COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 20 Oct 2022

Chapter 4 - Reallocation of Voted Funding

Mr. David Moloney (Secretary General, Department of Public Expenditure and Reform) called and examined.

Chairman

I welcome everyone to the meeting. Apologies have been received from Deputy Matt Carthy.

If attendees are contributing from within the committee room, they are asked to exercise personal responsibility to protect themselves and others from risk of contracting Covid-19. Members of the committee who are attending remotely must do so from within the precincts of the Parliament. This is due to the constitutional requirement that in order to participate in public meetings members must be physically present within the place the Parliament has chosen to sit.

The Comptroller and Auditor General, Mr. Seamus McCarthy, is a permanent witness to the committee. He is accompanied by Mr. Paul Southern, deputy director of audit, from the Office of the Comptroller and Auditor General.

This morning we will engage with officials from the Department of Public Expenditure and Reform to examine the following matters from the Comptroller and Auditor General's Report on the Account of the Public Services 2021: Chapter 3 - Vote accounting and budget management; Chapter 4 - the reallocation of voted funding; the format and content of the appropriation accounts; and the value for money and spending reviews.

The Department has also been advised that correspondence concerning the following may also be raised: the closure of the Benefacts database; the National Maternity Hospital; and a recent minute of the Minister for Public Expenditure and Reform, which is the official response to the recommendations in the committee’s report.

We are joined in the committee room by the following officials from the Department: Mr. David Moloney, Secretary General and Accounting Officer; Mr. John Kinnane, assistant secretary, expenditure policy division; Ms Niamh Callaghan, principal officer, expenditure policy division; and Mr. David Feeney, principal officer, corporate office. You are all very welcome. I remind all those in attendance to ensure their mobile phones are on silent mode or switched off.

Before we start, I wish to explain some limitations to parliamentary privilege, and the practice of the Houses as regards reference that witnesses may make to other persons in their evidence. As witnesses are within the precincts of Leinster House, they are protected by absolute privilege in respect of the presentations they make to the committee. This means the witnesses have an absolute defence against any defamation action for anything they say at the meeting. However, witnesses are expected not to abuse this privilege and it is my duty as Cathaoirleach to ensure that this privilege is not abused. Therefore, if statements are potentially defamatory in relation to an identifiable person or entity, witnesses will be directed to discontinue their remarks. It is imperative that they comply with any such direction.

Members are reminded of the provisions within Standing Order 218 that the committee shall refrain from inquiring into the merits of a policy or policies of the Government, or a Minister of the Government, or the merits of the objectives of such policies.

Members are also reminded of the long-standing parliamentary practice that they should not comment on, criticise, or make charges against a person outside the Houses, or an official either by name or in such a way as to make him or her identifiable.

I now call on the Comptroller and Auditor General, Mr. Seamus McCarthy, to make his opening statement.

Mr. Seamus McCarthy

As members are aware, central government Departments and offices deliver or oversee a wide range of public services. Expenditure required in relation to those services is provided for each year under a number of voted Estimates approved by Dáil Éireann. If circumstances require, additional funding can be provided through Supplementary Estimates. Ultimately, the voted provisions are given legal effect in an annual Appropriation Act.

The Accounting Officer for each voted service is required to prepare an annual appropriation account within three months of the end of the calendar year. This must conform to the reporting requirements set out in the relevant appropriation account circular issued each year by the Department of Public Expenditure and Reform. The accounts are prepared on a cash basis, which means they report the actual cash transactions of the Votes in the year. Some additional accrual-based information is also provided, in notes 1 and 2 to the accounts. The accrual basis is the standard method for accounting. Broadly, it aims to report the true costs of an economic activity in the period of account, and the value of any related assets and liabilities at the end of the period.

The Department determines the framework and basis of accounting for annual financial reporting by all public bodies. In addition to the accounts circular and other guidance set out in Public Financial Procedures, the Department has issued the Code of Practice for the Governance of State Bodies, and the Public Spending Code. Collectively, these represent the specific public sector standards and expectations against which my office carries out the audits of the accounts and financial statements of the bodies within my remit.

Chapter 3 deals with Vote accounting and budget management in the aggregate. The chapter aggregates and summarises the results of all 45 appropriation accounts for 2021. My office compiles this report each year because there is no other published source of aggregated appropriation account information.

The Appropriation Act 2021 provided for spending on voted services totalling €76 billion. This was to be funded by the issuing of up to €73.1 billion from the Central Fund of the Exchequer and the use of certain expected Vote receipts, referred to as appropriations-in-aid, of up to €2.9 billion. In addition, unused capital funding totalling €710 million was carried over from 2020 for spending in 2021, bringing the total available Vote funding to €76.7 billion.

A Department or office may not spend more than is legally provided for a Vote. In 2021, total gross expenditure for all 45 Votes amounted to €74.5 billion. The aggregate surplus for the year was almost €2.5 billion. Some €819 million of the surplus was approved for carryover to 2022 and the remaining €1.7 billion was liable for surrender back to the Exchequer.

Within each Vote Estimate, the funding approved by Dáil Éireann is allocated to various programmes and subheads and the appropriation accounts must report on spending at that level. For practical reasons, as set out in public financial procedures, there are arrangements to vary the allocations between subheads within an individual Vote.

When underspending on an individual subhead is anticipated, the key principle is that the Exchequer has the first claim on the saving. However, there are two formal mechanisms in place to allow for voted funding to be reallocated between subheads during the year. These are the passing of a technical Supplementary Estimate by Dáil Éireann or a process called virement, which is usually used for lower-value transfers and requires the prior approval of the Department of Public Expenditure and Reform.

In the course of audit of the appropriation accounts for 2021, a number of cases were identified where there was reallocation of voted funding between Vote subheads but where the prescribed transfer procedures did not appear to have been complied with. Chapter 4 outlines the circumstances of four such cases.

The total amount transferred through the virement process by the four Votes referred to in the chapter was more than €1 billion. The prior approval of the Department had not been obtained in all cases where required, resulting in the need for so-called retrospective sanction. Additionally, there is an evident requirement for better documentation of virement decisions.

Some of the amounts reallocated using virement were substantial by reference to the original subhead provisions, which in effect represent the level of spending envisaged by Dáil Éireann. The principles in public financial procedure indicate that a Supplementary Estimate should be used for such large transfers. This would allow the relevant sectoral committee of Dáil Éireann, in a timely way, to examine the reasons for both the emerging savings and the planned additional expenditure and to make recommendations in that regard.

Chairman

I welcome Mr. Moloney back to the committee. As set out in the invitation, he has five minutes. I know his statement is quite long because I read it yesterday evening. Could he please summarise it?

Mr. David Moloney

I thank the committee for inviting me. I will just briefly address each of main items on the agenda.

Turning to chapter 3 of the report, the total gross expenditure outturn for 2021 amounted to €74.5 billion. This level of funding supports the provision of a wide range of public services, infrastructure investment and income supports. There were a number of expenditure developments within 2021. Covid-related restrictions had a significant impact on the lives of Irish people, requiring a continued Government response. Some €13.5 billion was spent in 2021 on Covid-related measures. This level of expenditure reflects the funding allocated to support people, businesses and public services with the challenges posed by the pandemic.

There was capital carryover, or deferred surrender, in 2021 amounting to €819 million, sanctioned by the Minister for Public Expenditure and Reform for use in 2022. In addition, €1.7 billion was surrendered back to the Exchequer. These developments are due to a combination of factors, including slower than anticipated progress on capital projects driven by closures of the construction sector in early 2021 as a consequence of public health restrictions and supply chain issues, and also lower than expected uptake of core current services, for example, in the Department of Health, again, driven by the pandemic and public health restrictions.

Chapter 4 of the report refers to instances found in the audit relating to the practice of virement and raises issues as to whether, in some cases, Supplementary Estimates should have been used.

Virement between subheads in a Vote is possible because the Oireachtas, in appropriating money in the annual Appropriation Act, does so by specifying in the Schedule to the Act only the ambit of each Vote. The Act does not give legal effect to the various subheads, as to do so would almost certainly result in considerable overestimation and would disrupt the smooth working of the financial system. Accordingly, the Minister for Public Expenditure and Reform has discretion to vary the allocation for each Vote between its constituent subheads.

Public financial procedures recognise that the judgment of the Department in respect of virement is a wide power and provides guidance on instances where the Department may refuse virement, for example, where the additional expenditure: is on a new service, is novel or contentious; is large in relation to the original provision or although relatively small, likely to involve significant liabilities in future years; or arise from a major change of policy.

Within the overall financial parameters and where possible and appropriate, the Department is willing to consider the virement of sums from subheads to other subheads. The Department considers such cases in the context of the public financial procedures and where it is considered proportionate to facilitate a Department to deliver its policy objectives.

As outlined in chapter 3 of the Comptroller and Attorney General’s report, the Revised Estimates for public services provided for a total net fund of almost €67.7 billion across 45 Votes. After taking account of further Revised Estimates and Supplementary Estimates, this increased to €73.1 billion in the Appropriation Act 2021. This increase of €5.4 billion, or 8%, reflected decisions by Government to allocate significant additional funding for measures to respond to Covid-19. By way of comparison with the last pre-Covid financial year, the increase in net voted funding set out in appropriation account 2019 relative to that year’s Revised Estimates was €0.6 billion, or only 1%, of the difference. In these circumstances, with Government having presented significant additional sums for approval to Dáil Éireann in order to respond to Covid-19 and with savings emerging on core expenditure programmes and projects driven by the impact of the pandemic, the Department considered it appropriate and in line with public financial procedures to utilise the virement process to reallocate funding to facilitate delivery of priorities across Departments.

Decisions in relation to granting virement will always, as the public financial procedures make clear, rest significantly on the judgment of this Department. It would be counterproductive to the goals of both supporting the smooth operation of the Government financial system, and indeed to the operation of the Dáil, if artificial benchmarks were created in respect of the monetary thresholds which if exceeded would require Supplementary Estimates rather than virement.

Briefly on the format and content of the appropriation account, correspondence received by the Department from the committee in November 2021 highlighted a number of issues. In response, the Department made a number of changes as per the request from the committee in terms of the presentation of the legal

costs note in the 2021 accounts. We provided for the disclosure of the Accounting Officers salary scale or equivalent in a note to the account. In May, the Department committed to examining changes to the remuneration disclosure, but due regard was needed to the request for disclosure of actual remuneration of officers. Accordingly, my Department sought legal advice from the Office of the Attorney General. That advice has now been received and is being considered by the Department.

The Department is now reviewing changes that could be made in the appropriation account for 2022, including providing for the disclosure of the accounting officer gross salary and details of pay band analysis. The Department recently provided an update to the committee on these issues.

As the committee is aware, the Department is also progressing the financial accounting and reporting reforms programme for central government Votes. That will change the basis of the reporting of the financial statements from a cash to an accrual basis, in line with international public sector accounting standards.

Finally, turning to the value for money and spending reviews, the Department not only focuses on fiscal sustainability, but also the transformation of public services, supporting excellence in service delivery, strategic policy making and public governance structures. To achieve these goals, it is vital that public expenditure is managed in a planned, balanced and evidence-informed manner to support Ireland’s economic, social and climate goals. This is progressed in a number of ways, including through day-to-day management of resources and regular engagement with Departments throughout the year on their funding. It is also progressed through a range of important budgetary reform initiatives, including the spending review process.

Spending review is a key platform for the development and publication of evaluation output and the promotion of evidence-informed policy across the Civil Service. It works in tandem with broader initiatives, such as the establishment and development of the Irish Government Economic and Evaluation Service, to develop capacity and enhance the role of economic and value for money analysis in public policy making. It is with this more complete understanding that policy-makers can work towards the achievement of value for money, efficiency and effectiveness.

I thank the committee members for their attention. I look forward to our discussion on the agenda items.

Chairman

I thank Mr. Moloney. The first speaker is Deputy Carroll MacNeill. She has 15 minutes.

Deputy Jennifer Carroll MacNeill

I thank Mr. Moloney and his colleagues for coming in. As I understand it the Department sets the code for this virements process and last year we spent €74 billion with €1 billion of that essentially being reallocated through this virements process. Is that correct?

Mr. David Moloney

Yes, that is correct.

Mr. Seamus McCarthy

If could interject, it is €1 billion in these four cases. There were other virements as well, so the total amount that moved would probably be substantially more.

Deputy Jennifer Carroll MacNeill

What would the total amount be?

Mr. Seamus McCarthy

I do not know that there would be an aggregation.

Mr. David Moloney

I do not have that figure with me. I can get it for the Deputy.

Deputy Jennifer Carroll MacNeill

Is it €3 billion, €5 billion, €10 billion?

Mr. David Moloney

No, I think the instances the Comptroller and Auditor General highlighted in his report account for the main large-scale transfers. There are day-to-day smaller transfers involved as well.

Deputy Jennifer Carroll MacNeill

Okay, so it is at least €1 billion then out of the €74 billion.

Mr. David Moloney

At least.

Deputy Jennifer Carroll MacNeill

Mr. Moloney is saying the Department has stepped outside the code essentially because of Covid and the need to move money quickly. Is that it in essence?

Mr. David Moloney

No, we are saying the public financial procedures set out guidelines that give the Minister and Department considerable flexibility in how we approach virement. There were particular circumstances in 2020 and 2021 related to Covid that impacted in three ways. First, the closures impacted on capital spend; second, the Government took decisions on supporting businesses and households due directly to Covid but, more important, and maybe most important from the point of view of virement, a lot of ordinary day-to-day services spent less money because people could not access them due to Covid.

Deputy Jennifer Carroll MacNeill

Sure, so because of Covid the Department used this procedure more than it would normally. Is that correct?

Mr. David Moloney

That is fair to say.

Deputy Jennifer Carroll MacNeill

All right, that is what I said. When the Department was going through this process how did it flag it? For example, is it going to happen this year?

Mr. David Moloney

We expect it to happen much less this year. The Covid-related restrictions and the unpredictable elements of Covid were much smaller this year than they were in either 2020 or 2021, so we are working to get back to a more normal situation post-Covid. Normally, we do not really support virement in ordinary circumstances because savings are often time-related savings.

Deputy Jennifer Carroll MacNeill

Sure.

Mr. David Moloney

You have not hired people in time-----

Deputy Jennifer Carroll MacNeill

Yes.

Mr. David Moloney

-----and the costs will carry on to the next year. Reallocating those costs this year is no good because you have then spent it and you need it again next year when you have managed to hire people. During Covid it was slightly different because though the savings are themselves temporary and related to the closures due to Covid, so were the Covid supports they were then used to support. From our point of view the context for virement in 2020 and 2021 was very different from other years. One of the things we strove to do was to ensure we did not have €1 billion of extra money from the Oireachtas that was not required. In fact, because of the unpredictability of Covid and of events as they rolled out through the year we ended up, even with considerable virement of existing allocations, with a very large surrender to the Exchequer at the end of the year.

Deputy Jennifer Carroll MacNeill

Okay, that is fine. I will come back to that but I want to ask about the management of capital funds generally. Take, for example, the bigger-spending Departments. Ultimately, the Department of Public Expenditure and Reform is responsible for the NDP and the major capital projects. The funding is coming through the Department, as is the overall supervision. Is that not correct?

Mr. David Moloney

The Departments are responsible for the delivery of capital projects. We maintain an oversight and supervisory role, yes.

Deputy Jennifer Carroll MacNeill

Exactly. It is Mr. Moloney's Department. Let us take 2022 because obviously 2021 was a bit different. What does the Department expect from the Department of Housing, Local Government and Heritage? Where is it on profile at this stage, three quarters of the way through the year, with respect to its capital spend? I mean in percentage and monetary terms.

