Perhaps the finest testament to the progress made by this Government in three years is that the anarchy and chaos that defined the final years of the Fianna Fáil administration seems like a long time ago.
In three years this Government has brought stability in the place of chaos, economic growth not decline, employment not unemployment.
Where there was a real and substantial threat to the viability of the state there is now hope and progress. Where we once one of Europe’s failures with a tarnished reputation we are now the country with the best long term growth prospects in Europe.
I made the point during one of my Budget speeches that in time the Irish people will look back at this period not just with regret at allowing the Irish economic disaster to occur but also with pride at how we, as a people, knuckled down and fought our way back.
There has been a lot of responsibility shown and maturity displayed. We have faced a problem together with not inconsiderable courage. We have resolved it collectively. And that fact, more than any other, should serve as a warning to us not to return to the beggar my neighbour days of the boom.
Undoubtedly there is a lot more work to do. The Government knows that, the Irish people know it too.
We live in a competitive age. Our capacity to provide the living standards we aspire too for our people, and the public services they deserve, are dependent on our ability to earn our way in the world. We are a proud, resourceful and innovative people. We can compete and we are competing.
But economic growth is not an end in itself. It is the building block by which we build the kind of Ireland we aspire to. An Ireland were effort and work are rewarded, where our children and cherished and supported, where the elderly can live in dignity and where our communities represent what is best in ourselves.
This is the debate we will now have. Resources will remain an issue for some time so vast was the scale of our economic collapse. We have no room for complacency.
When this Government took office three years ago, our first challenge was to return the public finances to sanity. We simply could not sustain ourselves into the future while the gap between what we spent and what we earned was of the scale it was.
But unlike a private enterprise, this could not mean spending less and doing less. The state’s commitments and the impact of the economic collapse on our citizen’s lives meant we had to do more with less.
The necessity to align public expenditure policy with our Public Service reform agenda was central to the Government’s decision to establish a new Department of Public Expenditure and Reform.
The goals of the new Department, upon establishment, were: to contribute to the achievement of the Government’s fiscal targets on the spending side; to deliver fundamental change right across the Public Service; and to support the Government’s political reform agenda.
I believe we have made significant progress on advancing these goals and I am pleased to be able to report to the House today on these achievements.
Expenditure consolidation
Central to the Programme for Government was the strategy for the consolidation of tax and spending agreed by the two Government parties in order to meet our fiscal targets. Sustainable public finances are a pre-requisite for economic stability and growth. We have, therefore, pursued a determined deficit reduction strategy.
Since its peak in 2009, Gross voted expenditure has been reduced by 13.5% from €63.1 billion in 2009 to €54.6 billion in 2013. Estimated voted expenditure for 2014 will be in the region of €53 billion with a targeted General Government deficit of 4.8%. The expenditure measures required for 2014 amount to €1.6 billion out of a total consolidation requirement of €2.5 billion.
We are committed to reaching the 3% of GDP target for the General Government Deficit by the target date of end-2015. This is a challenging target and one that is set against a difficult economic background which has required fiscal corrections in the form of significant consolidation to voted expenditure. The consolidation measures introduced by this Government have ensured Ireland’s successful exit from the EU-IMF Programme of Financial Support for Ireland.
This has been achieved at a time when that the demand for public services is greater than ever.
For example, the numbers in receipt of Jobseeker’s payments, full time enrolments in Education and Medical Card Holders have all increased significantly since 2008.
Notwithstanding these increased demands, we have maintained service provision while reducing staff numbers in the Public Service by over 30,000 since 2008. The cost to the Exchequer of Public Service pay has fallen from €17.5 billion in 2009 to €14.1 billion last year.
Reform of the Budgetary/Estimates process
A one off correction in the public finances, important though it is, was not sufficient in itself. Not only was the Government faced with the challenge of cleaning up the Fianna Fáil mess, we also had to ensure that this problem never happened again.
Hand in hand with our commitments to bring spending to a sustainable level, the Programme for Government included a comprehensive suite of reforms to Ireland’s budgetary architecture.
The new measures have been designed to improve the management of public resources and ensure public funds are used effectively in a transparent manner.
A new Medium Term Expenditure Framework, setting out multi-annual ceilings for each Department on a rolling three year basis, has been implemented on a statutory basis following enactment of the Ministers and Secretaries (Amendment) Act 2013 in July last year. The framework allows for sensible, structural planning and prioritisation within each area of public expenditure, encompassing full public input and parliamentary oversight.
