Committee Reports::Report - Annual Progress Report 1984/85::15 April, 1986::Report

(1) That a Select Committee (which shall be called the Committee on Public Expenditure) consisting of 17 members be appointed to review the justification for and effectiveness of ongoing expenditure of Government Departments and Offices and of State-sponsored Bodies not included in the Schedule to the Order establishing the Joint Committee on Commercial State-sponsored Bodies in such areas as it may select and to report thereon to the House recommending cost effective alternatives and/or the elimination of wasteful or obsolete programmes, where desirable.

(2) That the Committee have power to appoint sub-committees and to refer to such sub-committees any matter comprehended by Paragraph (1) of this Order.

(3) That the Committee and any of its sub-committees shall, unless they decide otherwise, hold their meetings in public under the conditions specified in Standing Order No. 74.

(4) That the Committee or any of its sub-committees have the power to send for persons, papers and records and, subject to the consent of the Minister for the Public Service, the Committee have power to engage the services of persons with specialist or technical knowledge to assist it or its sub-committees.

(5) That every report which the Committee proposes to make shall, on adoption by the Committee, be laid before the House forthwith whereupon the Committee shall be empowered to print and publish such report together with such related documents as it thinks fit.

(6) That the Committee or its sub-committees, shall refrain from publishing confidential information regarding the activities and plans of a Government Department or Office, if so requested by a Member of the Government, or of a State-sponsored Body, if so requested either by a Member of the Government or by the State-sponsored Body concerned.

(7) That the Committee present to Dáil Éireann an Annual Progress Report on its activities and plans.

(8) That Members of the Government and Ministers of State be notified of meetings and be allowed to attend and take part in proceedings without having a right to vote.

(9) That the quorum of the Committee shall be 5 and that the quorum of each sub-committee shall be 3.

MEMBERS OF THE COMMITTEE ON PUBLIC EXPENDITURE

1984/85 PROGRESS REPORT

1. INTRODUCTION

1.1 This is the Second Annual Progress Report of the Committee on Public Expenditure as required under paragraph (7) of the terms of reference laid down by the Dáil on 21 June, 1983. The Report is in the form of a summary of Committee activities from 1 October, 1984 to 31 December, 1985.

1.2 The Committee met for the first time on 13 September, 1983. Deputies Michael Keating and Michael O’Kennedy were unanimously elected Chairman and Vice-Chairman respectively. It was agreed to meet each Tuesday afternoon and in the period under review the Committee met on 51 occasions, each meeting lasting an average of 2 hours.

1.3 The Committee decided from the outset that it would operate principally on two levels:-

(i)detailed consideration and evaluation of major policy areas of public expenditure of each Department/Office and non-commercial state-sponsored body insofar as possible, judging such expenditure on rational and consistent criteria.

(ii)consideration of specific expenditure items or policies which would be suggested for review, such items could be brought up for inclusion on the agenda at short notice, if considered sufficiently urgent by Members.

1.4 The Committee now has in operation a system for following-up the recommendations contained in its reports - this will ensure that positive action will be taken in the important areas of control of public expenditure.

2. REPORTS LAID BEFORE DAIL EIREANN

2.1 FIRST ANNUAL PROGRESS REPORT

The Committee’s First Annual Progress Report summarising its activities from the initial meeting on 13 September, 1983 to 30 September, 1984 was published in October, 1984 and was the subject of a debate in Dáil Éireann on 25 October, 1984.

2.2 OFFICE OF PUBLIC WORKS

2.2.1 The Committee was concerned that the Office of Public Works system of acquisition of accommodation for Government Departments was inefficient and wasteful of public expenditure. Following the hearing of evidence from officials of the Office of Public Works the Committee was of the view that procedures used in these areas required further study. Mr. John Ballance of J.J. Ballance and Co. Ltd., was engaged to undertake this work on the Committee’s behalf.

2.2.2 The Committee’s Report, which was published in November, 1984, examined the project procedures used in the Office of Public Works, comparing them with the best practices in the private sector and suggesting what appropriate improvements might be made.

(1)A long-term strategy on lease terms.

(2)Improvement in the attitude to rent reviews including arbitration, where necessary, use of outside professional valuation surveyors in selected situations.