Mr. David Moloney

I will get those numbers for the Deputy but in broad terms, this year has seen considerable supply chain disruption at the start of the year related to the war in Ukraine and considerable uncertainty caused by inflationary developments at the start of the year and that has impacted on decisions of people like developers and so on and so forth, so-----

Deputy Jennifer Carroll MacNeill

Is Mr. Moloney talking about in the private sector or in the Department of Housing, Local Government and Heritage?

Mr. David Moloney

In the construction industry as a whole.

Deputy Jennifer Carroll MacNeill

Okay but what I am asking, within my 15 minutes, is what is the Department's spend on capital projects relative to what it should be.

Mr. David Moloney

The exact number is €452 million or 30% below profile.

Deputy Jennifer Carroll MacNeill

The Department is 30% below profile three quarters into the year.

Mr. David Moloney

Yes.

Deputy Jennifer Carroll MacNeill

Where was the Department relative to profile at, say, the end of quarter 1?

Mr. David Moloney

I do not have the number to hand. I only have the most recent number but I can get that for the Deputy. I imagine the Department was still below profile within quarter 1. I think a lot of the problems were in quarter 1.

Deputy Jennifer Carroll MacNeill

Okay. What does Mr. Moloney expect will be the situation by the end of quarter 4?

Mr. David Moloney

We do not have complete sight of that during the year because the nature of capital, as I am sure members know, is it is often back-ended, especially around housing, so we are-----

Deputy Jennifer Carroll MacNeill

That is one of my concerns. I am glad Mr. Moloney has raised it. I am concerned it is being spent at the end of the year in a sort of heavy way on a range of different projects, including the purchase of turnkeys, which the Department says helps finance the development of those properties. That is fine except there is a willing market out there already looking to purchase homes. I am interested in Mr. Moloney's Department's oversight relative to the capital spend relative to profile and its capacity to do that. I understand his Department has that oversight role and that it has somebody liaising with the Department of Housing, Local Government and Heritage on its capital spend. It does, does it not?

Mr. David Moloney

That is correct. We have the oversight role. It is the Department of Housing, Local Government and Heritage that makes decisions on how to achieve its capital objectives but we have that oversight role.

Deputy Jennifer Carroll MacNeill

I am curious because from the overall perspective of the State to deliver capital projects, it requires an oversight mechanism such as Mr. Moloney's Department. What is his Department's capacity to test how the Department of Housing, Local Government and Heritage is doing relative to profile and in its decision-making? For example, does Mr. Moloney's Department have any engineers, chartered surveyors or any people with professional expertise in the industry or is it somebody else who is supervising it?

Mr. David Moloney

In the first instance-----

Deputy Jennifer Carroll MacNeill

I am not just talking about the Department of Housing, Local Government and Heritage as the Department of Transport could be another example. If Mr. Moloney's Department's objective is to ensure capital projects are delivered on behalf of the State and it provides the funding for that, in order to be able to effectively oversee that delivery his Department needs to at least have the capacity to test what other Departments are saying to it about delivery of the projects. A key part of that is the capacity to test it technically as much as from an accounting perspective.

Mr. David Moloney

Our key role is financial monitoring and oversight and value for money so we do not have any of that technical expertise, whether it be in school-building, transport or roads. That expertise rests with the Department that is responsible for developing and delivering on the projects.

Deputy Jennifer Carroll MacNeill

I do not think that is enough. It is not enough to give a big pile of money to the Department of Housing, Local Government and Heritage or the Department of Transport and to fail to have an oversight mechanism for the State to ensure those Departments are actually being tested externally in some way to ensure those projects are delivered. The sense one has is there is an awful lot of money in the State but things are not happening and not getting delivered.

I will give a different example with the local authorities. It is a continual source of frustration in this room that the Comptroller and Auditor General is not able to audit their accounts. They received, I think, €5.8 billion funding and we have no capacity to test how that is being spent on the delivery of capital projects, whatever about the management of the housing assistance payment or anything else. The authorities essentially audit themselves and the Comptroller and Auditor General can only go so far.

My question is really about Mr. Moloney's Department's capacity as the ultimate overseer on behalf of the State to technically and expertly probe the management of different projects without having to resort to your KPMGs, your Deloittes or anything else. Does Mr. Moloney's Department just give the others money and wait for them to come back at the end of the year when each either has a return or it does not? How can the Department of Public Expenditure and Reform be sure the projects are being A, delivered, B, delivered efficiently, C with the best value for money and that whatever is being learned - because there is always something to be learned on any engineering project - is being captured by the State system for the following capital projects? Where is the Department's expertise on that, or does it just pass on the money?

Mr. David Moloney

The role of my Department is financial monitoring and oversight and value for money. Oversight of the delivery of the actual projects is the responsibiltiy of the Department, which is audited to the Comptroller and Auditor General and the appropriation accounts are presented to this committee and to the Dáil. That is the oversight-----

Deputy Jennifer Carroll MacNeill

Is the OPW not part of Mr. Moloney's Department?

Mr. David Moloney

The OPW is part of the Minister's responsibilities, yes.

Deputy Jennifer Carroll MacNeill

All right. It has significant capital projects. For example, is it not engaged in a project on modular housing that is due to start shortly?

Mr. David Moloney

The OPW has its own Accounting Officer, as the Deputy knows. It is engaged, as far as I know, in procuring modular housing in respect of accommodation for Ukrainians.

Deputy Jennifer Carroll MacNeill

Does Mr. Moloney know when that is going to start?

Mr. David Moloney

I do not have visibility on that. That is a matter for the accounting office in the OPW but I think it is relatively immediate.

Deputy Jennifer Carroll MacNeill

Yes, it is quite shortly and I think the OPW was given that responsibility in May and it is now October. I understand the OPW may have rectified the absence of qualified engineers, chartered surveyors and so on, because this came up at this committee before. It obviously needs a measure of technical expertise to be able to manage projects and so on. However, that is in respect of the OPW itself. My suggestion to Mr. Moloney is his Department also needs such expertise. We have raised legal costs relating to the accounts. Mr. Moloney raised in his opening statement that the Department is now including legal costs and so on but we still regard that as insufficient, having regard to the Department's own code of practice for what needs to be included in the accounts of State bodies and indeed from a legislative perspective what we have said private bodies need to do. It should be in the appropriation accounts.

There should be information concerning temporary agency staffing. Crucially, it should include gender. Let us turn, however, to what I am talking about, which is expertise and the question of the expertise available to the State so we do not have to outsource every thought to KPMG. We are more than well able to do it ourselves. To be able to properly oversee the delivery of projects funded by the taxpayers and that the Oireachtas has voted money towards, I suggest it is the Department's responsibility to ensure these projects are delivered and that to do this it requires a measure of technical expertise to be able to probe the delivery of these different projects.

Mr. David Moloney

The point is that our responsibilities relate to the financial management and value-for-money oversight of projects. The people responsible for overseeing the technical aspects and those with the sectoral expertise are the Departments responsible for delivering these projects.

Deputy Jennifer Carroll MacNeill

Does Mr. Moloney think this is the right structure?

Mr. David Moloney

This is the structure-----

Deputy Jennifer Carroll MacNeill

Is it the right one?

Mr. David Moloney

-----set out in legislation.

Deputy Jennifer Carroll MacNeill

Okay. I cannot ask Mr. Moloney a policy question, but would he have any desire to see a stronger oversight role in this regard? For example, is he satisfied that all the projects his Department is funding are being delivered efficiently and correctly?

Mr. David Moloney

We have a number of ways, including through the spending review process, of testing this. We demand business cases for projects and we look at those. We have a major projects advisory group for very large projects. We have, therefore, means of assessing these projects. Again, however, we do not have engineering or other technical expertise and I do not think the Department needs to duplicate that type of expertise. Quite rightly, the Deputy mentioned the OPW. It delivers projects and therefore has architects, etc.

Deputy Jennifer Carroll MacNeill

Yes, I accept that. I am not suggesting that the Department should get into project delivery. What I am suggesting is that when the Department is testing how the Department of Housing, Local Government and Heritage is doing in respect of delivery, it should have somebody who can ask probing questions about the delivery of different projects. The spending of the Department of Housing, Local Government and Heritage, the example given, is now 30% under profile three quarters of the way through the year. Were this trajectory to continue, we would say it will be 40% under profile by the end of the year. Now, we both know that is not going to happen because that Department is going to spend like billy-o at the end of the year. The question, however, is what this money is going to be spent on. Are officials from the Department of Public Expenditure and Reform sitting down with those from the Department of Housing, Local Government and Heritage and asking this question now? For example, if this money is going to be spent on turnkey developments all over the country, is this what the Government intended would be done or was it intended that housing would be delivered in a different and sustained way throughout the year? Is this a satisfactory way of managing this endeavour?

Mr. David Moloney

To be clear, the whole team in my Department is constantly in touch with the Department of Housing, Local Government and Heritage and other Departments. There is constant communication. At all stages, we have a fairly good oversight of how much money is being spent and where it is being spent. We grant sanction for that spending. There is an ongoing and detailed conversation in this regard. We do have visibility regarding where the money is going, if that is the question. This is what we focus on.

Deputy Jennifer Carroll MacNeill

I appreciate that. The Department has visibility of where the money is going, but it does not sound like there is a conversation about whether that is enough spending, whether it is correct and whether it will deliver at the end of the year. If there is constant visibility, is spending of 30% under profile acceptable? Are other Departments under profile? Which Departments have spent above profile at this point in the year? This is an important year from an inflationary management perspective. We want to spend capital that is there for a range of different reasons. Which Departments are spending over profile now?

Mr. David Moloney

To my knowledge, only one Department is significantly over profile and that is the Department of Education. Departments have faced significant challenges this year and last year, first, because of Covid-19 and then due to supply chain disruption related to the war in Ukraine. There have been considerable challenges, particularly in rolling out new programmes. As the Deputy will be aware, the national development plan represents a considerable uplift in our capital ambitions. There is a certain amount of catch-up in the face of Covid-19, supply chain disruption and, as the Deputy said, inflation.

Deputy Jennifer Carroll MacNeill

Yes, I accept Covid-19 but that ended last year. No sites have been closed this year and there is now an opportunity for a huge catch-up on what had been there before. I do not think that is-----

Mr. David Moloney

There are two aspects. One is the supply chain disruption and the impact of Covid-19. The other is the significant increase in capital funding-----

Deputy Jennifer Carroll MacNeill

Regarding the profile-----

Mr. David Moloney

The spend is actually 13.4% ahead of last year-----

Deputy Jennifer Carroll MacNeill

Of last year, but last year was anomalous and does not count-----

Mr. David Moloney

-----but it is below profile because there has been a-----

Deputy Jennifer Carroll MacNeill

-----because there was Covid-19 and all sorts of things were closed. Mr. Moloney said that himself. I am interested in this year. The Department of Housing, Local Government and Heritage is 30% below profile, while the Department of Education is ahead. Where is the Department of Transport?

Mr. David Moloney

It is at €150 million, which is 13.1% below profile.

Deputy Jennifer Carroll MacNeill

Is the Department of Housing, Local Government and Heritage's below profile spending, at 30%, the biggest in this regard? Is another Department's bigger?

Mr. David Moloney

I think it probably is the biggest.

Deputy Jennifer Carroll MacNeill

Ms Callaghan has the list. Which Department is the next biggest?

Ms Niamh Callaghan

It is the Department of the Environment, Climate and Communications, which stands at 14.4% under profile.

Deputy Jennifer Carroll MacNeill

Which Department was 13% under profile? Forgive me, it was mentioned just a minute ago.

Ms Niamh Callaghan

It is the Department of Transport.

Deputy Jennifer Carroll MacNeill

The Department of Housing, Local Government and Heritage is 30% under profile. That is a considerable gap and the Department of Public Expenditure and Reform is not testing how it is spending. Officials are not sitting down with an engineer and asking what the projects are, which are behind and what is not getting delivered. At the end of the year, as happens at the end of every year in the Department of Housing, Local Government and Heritage, it will get caught up somehow. I appreciate that 2021 was a year affected by Covid-19, but nearly all the Department's money was spent. Something like €116 million was surrendered, which is a very small proportion of the €5.1 billion the Department had to begin with. It all got spent at the end of the year because there was a rush to spend it. My contention is that this is not an acceptable way to manage this within the Department of Housing, Local Government and Heritage itself or for the Department of Public Expenditure and Reform as the overseer either. The latter needs to strengthen its expertise to be able to ask more probing questions.

Deputy Verona Murphy

To follow on from Deputy Carroll MacNeill, regarding the Comptroller and Auditor General's comments on the reallocation of Vote funding through the Department of the Environment, Climate and Communications, was the Department of Public Expenditure and Reform aware of this €1 billion? Retrospective decisions were made but was the Department aware of this money at the time?

Mr. David Moloney

Regarding the four examples in the report of the Comptroller and Auditor General, it is clear there was ongoing and clear communication concerning three of those with the Vote teams. In the Revenue example, that came a little later than in the other three cases. There is ongoing conversation with Vote teams right across the different spending areas. In general, there is a high level of awareness, although I accept the Comptroller and Auditor General's point that in some cases the official record, the paper keeping, around sanctions was not what it could have been.

Deputy Verona Murphy

The question I asked was whether his Department was aware of it.

Mr. David Moloney

We were aware of it.

Deputy Verona Murphy

The Department was aware of this while it was happening, but no approval had been sought?

Mr. David Moloney

I suppose what the Comptroller and Auditor General is saying is that-----

Deputy Verona Murphy

I know what the Comptroller and Auditor General is saying. The question I asked was if the Department was aware of this while it was happening but had not been asked for approval. Is that the case, yes or no?

Mr. David Moloney

Even in the report of the Comptroller and Auditor General, it is clear that the Department was aware in most cases that the-----

Deputy Verona Murphy

The Department of Public Expenditure and Reform was aware.

Mr. David Moloney

Yes, we were aware and had agreed. For example, in relation to the Department of Health, there is a health budget oversight group. Those virements were clearly signalled in that group and are reflected in the minutes of those meetings. What did not happen-----

Deputy Verona Murphy

What was the reason for the non-approval? Was it a time-based thing?

Mr. David Moloney

I think it was agreed but the formal written sanctions were not exchanged. I think that is the issue.

Deputy Verona Murphy

Those were retrospective.

Mr. David Moloney

They were in respect of the Revenue example.

Deputy Verona Murphy

No, I mean that ordinarily approval would have been sought from the Department of Public Expenditure and Reform. In these four cases, that approval was not sought.

Mr. David Moloney

Well-----

Deputy Verona Murphy

Four virement transactions took place that were not approved by the Department of Public Expenditure and Reform.

Mr. David Moloney

We did not give formal sanction for them, but we were aware of and had agreed three of them.

Deputy Verona Murphy

Has the Department retrospectively sanctioned these actions yet?

Mr. David Moloney

The procedure is that provisional sanction is given during the year. Once the Appropriation Accounts are signed off, formal sanction is given. Formal sanction is given-----

Deputy Verona Murphy

Resulting in the need for so-called retrospective sanction.

Mr. David Moloney

Yes, in relation to the Revenue example.

Deputy Verona Murphy

Right. Basically, that is what happened - it was retrospective.

Mr. David Moloney

Yes, in relation to the Revenue example.

Deputy Verona Murphy

If we can do that in the case of €1 billion, what would Mr. Moloney say is wrong with that process?

Mr. David Moloney

The Revenue example did not amount to €1 billion.