We have greatly enhanced the amount of information we provide in the annual Estimates of Public Expenditure as part of the implementation of our Performance Budgeting initiative so that members of the Oireachtas, members of the public and decision makers can see, at a glance, the financial and human resource input costs, the key outputs and the impact indicators for each expenditure Programme.
The Performance Budgeting initiative is complemented by the expenditure and performance information contained in the IrelandStat, the whole-of-Government performance measurement website, which, following a successful pilot, is being rolled out to all Government Departments and policy areas.
We have introduced a new Public Spending Code to ensure that both current and capital expenditure are subject to rigorous value for money appraisal in advance of public moneys being spent.
We have also established the Irish Government Economic and Evaluation Service to support better policy making across the system through enhanced economic and policy analysis expertise.
In addition to this, I have made all areas of public spending subject to regular review and scrutiny. A Comprehensive Review of Expenditure (CRE) will be conducted regularly in order to examine spending and to inform the next three-year cycle of fiscal targets and expenditure allocations.
The first CRE took place in 2011, published in December 2011, and informed the expenditure ceilings from 2012 to 2014. The second CRE will be commencing shortly and will inform the expenditure ceilings for 2015-2017.
Public Capital Programme
The scale of our economic problem and our exclusion from the markets arising that occurred in 2010 closed off policy responses we might have considered in other times. Deficit sustainability took priority.
Nevertheless this Government remained committed, even against the backdrop of the financial crisis to sustaining the maximum possible capital investment in our economy to support employment and recovery consistent with meeting the increased demand for services.
Our current five year capital framework sets out a €17.1 billion investment programme out to 2017 to maintain and improve the country’s infrastructure. In fairness it sought to build on the considerable progress made in relation to our infrastructure during the boom years.
Stimulus
However, in recognition of the importance of stimulating economic activity, we have sought to augment that programme where possible, consistent with our Troika commitments.
In July 2013, I announced a €2.25 billion infrastructure stimulus package to deliver a new PPP programme and support further intensive capital projects in areas such as schools, transport and primary care centres. These projects are progressing as planned. 13,000 direct and many more indirect jobs are expected to be created by this programme.
National Lottery licence
In a similar vein we sought to maximise the opportunity afforded by the expiry of the national lottery licence to generate funds for investment in support of jobs.
As the House is aware, last week, I granted the next licence to operate the National Lottery to Premier Lotteries Ireland, a consortium comprising Ontario Teachers’ Pension Plan, An Post and An Post pension funds.
Half of the €405 million achieved for this transaction will now be paid and will be used for a number of job-rich projects, including the Wild Atlantic Way, the 1916 Commemoration and the National Sports Campus.
In nine months, the second instalment of €202.5 million will be delivered, bringing the construction of the new Children’s Hospital closer.
State Assets Sales
The same thinking also drove our approach to the asset disposal commitments in out troika progress. I was pleased to negotiate with the Troika to allow a greater share of the proceeds from the state assets sales in our programme to be used for investment purposes.
Significant progress is being made under the State assets disposal programme in fulfilment of our Programme for Government commitment to sell non-strategic assets to generate resources for additional investment in job creation initiatives in the economy.
I expect to receive €400 million in special dividends arising from the disposal of non-strategic assets by ESB in the UK and in Spain. In addition, ESB has announced that it is to sell its two peat stations, West Offaly Power and Lough Ree Power. The company will be proposing to prospective buyers an arrangement under which it will continue to operate and maintain these stations with existing staff. Financial advisors have been appointed for the sale process, which is likely to conclude in mid-2014.
In relation to Bord Gáis Éireann, a consortium comprising Centrica plc., Brookfield Renewable Power Inc. and iCON Infrastructure was selected in December as preferred bidder for Bord Gáis Energy on the basis of a bid that put an enterprise value of up to €1.12 billion on the business.
It would be inappropriate for me to comment in further detail on this transaction, but the terms of the sale will be outlined in due course when the deal has been signed.
NewERA / Ireland Strategic Investment Fund
Investment in our recovery is not confined to Exchequer or PPP spending.
Shortly the Minister for Finance will introduce legislation to provide for the establishment of the Ireland Strategic Investment Fund (ISIF) by reorienting the National Pensions Reserve Fund and making the €6.4 billion in the Fund’s discretionary portfolio available for commercial investment in Ireland.
