Tab 3 - Sectoral Policy Division (SPD)

GENERAL ISSUES 57
SPECIFIC ISSUES 57
MINISTERIAL BUDGET CYCLE 58
REGULAR REPORTS 58
BASIC FACTS 59

A. SPD 3 60
Sectoral Policy Division Central Section 60
1. Monitoring and control of expenditure in line with 2008 REV 60
2. Efficiency Review of Administrative Spending 60
3. Preparation of 2009-2011 Estimates of Expenditure 60
4. Value for Money Framework 60
5. Budget/Estimates Reform 60
6. Annual Output Statements (AOS) 61
National Development Plan 2007-2013 61
7. Responsibility of Section 61
8. Background 61
9. Value for Money 62
10. Implementation 62
11. Gateways Innovation Fund (GIF) 62
Education Vote Group 62
12. Demographic Pressures and Demand for School Places 62
13. Special Educational Needs |
• • • I H I ^ ^ H
14. Higher Education 63
] 5. Pressure for Service Improvements 64
Enterprise, Trade and Employment Vote Group and Agriculture and Food Vote
Group 64
16. Knowledge Economy 64
17. Labour Market Policy 65
18. Department of Agriculture, Fisheries and Food 65
19. Demand led Schemes 65
20. Farm Waste Management Scheme 65
21. Suckler Cow Scheme 66
22. White Fish Fleet Decommissioning Scheme 66
23. Forestry 66
24. WTO negotiations 66
B. SPD 2 67
Health Vote Group 67
25. Key Messages 67
26. Role of the Department of Finance 67
27. Particular issues 68
Social & Family Affairs; Community, Rural and Gaeltacht Affairs Vote Groups 68
28. Social and Family Affairs 68
29. Emerging 2008 expenditure position 69
30. Policy/Strategic Issues 69
31. Community, Rural and Gaeltacht Affairs 70

55
 Justice Group, Legal Offices, Property Registration Authority; Arts, Sports and
Tourism Vote Group (including the National Lottery); 70
32. Justice Group, Legal Offices, Property Registration Authority 70
33. Garda Resources 70
7
34. Migrant Integration 1
71
35. Tribunals
36. Arts, Sport and Tourism 72
37. National Lottery 72
7 3
C. SPD 1
Transport Vote 73
38. Transport 21 73
39. Public Transport: Metro North 73
40. Development Levies 73
41. Integrated Ticketing 73
42. Roads: M50 Buyout and Upgrade 73
43. North South Road Programmes 74
44. Airports: Dublin Airport Development - Terminal 2 74
45. Finalised break-up of State Airports 74
46. Regional Airport Investment 74
47. Derry Airport Investment..... 74
48. Seaports: New Deepwater Port at Bremore 74
7
49. Dublin Port-Study 4
50. Road Safety: Road Safety Authority 75
Central Expenditure Evaluation Unit 75
51. Responsibilities of the Unit 75
52. Capital Appraisal Guidelines and Cost Benefit Analysis Guidelines 75
Public Private Partnership Unit; Communications, Energy and Natural Resources
Vote Group 75
53. Public Private Partnerships 75
54. Energy 76
55. Communications: Broadband roll-out, the future of the Metropolitan Area
Network (MANs) Programme, and eircom's "Fibre Nation" Proposal 76
56.
57. Natural Resources: Remediation of former mining sites at Silvermines,
Tipperary 77
Environment Heritage and Local Government Vote, and Valuation Office 77
58. Environment Vote 77
59. Housing 77
60. Local Government 78
61. Environmental Services 78
62.
63. Heritage 79
64. Valuation Office 79
65. Electoral Expenses 80
66. Forthcoming Referendum 80
Climate Change Unit 80
67. The EU's 2020 Climate Change Package 81
68. The Headline implications for Ireland 81

56
D, Sectoral Policy Division Directorate 82
Administrative Budgets and Staff Numbers Policy 82
69. Administrative Budgets (AB) 82
70. Structures of Government 82
71. Civil Service Numbers Policy 82
72. Staffing and Redeployment issues arising from Decentralisation Programme 83
73. Staffing / Organisation Reviews, etc 83
74. Use of Consultants by Departments 83
75. Efficiency Reviews 83
Finance Vote Group, Foreign Affairs Vote Group; National Public Procurement
Policy Unit 83
76. Defence 83
77. Office of Public Works 84
78. Foreign Affairs Vote 84
79. Public Procurement Reform 84
80. Construction Procurement Reform 84
81. Proposed Public Procurement National Operations Unit 85

GENERAL ISSUES

The key policy objectives on SPD side are:-

• Ensure that Departments keep to Budgets in 2008. There are already emerging
pressures on the social welfare side |
| and in health and education.