Deputy Verona Murphy

How much was it?

Mr. David Moloney

I think it was €8 million. I will check.

Mr. Seamus McCarthy

I think it was about €11 million. It was relatively small. The bigger sums were in respect of the Department of Health and the Department of Housing, Local Government and Heritage. There was retrospective sanction. There was application after the turn of the year for sanction, but that was not what the public financial procedures, PFP, required. I certainly accept there was discussion and that the Department was aware that-----

Deputy Verona Murphy

It was happening.

Mr. Seamus McCarthy

-----savings were accruing and that there was a plan for how they were to be used. There is, however, a formal process and the difficulty from my point of view is trying to audit it. If there is not a formal sanction, then, technically, the moneys should have been surrendered rather than transferred. This is the difficulty I am left in.

I have to report if moneys have not been used for the purposes intended.

Deputy Verona Murphy

And what does the Comptroller and Auditor General say to that?

Mr. Seamus McCarthy

I cannot audit it without the formal approval process.

Deputy Verona Murphy

Has the Secretary General remedied that situation for the future?

Mr. David Moloney

Yes. We have taken steps to strengthen that formal process.

Deputy Verona Murphy

To strengthen or eradicate?

Mr. David Moloney

To strengthen the formal process. What we have at present is a process where, as a result of the ongoing engagement with other Departments, these things, as the Comptroller and Auditor General has said, are agreed. There are cases that he has identified the formal sanctions and there is a system of provisional sanction.

Deputy Verona Murphy

The formal procedure was not followed.

Mr. David Moloney

The provisional sanction was not requested in writing or given in writing. That is a weakness.

Deputy Verona Murphy

And that has been remedied.

Mr. David Moloney

We have gathered together the people who deal with Vote groups within the Department and we have set it out, as recently as yesterday.

Deputy Verona Murphy

Will there be any sanction if it is not followed for the future? Will there be any sanction for those involved who do not follow the process?

Mr. David Moloney

People's performance is dealt with via the performance management and development system on an ongoing basis within the Department.

Deputy Verona Murphy

Has the Secretary General made any recommendations in relation to that?

Mr. David Moloney

We have had discussions, particularly on foot of the Comptroller and Auditor General's report and in the context of the experience last year and the year before, which were very unusual years because of Covid, to remind people and to strengthen the response.

Deputy Verona Murphy

I appreciate that. I am still asking on the basis that the Secretary General is the one responsible.

Mr. David Moloney

Absolutely.

Deputy Verona Murphy

If somebody else is not following the process, the Secretary General clearly has to make some recommendation. Has the Secretary General made any recommendation for sanction?

Mr. David Moloney

What we have done is emphasise the need to do it, and people are more aware now.

Deputy Verona Murphy

Will there be any sanction if it continues in the vein that it has?

Mr. David Moloney

I do not think it will continue in the vein it has.

Deputy Verona Murphy

I would hope not. I understand that Covid resulted in an exceptional year or two. If it should, if the Secretary General comes in here this time next year and we have the same scenario, I will expect that he will say, "But this is what we categorically did as a matter or remedying that situation."

Mr. David Moloney

That is a reasonable expectation.

Deputy Verona Murphy

The Secretary General will be aware of that for next year.

After the economic crash, Irish Government Economic and Evaluation Service, IGEES, was set up. They do not seem to have a profile publicly. Does the Department take them seriously? Does the Department act on their reports?

Mr. David Moloney

Absolutely.

Deputy Verona Murphy

Can the Secretary General give me three examples of where the Department has taken action on foot of an IGEES report?

Mr. David Moloney

The reports that they have done over time in various areas have informed how we advise Government. There were several reports done in relation to illness, disability and carers. There were several reports done-----

Deputy Verona Murphy

I refer to the actions the Department has taken. I know what the reports are. I have looked them up. What actions did the Department take?

Mr. David Moloney

They feed into the advice that we give to Government in the budget process.

Deputy Verona Murphy

In other words, it is not about value for money. Basically, the Department comes back to Government and says that it should do this. The Department does not remove funds or recommend funds be diverted anywhere.

Mr. David Moloney

To the extent that we do that, it happens within the budgetary process which is where funds get allocated.

Deputy Verona Murphy

Therefore, the Department makes those recommendations or can.

Mr. David Moloney

Absolutely. I refer to the lessons, the evidence and the data that is provided in the reports that IGEES creates on an ongoing basis.

Deputy Verona Murphy

Will Secretary General give three examples of where the Department has done that on foot of the most recent reports?

Mr. David Moloney

As I say, it is all done within the budgetary context. There have been a lot of labour market reports. They have informed how we have constructed and designed, for example, the supports we offered through Covid.

Deputy Verona Murphy

Would the Secretary General give me an example of what changes were made on foot of the reports? I am trying to establish here that IGEES is working and that it is having an impact. Is it only more reports that sit on a shelf?

Mr. David Moloney

Absolutely not.

Deputy Verona Murphy

Can the Secretary General give me an example, please?

Mr. David Moloney

The example, to give it again, is the Covid supports, particularly around labour market. The Deputy will be aware of the employment wage subsidy scheme and the pandemic unemployment payment. The design of those schemes was very heavily influenced by the work that IGEES had done. I suppose what IGEES does at this stage of its development even more so than anything else is it collects together a base of evidence or data which can inform how we think policies can be designed and what the impact of those policies are.

Deputy Verona Murphy

I appreciate that. Based on my time limit, has the Secretary General have any other examples?

Mr. David Moloney

We have done quite a lot of work on illness disability and carers in relation to IGEES and we fed that into the annual budget process.

Deputy Verona Murphy

Such as, in the case of carers?

Mr. David Moloney

Looking at the numbers, the rate of growth and issues such as half-rate carers and how their numbers have evolved over time. We have looked at invalidity benefit versus disability allowance.

Deputy Verona Murphy

Will the Secretary General go back to carers for me? What about half-rate carers? Has the Department decided to increase it or reduce it? What are the numbers involved? I assume these are family carers.

Mr. David Moloney

At one stage, there would have been a concern that there was a huge increase in half-rate carers. The work done, to my recollection, showed actually that there was not a systematic long-term increase, that there were particular jumps as can happen over time but that it was not a systematic long-term increase. In that instance, it pointed out that half-rate carers were not as significant an expenditure issue as might have been thought on the basis of one or two years' data.

Deputy Verona Murphy

Given that they save the country so much money in the long term, I would hope not. Ultimately, the care of some of our people that is being carried out by family carers and carers in receipt of carer's allowance is saving the State approximately €500,000 on an individual basis. There are far more worthy things, I would assume, that the Secretary General could have come up with.

I have a question on local government. I may have to get this in writing. A sum of €5.8 billion is significant. Has the Department a lack of oversight regarding amounts of central funding of that nature - nearly €6 billion - being allocated? Especially, when, in Wexford, my local authority got sanction from its councillors to increase local property tax last week, in a cost-of-living crisis, by up to 15%, has the Department an appropriate oversight of the spending of local authorities?

Mr. David Moloney

That is a choice that is set out in the legislative provisions. The Comptroller and Auditor General does not-----

Deputy Verona Murphy

On the value-for-money aspect, how do we establish that we are getting €6 billion worth of value out of local authorities if there is no real oversight?

Mr. David Moloney

There is the Local Government Audit Service.

Deputy Verona Murphy

That does not come under the remit of this committee. Does the Department interact with that service?

Mr. David Moloney

We see their reports but we do not really interact with them in a significant way. These are matter, as the Comptroller and Auditor General will tell the Deputy, that are set out in legislation.

Deputy Verona Murphy

This is my final question. Mr. Moloney is the Secretary General of the Department. In a personal capacity in performing that role, is he happy that there is sufficient oversight of that kind of money with local authorities? Does he take any responsibility in the context of stating whether we do or do not have sufficient oversight regarding €6 billion in public moneys?

Mr. David Moloney

It is a considerable amount of spending but the provisions for oversight of it are set out in legislation.

Deputy Verona Murphy

Is the Secretary General happy with them?

Mr. David Moloney

I am not permitted comment on the merits or demerits of policy.

Deputy Verona Murphy

Could Mr. Moloney make recommendations in his capacity as the Secretary General of the Department for better oversight?

Mr. David Moloney

We could certainly look at that issue.

Deputy Verona Murphy

I would appreciate that. It is something that needs to be looked at. If the Secretary General could submit that to us, I can come back to it.

Deputy Alan Dillon

I welcome our guests and thank them for joining us this morning. I will start with the Department's dispute over the amount of the postal charges due to An Post for the 2016 general election. It has been reported that the Department paid €14.1 million to An Post in May 2016 and it disputed the liability of the Exchequer to pay the balance, which was €1.5 million. Will the Secretary General explain the reason for withholding this money from a State body such as An Post?

Mr. David Moloney

That is broadly correct. In 2011, the then Department of Finance and An Post signed an agreement covering the cost at a discounted rate of election communications for candidates in the 2011 general election at an agreed discount price. When the 2016 general election came along, An Post charged a higher price than had been agreed for the 2011 general election but that price had not been agreed with the Department of Finance. Therefore, I suppose, in fairness, a dispute arose as to what the appropriate level of charge should be.

Deputy Alan Dillon

Was there an agreement in place?

Mr. David Moloney

The last agreement had been the 2011 one and no subsequent agreement had been made.

Deputy Alan Dillon

So no agreement was in place in relation to the charge per item.

Mr. David Moloney

Yes. The view that the Department of Finance at the time took was that there had been no agreement to increase the charge.

That is where the dispute arose. As Deputy Dillon knows, general elections take place at short notice. There was not an agreement in time to allow communications to go ahead. It was not viewed as feasible to stop the communications, so we had a situation where a service was delivered but there was a dispute about the price. The amount we paid at that point was based on the 2011 price.

Deputy Alan Dillon

How much did the Department pay in legal costs to defend the withholding of this €1.5 million from An Post?

Mr. David Moloney

I understand that the final settlement included €735,000 for accumulated interest which was shared between us and An Post. We paid €367,000 in interest, with a further €92,000 as a contribution to the cost of arbitration.

Deputy Alan Dillon

Will Mr. Moloney repeat the total cost?

Mr. David Moloney

The total cost of accumulated interest was estimated at €735,000. It was agreed to split that, so we paid €367,000 of that. We made a further contribution to the cost of arbitration, which I think the Deputy is referring to, of €92,000.

Deputy Alan Dillon

Has Mr. Moloney learned any lessons from this incident with regard to the Department of Public Expenditure and Reform's credibility in defending this case?

Mr. David Moloney

Disputes arise. That is part of life. Regarding lessons learned, we now have an agreement in place with An Post that covers until 2026. The way around this happening again is to have longer term agreements in place so that we are not caught on the hop by an election or such. I think the agreement lasting until 2026 means that this will not arise.

Deputy Alan Dillon

Do these types of dispute regularly arise between the Civil Service and public services such as An Post? Was this a once-off incident? It has certainly cost the Department a significant amount of money from its internal funds.

Mr. David Moloney

As a matter of general principle, we strongly encourage public bodies to arbitrate, mediate and settle with each other rather than incur legal costs, as the Deputy says. That is not always possible but, in the main, public bodies would seek to settle these differences outside of a court or legal case framework.

Deputy Alan Dillon

I will move on to the spending reviews undertaken to date, as other Deputies raised, and the demonstration of value for money being achieved by the relevant Accounting Officers. Will Mr. Moloney give an indication of the spending reviews for health? What findings, conclusions or recommendations have been taken on board with regard to health spending?

Mr. David Moloney

Quite a number of spending reviews related to health have been done over time. Initially, they were mostly done by the Department of Public Expenditure and Reform. More recently, they have been done in collaboration between the Department of Public Expenditure and Reform and the Department of Health, or by the Department of Health itself. Some of the significant issues that were covered and informed policy in the area included work on the nursing homes support scheme, which is called the fair deal scheme. That has fed into the review of costings for that scheme. We have negotiated agreements on pharmaceutical pricing. IGEES did work which the Department greatly informed. As I said to Deputy Verona Murphy, IGEES has been around for ten years. The Government Economic Service, GES, in the UK has been around for 50 years. It is in a phase where collecting data and using those data to inform policy is at its core. Over time, it will become even more impactful.

Deputy Alan Dillon

There is a serious concern about health spending. This arises in particular when the HSE and the Department of Health are before the committee to discuss their financial accounting systems. There are concerns about accountability for and traceability of the use of public funds and about the value for money reports. We are very light about how we assign funds to areas in health where funding is required. There is frustration at this committee when the HSE and Department of Health come before us. Have any recommendations been implemented to date in 2022 that Mr. Moloney can share with us with regard to value for money or spending reviews in health?

Mr. David Moloney

I have given two significant examples relating to the pricing of pharmaceutical drugs and the funding of the fair deal scheme. There are other examples. We have looked at various aspects of primary care and at care for the elderly. Much work has been done. The work by the IGEES economists and policy analysts in Government Departments has brought much greater clarity to what is being spent and what it is spent on, which greatly facilitates value-for-money assessments and how money is allocated within the health service. As the Deputy knows, there are considerable limitations in the information available about financial management in the HSE.

Deputy Alan Dillon

Does Mr. Moloney have a timeline for the implementation of the new system? We are told it could take four or five years before the HSE is able to roll it out. I know procurement has finished and a contract has been signed to implement the system, but I am sure the Department of Public Expenditure and Reform wants to get this up and running as quickly as possible.

Mr. David Moloney

We have been involved with the HSE in trying to pull together an integrated financial management system for the health sector for quite some time. It made progress before Covid. Post Covid, we are told that the current timeline for the project is that 53% of all the HSE's directly-run services will be on the integrated financial management system, IFMS, by the end of 2023. It will be at 82% by the end of 2024 and 100% by mid-2025.

Deputy Alan Dillon

Has the Department of Public Expenditure and Reform done a risk assessment of the areas that have the largest spend? Will they be put on the system first? Are the HSE and Department of Health telling the Department which areas they will pick? Is the Department working with them to address where the scrutiny and traceability need to be focused?

Mr. David Moloney

One challenge that the HSE has with this is that it is a move from a legacy system to a new system. The legacy system is derived from the old health boards. To a large extent, the programming was dictated by the old legacy systems in the health boards, which were primarily regional. The prioritisation of the programming was focused on where the greatest weaknesses in the legacy systems were. The risk assessment fed into the timing and sequencing for the move to the IFMS.

Deputy Paul McAuliffe

I thank the witnesses for coming in. I want to turn to the Department's role in establishing remote policy across the Civil Service. Remarkable things were done during the Covid pandemic with regard to seeing what was possible to do through remote working. Thousands of social welfare payments were processed in a manner and from places which we would probably never have sanctioned or predicted. I think the same work was carried out in the Department of Public Expenditure and Reform. How has the Department taken that learning and applied it to a new policy? Will Mr. Moloney talk to us about the Department's policy on remote working and how it applies to the broader Civil Service? How does the Department take account of our climate action targets in that same policy by reducing commuting times and so on? How do the new provisions for flexible working fit with the Government's policy on work-life balance?

Mr. David Moloney

I thank Deputy McAuliffe. A huge amount was done in the Civil Service, public service and private sector when the pandemic landed in spring 2020. IT resources were quickly put in place to make remote working practical in a way we never thought it was before. As we discussed earlier, there are some trade-offs with that. There was a level of disruption in 2021 with such an unplanned move.