(3)A strategic plan to allow an ordered approach to the acquisition of accommodation.

(4)Better management of the Rent Roll.

(5)Review of all current leases and definition of lease terms for future acquisitions.

(6)Selective use of professional expertise.

(7)Acceptance by Government Departments of risks to acquisition of desired buildings in negotiating best lease and rental terms.

(8)Rent on unoccupied space to be shown as a separate figure in Office of Public Works Estimate and Out-turn.

(9)Avoidance of competition between Office of Public Works and other Public Sector bodies for available buildings.

(10)The Property Services Division of the Office of Public Works to furnish an Annual Report.

(1)A basic feasibility document should be prepared for all but the smallest projects.

(2)Basic project data to be used as a basis for management controls.

(3)Changes in the scope of projects or delays occasioned by client departments to be allocated as their responsibility.

(4)Management Control systems to compare basic project data with regular projections of the final cost.

(5)The appointment of Project Co-ordinators, particularly on sizeable jobs, to ensure overall achievement of cost and programme targets. Additional training should be considered for the staff of the Projects Branch in the Office of Public Works because of the importance of this management role.

(6)A routine review system should be set up at Assistant Secretary level to compare performance on projects on an ongoing basis.

(7)A working party be set up to review the recommendations and plan their implementation.

(a)Items such as rent and rates be allocated directly to the vote of the appropriate Departments.

(b)A system for charging the Office of Public Workscosts on individual projects.

(c)Some investigations have been carried out on international practice in allocating costs such as rent etc. directly to Departments of State. This system is at present being adopted in the United Kingdom.

(d)Consideration should be given to reallocation of staff in certain sectors of the Office of Public Works.

2.2.5 The Report was the subject of a debate in Dáil Eireann on 29 November, 1984.

2.2.6 The follow-up action on the Report is outlined in Appendix II to this Report.

2.3 REVIEW OF LEASING OF PUBLIC SECTOR ACCOMMODATION

2.3.1 Subsequent to the publication of the Committee’s Report on the Acquisition of Premises (par. 2) it came to notice that, in some cases, leases had been signed on behalf of client Departments/Agencies and rental paid in respect of the new premises while the lease for the existing occupied building hand not been disposed of. The Committee was concerned that this practice was an unnecessary and avoidable charge on public expenditure.

2.3.2 The Committee recommended that, unless the prior approval of the Minister for Finance was obtained in each case involving new or additional accommodation, a study be undertaken as to whether it would be more cost-effective to rent, purchase or build and that no lease be signed unless the disposal of the existing accommodation had been contracted for. Rent should not be paid in respect of more than one office or group of offices without similar prior approval.

2.3.3 The Committee’s Report was published in May, 1985 and was the subject of a debate in Dáil Eireann on 30 May, 1985.

2.3.4 The action taken with regard to the above recommendations are detailed in Appendix II to this Report.

2.4 REVIEW OF THE DEPARTMENT OF THE PUBLIC SERVICE

2.4.1 The Review of the Department of the Public Service was the first of a series of comprehensive reviews of the operations of Government Departments/Offices being undertaken by the Committee.

2.4.2 In January, 1984 the Committee issued a questionnaire (Appendix 1) to the Secretaries of all Departments. Having considered the response of the Department of the Public Service the Committee met with the Secretary and his officers on six occasions between April and June, 1984. Mr. David Algeo of Craig Gardner Company, who was engaged to assist in the review, had further discussions with officials in the Department and submitted a report to the Committee.

2.4.3 The Committee’s Report was published in May, 1985. The recommendations were wide-ranging and may be summarised as follows:

1.Considerable efforts should be devoted to achieving significant productivity improvements in the non-industrial civil service.

2.The value of productivity improvement projects should be assessed prior to approval and anticipated benefits to be reflected in future Departmental budgets.

4.Changes in the organisation of advisory projects and the resources allocated to the advisory service be redetermined accordingly.

5.Priority to be given to projects with high expected benefits and systematic monitoring of benefits achieved.

6.Certain Civil Service Training Centre resources and the level of investment in training for senior personnel in the Civil Service should be increased.

7.The advisory units of the Department of the Public Service should be reviewed and the range of skills increased. Their overall organisation should be reviewed to see whether a merging of all advisory units into one would improve their effectiveness.