• Reduce the rate spending H H U H f l ^ ^ ^ ^ ^ ^ ^ H M B .

This means that given the very low growth in resources likely next year, the scope for
growth in current expenditure is limited

• Maintaining a high rate of capital spending (5% to 6% of GNP) should enable Ireland to
grow at higher rates over future years. This means delivery of the NDP (2007-2013)
and Transport 21 in particular.

SPECIFIC ISSUES

57
 Social Welfare (32% of current spending): Future Budget packages must be framed in
the light of budgetary constraints and with an eye to the long-term sustainability of
pension outlays (demographic shifts are projected to increase the old age dependency
ratio from 16% now, to 21% by 2020 and to almost 50% by 2050). New priorities will
have to be established,

Education (16% of current spending):

o Demographics: The Primary school population is predicted by the Department of
Education and Science to increase by 100,000 over the period of the NDP (average
14,000 per year). This puts upward pressure on the provision of school places,
teachers and all other facilities,
o Special needs Education: On top of the €900 million already spent on special
needs the Department of Education now estimate that a further €100 million will
be needed to implement their part of the EPSEN Act, which is due to be
commenced by regulation in 2010.
o Institutes of Technology and University statusA number of the Institutes of
Technology have applied for University Status.

• Housing: the Government is committed to the provision of social and affordable housing
and €21,2bn is provided for this purpose in the NDP. In the light of the current softening
of the housing market, officials are engaging to ensure maximum value for money is
achieved in the provision of both social and affordable housing.

• Climate Change: We are currently aiming to meet our Kyoto targets through the policies
outlined in the National Climate Change Strategy. A far more significant challenge will be
to meet the targets emerging from the current discussions on EU legalisation to reduce
emissions (by 20-30%) in the EU by 2020. These negotiations need to be closely
monitored and will have significant economic and social implications.

MINISTERIAL BUDGET CYCLE:

June/July - Budget Strategy Memo- specifies fiscal parameters e.g. max. increase in
Govt spending affordable
Sept/Oct - Pre-Budget Outlook - gives pre-Budget Estimates and fiscal outlook
- Spending bilaterals - meetings with Ministers
November - settle spending increases by mid-November
December - Budget Estimates published on Budget day
Jan / Feb - Annual Output Statements (AOSs) prepared by Depts
Mar - May - Dail Select Cttees - examination of Vote and fiscal policies generally

REGULAR REPORTS

Monthly - Publication of monthly Exchequer Receipts and Spending1. Expenditure

Management Report memo to Govt to keep Departments on Budget
1
No press conference bui usually attracts publicity.
 Bi-monthly - Expenditure Management Reports from main spending Depts to explain,
in particular, if they are not on target
Quarterly - end-quarter Exchequer Returns, incl. expenditure2
- quarterly report to Minister on NDP implementation / outputs
- quarterly report on VFM Reviews to Central Steering Cttee
Twice-yearly - Memo to Govt (from all Govt Depts) on VFM Reviews
Yearly - NDP Annual Implementation Report
- Annual Output Statement (from every Minister)

BASIC FACTS

Gross Public Spending: 2007 2008 year-on-year

Current €48.8 bn €52.8 bn +€4 bn or 8.2%
Capital €8.1 bn €9.1 bn +€0.9 bn or 11.2%
Total €56.9 bn €61.9 bn +€4.9 bn or 8.7%

Main elements of2008 Current expenditure:

Social Welfare (32%), Health (29%), Education (16%), Others (23%).

STAFF DIVISIONS
Second Secretary General - Donal McNally
Asst Secretary - Ann Nolan - Overall public expenditure policy / control; NDP and
multi-annual capital programme; Education, ET&E and Agriculture Votes.
Asst Secretary - John C. O 'Connell - Health, Social Welfare, Justice, CR&GA,
AS&T, Taoiseach's Votes.
Asst Secretary - Robert Watt - Transport, Environment, CE&NR Votes; PPPs,
Climate Change policy; Expenditure evaluation / VFM reviews
Director - Eamonn Kearns - Admin. Budgets and numbers policy; Finance, OPW,
Defence Votes; Public procurement reform

2
Quarterly press conference hosted by officials but Minister often interviewed or questioned in Dail

59
A. SPD 3
Assistant Secretary: Ann Nolan

Sectoral Policy Division Central Section

(PO: Ronnie Downes)