As we look to the future, however, we have seen there are benefits to remote working. There are benefits as an employer of choice and there are benefits to the people who work for us and with us. We have seen that large areas of work can continue uninterrupted and at high quality within a blended working environment. For the Civil Service as a whole, the Minister has charge of the Civil Service blended working policy framework and we have a blended working policy framework that has been agreed by the Government in terms of general principles. That has been discussed and supported by the Civil Service Management Board.

Deputy Paul McAuliffe

In Mr. Moloney's experience, how is that embedding in each Department?

Mr. David Moloney

What is happening at the moment is that, across the board, there is a bit of readjustment post Covid. People are returning to the workplace-----

Deputy Paul McAuliffe

Is Mr. Moloney satisfied that each Department is putting in place blended working options for public servants?

Mr. David Moloney

Yes. That is fully in line with the blended working framework that-----

Deputy Paul McAuliffe

Is there any data collection in terms of percentages?

Mr. David Moloney

No. Each Department would keep those data for itself in terms of how many people were availing of blended working and what kind of patterns-----

Deputy Paul McAuliffe

Mr. Moloney is correct that there are trade-offs with it as well. If we are really to analyse its success, does he envisage a role for the Department, given its central role in public service and reform, in reviewing how those policies have been implemented? Does he have plans to do that?

Mr. David Moloney

There is a sense that the operation of the blended working framework should be reviewed after a year or so. There is a sense that because Departments are currently piloting different types of blended working schemes, it is the experience of individual Departments that will matter most. I suspect the review will take the form of the collection of the experiences of individual Departments, perhaps in the context of the Civil Service Management Board.

Deputy Paul McAuliffe

One of the scenarios in the current sort of war-time situation is that large users of energy may be asked not to operate at peak times. Does Mr. Moloney have contingency plans in terms of civil servants being asked to work from home during potential high usage periods or any period where we are not able to match supply with demand?

Mr. David Moloney

At the moment, that does not specifically form part of the Government's decisions in respect of the different measures we have taken. There are energy saving initiatives across the civil and public service. There are guidelines in respect of heating and light within each Department. We have supported policies to reduce use. The suggestion, for example, of moving to fully remote working as a means of cutting down on power usage during peak hours is one we could look at and consider its implications. There is always the danger that people might think-----

Deputy Paul McAuliffe

I was not recommending it, but it is a suggestion that has been floated in media debate and so on. At this point, there are no contingency plans in that regard.

Mr. David Moloney

It does not form part of the Government's contingency plans at this point. If we were considering that, we would have to look at the balance between the energy that would be used in a government building and the energy that would be used in 300 households. There are trade-offs there.

Deputy Paul McAuliffe

I will move on to the value for money elements that were touched on by Deputy Dillon. I specifically refer to the value for money process in the Department of Housing, Local Government and Heritage, particularly with regard to the value for money sought for the procurement of housing. Does Mr. Moloney believe that model is sufficiently broad to balance also the spending in the Department of Social Protection, for example, on the procurement of housing through schemes such as the housing assistance payment, HAP? Sometimes there is too narrow a focus on value for money in the procurement of a particular unit or set of units and account is not taken of the broader value for money in terms of it not having to be spent by another Department.

Mr. David Moloney

I take the point. That view across Government is something we need to strengthen in terms of our value for money approach. In terms of housing, we take into account the money spent by the Department of Social Protection as well as the money spent by the Department of Housing, Local Government and Heritage when we consider those issues. In recent years we have moved a lot of the spending that was formerly in the social protection Vote into the housing Vote so that there is greater consistency of approach. We are conscious of that and we are aware how important it is to take it into account to the full. In any value for money assessment or business case, the full costs to the Exchequer should be taken into account and, indeed, the full benefits in terms of the access to services should be as well.

Deputy Paul McAuliffe

An issue flagged many times when I was a member of Dublin City Council was that, in essence, the Department of Social Protection saved millions of euro when the rent supplement scheme started to be phased out, but that burden was transferred, often to the local authorities in many ways, which were doing long-term leasing and other schemes. That holistic approach to housing is important. In particular as we now start to look at procurement, there is going to come a point when viability is a major issue for housing, even social housing. Last week, Dublin City Council had tenders with which it cannot proceed because the costs for social housing are deemed to be too high, yet we know the cost of not doing it is far greater. That broader aspect of how we apply value for money in housing is key.

I refer to the delay to the process that often results from value for money auditing. Local authorities would say they are almost constantly, at each stage, coming back with value for money reports, and that is adding to the overall delay in the provision of housing. Has the Department examined that issue?

Mr. David Moloney

We are engaged regularly in those kinds of conversations. There are two points we would make in that regard. One is that the development of business cases and value for money justifications at an early stage in a project are a key signifier of the success of that project. Where that basic work is not done at the start, the project has a much higher chance of going over budget and over time. We do not see it as a delay. There are challenges in different State agencies in the context of remembering and taking it into account in their planning. Nobody goes out to buy a suite of houses next week. These things are all planned well in advance, and the value for money aspects need to be built into the planning by purchasing authorities.

Deputy Paul McAuliffe

Mr. Moloney accepts that the value for money is clear in terms of the provision of housing when it is considered that the alternative is the procurement of hotel beds. The value for money is evident regardless of what the house costs. I am not saying we should pay any amount, but the cost of it is dwarfed by comparison with the cost the State is incurring in the context of emergency provision of accommodation.

Mr. David Moloney

Emergency accommodation is expensive and it is clear it is not a first choice for anyone.

Deputy Paul McAuliffe

This may stray into housing policy and Mr. Moloney may not wish to comment, but has the Department examined the use of the HAP scheme? An issue that has come up many times at the committee is that the people who are procuring one of the largest amounts of spending, namely, HAP, are some of the most vulnerable people in Ireland. They are the procurement manager for their own rents, yet the State is spending millions in the private rental market with a resultant disproportionate impact. Has the Department examined the impact of HAP and the idea of who is procuring the service? In my experience, it is often the most vulnerable people - those who need housing - who are negotiating on behalf of the State, to put it that way.

Mr. David Moloney

We constantly look at HAP, the trends in HAP and who is taking it up. We keep that under review.

Deputy Paul McAuliffe

I thank Mr. Moloney.

Chairman

Is Mr. Moloney concerned that, with rising rents and in the absence of rent controls, any increases in HAP will just be chasing the higher rents? I know that is a policy issue but does Mr. Moloney have a concern in that regard?

Mr. David Moloney

It is a practical challenge for local authorities to-----

Chairman

It is a challenge but does Mr. Moloney have-----

Mr. David Moloney

-----balance between the rent caps that are in place-----

Chairman

There is more than €1 billion in rent subsidies this year. Does Mr. Moloney have a concern that, without rent controls, it will be a case of just chasing rising rents? Does he envisage that figure ballooning further?

Mr. David Moloney

It is difficult to anticipate what will happen in the rental market. Obviously, the amount we pay is capped. It is about whether the Department of Housing, Local Government and Heritage changes those caps.

Chairman

When the caps were changed previously, rents increased significantly. There was a spike in the weeks thereafter.

Mr. David Moloney

There is a huge trade-off there. On the one hand, the push to increase caps is because people cannot get rental properties at the cap, and then when the cap is increased, the rents often chase it. It is really a supply issue.

Deputy Catherine Murphy

In his opening statement, Mr. Moloney talked about strategic policymaking in terms of the transformation of the public service and stated that it was vital that public expenditure be managed in a planned, balanced and evidence-informed manner, and I completely agree. That is why I continue to find it difficult to see the rationale of ceasing to use Benefacts, a large database for the not-for-profit sector, which has many streams of funding, that brought some transparency to that sector. Has the Indecon report into Benefacts been laid before the Houses of the Oireachtas?

Mr. David Moloney

I do not know the answer to that question but I doubt it has. We provided the report to the committee, I believe, albeit in redacted form-----

Deputy Catherine Murphy

Is there any reason it would not be laid before the Houses of the Oireachtas and be publicly available?

Mr. David Moloney

I do not think there is any reason it could not be in a redacted form, for commercial sensitivity reasons, but that is a very small redaction. We would happily put that on our website.

Deputy Catherine Murphy

The Central Statistics Office, CSO, in correspondence with this committee, talked about its reliance on Benefacts in regard to EUROSTAT. We could be exposed to fines eventually. For the next year or two, the CSO will be able to project, from the base information that was provided by Benefacts, what they might be but that information will be exhausted over a short period. What is Mr. Moloney's response to that, given Benefacts had a clear benefit?

Mr. David Moloney

I have explained to the committee previously the steps we took to assess whether there was an appetite to maintain Benefacts on behalf of any of the relevant agencies including the CSO. As I explained previously, the CSO, when afforded the opportunity to take over the database and do what Benefacts does, did not take it over. I am not really in a position to assess why it did not take it over but it was offered ample opportunity to do so.

Deputy Catherine Murphy

Did Mr. Moloney consider offering it to the Department of the Taoiseach given the Minister of State at that Department has a function in respect of the CSO? Was that view canvassed? Was there engagement with that Department?

Mr. David Moloney

Certainly, there was engagement with the Department of the Taoiseach in respect of Benefacts. That Department, no more than ourselves, is not directly a provider of data and information of this type, so it would not be one of the agencies we would expect, from a policy perspective, to have an interest in taking it over but we certainly discussed Benefacts with that Department over time.

Deputy Catherine Murphy

Did Mr. Moloney’s Department ever use the information provided by Benefacts in respect of, for example, pay and pensions? Was that function used?

Mr. David Moloney

I think there was some information of use in Benefacts in respect of charities and the community and voluntary sector, but we are not responsible for pay and pensions in that sector in general.

Deputy Catherine Murphy

The Department made no use of Benefacts in respect of pay and pensions and extrapolating that information.

Mr. David Moloney

I have looked at the Benefacts information myself over time for limited purposes, but I would not see the Department as having a use for the pay and pensions piece because we are not responsible for the pay and pensions of that group of people.

Deputy Catherine Murphy

Mr. Moloney can categorically say it was not ever used.

Mr. David Moloney

It is a large Department and I cannot really speak to what everybody looked at over time.

Deputy Catherine Murphy

The analytics side of Benefacts was quite a powerful tool. It was very useful for internal audit, for example. Tusla, for example, expressed an interest in its continuation for precisely that reason, the internal audit process. Was anything done to assess the impact of the loss of Benefacts on Tusla and how that might manifest? Funders such as the Department of Health, the HSE, the Department of Social Protection and a couple of local authorities contributed to the pilot project that was Benefacts and its information was comprehensive. There can be no accountability without transparency, and here was a very transparent database that was open source. It was very usable for internal audit purposes and Tusla expressed an interest in its continuation. What consideration did the Department give to Tusla and that function, which I am sure would have had a wider application?

Mr. David Moloney

As I mentioned in correspondence with the committee, Tusla was one of the organisations we asked. We canvassed quite widely. It was a pilot, or pathfinder, project and it was clear from the start it was not part of our core mandate. Part of our approach in reform issues is often to start with a pilot project and then to find a home for it. Among the most likely State agencies - Tusla was certainly one and the CSO was another - we asked whether they wanted to take over Benefacts and they did not. It did not align with their data needs.

Deputy Catherine Murphy

I have to say, I have come to the conclusion Benefacts was too transparent. We have this supposedly open Government approach but I do not see how that can manifest without tools such as this one, which was working, usable and being used and which had potential other uses. When it comes to value for money, starting a project, getting it to that point and then ceasing it seems to be the opposite of that.

Did the Comptroller and Auditor General's office have any reason to use Benefacts? Is it the kind of tool that would be useful for internal audit? What kind of functions did it use it for, if it was used?

Mr. Seamus McCarthy

Certainly, we did use it ourselves from time to time. Where we particularly saw value in it was in regard to section 38 and section 39 organisations and having an understanding of what was happening in that sector. However, it is a policy matter it is not appropriate for me to get drawn into, so I did not, and do not, express a view on whether it should have been retained.

Deputy Catherine Murphy

We got correspondence last week in regard to the very large number of section 38 and section 39 organisations. I would say they make up a sizeable portion of the not-for-profit sector, at least in terms of the finances. I presumed Benefacts would have had potential to identify asset ratios and so on in that kind of scenario.

Mr. Seamus McCarthy

In the way it was structured, I seem to recall there was some issue with levels of payment to the senior officers of charities or section 38 or section 39 organisations. Two and a half thousand section 39 organisations is quite a sizeable database for the HSE to manage, and harvesting that information consistently is certainly a challenge for any organisation. That is probably where the value would be for a body like the HSE or Tusla to be able to get an overview of those organisations they were dealing with.

Deputy Catherine Murphy

Obviously that overview is gone now with the database having ceased.

I want to move on to the business case for the national maternity hospital. Regarding the single lot multi-supplier framework for sourcing independent reviews, is there a schedule of preferred providers? Who is on that list and how does a company get onto the list?

Mr. David Moloney

I am sorry, but I did not quite catch the question.

Deputy Catherine Murphy

I asked about the multi-supplier framework for sourcing independent reviews. Is there a list of preferred providers?

Mr. David Moloney

I will have to check that for the Deputy.

Deputy Catherine Murphy

I ask Mr. Moloney to please do that. Were weaknesses identified in the business case for the national maternity hospital?

Mr. David Moloney

As I mentioned in correspondence with the committee, we have not yet received from the Department of Health the business case for the national maternity hospital. I understand that it is at an advanced stage and the Department is going through an external process with regard to it. We expect to receive it reasonably shortly.

Deputy Catherine Murphy

I received a reply to a parliamentary question from the Department of Health that would indicate there are some weaknesses. It is very important that this is looked at.

Mr. David Moloney

As soon as we get it, besides interrogating it ourselves, one of the things we do is we have a major projects assurance group of external experts who also run the rule over it, so it will be analysed when we receive it.

Deputy Imelda Munster

I want to raise first the retrofitting scheme, which has a budget of €8 billion. I am sure taxpayers, along with ourselves on the committee, and the Department would be eager to ensure value for money when it comes to the scheme. The national development plan had allocated €202 million for 2022, but as of August of this year no deep retrofits had been completed. Has the Department raised concerns with the Department of the Environment, Climate and Communications about the scheme? Some €40 million, or almost 20% of the total fund, was reallocated from the scheme to other purposes this year. Would Mr. Moloney consider it a red flag that the scheme is not working or is not being implemented as expected?

Mr. David Moloney

I thank Deputy Munster for the question. She obviously knows that the retrofitting scheme is a matter for the Department of the Environment, Climate and Communications in the first instance, but of course, we do take an interest. It is a large amount of money, and it is a big part of the NDP and a significant commitment within it. The challenge in the context we discussed earlier in terms of the broad capital programme, post-Covid supply chain disruption and all the rest of it is probably amplified in the case of retrofit because the ambition in the national development plan is to create a whole new retrofit industry. My understanding is that Minister for the Environment, Climate and Communications is optimistic that progress is being made in that regard, and that the underspend we see in retrofitting will be addressed over time. Many people are now going into the industry and there is a lot more interest, in particular with the price of energy going the way it is. The Minister anticipates a greater interest in the scheme. We do look at it. Internationally, the big problem with deep retrofit is that it is costly and disruptive, so there is a good deal of inertia.

Deputy Imelda Munster

The Department said at the start that there was a big uptake for the scheme and that the response was overwhelming. It is concerning that as of August of this year there were no deep retrofits completed. When the Department was doing the budget for 2022, did the Department of the Environment, Climate and Communications say it would be able to spend that money?

Mr. David Moloney

The provision for retrofitting is part of the capital provision, which was set out at the review of the NDP. Broadly, across the Government, the ceilings that were set in the NDP review for capital were applied in the 2021 and 2022 budgets.