8.Procedure for sanctioning additional computer systems in Departments should be revised.

9.The Central Data Processing Service should be reviewed. Maintenance projects should be costed more effectively and modern systems analysis should be introduced.

10.The real cost of all programmes for which the Department of the Public Service is responsible should be costed.

11.The true cost of services provided to a Department should be paid for and client Departments should seek competitive quotation for services required from external organisations.

12.Improve manpower planning and estimate effect of funded pension liability on future commitment.

14.Improve information, costing and internal management reporting systems and reconcile total costs and values to the overall vote for the D.P.S.

2.4.5 The action taken by the Department of the Public Service in regard to the Report will be the next Annual Progress Report.

2.5 SERVICE OF THE PUBLIC DEBT

2.5.1 The Committee was concerned that there is no clear mechanism whereby the Oireachtas can monitor or comment on decisions taken in regard to domestic or foreign borrowing which means that a very large sector of public expenditure is excluded from scrutiny. Because of the impact of Government borrowing decisions on public expenditure generally, the Committee recommended that the situation be corrected and that some system of meaningful debate on the specific issue should be developed, by discussions between the Minister for Finance, the Leader of the House and appropriate Oireachtas Committees.

2.5.2 The Committee’s Report was published in July, 1985 and was the subject of a debate in Dáil Eireann on 12 November, 1985.

2.6 CONTROL OF CAPITAL PROJECTS

2.6.1 Arising from public concern about cost over-runs on public construction contracts the Committee decided to undertake a review of the extent to which public sector contracts are controlled and monitored at present, particularly the Howth Harbour development scheme and the Department of Justice prison building programme.

2.6.2 Because of the Committee’s concern about the apparent lack of control on capital projects a sub-Committee was appointed to examine the subject on behalf of the Committee.

2.6.3 The sub-Committee consisted on Deputies Liam Fitzgerald (Chairman), Richard Bruton, Joe Doyle and Noel Treacy. They met on twelve occasions and heard evidence from officials of the Departments of Finance, Fisheries and Forestry, Justice and the Office of Public Works. Submissions were also received from the Royal Institute of Architects in Ireland and the Society of Chartered Surveyors in the Republic of Ireland. The sub-Committee reported its findings back to the main Committee on 21 May, 1985.

2.6.4 Following further consideration the report was adopted on 15 July, 1985 and was the subject of a debate in Dáil Eireann on 27 November, 1985.

1.Present systems of briefing, monitoring and controlling expenditure on capital projects must be improved.

2.Fixed price tenders be sought for contracts of shorter duration than two years.

3.Project proposals be based on estimated total costs rather than current costs.

8.Specific responsibility/accountability to be assigned to individual management teams within Departments.

9.Improvements should be made in format and layout of the Public Capital Programme booklet.

10.No project should be considered for inclusion in the Public Capital Programme unless it satisfies the criteria of Department of Finance Circular 1/83. There should be more stringent controls and less discretion to Departments in the interpretation of the guidelines laid down therein.

2.7 REVIEW OF A PROPOSAL TO INTRODUCE A CHARGE CARD SYSTEM FOR CIVIL SERVANTS TRAVELLING ON OFFICIAL BUSINESS

2.7.1 The Committee examined the procedures used within the public service in the payment of charges for travel and subsistence and compared them with an alternative system demonstrated by a charge card company.

2.7.2 While the Department of Finance had reservations about the proposal, the Committee recommended that, in the light of the evidence submitted, a pilot scheme should be introduced in an appropriate Department for a limited time on the understanding that there would be no net increased cost to the Exchequer. The report was adopted in October, 1985 and was the subject of a debate in Dáil Eireann on 26 November, 1985.

2.8 REVIEW OF EXCHEQUER COSTS OF TRAVEL AND SUBSISTENCE

2.8.1 In July, 1984, the Committee decided that the procedures governing travel and subsistence in the public service be examined to see whether savings could be made. The Committee heard evidence from representatives of Lep Travel Limited, on behalf of the travel trade and from officials of the Departments of Agriculture, Finance and the Public Service.

2.8.2 Arising from the meetings the Committee sought further details from Lep Travel Limited and the Departments of Finance and the Public Service. Aer Lingus also made a written submission.