SPD Central Section deals with the major policy issues that arise for public expenditure
policy within SPD as a whole, including the key issues set out below:

I. Monitoring and control of expenditure in line with 2008 REV

The 2008 Estimates provide for gross expenditure of almost €61.9 billion - of which €52.8
billion is current and €9.1 billion is capital. A monthly profile of expenditure was published
in January, showing how each Ministerial Vote Group expected to spend their allocations
over the course of 2008, Every month, the Minister for Finance brings to Government
an "Expenditure Management Report" - i.e. a Memorandum for Information setting out
the trends on spending for each Ministerial Vote Group against the profile. The expenditure
trends are also reported publicly every month, and a Press Conference on Exchequer spending
and tax receipts is conducted by Departmental officials at the end of every quarter.

Review of Administrative S

3. Preparation ol 2009-20 H Estimates of Expenditure

The Minister for Finance will submit a Budget Strategy Memorandum (BSM) to
Government in July. This will set out the overall Budget parameters recommended by the
Minister and consequent Expenditure and Revenue targets.

Central section will prepare the aggregate policy analysis and options for the Estimates round,
in light of the priorities / challenges outlined under the "General Issues" above.

4. Value for Money Framework

There has been a significantly improved value for money framework put in place in recent
years. The specific elements of theframework include the following:
• Revision of capital appraisal guidelines;
• All capital projects over €30m require a full cost-benefit analysis (CBA);
• An individual is appointed as project manager to manage and monitor progress on all
such major projects;
• Departmental MACs to review progress on capital programmes and projects regularly;
• Departments and Agencies are required to carry out annual spot checks to ensure
compliance with the Value for Money requirements;
• NDP Programme evaluations and Value for Money and policy reviews will be
published and submitted to the relevant select committees of the Oireachtas; and
• Establishment of a new Central Expenditure Evaluation unit in the Department of
Finance.

5. Budget/Estimates Reform
A good deal of progress has been made in the area of Budgetary and Estimates reform over
recent years. The key initiatives introduced to date under this heading are:-

60
 • The Pre-Budget Estimates, showing the ELS expenditure increases in advance of any
policy improvements, were published in October 2007 as part of the Pre-Budget
Outlook document - which was itself published for the first time in October 2006;
• The Unified Budget was introduced in 2007, with all expenditure decisions for the
year ahead announced alongside the revenue decisions at Budget Day. This makes for
a more coherent approach to budgetary decision-making and helps the Government in
its task of overall fiscal management;
• Presentation by Minister for Finance of the annual Stability Programme Update
(which sets out three-year budgetary targets, as required under the EU Stability &
Growth Pact) to the Oireachtas Committee on Finance and the Public Services; and
• Submission by Ministers of Annual Output Statements (see below) to accompany their
Annual Estimates.

6. Annual Output Statements (AOS)

The Annual Output Statements were submitted to the relevant Dail Committees, together with
the Estimates, for the first time in 2007. The AOSs set out the public-service outputs that are
expected to be delivered in the year ahead with the financial resources (the inputs) that are
being voted on, The 2008 Output Statements, which are being considered by the Dail
Committees at present, also set out performance in 2007 against last year's targets. As the
AOS process becomes bedded down, the focus will be on improving the quality and
relevance of the output targets / performance indicators.

National Development Plan 2007-2013

(PO Dermot Nolan)

7. Responsibility of Section
The National Development Plan 2007-2013 launched in July 2007 was drafted by this section.
The focus of its ongoing work is now on implementation and monitoring of the NDP.

8. Background
The €184bn (current prices) investment (€100bn capital and €84bn current) to be invested
under the NDP is allocated under five sectoral Priorities as set out below. There are also four
horizontal objectives or themes in the NDP.

The €143bn Exchequer contribution will still be allocated annually under the Estimates
process. PPP funding of €13.35bn is included in the 7 year NDP Capital Envelope while the
money from other sources such as State Bodies (€16bn) are projections of what they
anticipate investing over the lifetime of the Plan. The remaining €ll.lbn will be funded by
Local Authority own resources, the Local Government Fund, the Training Fund and the
Environment Fund.

NDP Investment Priority Areas are:-

• Economic Infrastructure Priority - €55 billion

• Enterprise Science and Innovation Priority - €20 billion

• Human Capital Priority - €26 billion

• Social Infrastructure Priority - €34 billion

61
 • Social Inclusion Priority - €50 billion

These all have Horizontal Objectives

These horizontal objectives include balanced regional development, development of the rural
economy, all-island cooperation and environmental sustainability. Progress of the NDP, in
general, will include measurement by reference to these overarching objectives.