Deputy Imelda Munster

Yes, but did the Department of the Environment, Climate and Communications actually say when the money was being allocated that the €202 million would be spent?

Mr. David Moloney

It did not form part of the budget discussions because we did not discuss capital in relation to the budget because the allocations had been set.

Deputy Imelda Munster

It is the same with the Department of Health. Every year a certain amount of funding is allocated, and it is never spent because the Department does not recruit sufficient staff. At what stage does the Department of Public Expenditure and Reform ever take the Department to task over that, or is the Department of Public Expenditure and Reform happy to take whatever is said and to allocate the funding? My concern is that it is going to be the same for this scheme. Where is the oversight and the assurance that it has provided value for money, and that the moneys allocated will be spent?

Mr. David Moloney

First, in relation to the Department of Health, we sit down and go intensively through the Vote and the spending patterns, and we discuss the allocation. That all feeds into the budget. For example, the staffing in the Department of Health remains below target, although it has had considerable success-----

Deputy Imelda Munster

Does Mr. Moloney ever say to the Department that it gets it wrong every year or is it just allocated whatever money is requested?

Mr. David Moloney

The actual amount of spend informs the budget discussions every year. The budget this year was predicated on what is actually in the HSE pay bill as opposed to the ambition of the HSE pay bill. It does form part of the budget discussions and it does inform the settlements in relation to that.

Deputy Imelda Munster

How would Mr. Moloney juggle that with the retrofit scheme?

Mr. David Moloney

The retrofit scheme is slightly different, insofar as we did not discuss that in the budget context because we did not discuss capital in the budget context. Over the next 12 months, what we will see in regard to the revised NDP is that first we have undertaken to provide capital ceilings for three further years and that allows us an opportunity to look at the actual spend and uptake under those schemes.

Deputy Imelda Munster

Does Mr. Moloney see himself revising down the targets for the retrofit scheme?

Mr. David Moloney

That will form part of the discussion with the Department. As I already indicated, the Department is confident that the retrofit scheme will catch up, but to what extent that is happening will form part of the discussion.

Deputy Imelda Munster

Does Mr. Moloney have any value-for-money concerns around the deep retrofitting schemes? The primary focus is on deep retrofitting. We have a situation where people who are in a position to go ahead and go to the one-stop-shop can draw down a low-interest loan and there is no significant outlay as such for that. Does he have concerns that it is primarily geared towards that and other people with less disposable income must apply for individual retrofit grants, whether it is for attic insulation-----

Mr. David Moloney

Windows and insulation.

Deputy Imelda Munster

-----and all that sort of thing. Some people are not in a financial position to do more extensive work. From a value-for-money perspective and in terms of reducing emissions or from the point of view of ordinary people, does it offers value for money as it currently stands?

Mr. David Moloney

The policy issues here are a matter for the Minister for the Environment, Climate and Communications. From our point of view, in terms of value for money, it is fairly well established that retrofitting does provide value for money in the long term, given our climate targets in particular. That is well established. Deputy Munster made a good point about whether income levels then start to determine how much of that a person can do. That is one of the reasons the Minister for the Environment, Climate and Communications has a number of different schemes that operate at different levels.

Deputy Imelda Munster

Yes, but I am talking about people who have to pay upfront for individual schemes. They have far fewer options open them. The scheme is hardly fit for purpose from the point of view of value for money or even fairness, and the impact in terms of reducing carbon emissions. Does Mr. Moloney have concerns about that?

Mr. David Moloney

It is really a matter for the Minister for the Environment, Climate and Communications, but what I would say is that it is clear that the overall purpose of retrofitting is a value-for-money one. I take the point the Deputy makes. Inertia in upfront costs is going to have an impact on that.

However, the degree to which the State funds all or part of a retrofitting package is really a policy matter.

Deputy Imelda Munster

Okay. I want to raise the informal agreement, if you like, between the Department of Public Expenditure and Reform and the Department of Housing, Local Government and Heritage that allows for the transfer of funds of up to €3 million under subheads. Is that figure correct?

Mr. David Moloney

It is €3 million.

Deputy Imelda Munster

Against the budget of €5.1 billion, €466 million was allocated under the arrangement. Is Mr. Moloney's Department concerned that such significant sums are being allocated without oversight.

Mr. David Moloney

I will again move back to the context regarding, first, the-----

Deputy Imelda Munster

I understand it is there and in place. Time is of the essence, however. Has Mr. Moloney concerns about a vast amount of money like that?

Mr. David Moloney

We think that is related to 2020 and 2021 and Covid-19. We would not see it as part of or a feature of the ongoing management of the public finances with regard to that Vote or any other Vote. The €3 million agreement was really a temporary agreement. It no longer applies. It was a temporary agreement to do with the administrative needs at the time.

Deputy Imelda Munster

A figure of €230 million was reallocated from housing to local government. Given that he has oversight, can Mr. Moloney indicate what did not go ahead in housing and what did go ahead in local government instead? It was €230 million.

Mr. David Moloney

My understanding of the local government transfer is that it predominantly related to the commercial rates waiver that year. It was to pay for the commercial rates waiver decided by the Government. In terms of what did not go ahead, that would have happened across a number of subheads in the circumstances at the time. We can certainly list the subheads from which money was vired and provide that information to the Deputy.

Deputy Imelda Munster

Yes, I would appreciate that. Are there similar arrangements with other Departments?

Mr. David Moloney

Virement can happen across Departments. It is permitted by public financial procedures.

Deputy Imelda Munster

Would Mr. Moloney have an idea of the total value or percentage of that expenditure for 2021?

Mr. David Moloney

We spoke earlier about the four examples the Comptroller and Auditor General has in his report, which comprised €1 billion worth of expenditure. We think that probably captures the large virements but there could have been other smaller virements across other Votes.

Deputy Imelda Munster

Would that be €1 billion in total across all Departments-----

Mr. David Moloney

We think it would be a little more than €1 billion.

Deputy Imelda Munster

-----that was transferred under different subheads without any kind of oversight?

Mr. David Moloney

Under public financial procedures, it would have transferred with the agreement of the Minister for Public Expenditure and Reform.

Deputy Imelda Munster

It is a hell of a lot of taxpayers' money on which to have no oversight, is it not?

Mr. David Moloney

There is oversight by the Department. It is visible to the Department. We will reinforce the formal procedures that have been highlighted by the Comptroller and Auditor General, and we-----

Deputy Imelda Munster

When will that be done?

Mr. David Moloney

We have taken steps to do that already. That will be done in relation to this year and going forward. Much of the-----

Deputy Imelda Munster

It will be done this year.

Mr. David Moloney

Yes, in respect of 2022. We accept that it is a lot of money. The demands of Covid-19 and the need to provide for Covid added more than €5 billion to public expenditure in 2021. Our concern was that we would not add €6 billion when we did not need to and that if there were savings on budget line, those savings would be used in the first instance to fund the temporary Covid measures. Really, it does arise in those very particular circumstances.

Chairman

As €230 million is such a large sum of money, should that have not come back before the Oireachtas?

Mr. David Moloney

I believe there was engagement-----

Chairman

It was moved without any Oireachtas oversight or with the engagement of an Oireachtas committee.

Mr. David Moloney

I believe there was engagement with the select committee and there was a Government decision-----

Chairman

I am sorry; could Mr. Moloney please repeat that?

Mr. David Moloney

I believe there was engagement with the select committee. It was also partial, was it not? I think the commercial rates waiver was funded partly though virement but partly through a Supplementary Estimate.

Mr. Seamus McCarthy

I believe it was €119 million of a supplementary in the end. I suppose the point is that the Supplementary Estimate could have been used to do the transfer of the balance of the funding as well.

Chairman

Okay, I thank our witnesses. We will break then resume in ten minutes sharp to continue the meeting.

Sitting suspended at 11.05 p.m. and resumed at 11.16 p.m.

Chairman

The next speaker is Deputy Colm Burke.

Deputy Colm Burke

I thank our guests for coming in today. My apologies for arriving late but I had other meetings to attend. On the overall expenditure by the Government, part of that expenditure is funding that is provided by the relevant Departments to local authorities. Does the Department believe there is enough scrutiny of how local authorities use that money? I know they are accountable to the councillors but there is not the same level of scrutiny. For instance, we cannot invite a local authority before the Committee of Public Accounts. Do the witnesses believe we now need to change the legislation to deal with that issue? It is a substantial budget, between all the local authorities. Is it time to look at that whole issue of how we can get better value for money? We have talked about that. Does the Department feel we can do a lot more in scrutinising that whole area?

Mr. David Moloney

There are a few things. Earlier, we promised to provide a note on that to Deputy Carroll MacNeill. The Deputy is quite right that we are constrained, in that the accountability for local government funds is dealt with separately. The legislation and legal provisions dealing with it are separate. Instead of having a role for the Comptroller and Auditor General, there is a role for a local government auditor. I suppose I am precluded from commenting on that, as it is the policy position, but we have agreed to furnish the committee with a note on the issues and what flows from them.

Deputy Colm Burke

Have there been cases where the Department has expressed concern in relation to the allocation of funding, and it not necessarily being used in the area that it was assigned to? I know there is a local government auditor but have concerns been raised with the Department in relation to this issue?

Mr. David Moloney

I am not aware of specific concerns having been raised but we are very conscious that the way the accountability for those funds operates is different to the way that a lot of other funding operates.

Deputy Colm Burke

In the discussion earlier, some of my colleagues raised the issue of value for money. One of the problems that is arising now is the timeframe from the time a project is started to the time it finally gets approval. For instance, the documentation on the new elective hospital for Cork was submitted by the South/Southwest Hospital Group in January, and we still do not have a decision from the Department because it has to go through the Department of Health and the Department of Public Expenditure and Reform.

The figures given in January are in real terms a kind of estimate of what they would be now. It is not necessarily saying that it was an inaccurate estimate. The figures are now completely irrelevant because the whole issue of costs has changed substantially. Does the Secretary General not think that it is time now for all Departments to look at the way we assess projects and the timeframe it is taking to do so? I will give the Secretary General one example. I know of a project in my own constituency which started off as planning for a school. A Government agency objected to the planning and took it all of the way to An Bord Pleanála. Its argument was that the local sewage treatment facility did not have capacity, even though it was an existing school which was already connected into that system. The people gave an undertaking that the school would not increase its numbers but the appeal still went all the way to An Bord Pleanála.

Does the Secretary General not think that we need to look at this whole issue of the delaying of projects and how we can deliver them more quickly, especially where the decision-making process needs to be looked at?

Mr. David Moloney

I thank the Deputy for his question. There is a concern about the length of time projects are taking to get to implementation stage and that is being addressed in a number of different ways. A review of planning legislation is at an advanced stage and is being undertaken in the Attorney General’s office.

I currently chair a group which is looking at the public spending code to consider how much of that can be foreshortened, where appropriate. We are aware and conscious of the need to minimise any delays caused by regulatory decision-making.

I made a point earlier is that all of these projects take a long time;from having the idea, to getting the planning permission, to finding the funding. On the value-for-money pieces of that, those pieces can generally be done alongside the planning for the project and perhaps the thing that needs to be done most is that alongside the planning for a project, the value-for-money pieces and the business cases need to be factored in and done alongside it. They do not need to be a surprise or a delay at a particular given point.

Deputy Colm Burke

If one takes the elective hospital issue which I am raising here, we are ten months on and we have no decision. We are now talking about a completely different budget to what we were talking about ten months ago, and we still do not get an explanation as to why it is taking so long. Some clarification needs to be given as to why projects are taking so long.

I am aware of another project, which is about ophthalmology care, where the building has been sitting idle for the past six months but adequate funding to fully equip and staff the facility has not yet been provided. Why does all of this happen? We have made a decision that we need to improve a service but when we take that decision towards its implementation stage, it is just not happening fast enough. How does the Secretary General believe we can change that?

Mr. David Moloney

I certainly can understand the concern and in an inflationary environment that concern is emphasised. We are looking at planning permission and at our own processes. It would be appropriate for all State agencies to look at their own processes. We discussed the underspending of capital earlier on also, so at this stage, with a greatly expanded capital programme, it is very important that all public sector agencies look at their procedures.

On the other hand, I have to go back to the reasons we have many of these procedures, which are twofold. First, we have had problems in the past, in particular with major projects. Second, all of the evidence shows that planning around detailed specification and proper business cases at the start makes it a quicker process.

Deputy Colm Burke

I fully understand that but the problem I have is that on this elective hospital issue, it has taken ten months. The decision had been made that we need it but the two Departments have not signed off on it. We have not even gone to planning stage or started that process. Why does it take ten months to come to a decision where everyone already accepts that we need to build this hospital and in the meantime, a huge cost has been added on to it. It is likewise with school and housing projects. It is about the time from when the local authorities make a submission to the Department to getting the response back from the Department.

If one takes the Glashaboy flood relief scheme in my own constituency, the tender was submitted but in the time the Department took to accept the tender, the price had gone through the roof because there was too much of a delay in accepting the tender that had been submitted. In planning permission, a decision has to be given within a certain number of weeks. We do not seem to have the same timeframe in respect of tenders. When a tender comes in, is there a timeframe within a Department at the moment by which a decision must be made as regards who is awarded the project?

Mr. David Moloney

On the elective care centre in Cork, the Department of Public Expenditure and Reform received the preliminary business case for that on 27 September. Our next step in that is to send it to the major projects advisory group, MPAG, because it is a large-scale project.

Deputy Colm Burke

Is the Secretary General saying that the Department of Health did not send it on to his Department between January and September?

Mr. David Moloney

I do not have visibility on the Department of Health side but I am saying that we received this documentation on 27 September and we have sent it to the major projects advisory group. We expect it to complete its review - and we have sent quite a few such projects to this group - and it is a six-week to eight-week timeframe. We expect to have a conclusion on that in mid-November.

I take the point that the Deputy is making that we need, in the context of an expanded NDP, to constantly look at our procedures and at our decision-making procedures because-----

Deputy Colm Burke

My apologies for interrupting the Secretary General. The Secretary General of the Department of Health appeared before this committee and I was advised that the decision on the elective hospital in Cork would be made in mid-October and this is on the public record. The Secretary General is now telling me that the Department of Public Expenditure and Reform did not receive the documentation from the Department of Health until 27 September. In fact, I was misled and I had been advised earlier that the decision would be made at the end of July.

Mr. David Moloney

That is the information I have here, Deputy, which is that we received that documentation on 27 September. Clearly, on the consideration that has to be done for any of these projects, the engagement with external experts, and so on and so forth, timescales do change, but the information I have is that we received this documentation on 27 September and we expect the MPAG to complete its review in mid-November.

Deputy Colm Burke

I will go back to the issue of tenders. There are timeframes within which local authorities have to comply in respect of planning. From the time tenders are accepted and are actually submitted, and where, for instance, there is a deadline set for 1 October for all the tenders to be submitted, what is the deadline within Departments for a Department to come to a decision in respect of to whom the contract will be awarded? Do we have deadlines within Departments because I have seen delays of five months to six months in Departments in respect of deciding what tender the Department is accepting. Is it not now time that we would set down for every Department a timeframe, from the time a tender is to be submitted to a Department and within which a decision has then to be made? That can be four weeks, six weeks or eight weeks but at least to have a timeframe.

Mr. David Moloney

I do not believe that there is such a guideline in place at the moment.

Deputy Colm Burke

But does the Secretary General not accept that it is now time to put such a guideline in place?

Mr. David Moloney

We could look at the at the merits and demerits of putting in such a guideline. We can look at and do some work on that for the Deputy. Different tenders have different results and are more or less complicated.