2.8.3 The Committee’s report was aodpted in November, 1985 and laid before Dáil Eireann on 30 December. Follow-up action will be referred to in the Committee’s next Annual Report.

2.9 FAULTS IN BUILDINGS OCCUPIED BY THE PUBLIC SERVICE

Arising from a question by Deputy John Kelly (P.Q. 644 Dáil Debates, 23 April, 1985) the Committee considered the question of structural defects which were found in two buildings occupied by Civil Service staff (a) Kildare House, Kildare Street and (b) Davitt House, Mespil Road. Having taken evidence from officials of the Office of Public Works a report on the need to avoid similar problems in the future was adopted by the Committee in December, 1985 and will be the subject of a debate in the Dáil.

3. MATTERS UNDER CONSIDERATION

3.1 REVIEW OF GOVERNMENT DEPARTMENTS/OFFICES AND STATE-SPONSORED BODIES

3.1.1 In 1984, the Committee sent a detailed questionnaire (see Appendix 1) to the Secretaries of Departments/Offices and Chief Executives of non-commercial State-sponsored Bodies. The replies to these questionnaires form the basic source document in the Committee’s reviews of the individual bodies.

3.1.2 Detailed examination of the following commenced in the year under review (see Index for further details).

3.1.3 Consultants were engaged to assist the Committee in each review. The Committee considered the oral and written evidence and the consultants’ reports and will publish reports and recommendations in due course for debate in the Dáil.

3.2 REVIEW OF THE DEPARTMENT OF HEALTH

The Committee considered a consultant’s position paper which was the subject of discussion with officials of the Department during 1985.

The Committee’s review, which is ongoing, will include (a) a comparative analysis of a number of Health Boards and (b) consideration of the cost of drugs to the State.

3.3 IMPROVEMENT OF PUBLIC AWARENESS AND PUBLIC EDUCATION WITH REGARD TO PUBLIC EXPENDITURE ISSUES

3.3.1 Arising from a proposal by the Chairman (Appendix 3) all Government Departments and State-sponsored Bodies were written to regarding the feasibility of providing, as often as possible, the true costs of services provided, so that the recipients of services provided by the State be aware of the degree of subsidy involved.

3.3.2 The proposal will be examined by the Committee in the light of the observations received from those contacted.

4. MISCELLANEOUS

4.1 COMPREHENSIVE PUBLIC EXPENDITURE PROGRAMMES

Following examination of the publication issued for 1984 the Committee met with officials from the Department of Finance. The Committee’s view was that while the Programme publication was very comprehensive and a significant improvement on earlier official publications it would be desirable to include additional data, e.g. total costs where possible - depreciation, funding of pensions etc.

4.2 PUBLIC SERVICE ADVISORY COUNCIL, 1984 REPORT

Following consideration of the Report and discussion with the Council the recommendations contained in the Report were brought to the attention of Dáil Eireann in the course of the Debate on the Committee’s report of the “Review of the Department of the Public Service” (see par. 2.4 of this Report). The Council had expressed concern about lack of action on recommendations in earlier reports.

4.3 ADVISORY PANEL TO THE COMMITTEE ON PUBLIC EXPENDITURE

4.3.1 The advisory panel consists of 35 business people and academics willing to give the benefit of their views and expertise on aspects of public expenditure from time to time.

4.3.2 The inaugural meeting of the panel took place on 17 April, 1985. As a first step a steering group was formed among the members to decide on a practical programme of work and to divide the panel into sub-groups which will concentrate on different sectors of public expenditure.

4.3.3 The advisory panel, liaising with the Committee’s full-time Adviser/Consultant, will

(a)react to requests made by the Committee

(b)generate its own work programme

(c)evolve suitable approaches to assist the Committee in reviewing public expenditure

(d)as individuals provide practical assistance and advice by way of papers and submissions on matters related to public expenditure which will be published by the Committee or form part of the input to Committee reports.