9. Value for Money

Particular emphasis is laid on the need to ensure that all NDP projects and programmes are
delivered within the significantly enhanced VFM framework now in place.

10. Implementation
The Department is responsible for coordination of implementation of the Plan. Delivery is
primarily delegated to implementing Departments and Agencies. A Central Monitoring
Committee representative of Social Partners, Regional Interests, etc. and chaired by
D/Finance has been established to monitor implementation of the Plan.

The NDP will be the subject of an Annual Report to be submitted to the Oireachtas. The
annual report is prepared by the Department of Finance.

11. Gateways Innovation Fund (GIF)

The Fund is €300 million over the years 2008 to 2010. An initial allocation of €40 million is
provided in 2008 to cover the operations of GIF. Applications for the Fund are currently
being considered and evaluated. The GIF Management Committee has completed its work
and finalised its report. It is expected that a Memo for Government recommending the
allocation of the Fund will be presented shortly.

Education Vote Group

(PO Brendan Ellison)

Introduction
The Gross Estimates Provision for the Education & Science Vote in 2008 is €9.3 billion,
equivalent to 5.5% of GNP (based on the Budget Day GNP forecast of €169 billion).

The following is a summary of the main issues in the Education area:

12. Demographic Pressures and Demand for School Places

The Primary school population is projected by the Department of Education & Science (DES)
to increase by 100,000 over the period of the NDP, i.e. 2007-2013. This is likely to require
about 4,000 extra teachers, at a cost of some €240 million per annum when the fiill increase
has taken place - before any improvement in service is provided for. There will also be a
capital cost associated with the provision of these additional teachers, with the requirement
for additional classrooms expected to cost another €480 million.
In the last three years alone, over €2 billion has been invested in educational infrastructure
(across all levels). Significant progress has already been made in improving the existing
stock of school buildings, and €4.5 billion has been provided for the school building and

62
modernisation programme under the National Development Plan 2007-2013. In 2008, the
priority for educational expenditure is to provide additional new accommodation to cater for
the 13,000 additional children who are expected to seek a school place this year.

13. Special Educational Needs!

In 2008, some €900 million is being allocated for expenditure on Special Needs in the
Education sector. This is funding almost 9,000 teachers and 10,000 Special Needs
Assistants to work solely with children with special educational needs and learning
difficulties in schools.

14. Higher Education

There have been a number of significant developments in recent years in the Higher
Education area, including:
• The establishment of the Strategic Innovation Fund to encourage structural reform
and promote flexibility in the use of funding by the higher education sector.
• The launching of the Strategy for Science, Technology and Innovation (SSTI), with
the aim of doubling the number of PhD graduates, and thus paving the way for the
development of Fourth Level Ireland.
• A reform of the current funding allocation model by which the HEA allocates the
funding available for the sector between the various third level institutions. The newr
funding system will place a very strong emphasis on strategic planning in the
institutional context.
In relation to infrastructural development, significant capital funding of €2 billion has been
allocated for infrastructural investment in Higher Education over the 7 year period of the
NDP, double the previous 1997-2006 amount.
However, there are a number of major issues to be addressed in relation to policy in the
Higher Education area, in particular:
• Strategy for the Higher Education Sector: The Minister for Education and Science
is shortly to establish a high level group to develop a new strategy for higher
education in Ireland. The group is to have a wide representation of education
interests. We have indicated our desire to be represented on the Group — —

63
 • Applications by Institutes of Technology for Designation as Universities: The
OECD in its Review of Higher Education (2004) indicated that the present
differentiation between universities and institutes should be preserved and specifically
recommended that there should be no further institutional transfers into the university
sector. This is an issue which will have to be tackled in the short to medium term.

15. Pressure for Service Improvements

• Doubling the Capitation Grant for Primary Schools: The Programme for
Government contained a commitment to double the capitation grant for primary
schools. The cost of this measure was €85m on the basis of the prevailing rate of
capitation grant in 2007. Since then, the rate of capitation grant has already been
increased by 10% (in 2008), so the cost of increasing the rate of capitation grant to the
level envisaged in the Programme for Government would now be approximately
€7 7m.
• Reducing Class Size: The pupil teacher ratio at primary level in the 2006/07 school
year was 16:1.
Each 1 point reduction in the Staffing Schedule (number of pupils required to qualify
for an additional teacher) would cost €27m annually in the short term - representing
the pay cost of an estimated 320 additional teachers, the cost of renting additional
temporary school accommodation and other costs.
However, there would be significant additional capital costs associated with this
proposal in the longer term, as 320 additional classrooms would be needed to
accommodate the additional teachers/classes. This would cost an estimated €38.4m.