Deputy Colm Burke

So are planning permissions.

Mr. David Moloney

Indeed.

Deputy Colm Burke

There are still timelines with which local authorities still have to comply no matter how complex, and they have to come back with a decision. They may look for further information but I am saying that we have tenders that are sitting in Departments and in the meantime, the cost of doing the project has gone through the roof. Like in the case of the Glashaboy flood relief scheme, the contractor walked away from it and it is now back out to the tendering process again.

Mr. David Moloney

We can certainly look at that for the Deputy.

Deputy Colm Burke

I thank the Secretary General.

Chairman

On the oversight and control public of spending code the Department of Public Expenditure and Reform has, we are in a situation now where we have a fairly large national development plan with many big projects being rolled out. There have been some substantial infrastructural upgrades done over the past number of decades.

In that context, I wish to ask about cases where there may be a level of collusion between companies that are tendering. In July, six Spanish construction firms were fined €200 million by the Spanish regulator for colluding on bids for public-private contracts, or public private partnerships, PPPs, as we know them. The regulator found that their behaviour resulted in fewer and lower quality bids being received. The Spanish state has moved to ban these companies from winning public contracts for the foreseeable future. Five of those Spanish companies have won contracts for PPPs in this State. Was Mr. Moloney aware of the situation that arose in Spain and the decision of the regulator there?

Mr. David Moloney

I was not aware of it. I have not heard about it before. In our context, we have the Competition and Consumer Protection Commission, CCPC, and it is in a position to investigate any allegation of collusion, which is contrary to competition law.

Chairman

The head of the CCPC has raised concerns about issues like this, although not necessarily cases like the ones to which I am referring. Mr. Moloney is not aware of what happened in Spain, but does he know how many PPPs the five Spanish companies in question are engaged in?

Mr. David Moloney

I was not aware of the situation with the Spanish companies and I do not necessarily know the names of companies that are involved in PPPs, but I can provide that information to the committee.

Chairman

It has been publicly reported. Dragados, which is a part of the ACS Group, was fined €57.1 million, FCC Construccion was fined €40.4 million, Ferrovial Construccion was fined €38.5 million, Acciona Construccion was fined €29.4 million and Obrasco Huarte Lain was fined €21.5 million. The sixth company, Sacyr Construccion, was fined €16.7 million. This story was reported by Reuters on 7 July. The Spanish regulator found that, between 1992 and 2017, the companies had met weekly to analyse which public projects they were planning to bid for, plan a common strategy and share technical documents between them. The regulator found that this had affected many construction bids, leading to fewer and lower quality bids. The regulator viewed this as a serious infringement of Spanish and European competition law. We are under the umbrella of the latter, as Mr. Moloney is well aware. The Department is not aware of this situation or has not been alerted to it.

Mr. David Moloney

No. I was not aware of the situation involving the Spanish companies, but we can follow up on it.

Chairman

The chairperson of the CCPC, Ms Isolde Goggin, has discussed fears about potential rigging of public procurement contracts. She has sought a more sophisticated data system - I will come to the Department's role in a moment - to monitor for potential abuses. I understand that the CCPC is currently examining the waste and motor sectors. She outlined that the CCPC was relying on whistleblowers to detect wrongdoing. It has been estimated that wrongdoing may be adding 20% to 30% to the cost of contracts. On 14 August, she was reported as saying:

We've had various complaints over the years, and we've done various investigations, but we haven't had a successful prosecution. We need to improve the data, the evidence base for what we're looking at.

She added: "International experience would tell you that [public procurement] is something that tends to be very prone to cartel activity, and particularly to bid-rigging". I understand that she and her office have written to the Department of Public Expenditure and Reform to make the case for a data analytics-based system, which would make it easier to track activity. In this regard, she has stated:

At the moment in order to detect bid-rigging we'd be reliant on a whistleblower ... But we also know that the Irish State could use software a lot more cleverly than we do at the moment to kind of detect patterns like that ... [and] to look at the historical pattern"

I am not alleging wrongdoing, but the Department needs to be alert to this. When I became aware of the Spanish case, it alerted me to the situation.

Dragados, which Reuters reported was fined €57.1 million by the Spanish regulator, was awarded the New Ross N25 bypass contract, which was worth €230 million. It was also awarded the Gorey M11 contract, which was worth €350 million. From the Department's point of view, have issues arisen with any of these contracts?

Mr. David Moloney

No such issue has been brought to my attention. I cannot speak for the relevant Accounting Officers, but I believe I would have heard about it if there had been an issue. Collusion would be a serious allegation, one that was-----

Chairman

I am not saying that there has been collusion.

Mr. David Moloney

I am not suggesting that the Chairman did, but if anyone had a sense that there was collusion, that would be a serious issue.

Chairman

The context of my questions is that we have many PPPs, we are getting a great deal of infrastructure built and there are sizeable contracts out there. My understanding is that Dragados was partnered with BAM on both of the contracts I mentioned. Is that correct?

Mr. David Moloney

I will check for the Chairman.

Chairman

One of the other companies, FCC Construccion, was fined €40.4 million by the Spanish regulator. It had the contracts for the north runway at Dublin Airport and the widening and retrofitting of the M50. I am just flagging that. Am I correct in saying that there were four bidders for the national children's hospital?

Mr. David Moloney

I cannot recall.

Chairman

Was that in 2016?

Mr. David Moloney

That sounds right.

Chairman

There or thereabouts. One of the bidders was BAM, Dragados was another and FCC Construccion was a third. It was reported in July that the latter two had been caught colluding in Spain. I am not alleging that there has been collusion in Ireland, but there are substantial opportunities for companies internationally. What I am saying to Mr. Moloney, as the Secretary General of the Department of Public Expenditure and Reform, is that we are signing multimillion euro public contracts - in some cases, they are worth billions of euro - when there are issues arising internationally to which the State, the Department and our committee need to be alert. Has Mr. Moloney any concern that there has been price rigging on public contracts? I do not mean the contracts I mentioned, but public contracts in general. Has Mr. Moloney encountered anything?

Mr. David Moloney

Under EU procurement frameworks, public bodies may exclude a contractor from a public procurement competition where the contractor has had a contract terminated and is guilty of grave professional misconduct, which is what the Chairman is describing, that renders its activity questionable. I am happy to initiate a conversation with the chairperson of the CCPC about the matters the Chairman raised. The Office of Government Procurement has a watching brief.

Chairman

It is under the Department's brief.

Mr. David Moloney

We are very happy to engage on that. The reality is that no allegations of collusion had been brought to me at any point.

Chairman

I understand and accept that. The point I am making is that it is something the various arms of the State, including the Oireachtas and the Committee of Public Accounts, need to be alert to. Does Mr. Moloney accept that?

Mr. David Moloney

Absolutely. I completely agree.

Chairman

The then chair of the CCPC wrote to the Department of Public Expenditure and Reform in 2016 making the case for increased funding for a more sophisticated database to track the bidding in PPPs. What happened as a consequence of that? Have any measures been put in place to assist in that regard? The CCPC raised the matter again this year. My concern is that these two things happened within a month of each other. The chair raised the issue of the inability of the CCPC to examine these matters because of the absence of a sophisticated database and the technological means to look back and monitor. Has the Department engaged with the CCPC on that so far? Can any of the officials indicate whether there has been any level of engagement?

Mr. David Moloney

Any requests for funding by the chairperson of the CCPC would be in the first instance relevant to the parent Department. Funding issues for the CCPC are dealt with in the enterprise Vote. I am not aware of specific discussions directly through us, but we can follow up on that correspondence. It is relevant to the work of the OGP.

Chairman

I do not expect Mr. Moloney to remember everything but my understanding is that the then chairperson of the CCPC, Ms Goggins, wrote to Mr. Moloney's Department in 2016 making the case for increased funding and a more sophisticated database and tracking system, particularly around public contracts and PPPs. Is Mr. Moloney concerned about the potential in this area and the need to be extra careful where big contracts are being awarded? The Spanish case worked its way through to a conclusion and some damning findings on those five companies are being reported. This shows the potential. We all wonder about that, maybe in relation to smaller contracts at a more local level. Issues arise sometimes and allegations are made, many of which are wrong. False allegations are sometimes made by people who have a gripe or for some other reason. Perhaps they lost out in a bidding process. Is Mr. Moloney concerned about this and does he feel we need to keep a good eye on it?

Mr. David Moloney

We have greatly improved our approach to public procurement with the establishment of the Office of Government Procurement. The kinds of issues raised by the Chair are one of the reasons we did that in order to make procurement compliant with EU law and drive better value for money. Any suggestion of professional misconduct, which is what the Chair is describing, and proven professional misconduct, albeit in other jurisdictions, is a matter of concern and one we would be happy to follow up on with the CCCP through the OGP.

Chairman

It is particularly important and not only for taxpayers as we are also under the umbrella of European competition law. Will Mr. Moloney engage with the chairperson of the CCPC to get an update on where his Department and the CCPC are with regard to this matter and revert to the committee on it? Will he also clarify what happened in 2016 regarding that correspondence, whether his Department received it, and what has happened since in terms of trying to improve the systems?

Mr. David Moloney

We can certainly do that.

Chairman

I will go back to Deputy Verona Murphy who has five minutes.

Deputy Verona Murphy

I return to the points about value for money and oversight. Mr. Moloney is the accountable person and someone in his position in the public sector or in a public sector body has an ongoing obligation to demonstrate to this committee in particular that what is happening with Government and public spending is good value for money. I have not heard anything today that demonstrates how he does that or what his benchmark is. I understand the line of questioning from Deputy Carroll MacNeill when she asked about expertise. What does Mr. Moloney benchmark value for money against in the housing sector?

Mr. David Moloney

As I explained to the Deputy, the value-for-money circulars and initiatives in terms of the spending review we have are intended to generate a conversation on value for money and attention to that. Gathering the data showing the outputs is a very important element of that but, fundamentally, the Accounting Officer for the Department of Housing, Local Government and Heritage is responsible for value for money for housing. I think this is a point the Deputy is well aware of.

Deputy Verona Murphy

I understand the Accounting Officer is responsible but what I am asking is what Mr. Moloney benchmarks the Accounting Officer's report against when he has sight of it. Does he benchmark it against other countries or against the private sector delivering a three-bedroom house over a county council or social housing project? What does he use?

Mr. David Moloney

For example, in work done on housing, which we have discussed at the committee before, we have compared the different types of provision such as leasing and others against each other in terms of where-----

Deputy Verona Murphy

I will give a specific instance that comes to mind and relates to the housing assistance payment, HAP, on which we have an extravagant spend. I know it is the system we have and without extra supply, we are not going to overcome it. Would Mr. Moloney believe that several people have contacted me pointing out that the housing assistance department in Limerick has been writing to them on a monthly basis - for years in some cases - to tell them their tenants have not paid their portion of the rent. The landlord wrote to HAP to say their tenant has continually paid their rent. The letter comes monthly to say the department is stopping the HAP payment. It is a monthly letter and no matter what form of communication the landlord uses to say the department is incorrect, that letter still arrives. It still comes on a monthly basis and the tenant has missed no payment. First, the letter says it is stopping the HAP payment, which it never does, and, second, it comes monthly, which obviously means there is a postage cost. Was Mr. Moloney aware of that?

Mr. David Moloney

Certainly not. I would not have any insight into the operation of HAP.

Deputy Verona Murphy

As a public representative, I have engaged with HAP and I have got nowhere. How would the Department identify that? I do not know how many cases of this there are. It is clearly a huge waste of money on postage. Somebody is clearly not doing, or does not understand their job, because if they are supposed to be stopping the tenant's housing assistance payment and it never happens, how is the letter to the landlord generated?

Mr. David Moloney

I am not responsible for the administration of the housing assistance payment scheme.

Deputy Verona Murphy

Is that kind of wastage within Mr. Moloney's remit?

Mr. David Moloney

It is certainly of interest but-----

Deputy Verona Murphy

It is either in Mr. Moloney's remit or it is of interest. It is of interest to us all to save money.

Mr. David Moloney

I have been clear that it is within the remit of the Accounting Officer in the Department of Housing, Local Government and Heritage but it is of interest to us because we have-----

Deputy Verona Murphy

Would Mr. Moloney consider asking the Accounting Officer in that Department what the story is with that?

Mr. David Moloney

We are happy to do that.

Deputy Verona Murphy

Will Mr. Moloney then come back to the committee on this because it is ongoing in a number of cases to the point that it is becoming a waste of my time. I have failed to get a response on it.

How many employees are in the Department of Public Expenditure and Reform?

Mr. David Moloney

There are approximately 650 employees.

Deputy Verona Murphy

What does it cost to run the Department annually?

Mr. David Moloney

Just under €50 million.

Deputy Verona Murphy

Did the Department of Finance save €50 million when it was decided to split the Departments and create the Department of Public Expenditure and Reform? Was €50 million saved?

Mr. David Moloney

Almost certainly not. There are a couple of different elements to that. First, the Department of Public Expenditure and Reform has functions-----

Deputy Verona Murphy

Not to interrupt Mr. Moloney, but my focus is on whether the Department is value for money. I have read a huge amount in preparation for this committee meeting and many of my colleagues and I are of the opinion it is time to reintegrate the two Departments. The 650 employees at the Department of Public Expenditure and Reform could probably be put to much better use. Mr. Moloney previously mentioned that the equivalent body in the UK has been in existence for 50 years.

Unless Mr. Moloney has proof that the Department has saved in excess of €50 million in reforms, it is not really worth our while. It is a waste of money. We are paying two grade 1 Secretaries General. I do not see the level of expertise there. Can Mr. Moloney tell me categorically, for the benefit of the committee and the people who pay their taxes into the Exchequer, that his Department is value for money? I am not talking about him personally. Is the Department worth those 650 people and taking up this committee's time? Has it generated savings in excess of €50 million in the years since it was established? It it ten years now?

Mr. David Moloney

Since 2011.

Deputy Verona Murphy

What have the savings been?

Mr. David Moloney

There are very clearly identifiable savings in terms of the Office of Government Procurement. Of the 630 people, over 200 are in that office.

Deputy Verona Murphy

At a cost.

Mr. David Moloney

That is generating savings through the aggregation of public procurement in the region of-----

Deputy Verona Murphy

How much are they?

Mr. David Moloney

In the region of €500 million. That is the target and-----

Deputy Verona Murphy

That is the target, over how many years?

Mr. David Moloney

It is in relation to core expenditure-----

Deputy Verona Murphy

The Department has been established for ten years. A cost of €50 million per annum is €500 million. It has saved €500 million so there are no real savings, are there?

Mr. David Moloney

Savings are generated on an annual basis.

Deputy Verona Murphy

That €500 million is annual. I was asking whether it was annual. If it is €500 million, can Mr. Moloney show me on paper where the savings are made? I ask him to submit documentation to the committee showing where all those savings were made in 2021.

Mr. David Moloney

We can provide a note on the savings.

Deputy Verona Murphy

That is grand.

Chairman

Deputy Colm Burke mentioned capital projects. This is an issue I have raised with Graham Doyle, the Secretary General of the Department of Housing, Local Government and Heritage. At the moment, we are in a housing crisis. I am approaching this in a constructive way. I am not making a criticism but it is one of the issues that I fail to understand. We have to mass-produce houses, particularly social housing. I am not talking about low quality housing but good quality affordable housing and cost-rental housing. The State has, thank God, at last moved to doing that but personally I would like to see it on a larger scale.

