Digital Programme Office in the OGCIO.
A new eGovernment Strategy, to be published shortly, will set out the means to deliver the Government’s commitment to better serve its people using modern, secure and robust technology.
A new Government Digital Services Gateway, due to go live shortly, is a key element of the eGovernment Strategy. The Gateway will present public services of most interest or relevance to citizens and businesses. The aim is to ensure that all Digital Government Services are high quality, secure, reliable and easy to use; that they are provided on a cross-government basis and designed around a positive user experience.
The Government Digital Services Gateway together with the Public Services Card and MyGovID, our online identity service, are key to Ireland becoming an exemplar in digital transactions.
Work is also progressing on the Data Sharing and Governance Bill, which will provide a generalised legal basis for the sharing of data between public bodies while setting out appropriate principles and safeguards under which such sharing should take place. This Bill is currently going through pre-legislative scrutiny.
One of the biggest transformational changes the Civil Service has experienced has been the transition to shared services for key back office functions.
The National Shared Services Office (NSSO) is leading on Shared Services strategy and the implementation of Shared Services projects and operations within my Department. The NSSO is directly responsible for delivering business shared services within the Civil Service and also supports other Public Service sectors in progressing their shared service commitments.
The NSSO was established in 2014 on an administrative basis within my Department. In 2015, the Government approved the establishment of the NSSO on a statutory basis as a new Civil Service Office under the aegis of my Department. Last month, the NSSO Bill completed the Committee Stage.
The comprehensive reform of how the State procures goods and services has also delivered a transformational change for the better. This has been led by the Office of Government Procurement (OGP).
Between 2013 and 2016, in excess of €300 million in procurement savings has been enabled by the OGP and the sector sourcing organisations in Health, Local Government, Education and Defence.
The OGP currently has in excess of 100 active framework agreements and since 2014 has put in place 853 contracts / mini-competitions, representing an estimated framework / contract value of €12 billion and an estimated annual spend of €3 billion.
OGP is building increased transparency of the procurement process through its annual Public Service Spend and Tendering Analysis Reports. The 2014 report, which is the most recent, indicates that 95% of expenditure analysed is with firms with an Irish base and that the majority of spend is with the SME Sector.
I would now like to turn to some of the specific items on the agenda today.
Vote 11 – Office of the Minister for Public Expenditure & Reform
In respect of our own Vote, the Estimate for 2015 was €40.6 million, a 13% increase on the 2014 Estimate. This was driven mainly by the need for additional resources for the Office of the Government Chief Information Officer, technical support and assistance for regional assemblies and structural funds and the reform agenda.
The audited surplus to be surrendered was €4.1 million. This surplus arose for a number of reasons which are set out in the briefing supplied, including savings on pay and a number of reform projects.
Vote 12 – Superannuation and Retired Allowances
The second item on the agenda is Vote 12, Superannuation and Retired Allowances. The audited 2015 Appropriation Accounts for this Vote show a net outturn of €363 million compared to an estimate of €387 million, giving a surplus of €24 million.
A Supplementary Estimate of €37 million was granted for this Vote in 2015 on the basis that the number of retirements in 2015 was substantially greater than projected for the year. In the event, the excess spending came in lower at €25 million, while the level of receipts came in higher at €34 million. These additional receipts came mainly from the Single Pension Scheme, a considerable proportion of which were not credited to the Vote until after the Supplementary Estimate had been taken.
Vote 18 – Shared Services
The 2015 Estimate of €40 million, including capital carryover, for Vote 18, Shared Services, represented an increase of €8.5 million on the previous year. This increase was largely driven by the planned further migration of payroll functions to the Payroll Shared Services Centre and the provision of resources for the delivery of the Financial Management Shared Services solution.
The net outturn was €22 million and the surplus of €18 million arose because of a delay in the tender process for the Financial Management Shared Services project and the later than expected migration of staff to Payroll Shared Services.
€1.2 million of this surplus was deferred as capital carryover to the Financial Management Shared Services project.
Vote 39 – Office of Government Procurement
The Estimate for the OGP for 2015 was €19 million and the outturn was €14 million, leaving a surplus of €5 million. This arose mainly because a delay in obtaining office accommodation impacted on the level of expected recruitment and spending on procurement consultancy and other costs.
Chapter 3 – Vote Accounting and Budget Management
Turning to Chapter 3 of the Comptroller and Auditor General’s report concerning Vote Accounting and Budget Management, as I said in my opening remarks, progress continues to be made in ensuring we reduce the fiscal deficit and meet our spending targets.
In respect of 2015 – the period covered by this chapter – gross voted expenditure amounted to €54.6 billion, €1.4 billion, or 2.6%, ahead of profile and €495 million, or 0.9%, up on the 2014 figure. Net voted expenditure amounted to €42.7 billion, €1 billion, or 2.5%, ahead of profile and up €313 million, or 0.7%, on the 2014 figure.
In respect of 2016, gross voted current expenditure was €51.8 billion. This was €0.1 billion, or 0.2%, under profile and €0.9 billion, or 1.8%, up on the 2015 figure. Gross voted capital expenditure was €4.2 billion. This was €0.2 billion, or 6.2%, ahead of profile and
€0.5 billion, or 12.8%, up on the 2015 figure. The higher level of capital expenditure was signalled in the Mid-Year Expenditure Report and related mainly to road repairs in response to the 2016 floods and faster than expected progress on the schools building programme.
The Exchequer Returns, published earlier this week, show that gross voted expenditure to end-June amounted to €27.4 billion. This is €0.3 billion, or 1.2%, below profile and 4.4%, or almost €1.2 billion, higher than the same period in 2016.
Special Report 95 – Financial Reporting in the Public Sector
The final item on the agenda is a Special Report by the Comptroller and Auditor General on the timeliness of financial reporting by public bodies under Section 11 of the Comptroller and Auditor General (Amendment) Act, 1993. The report found that all Departments and most other public bodies submitted their accounts on time.
The C&AG has recommended that the Department of Public Expenditure & Reform should consider requiring Departments to include, in an annexe to their Appropriation Accounts, a report on the presentation to the Houses of the Oireachtas of the financial statements of the funds and bodies under their aegis.
I have accepted this recommendation and the officials in the Department are currently examining how it can be implemented. The Department will issue instructions to all Accounting Officers in relation to this as part of the requirements for the 2017 Appropriation Accounts.
Before I conclude, I would like to take this opportunity to pay tribute to all of the staff in the Department for their hard work and the significant contribution they have made, and continue to make, in ensuring the Department delivers on its strategic goals.
As Minister Donohoe has said on a number of occasions, it is not the Department’s money we are spending. It is not the Government’s money. It is the public’s money. It is not enough to just keep a lid on public spending. We must also spend wisely so that our resources are used in the best way possible for the benefit of our economy, our society and our people.
Thank you.
ENDS