The ISIF will develop a clear investment strategy, which will deliver investment in areas of strategic importance to Ireland particularly in areas that support economic growth and job creation in the years ahead. The Fund will seek to recycle its capital investments over time so as to be in a position to make new investments in line with its mandate.
The Fund’s investment strategy will be consistent with Government’s policy objectives. The NTMA will be responsible for the management of the Ireland Strategic Investment Fund and an Investment Committee will be established that will have discretion to make investment and disposal decisions.
The Programme for Government also commits us to examining the viability of establishing a state investment bank to provide additional impetus in the banking sector and I welcome the Minister for Finance’s comments in this regard in recent days.
Similarly, on foot of our Programme for Government commitments, NewERA was established on an administrative basis within the NTMA in 2011, in order to reform the manner in which Government manages its commercial State companies in the sectors of energy, forestry, water and telecommunications.
NewERA now manages the shareholder function in relation to ESB, Bord Gáis, EirGrid, Bord na Móna, and Coillte as well as providing specialist investment and financial advice to Ministers on the corporate governance of these commercial State companies. NewERA is also closely involved in the establishment of Irish Water, which will also come under its remit.
Public Service Reform
As I’ve already indicated not only was the public sector charged with downsizing in pursuit of fiscal necessities, it was challenged with doing so at a time of increased service demand.
By necessity the Programme for Government committed us to new approaches and new thinking would form the constant backdrop to the design and delivery of public services. We knew that the Government and the Public Service had to think and act in new ways if we were to meet our commitment to protect the most vulnerable in our society from the effects of the economic crisis. It is for this reason that we embarked on the most comprehensive and far-reaching programme of Public Service reform since the foundation of the State.
Our first Public Service Reform Plan was published in November 2011 and I am pleased to say that we have made good progress in delivering on its aims of bringing real and sustainable change to the Public Service in terms of how it is managed and organised and how it delivers services. For example:
- PeoplePoint – the Civil Service wide Human Resources and Pensions Shared Services Centre – has been operational since March last year and is now servicing over 24,000 employees across 19 organisations. When fully operational, PeoplePoint will provide services to 40 organisations with savings estimated at €12.5 million annually. Other shared services projects are progressing well in the Civil Service and in other sectors.
- The Office of Government Chief Information Officer has been established within my Department to build on our strong performance on eGovernment and to maximise the potential benefits of cloud computing, digitalisation and open data to deliver services and information in more efficient and innovative ways.
- In this regard, the Government services portal – www.gov.ie – now includes quick links to more than 400 information and transaction services including those relating to Revenue, Social Welfare, Higher Education Grants, Motor Tax and Property Registration. A number of customer-facing online services have also been launched. These include fixyourstreet.ie, which allows the public to report non-emergency issues to their local authorities, and intreo.ie, through which employers and jobseekers can access all existing information and services in relation to support, training and entitlements.
- We have issued over 580,000 Public Services Cards. The Cards are currently being used for social welfare payments and the free travel scheme and we are considering extension of the Card to cover a greater range of services.
- We have undertaken a major review of public procurement and are now implementing a radical overhaul of our approach, with the new Office of Public Procurement targeting €500 million in savings over the next three years. We are also working on measures to address any obstacles to SMEs participating in the public procurement process and to improve the capacity of SMEs to tender for public sector contracts.
- An Action Plan setting out a broad range of measures to deliver efficiencies in the State’s extensive property portfolio was published last summer and is currently being implemented.
- We have also commenced a programme of Civil Service Renewal to ensure our Civil Service is a strong and capable organisation, equipped to address current and future challenges and bolstered by a workforce that has the skills, capacity and tools to meet those challenges effectively.
Many of our commitments in the Programme for Government have been met or are in the process of being met through the ongoing successful implementation of the reform programme. Further details of what we have achieved can be found in the Second Progress Report on the Public Service Reform Plan, which I published in January.
Croke Park and Haddington Road Agreements
Many of the reforms I have referenced have been enabled by the climate of industrial peace the Government has maintained over the past three years. In this context, it is important that we recognise the significant contribution made and commitment shown by public servants to restoring our Public Finances to sustainable levels and ensuring that we deliver on our international commitments.