Enterprise, Trade and Employment Vote Group and Agriculture and Food Vote Group
(PO Grainne McGuckin)

Enterprise, Trade and Employment

16. Knowledge Economy

To create the conditions for sustainable growth and prosperity the knowledge economy must
continue to develop. The following are the principal policy actions in place under the NDP:

Strategy for Science Technology and Innovation (SSTI): This strategy involves NDP
investment of €8,2 billion, mainly in Third Level Education and State Research organisations,
including Science Foundation Ireland (SFI), as well as a focus on expanding in-company
R&D, greater commercialisation of research output and the management of intellectual
property to maximise the economic return.
Enterprise Development:
• IDA: A key component of industrial development continues to be Ireland's ability to
attract high end foreign direct investment in niche areas. The FDI sector in Ireland,
which comprises approximately 1,000 companies employing over 136,000 people
directly (with a substantial multiple indirectly), accounts for over 80% of Ireland's

64
 merchandise trade and spends approximately €15bn. in the economy p.a. while
generating approximately €3bn. p.a. in Corporation Tax.
• EI: EI assists indigenous companies to compete and grow, working in partnership
with its client base to develop sustainable start ups, international scale to enhance
export capacity and to enhance product innovation, technology acquisition and
management development. On the technological innovation front, Business
Expenditure on R&D (BERD) doubled between 2000 and 2006 to €1.56 billion.
• National Skills Strategy: The total allocation under the NDP for the Training and
Skills Development Programme is €7.7 billion (Sub Programme for Upskilling the
Workforce: €2.9 billion; Sub Programme for Activation and Participation of Groups
outside the Workforce: €4.8 billion). In 2006, approximately 47,000 people in
employment received training through either FAS or Skillnets funded training
programmes. The expected equivalent figure for this year is 67,000, which represents
a 43% increase over the two year period. Development of our skills policy is essential
if high-end jobs are to be developed and maintained.

17. Labour Market Policy

Labour market activation policies will be important in achieving increased employment!

18. Department of Agriculture, Fisheries and Food

Main Issues
19. Demand led Schemes
The Partnership agreement negotiated with the fanning bodies in 2006 involves a package for
farmers of €6.8 million (Exchequer: €4.7 billion; EU €2.1 billion) up to 2013. The bulk of
this package involved substantial increases for many of the schemes operated by that
Department. Most of these schemes are demand led and two in particular Farm Waste
Management Scheme (FWMS) and Suckler Cow - are showing signs of exceeding the existing
allocation over the short and medium term.

20. Farm Waste Management Scheme

65
 21. Suckler Cow Schcme
This is a new scheme which was agreed under Partnership and launched belatedly this year
due to delays in receiving EU approval. €33m has been set aside this year for the scheme in
the Estimates and €250m in total over the next five years.

22, White Fish Fleet Decommissioning Scheme

This voluntary scheme was launched by DAFF early this year and aims to remove older and
larger fishing vessels with mixed catches of fish such as cod, haddock, monkfish, mackerel
and herring. This investment in the future of the catching sector will permanently remove
some 75 boats from the Irish fleet. The scheme seeks to deliver on a key recommendation of
the Cowley Report. To date, BIM have received 27 applications under the Decommissioning
Scheme that amount to approximately 35% of the overall target. There is just over €20m
available in the REV for this scheme this year and DAFF have been notified that the scheme
must close for this year once demand reaches this limit.

23. Forestry
A total of €960m (100% Exchequer funded) has been earmarked in the NDP for forestry. The
minimum planting for a viable forestry industry/sector is 10,000 hectares per annum. In recent
years, new planting has declined steadily and planting in 2008 is projected to be about 6,000
hectares.

66
B. SPD 2
Assistant Secretary: John O'Connell

Health Vote Group

(POs: Tom Heffernan; Patricia Purtill)

25. Key Messages

Health accounts for over €16 billion or nearly one quarter of all public expenditure. The HSE
is responsible for some €15 billion of this and some 111,500 wholetime equivalent staff in the
Health sector.

67
Social & Family Affairs; Community, Rural and Gaeltacht Affairs Vote Groups
(PO: Fred Foster)

28. Social and Family Affairs

Summary
The 2008 social welfare allocation is almost €17 billion of which the Social Insurance fund
(SIF) will meet €7.7 billion. This is some 10% of GNP and compares with the 7.5% of GNP
that social welfare expenditure constituted in 2000 even before the recent upsurge in
unemployment is factored in.