4.4 FULL-TIME ADVISER/CONSULTANT TO THE COMMITTEE

4.4.1 During 1985 the Committee decided to seek the services of a full-time Adviser/Consultant in order to

(a)ensure continuity of expert advice to the Committee from a person who would be familiar with the Committee’s thinking,

(b)avoid the long delays in allocating assignments caused by the requirement to seek sanction for each individual assignment,

(c)reduce the Committee’s expenditure on short term consultancy assignments which can be an expensive charge on the Committee’s budgetary allocation.

4.4.2 The post was advertised and applicants were interviewed by a board drawn from the Advisory Panel to the Committee (Par. 4.3). The Committee then selected an applicant with the formal approval of the Minister for the Public Service. Mr. John McCarrick was appointed Adviser/Consultant, with effect from 11 November, 1985.

4.5 MEETING WITH THE MINISTER FOR FINANCE

The Minister for Finance, Mr. Alan Dukes T.D., met the Committee on 24 September, 1985. The Committee discussed aspects of the Public Capital Programme with the Minister and he agreed generally with the Committee’s findings on lack of control in some areas of capital expenditure. The Minister stated that the present system of payment of fees to professional consultants would be changed following discussion with those bodies.

4.6 TRUE COST OF SHORT TIME WORKING IN LOCAL AUTHORITIES

4.6.1 Arising from concern expressed by a number of members the Committee decided to examine the situation where some local authorities had resorted to short time working in order to keep expenditure within their estimates for 1984. It was felt that employees were better off financially, at State expense, from their short time wages being supplemented by Social Welfare payments.

4.6.2 The Committee, having ascertained the position in a random sample of local authorities (Galway, Laois, Sligo and Wexford County Councils along with the Corporations of Cork and Limerick), requested the observations of the Departments of the Environment and Social Welfare on the matter.

4.6.3 On further examination, with the assistance of Messrs. Davy Kelleher McCarthy, Economics Consultants, the Committee established that, on the question of using short time working and temporary lay offs as a means of saving money, in some cases the resulting cost to the Exchequer can be greater than the savings made by local authorities with a resultant cost to the public sector as a whole. The practice is not widespread, however, and the net cost in 1984 was estimated at about £50,000.

4.6.4 In the opinion of the Committee no further expenditure on investigation was warranted but the anomalies revealed by the investigation were brought to the attention of the Department of the Environment for appropriate follow-up action, if necessary.

4.7 VISIT TO WESTMINSTER

A Committee delegation visited Westminster, London, on 28/29 January 1985. The purpose of the visit was to study the U.K. Select Committee system at first hand.

Meetings were held with Members and staff of the Treasury and Civil Service Committee, the Committee of Public Accounts and also the Prime Minister’s Efficiency Unit. The delegation sat in at a public session of the Treasury and Civil Service Committee at which the Chancellor of the Exchequer was examined by that Committee.

4.8 EEC BUDGETARY COMMITTEES

Since 1984 the Committee has been liaising with the Budget Committees of the National Parliaments of EEC countries and the European Parliament. The Committee was represented at an inaugural session in Rome in July 1984 and a further conference was held in Venice in February 1985. It was agreed that delegations from the relevant committees would meet on a yearly basis to discuss, inter alia, the need for a common approach to European economic development and the need to improve procedures for controlling public spending and government borrowing. The Committee was also represented at a meeting in Paris in December 1985.

5. FOLLOW-UP TO COMMITTEE REPORTS

The action taken by the relevant Departments/Offices arising from the recommendations contained in Reports published by the Committee is documented in Appendix 2 to this Report.

6. CONCLUSION

The Committee has now completed over two years of review work on public expenditure. The Members would like to record their appreciation to all the officials and members of the public who have given evidence before the Committee at its weekly meetings. We are convinced that the reviews to date have been very beneficial in that they have highlighted systems that need to be amended or overhauled so that better value for money will be provided. We have no doubt that Ministers, their officials and members of the public will benefit from the Committee’s work to date. The co-operation the Members obtained from all concerned augurs well for the future work of the Committee on Public Expenditure.

DÁIL ÉIREANN

TUARASCÁIL ÓN GCOISTE UM CHAITEACHAS POIBLÍ

TUARASCÁIL BHLIANTÚIL FAOI DHUL CHUN CINN 1984/85

REPORT OF THE COMMITTEE ON PUBLIC EXPENDITURE 1984/85 ANNUAL PROGRESS REPORT