As I recall, around 2002 local authorities were instructed that all local authority housing be architecturally designed. Up to then it was done in-house. Nice, good and practical local authority houses were built that were very easy to maintain. I will not go into it because I have said all this before. Looking at examples of houses built before that period and ones built after, the ones built after are totally impractical and awful looking. They are not all awful looking but some of them are terrible. I am not sure what the move to architecturally designed houses did. I could rattle off some bad examples of where there were maintenance problems afterwards but that is for another day.

A couple of years after that I was chair of a housing strategic policy committee, SPC, and the cost of architecturally designing was 7% or 8%. One senior local authority figure told me recently that it is now up to 10%. I mentioned the 7% figure and they said it was closer to 10% now. We built a lot of houses in the 1930s. I am not arguing for them. I pass them coming in here in the morning. They are okay. They are fine. I lived in a house like that for a good few years, no problem. I am not arguing that we should go back to those two-up, two-down houses. What I am saying is that one of the reasons we were able to build those is that we did not mess around by starting with a blank canvas for every site. We started with a drawing from the local authority. The houses I pass are in Sligo, Portlaoise, Donegal and Waterford. I have seen them all over the country. If we want to build houses on that scale, that is what we have to do.

I am raising this in the context of the pounds, shillings and pence of it. It is taking up 5% or 10% of the cost, which is outrageous. Graham Doyle would say to the committee, and I accept this, that there is now a standardised framework within the Department but that is not the same thing. That is not what I am talking about. What I am talking about is a standard design. In other words, the only blank canvas should be the actual site. Obviously there is a need for different types of housing. There is a need for single-storey housing for elderly people and people with disabilities. There is a need for apartments, and houses with one, two, three or four bedrooms. There is a need for rural housing, semi-detached houses, terraced houses and so on. I get all of that. There is only way we can do that. I will give this example. There have been situations where decisions about the hood over the front door or the type of windowsill have gone back and forth between the local authorities and the Custom House. This has been going on over the last number of years. The people in the Custom House have a job to do but that is not their job. They could give the money to the local authorities but the local authorities are strangled trying to deal with this. They did not have the staff, although there have been some improvements there and I welcome that. The Government has moved on that but the Department needs to move further on it.

One thing holding up all of this and costing more money is this ludicrous situation where we have different designs for every development. We have good examples of good houses built in the last two or three years. In the case of social housing, we should use those examples and just build the bloody things. It is the same for affordable housing. People in Laois or Cork are not worried that there is someone in Donegal living in the same type of house as them. This includes people who want to buy an affordable house. Most people are priced out of what is called the market and we need to get people into a position where they can buy an affordable house. It is a good scheme but we need to accelerate it. It is not even in first gear yet. That is the problem. I am asking Mr. Moloney, as Secretary General of the Department of Public Expenditure and Reform, to take this up with the Department of Housing, Local Government and Heritage. I have raised this with previous housing Ministers. I have raised it with Secretaries General. Graham Doyle said he would talk about this again. Maybe there is an openness there now to do it. Can Mr. Moloney raise this now with the Minister? It is not a policy issue; it is procedural issue. Shuffling papers back and forward from local authorities to the Custom House and adding up to 10% extra onto the cost is absolutely bananas in the middle of a housing crisis. I ask Mr. Moloney to give me a view on that. What can be done about it?

Mr. David Moloney

What the Chairman is describing sounds very much like what is done in the education sector, where there are a number of basic designs for schools. Effectively, they are built-----

Chairman

No, this is more complex.

Mr. David Moloney

I was just going to say that this is slightly more complex. It is certainly an issue I can speak to the Department of Housing, Local Government and Heritage about. We are involved in a number of working groups under Housing for All, which seeks to simplify the processes around the approval and delivery of housing, and social housing in particular. It is made more complicated by the preference for mixed-tenure developments, which would not have been there in some of the instances the Chairman has described. There could be scope for making further progress on that matter. I am happy to take that forward.

Chairman

It could be done in mixed-tenure developments. The estate I live in is private but there is local authority housing in it. People driving in cannot see the difference. There is no difference. Nobody even knows who is living the local authority housing, although I would know as a former councillor. There is no need for this duplication and this rigmarole, and the extra cost. I am saying this to Mr. Moloney as the head of the Department of Public Expenditure and Reform and a senior official. He is the Accounting Officer of the Department. Someone somewhere needs to take action on this. I am saying this out of frustration. It annoys me to think that any money is being wasted on architecture. That is nothing against the architectural profession. If we need to perfect some of those two-up, two-down houses, three bedroom semis, or one or two bedroom bungalows for people who have disabilities or pensioners, that is fine. Let us do that. The only blank canvas there should be is the actual site layout with the infrastructure in place. We cannot have a blank canvas for each individual house. It is absolute madness. The Department talks about this framework it has of a certain size for rooms, the energy requirements and all of that. That is all fine. That is not the issue. It has to go a step further by using the same house. I would not see any problem with it. If Mr. Moloney was on the housing waiting list, trying to buy an affordable house or get a home, would he have an objection to living in the same type of house that I was living in? Going back maybe 30 years to when he would have been trying to get going with a house, would that have bothered him? I do not think it would bother anyone. It would be irrelevant. If people out there on the market want to buy something that looks a certain way or they like the look of a house, that is fine. This would not stop any of that. That happens and that is legitimate.

If the State, as the player, is trying to get housing moving, it cannot be done with one foot on the accelerator and one foot on the brake. That is the point I am making. Will the Department come back to the committee with a note on this, if it can be addressed directly with the head of the Department of Housing, Local Government and Heritage?

Mr. David Moloney

We can certainly ask the Department of Housing, Local Government and Heritage to provide the Chairman with a note.

Chairman

Thank you. I call Deputy O'Connor.

Deputy James O'Connor

I welcome the Department. First and foremost, I want to ask about the public spending code relating to major public capital projects being undertaken, including the one that is relevant here today. Has that ever been used to stop a project from happening?

Mr. David Moloney

The public spending code is a set of guidelines that are intended to facilitate projects in a rational and planned way. It is not the intention to stop a project. The intention is to be very clear about the specification and as clear as possible about the costs from the outset. We are very much informed by a lot of the work the committee has done on particular projects in terms of what can go wrong. We are also very informed by international experience, which suggests, as I said before, that the better planned and specified a project is from the start, the better hope we have of delivering that project on time and on budget. The public spending code has that emphasis.

Deputy James O'Connor

I do not disagree with anything Mr. Moloney said. I raise this with him because when undertaking a major capital project, I believe a threshold of €100 million applies to public spending code analysis. Is that correct?

Mr. David Moloney

There are specific provisions for major projects where €100 million is the threshold.

Deputy James O'Connor

Is anyone present in a position to clarify that? I understand it is €100 million.

Mr. David Moloney

The public spending code applies broadly across capital projects but it applies in different ways according to different thresholds. It is fair to say that the keen interest would be in the major capital projects that are more than €100 million.

Deputy James O'Connor

Would the Department accept the criticism that the public spending code is an instrument of delay when it comes to capital projects?

Mr. David Moloney

No, we would not. As I have said this morning, capital projects, particularly major capital projects, take a long time to plan and execute. There is no reason the timeline for their planning and execution could not run alongside the timeline for ensuring value for money. In fact, we believe that by specifying the project properly at the start and planning it properly at the start, the chance of getting it on time and on budget is much higher.

Deputy James O'Connor

The Department of Public Expenditure and Reform has a key role and it is probably one of the first Departments that has to give sign-off on any project going ahead and, of course, funding it is its responsibility. Is the Department concerned about the pace at which capital projects are developed and funded by the State? Is there any cause for concern at the moment?

Mr. David Moloney

It is clearly the case that the increase in the NDP has coincided with a period of instability, initially due to Covid and then due to supply chain problems, disruption with regard to the war in Ukraine and energy pricing. We are concerned about the delivery of the NDP and we are concerned that it would be delivered going forward.

Deputy James O'Connor

On a more domestic level, it is important that we get an understanding from the Department's point of view, as the holder of the purse, on the spending of taxpayers’ money. Is the Department concerned about the pace of development at the moment in fulfilling what is contained in the NDP? I will give an example. Given what happened with the Galway ring road this week, does Mr. Moloney believe that was a wise use of taxpayers’ money in light of the outcome of that decision?

Mr. David Moloney

One of the issues that comes up in the delivery of the NDP is planning. We have a project under the auspices of the Attorney General’s office looking at planning and trying to streamline and clarify the planning processes. I cannot really talk about an individual planning decision.

Deputy James O'Connor

I want to broaden the point that I am trying to make and I will try to get Mr. Moloney's reaction to that. Investors from abroad look at Ireland at the moment and they express concern about the pace at which we can develop our infrastructure. The NDP is under the auspices of the Department. I cannot see how those projects are going to be developed within a respectable timeframe, as has been demonstrated with projects such as metro north and past projects that have either been shelved or cancelled as a consequence of bureaucracy and red tape. I want to get an insight into how the Department intends to get those projects done, particularly given what happened with the Galway ring road, where, effectively, an independent State agency, electable by or accountable to pretty much no one, which has been proven to be the case, is able to go in and strip Government-backed decisions that have been made to build road infrastructure.

Mr. David Moloney

The planning issue has been discussed and looked at. Obviously, the planning issue is subject to national and European law. We would hope that, as we look at all of our approvals processes, that we constantly look at them with a view to foreshortening them and making them more efficient and more effective. We are concerned about delivery. We have very ambitious delivery targets within the NDP. As we discussed earlier, we are behind profile in capital spending at the moment, although we are ahead year on year. That is a concern for us. At every stage, we are trying to look at our decisions and approvals process with a view to speeding that up and making it better.

We would have to say that we do not accept that the application of value for money rules and the public spending code is, of necessity, a delay in that regard. It does not have to be. It just needs to be incorporated into the planning at an early stage. We believe it can assist in the delivery of projects.

Deputy James O'Connor

As a consequence of what happened in Galway, is the Department going to analyse all of the road projects contained within the NDP expenditure plan to see what the ramifications of that decision will be for those projects?

Mr. David Moloney

Within the Department of Transport, there would be an awareness about that.

Deputy James O'Connor

I am asking the Department of Public Expenditure and Reform.

Mr. David Moloney

The accountable officer for the roads programme within the NDP is the Accounting Officer of the Department of Transport. We would certainly be interested in knowing about any potential impact on the NDP.

Deputy James O'Connor

Is the Department concerned about it?

Mr. David Moloney

Anything that threatens the delivery of the NDP is of concern to us.

Deputy James O'Connor

That decision threatens the entire NDP in regard to road projects. I want to get an insight from the Department, which is funding all of those projects, as to what its take on it is.

Mr. David Moloney

As I said, I am not really in a position where I can comment on the decision of a regulatory authority that is-----

Deputy James O'Connor

That is not very reassuring.

Mr. David Moloney

Those are the limits under which I speak. I cannot comment on the merits and demerits of Government policy, and regulatory arrangements are a matter of Government policy.

Deputy James O'Connor

Does Mr. Moloney think the NDP as it stands is reflective of our climate obligations? Does he think it now needs to be analysed and reviewed as a consequence of what has happened with the An Bord Pleanála decision?

Mr. David Moloney

The NDP is, in fact, the public funding envelope for our climate ambitions. I think we-----

Deputy James O'Connor

Does Mr. Moloney not see the irony in what he has just said, given the point I have been trying to make to him? Essentially, what has happened with the An Bord Pleanála intervention and the outcome of what has happened in Galway has pretty much torn apart the plan. Does Mr. Moloney agree with that?

Mr. David Moloney

I do not have that perspective on it.

Deputy James O'Connor

I want to move on as I do not think we are getting anywhere. With regard to the funding envelope for the NDP as described, I want Mr. Moloney to bring that away and to look at the State agencies. There is An Bord Pleanála, the Department of Public Expenditure and Reform, the relevant Department, the local authority and now, to add insult to injury, the Office of the Planning Regulator seems to be increasing its interventions, for example, in county development plans. All of these are essential, along with Cabinet approval and, therefore, there are six major steps when it comes to getting a capital project effectively on the road. Does Mr. Moloney think that process could be streamlined to potentially save the taxpayer billions of euro? I will give one example. If we were to implement a strategic policy unit within the Department of Public Expenditure and Reform for the delivery of capital projects, with a representative from the relevant Department in each area, for example, the Department of Transport, and people from the local authority in the relevant area where the project is happening, does Mr. Moloney think that would be appropriate or could be done from a statutory point of view?

Mr. David Moloney

I believe the current arrangements all derive from statute so they all represent policy and legislation.

Deputy James O'Connor

That is not what I am asking. To be fair, I am not trying to be smart with Mr. Moloney. I am just trying to figure out how we can deal with the issues we have in this country, where we seem to be tying ourselves up in knots when it comes to delivering capital projects. I am even hearing some reports from Irish Rail that An Bord Pleanála is delaying some of the projects it has ongoing, and it is waiting for months to do what should realistically take weeks when it comes to the delivery of new infrastructure.

I wish to make the following point to the Secretary General of the Department that provides the entire funding needed for these projects. It is outrageously slow to develop a capital project in this country and I want to develop an understanding of how we can improve upon that. Has he any suggestions?

Mr. David Moloney

As I said, we are looking at planning, decision-making processes and at the public spending code to see what shortening can be done on that. We are doing all of that in the context of where serious concerns have been raised, including by this committee, about value for money and the conduct of certain capital projects. We have a balance to strike. I agree with the Deputy that we want to, and will, exploit every possible opportunity to accelerate and deliver the NDP.

Deputy Verona Murphy

Deputy O'Connor undoubtedly did not receive an answer to his question from Mr. Moloney.

Chairman

The Deputy has five minutes.

Deputy Verona Murphy

From the time that it was first intimated that there would be a ring road in Galway, the project has cost in excess of €20 million. It cost that much for plans and for everybody to have their say but we have nothing except that a defunct organisation called An Bord Pleanála overturned the decision.

Last week, I made a speech in the Dáil about regulation and regulation has been mentioned here today. To my mind, regulators in this country are appointment by the Government in order that the Government and the politicians in government are once removed from having to be accountable. They instead put in a regulator. Consequently, we have an energy regulator that could not foresee the energy crisis. We have an aviation regulator that could not foresee the crisis at Dublin Airport. I am well known for commenting on how the Office of the Planning Regulator does its business. We have a planning regulator who clearly could not identify the difficulties in An Bord Pleanála until they were published by an online magazine or another media outlet. In terms of value for money, how much will all these defunct regulators cost the State? In the case of An Bord Pleanála, I assume that at some point we are going to have huge legal fees on top of the ones that we already have incurred, which are upwards of €20 million for the failed strategic housing development, SHD, process.

I struggle to identify what the €50 million spent on the Department of Public Expenditure and Reform does, so please explain. Perhaps €500 million has been saved but we have spent it already with defunct regulatory organisations. Has the Secretary General any act or part to play in advising the Government to get rid of or stop appointing lame ducks?

Mr. David Moloney

I thank the Deputy for the question. Obviously regulators are set up under legislation and the legislation on which they are established is passed by the Oireachtas. That legislation often reflects EU legislation. We have a part in resourcing those regulators. There clearly are concerns about some regulators. Those concerns need to be address and will be addressed.

Deputy Verona Murphy

It is interesting that the Secretary General said that the concerns "will be addressed". An Bord Pleanála has not been disbanded. Every project in the country has been held up whether it is private planning, infrastructural planning and national infrastructure projects. We cannot do anything.

Mr. David Moloney

We have provided extra resources to An Bord Pleanála.

Deputy Verona Murphy

Oh, sacred heart.