The main driver of social welfare expenditure in the various demand led schemes (i.e.
recipients receive the payments to which they are statutorily entitled) is the level of social
welfare rates announced in the annual Budget. The scale of such rates is closely linked to
commitments in Programmes for Government and National Social Partnership Agreements.

On the income side, 2008 income to the Social Insurance Fund (the vast bulk of which is
PRSI receipts) will be around €8.4 bn.

29. Emerging 2008 expenditure position

While still relatively early in the year, there are pressures on social welfare expenditure. In
particular, the Live Register is under pressure j

30. Policy/Strategic Issues

[a] General Social Welfare Rates Targets - there will be considerable focus on the
implementation of Government and social partnership commitments and targets; in particular,
the commitments to increase the old age pension to at least €300 per week by 2012 and to
continue to "maintain the value" of the lowest social welfare rate (which, in effect, is all non-
old age pension social welfare rates). These commitments have significant financial
implications and budgetary constraints will be a major factor here;

[b] Green Paper on Pensions - A Green Paper on Pensions was published last autumn, alom
with an Actuarial Review of the Social Insurance Fund.

[c] Social Inclusion - there are continuing concerns about the effectiveness of the structures
in place for service delivery at local level of social inclusion programmes - it will be
necessary to use the interdepartmental Senior Officials Group on Social Inclusion (which is
chaired by the Department of An Taoiseach and reports to the Cabinet Committee on Social
Inclusion) and the Office of Social Inclusion (which is part of the Department of Social and
Family Affairs) to promote cohesion between Departments and Agencies in the
implementation of the NAPincl and the NDP.

[d] Activation - Lone parents and ill/disabled people experience higher rates of poverty than
the general population and the most effective way of tackling this is to promote greater levels
of employment, education and training. However, the recent increase in the Live Register
means that the environment in which to seek to activate groups more distant from the labour
market is now less favourable.

[e] Poverty -There are ongoing differences on how to measure the poverty level. Those
seeking enhanced Social Welfare benefits focus on so-called relative income poverty, which
can fluctuate depending on factors unrelated to poverty itself (e.g. the more and better paid
jobs we create, the (relatively) "poorer" are those still unemployed!) Department of Finance
prefers to target resources on actual poverty as measured more by deprivation indexes (i.e. the
lack of essentials for a decent life). No matter how we measure it, some progress has been
shown in recent years (particularly in the case of the elderly) due, in part, to the significant
level of social welfare rates increases in recent years.

69
 31. Community, Rural and Gaeltacht Affairs

The Department has a wide range of expenditure programmes, totalling €557m both current
and capital in 2008. Its functions include community and rural development, for example, the
Rural Social Scheme and Leader [total: €110m], the development of the Gaeltacht and Islands
[€106m], North-South Co-operation [€66m], anti-drugs programmes [€64m], and the
promotion and maintenance of the Irish language [€7m].

One of the major issues is to ensure that, in view of the changed budgetary climate, that these
expenditure programmes operate efficiently and effectively - where it is clear that the
programmes are not achieving their targets, steps need to be taken to reallocate resources to
other priorities.

Linguistic Study on the Use of Irish in the Gaeltacht/ Strategy on the Irish language
The Government has published the Report of the Linquistic Study without commitment about
its recommendations. A Cabinet committee has been established - its first meeting was
chaired by the then Tanaiste to consider matters arising from the Report and agree an action
plan to secure the position of the language within the Gaeltacht. The Government is also
committed to publishing an overall strategy on Irish by the end of the year.

Justice Group, Legal Offices, Property Registration Authority; Arts, Sports and
Tourism Vote Group (including the National Lottery);
(PO: John Thompson)

32. Justice Group, Legal Offices, Property Registration Authority

Responsibilities of Section

This section is responsible for the policy and expenditure dimension of the above sectoral
Votes. It also has a general remit in relation to cost issues arising from the State's
involvement in legal issues, including costs arising from Tribunals and Commissions of
Enquiry. Key issues arising for the section are as follows:

Effective deployment of Garda resources, with less reliance on overtime, in context of higher
numbers and accelerating civilianisation
Migrant Integration (with subsection on asylum seekers)
Youth Justice
Prisons: (i) Thornton; (ii) proposed Munster Prison
Tribunal legislation - background and need for early enactment

33. Garda Resources

Background
Garda resources have been substantially increased in recent years, not only through the
recruitment and training of extra members for the conventional Force, but also through the
ongoing civilianisation process and the Garda Reserve.