I have already mentioned the substantial reduction in the Public Service pay bill. In addition, new working arrangements have been introduced, including longer working hours, new rosters, and standardised arrangements for annual leave and sick leave.
The Government has shown that it can work with staff representatives to secure significant cost reductions and to deliver necessary reforms and work place changes, initially through the Croke Park Agreement and more recently through the Haddington Road Agreement.
Despite significant pay reductions and increased workloads, public servants continue, day in and day out, to deliver quality public services.
In looking closer at the Croke Park Agreement, it is clear from the various reports of the Implementation Body that the Agreement delivered on its objectives, through the delivery of €1.8 billion in pay and non-pay savings and indeed through the delivery of the vast majority of commitments around reform and work place changes.
The Haddington Road Agreement represents a further major achievement of this Government. Haddington Road sets out a number of equitable and sustainable measures to deliver a further reduction of €1 billion in the public service pay and pensions bill by 2016 and will enable the delivery of the next stage of the Government’s ambitious reform agenda. It also provides for a total of 15 million additional working hours annually across all sectors of the Public Service. These additional hours will help to deliver long term and sustainable increases in productivity, while also helping to improve the provision of services to citizens.
I want to pay tribute to our Public Service. Too often debate in this house centres on what goes wrong in public service delivery. That is the job of our committee system and as a long term advocate of the committee system I welcome the increase prominence of the role played by committees in the Houses.
But with that opportunity also comes responsibility to recognise the enormous contribution made by public servants to our economic survival in recent years.
They have fronted up to the challenge and sought to do the more with less with a minimum of grumbling.
For too long Fianna Fáil sought to solve problem in the boom years with money. Not only was the practice not sustainable when the money ran out, it undermined innovation and reform in the Public Service.
Political Reform
In recognition that the Irish financial collapse was systemic not just economic the Programme for Government also promised a radical overhaul of the way Irish politics and Government work. We have committed ourselves to implementing an ambitious and far-reaching suite of reforms to make Government more open and accountable to the people to rebuild public trust in the administrative and political branches of the State.
We have already enacted changes in legislation to give greater powers to the Ombudsman and for the Oireachtas to conduct inquiries within the current constitutional framework.
Other legislative reforms are being advanced. These include: the introduction and implementation of lobbying regulation; enactment and implementation of a reformed Freedom of Information Act; participation in the Open Government Partnership; enactment and implementation of legislation to protect Whistleblowers; the continuation of the comprehensive programme of Statute Law Revision; and further strengthening of the ethical framework for office holders and public servants underpinned by legislation. I have also published a consultation paper on strengthening Civil Service accountability and performance.
The Government has, of course, also established the Constitutional Convention. Previous debates about our constitution have been confined to the Oireachtas or its committees. This innovative format will see this Government present to the people the most radical reform of our constitution in the State’s history. The people will, at their wisdom, approve or accept proposals for change. That is their prerogative. But they will have been asked and it is their stamp that will be borne out on the State’s institutions.
The Next Wave of Public Service Reform
The Government is committed to building on the success we have achieved to date. In this context, I published a new Public Service Reform Plan 2014-2016 in January, which sets out an ambitious new phase in the reform programme. This new Plan outlines the key cross-cutting and sectoral reform initiatives that will be implemented over the next three years. It also looks further forward to address the broader ambition for reform towards 2020.
The first phase of our Public Service reform programme focused on ways to consolidate and reduce costs, and taking out duplication and waste by focusing on shared services, better procurement, rationalisation, reducing staff numbers and improving expenditure controls. The next phase of reform will continue to drive reduced costs and greater efficiency but will also have an increased focus on citizen engagement and improving outcomes for service users, for our economy and for our society.
As reforms deliver efficiencies and greater productivity, some of the savings made will be re-invested in services. This “Reform Dividend” will serve to underpin and help sustain the reform agenda beyond the current fiscal crisis.
Conclusion
Each and every member of this Government knows that our work is not done. The Taoiseach and Tánaiste made that clear this morning.
We have come a long way since the dark days of 2010 but undoing the damage of the last administration will take many years.
We are on the right path thanks to the fortitude of the Irish people. They have high expectations of us and they are right to do so.
We have come through a once in a lifetime economic experience. It has left a legacy of hurt and disappointment.
But we are slowly and surely putting in place the building blocks of a sustainable recovery.
It is the defining task of this Government and one we dedicate ourselves to again today.
Thank you.
ENDS