Mr. David Moloney

I think there are internal issues there that are being-----

Deputy Verona Murphy

I will not curse but I am frustrated. I only seek an answer on what is the Department's function in advising on how we should deal with the wastage of each and every one of these regulators, State bodies or whatever one likes to call them. What is the Secretary General's function in advising the Government? Is there a point in time when he says enough is enough? The State Claims Agency must have something to say to him about the claims that will ensue following the actions taken by An Bord Pleanála or does that not happen? Is that aspect not a consideration?

Mr. David Moloney

These are certainly considerations. In terms of funding, my Department is primarily responsible for allocating funding to Departments, which then allocate it to their agencies, including regulators.

Deputy Verona Murphy

So the money goes into black holes and legal fees.

Mr. David Moloney

There is not a possible outcome where one does not have a planning regulator, so the challenge is to ensure-----

Deputy Verona Murphy

What does the Secretary General mean by saying that? We did not have a planning regulator until 2018 and all that he has done since he was put in situ is cause problems and we have no housing as a matter of fact.

Chairman

Deputy, I know that this is a frustrating issue but the regulator is not here to defend himself.

Deputy Verona Murphy

I still have not heard an answer to my question.

Chairman

Did the Deputy ask how can we streamline funding and get projects up and running?

Deputy Verona Murphy

No. What is the Department of Public Expenditure and Reform's function, in that it cost us €50 million a year to operate and the money that it may save has been stated to be €500 million a year but that has been whittled to just half? I could go on, because my speech only lasted three minutes. If I were to name every regulator then we would probably be looking at well in excess of the saving of €500 million. My point is there really is no benefit here, or is there?

Mr. David Moloney

The regulators are set up by legislation, by and large. That is how regulators are established. Quite often, the need for regulation is a requirement of EU legislation. The Office of the Planning Regulator is a new office but there has always been planning regulation.

Deputy Verona Murphy

Let us consider the banking regulator and the banking fiasco. Did the Department learn anything from the banking fiasco and regulator? Has the Department anything to say after all of these instances? It is like the Department is arriving breathless to the scene of the accident when everything has occurred and nobody foresaw what was happening, even though we have all of these regulators. Is that not amazing, Chair?

Chairman

There certainly is frustration at the fact that there seems to be blocks.

Deputy Verona Murphy

I thought the regulator was the overseer, which effectively made the Department of Public Expenditure and Reform the regulator of the finances for all of the other Departments but clearly-----

Chairman

Okay. We have heard the answer from the Department of Public Expenditure and Reform.

Deputy Colm Burke

I will come back to another health issue, namely, the fair deal scheme and the current disparity between public and private homes. Last weekend, I heard that a private nursing home gets €950 per week per bed, whereas a public nursing home just a little further down the road cost €1,900 per bed per week. The problem at the moment is that private nursing homes are closing and 16 have closed since January. I understand that one Department has something like €47 million or €49 million available to the private nursing home system to assist them but the homes do not know when that money will be made available, even though the funding is in the budget. The whole issue about public expenditure is to make sure that where someone provides a service, because that person is unable to get adequate funding then that service is no longer available and the service comes back then under the control of the State or the State must step in. Why would a Department delay a process that really needs to be sorted very fast in order to prevent the closure of essential services? This aspect does not just relate to nursing homes but can apply to other areas as well where, due to delays in Departments in dealing with an issue, there are huge consequences, which is exactly what has happened in this case.

Mr. David Moloney

It would be very undesirable if delays in Departments caused the closing down of essential services. By and large, the fair deal scheme works very well. The scheme is administered on behalf of the Department of Health. There are differences between private and public within the scheme. Some of those differences relate to the complexity and composition of care.

Deputy Colm Burke

That is not correct. For example, if a private nursing home decides to take in someone today and the health of that person deteriorates over the next three or four years, then the standard of care provided and time required to provide that care will increase but the home does not get any increase in the payments to it in three or four years' time, whereas it is a different scenario in a public nursing home. I do not accept that there is a difference although there is some difference in certain cases.

However, we have a scenario where 16 private nursing homes have closed because they could no longer provide the service with the funding they were getting. We also have a situation where a Department has €49 million in funds which is designated for private nursing homes and the private nursing homes have not been told how that is going to be administered and when, all while they are under pressure. It should be remembered that a private nursing home has a good deal of expenditure that a public nursing home does not have, for instance public liability insurance, whereas all the public nursing homes are covered by the HSE insurance. Private nursing homes have commercial rates which must be paid to local authorities. The average 50-bed private nursing home is paying out on average €120,000 per annum between those two items. There is funding available in the Department but the Department is not saying how it is going to deal with the private nursing homes.

Mr. David Moloney

The question seems to be about decision-making on allocations in the Department of Health. Is that it?

Deputy Colm Burke

Yes.

Mr. David Moloney

We can follow up and find out what is happening there.

Deputy Colm Burke

We are concerned that unless nursing homes get some idea about what is going to happen, they will have to close. The responsibility for looking after the people who are now in private nursing homes will then come back to the HSE and the public nursing homes, which may not have capacity. We also have the other problem. For example, I spoke to a person yesterday whose family member has been in a hospital bed for nine months because they cannot get a care facility to take on the person who needs a certain level of care but does not need hospital care. There is a huge cost. The average cost in a hospital is €8,000 per bed per week. We are talking about nine months of that and the problem is still not resolved. The question is about timing and about getting funding out to where people are prepared to provide the care.

Mr. David Moloney

Absolutely, the fair deal scheme is about supporting people into the appropriate care setting. Where that is not operating, that is a considerable concern. We can follow up on the specific question with the Department of Health.

Deputy Colm Burke

I thank Mr. Moloney.

Deputy James O'Connor

I will continue with the line of question I was on. I regret to tell the Secretary General that I am very worried by the presentation and the answering of my questions earlier, and Deputy Murphy built upon it. Mr. Moloney needs to appreciate that, from our point of view, the public has no confidence in our State's ability to deliver on capital infrastructure. I cannot blame the public for that. If we look at all the major public transport infrastructure projects in the country that have been proposed, shelved and cancelled and all the issues that have arisen with An Bord Pleanála and the planning system itself, there are so many problems. It is hard to know where to start. Above all else, it is hurting the economy. The Department has had, between 2015 and 2017, a review of more than €40 billion in expenditure and more than 80 spending review papers. In regard to the questions I asked today, while Mr. Moloney answered them, I regret to say he did so very poorly when it came to those efficiencies. I am particularly interested in capital infrastructure which, outside of the Department of Health, is one of the biggest users of the capital in the Department of Public Expenditure and Reform and it is where we can make efficiencies. Will Mr. Moloney take another opportunity to tell the Committee of Public Accounts how we are going to deal with the extraordinary mess our country has when it comes to building basic infrastructure such as roads and rail? Will he give us any further outline of what is underway and what is being proposed rather than giving us sentiments that something needs to be done about it?

Mr. David Moloney

I thank the Deputy for the question. The spending review papers predominantly relate to current expenditure, so they are probably not as relevant to the national development plan, NDP. Within capital expenditure, we have the public spending code which requires business cases to be created in regard to particular capital projects. That is important. We have seen from international evidence that setting out planning correctly and specifying and costing a project at an early stage is a very positive indicator of delivering that project on budget and on time. We know that is very challenging in regard to bespoke or megaprojects. It is less challenging in regard to more standardised projects. We are very conscious of that.

In regard to the issues raised by the Deputy on planning, I accept that planning is an issue that needs to be constantly reviewed and overseen. I have pointed out that there is a major project on planning currently being undertaken by the-----

Deputy James O'Connor

It is a year late; that is right.

Mr. David Moloney

It is currently being undertaken by the Attorney General.

Deputy James O'Connor

Correct. They were expecting to have that done last year.

Mr. David Moloney

There may have been a different project-----

Deputy James O'Connor

No, it is the planning review being undertaken by the Attorney General. That is due out in three weeks.

Mr. David Moloney

There is that. We constantly look at our decision-making approval process which is sometimes raised as a way of explaining delays. We do not necessarily believe that is intrinsic to our approval. We think our approval processes help.

Deputy James O'Connor

As time is limited, I must stop Mr. Moloney there. Has Mr. Moloney any view on the crisis within An Bord Pleanála?

Mr. David Moloney

As I understand it, that crisis involves a number of different elements. It is not appropriate for me to comment on those elements.

Deputy James O'Connor

If it is impacting on all the projects being funded by the Department it is more than appropriate for Mr. Moloney to comment.

Mr. David Moloney

As far as I am aware, various people are looking at the issues-----

Deputy James O'Connor

Mr. Moloney said he gave additional resources. Will he give an outline of what they were?

Mr. David Moloney

I do not know that I have the detail to hand.

Deputy James O'Connor

Would Ms Callaghan have any information on that, please?

Ms Niamh Callaghan

I will get back to the committee.

Mr. David Moloney

My recollection is there is approximately 30 extra staff.

Deputy James O'Connor

Thirty additional staff. Will Mr. Moloney give us any outline, from what they have said, what their issues are?

Mr. David Moloney

We can provide that to the Deputy.

Deputy James O'Connor

We need to get that information.

Mr. David Moloney

It is about the time taken to process the planning. That is a shared concern. We are not shying away from that. We have given additional resources in that regard, but it is very complex. The legislative, national-----

Deputy James O'Connor

I do not believe anybody doubts that.

Chairman

This committee issued a report on 5 July regarding the examination of the 2019 Appropriation Accounts, Vote 29 for the Department responsible for the environment, climate, communications, broadcasting and media. There was a focus on four areas. We received a minute from the Minister in reply to those recommendations, as would be normal, on 7 October. We normally get a response saying "Yes" or "No", it can be done, will be done or why it cannot be done. In this case, however, we did not get any answer in regard to two of the issues, nor did the Department give a commitment to provide any further responses. That minute would have been signed off by the Minister who was presumably advised by Mr. Moloney. I noted that in regard to recommendation 2, which was about the corporate governance division of the Department of Tourism, Culture, Arts, Gaeltacht, Sports and Media and which recommended that it should continue to monitor RTÉ’s response to the findings of the Eversheds report, which related to the classification of employees at RTÉ, and report to the committee on its views of RTÉ’s responses to the findings of that review, the Department did not accept or reject the committee’s recommendations, nor did it discuss providing the recommended report to the committee. As I understand it, in my time as a Member, that is without precedent. Is the Department of Public Expenditure and Reform satisfied with that response to recommendation 2 in that report?

Recommendations 6 and 7 called on the Department of Tourism, Culture, Arts, Gaeltacht, Sports and Media to provide a report to the committee on the means of generating extra income for the Exchequer in regard to broadcasting and exploring measures for RTÉ to reduce its dependence on Exchequer funding.

The Department did not accept or reject our recommendations nor did it discuss providing the recommended report to the committee. Is this an attempt to brush off the Committee of Public Accounts? This is what it looks like to me. What accountability do Departments and public bodies have to the Minister for Public Expenditure and Reform in the context of the implementation of committee recommendations and responses to them?

What is the view of the Department of Public Expenditure and Reform on the responses provided in the minute of the Minister given that none of the recommendations have been accepted or rejected and no explanation has been given? This in the context of circular 01/2011, Revised Instructions for Preparing Material for Inclusion in Minutes of the Minister for Finance on Reports of the Committee of Public Accounts. Mr. Moloney signed off on this as the assistant secretary at the time. I am speaking about a response to the committee. When the committee does a report and makes recommendations, we do not want to waste our time. These are important issues. We expect that at least note is taken of the recommendations. If they cannot be implemented, we want clear explanations as to why. If they are being implemented, that is good news and we want to hear about it. It is not acceptable that such a response as we have received would come back.

Circular 01/2011, which Mr. Moloney signed off, states the committee may consider minutes in public session and if it is not satisfied with the responses to the recommendations it may pursue the matter further with the Minister for Finance. The circular also states the committee may seek to debate the matter in the Dáil. There should be a response to every recommendation stating whether it is accepted or not and why. The circular was signed off by Mr. Moloney. Appendix 1 states every recommendation should have a response stating whether or not it is accepted and the reasons. This has not been done. As Secretary General of the Department of Public Expenditure and Reform, what is Mr. Moloney's view on this? The committee is basically being told that its report and recommendations are irrelevant. They are being neither accepted nor rejected. There is no engagement or explanation. What is the opinion of Mr. Moloney on all of this?

Mr. David Moloney

I thank the Chair. I am happy to get further clarification from the Department for the committee. As I understand it, the key issue is the status of RTÉ under the relevant legislation and the extent to which the Minister may answer on behalf of RTÉ.

Chairman

The Department of Tourism, Culture, Arts, Gaeltacht, Sport and Media is in charge of the public money that goes to RTÉ, including taxpayers' money. This is not to mention the licence fee that it collects. It has responded to us. Mr. Moloney has a role as Secretary General of the Department of Public Expenditure and Reform. His Department has accountability to ensure these issues are dealt with. The Department with responsibility for media has clearly decided, for whatever reason, that it does not have to give us any meaningful response on this. It has not said "Yes" or "No" to the recommendations. We made recommendations in good faith after giving these matters serious examination. The Department has basically brushed us off. The committee will consider this later. At this point I do not want to speak for the committee, and committee members have their own views on it. What I am saying is that we will not let go of this. This is not acceptable. As Chair of the Committee of Public Accounts, I will not tolerate it. I want Mr. Moloney to take this up with the Department. I want him to examine the matter. I want him to come back with his response to it. I, and I am sure other members, will revert to the Department of Tourism, Culture, Arts, Gaeltacht, Sport and Media to inform it of this. Does Mr. Moloney want to make a comment on this?

Mr. David Moloney

We will absolutely do that. We can follow up on this issue in whatever way the committee wishes. Perhaps the issue has not been fully set out in the replies. It is unusual not to accept or reject a recommendation of the Committee of Public Accounts. It is usual to accept such recommendations. I believe the reason for how the reply is phrased is how various Acts are being interpreted. We can come back to the committee with more detail on this.

Chairman

That Department cannot have a hands-off approach. I do not expect it to micromanage RTÉ but it cannot have a hands-off approach when significant amounts of taxpayers' money are being administrated. I am alerting Mr. Moloney to this. I would appreciate if he came back to us on it and followed up on it.

That concludes our business for today. I thank the witnesses for joining us, the departmental staff for the work they did in preparing for today's meeting, and the Comptroller and Auditor General and his staff for attending the meeting. Is it agreed that the clerk to the committee will seek follow-up information and carry out agreed actions from the meeting? Agreed. There are a number of items to be followed up on. Is it also agreed that we note and publish the opening statements and briefings for today's meetings? Agreed.

Deputy James O'Connor

I seek one point of clarification on follow-up from today's meeting. It is with regard to the communications of An Bord Pleanála for additional resources. Will Mr. Moloney guarantee it will be furnished to the committee? I asked this earlier and he said he would look into it.

Mr. David Moloney

Normally this communication is from the Department to me and if it is from the Department, the answer would be "Yes".

Deputy James O'Connor

That can be given to the Committee of Public Accounts.

Mr. David Moloney

I imagine so unless there is a particular reason. I imagine it can be.

Deputy James O'Connor

I thank Mr. Moloney.

Chairman

I thank Mr. Moloney and the staff. I ask him to follow up with the information.

With the agreement of the committee we will now suspend to allow the officials to withdraw, after which we will briefly go into private session and resume in public session to deal with correspondence and other business of the committee. Is that agreed? Agreed.

The witnesses withdrew.

Sitting suspended at 12.38 p.m., resumed in private session at 12.41 p.m., suspended at 1.39 p.m. and resumed in public session at 2.18 p.m.