70
In the light of the governance issues underlined by the Morris Tribunal, the Garda Act 2005
provided for improved independent oversight of the Force through the Garda Ombudsman
Commission and the Garda Inspectorate, both now established.

Policy Aspect
This Department is concerned that further increases in the number of Gardai should be
planned coherently. We should also actively seek to ensure delivery of the personnel
resources in a cost-effective manner by reducing the current excess reliance on overtime;
contrary to previous expectations, the overtime bill has not reduced in line with the expansion
of the Garda Force that has already been achieved. Overtime is already at €33 million by end-
March and will need to be closely monitored.

34, Migrant Integration

Background
The 2006 Census data indicate that since 2002, our overall population has increased by
around 10%, due mainly to an increase of almost 90% in the number of non-Irish within the
population. The policy challenge is how to effectively integrate these new comers into Irish
society so as to maximise their contribution and welfare as productive contributors to the
economy.

Since 2002 there has been a significant decrease in the number of applications for asylum. A
total of 3,985 asylum applications were received in 2007 which represents the lowest annual
total since 1997 and is a decrease of 66% on the 2002 figure. It is also the first time that
asylum application numbers have been below thefigure of 4.000 since 1997.

This reduction in the number of asylum applications has resulted from the implementation of
strategies aimed at combating across the spectrum abuses of the asylum process and
streamlining processes in the asylum area. Despite this, the Justice Vote still carries costs of
€147m p.a.

35. Tribunals

Background
Cost of Tribunals to date
Completed and sitting Tribunals and other Public Inquiries have to end-February 2008 cost
€328.6m, of which €237m derives from legal costs - including € l l l m for third-party legal
costs. Third-party costs are set to increase very significantly, as a large proportion of the
costs already incurred have yet to be presented and taxed.

Control of future Costs

The constitutional entitlement to legal representation for those whose good name or personal
and property rights are at issue, combined with the necessity for a Tribunal to be independent
in its operations, means that it is very difficult to control costs once an Inquiry is established.

The Minister for Justice, Equality and Law Reform has published proposals for a Tribunals of
Inquiry Bill 2005 intended to consolidate the existing cohort of legislation, reduce costs and
facilitate the recording and estimation of costs by placing a clear responsibility on a Tribunal
to monitor costs. The Second Stage debate on the Bill commenced in the Dail on 20
November 2007 and is awaiting completion.

71
The legislation is strongly supported by this Department (which had advocated many of the
measures in the Working Group which drafted the Bill) and we are keen to see its early
enactment.

Fixed Fees for Inquiries

In 2006 and 2007, a number of commissions of investigation were set up on the basis of a
fixed fee to encourage completion on time. However, in the case of two of these, the
chairpersons have indicated that the Inquiries will not be completed within the envisaged 6
and 3 months respectively, and sought an extension of both the timeframes and period for
payment of fees/costs.

36. Arts, Sport and Tourism

The major issue on hand in relation to the Department of Arts, Sport and Tourism's activities
is to ensure that the very large capital projects planned or underway are completed in the mist
cost-effective manner (the OPW and the National Development Finance Agency (NDFA) will
have a very significant involvement in overseeing the progress of these projects).

The main capital projects are as follows:

• The new Lansdowne Road Stadium currently under construction. Although the overall
project cost has increased, the Exchequer grant is fixed at €191m and the increased cost
must be borne by the IRFU and FA1;

• The National Conference Centre where construction is underway and which is due for
completion in 2010;

• The National Sports Campus at Abbotstown, the cost of which is to be recouped from the
sale of surplus land;

• The Abbey Theatre and National Concert Hall, both PPPs, in the early stages of
procurement.

Provision for funding for these projects is included in the NDP which also includes funding
for the Sports Capital programme, ACCESS programme for arts facilities and tourism product
development and marketing.

37. National Lottery

The current licence to operate the National Lottery which expires at end 2008 has been
extended to the end of 2010. Advice has been sought from the Attorney General's Office
regarding renewal, competition etc.

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C. SPD 1
Assistant Secretary: Robert Watt

Transport Vote
(PO: Deirdre Hanlon)

38. Transport 21
In November 2005, the Government launched a ten-year €34bn investment programme for the
period 2006 to 2015. This allocation is made up of €26bn in Exchequer funds, €6bn in PPP
investment to be funded by the Exchequer and €2bn in PPP investment to be funded from user
charges/tolls. Of this investment, €18.5 bn will be invested in the national roads programme,
while €15.8 bn will be provided for public transport projects and for regional airports. This
will be roughly split as €20bn for the Greater Dublin Area and €14bn for the rest of the
country.

Public Transport
39. Public Transport: Metro North
The Metro line from St. Stephen's Green to Swords via Dublin Airport is the largest
individual project under Transport 21

40. Development Levies

D/Transport is to avail of special development levies to part-fund the capital cost of certain
infrastructure projects in Transport 21, primarily Luas and Metro works and other rail
projects. However, there is a timing mismatch between a project's construction period (say
five years) and the levy construction period (say 30 years). This causes cash flow problems
for the proiect sponsors that need to be

41. Integrated Ticketing

This project involves the provision of a new integrated "smart card" ticketing system for the
Greater Dublin Area. The proposed system is due to be rolled out within the GDA in
September 2009 on the services of Bus Atha Cliath, LUAS and Mortons Coaches (a private
transport operator). It will be extended to Iarnrod Eireann, DART and Commuter rail services
within the following year. Bus Eireann will undertake a trial project on one of its commuter
routes.

Roads
42. Roads: M50 Buyout and Upgrade
In 2007, the National Roads Authority (NRA) agreed to buy out National Toll Roads (NTR)
from its M50 concession contract. This was a step needed for barrier free tolling on the M50.
The broad outline of the deal agreed between the NRA and NTR is €50m (plus CPI) per
annum in monthly instalments to be made to NTR from August 2008 to 2020. Barrier free
tolling is on schedule to be introduced in August 2008 as planned.

The M50 upgrade has three phases which will be 75% funded by future toll revenues
collected by the NRA from the new barrier-free operations.

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 43. North South Road Programmes
In 2007, the Government agreed to provide €580m for investment in roads in Northern
Ireland, primarily for the route linking the Border at Monaghan to Derry (A2). Our role over
the next period will be to clarify appropriate funding mechanisms and agree a project spend
profile. We would like this project to be significantly progressed during the lifetime of the
current NDP.

Airports
44. Airports: Dublin Airport Development - Terminal 2
In mid 2007 the Tanaiste gave his consent to an increase in the statutory borrowing limit of
the Dublin Airport Authority from €700m to 61,800m. This capacity will allow the Authority
to proceed with the development of Terminal 2 and other related capital works. The DAA has
to get Ministerial sanction in each case of actual borrowing.

45. Finalised break-up of State Airports

The State Airports Act 2004 provides for the restructuring of Aer Rianta into three separate
airport companies - Dublin, Shannon and Cork. The legislation provides that restructuring
cannot take place until the Minister for Finance and Minister for Transport are satisfied as to
their operational and financial readiness. This will be proven by the submission of business
plans.

The Board of Cork Airport recent! accepted proposals put forward by the mediator Peter
Cassells.

46. Regional Airport Investment

The Government Decision in early 2007 approved a capital investment programme of €86m
for regional airports under Transport 21. Informed by an independent consultants' report
amounts ranging between €27m and €3,8m will be awarded to all six regional airports, with
Knock, Kerry and Waterford receiving the largest amounts.

47. Derry Airport Investment

The Government is committed to the provision of grant aid of up to €10,87m for Derry
Airport in a co-funded arrangement with the British Government. There has been delays in
drawing down this funding to date due to compliance issues between the Department of
Regional Development Northern Ireland and Derry City Council. These have now been
resolved and the monies will be drawn in 2008.

Seaports
48. Seaports: New Deepwater Port at Bremore
Drogheda Port Company has been working towards the development of a new port facility at
Bremore, County Dublin. In September 2007, Min/Finance gave his consent to DPC entering
into a joint venture. The JV Company, called Bremore Port Ireland, recently announced
Hutchison Port Holdings as a development partner.

49. Dublin Port-Study

The Department of Transport is chairing a review of the future of Dublin Port. This
Department will be represented on the Steering Group.

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 50. Road Safety: Road Safety Authority
The Road Safety Authority RSA was formally established in late 2006. The RSA has been
given significant levels of investment to clear the driver test backlog and also ramp up road
safety campaign in 2008.

Central Expenditure Evaluation Unit

(PO: Cormac Gilhooly)

51. Responsibilities of the Unit

The Central Expenditure Evaluation Unit is based in the Department's offices in Tuliamore.
In broad terms its role is to promote the application of best Value for Money (VFM) practice
in public expenditure programmes and projects. The key elements of the Unit's work
programme are:

Spot checks for compliance with the Capital Appraisal Guidelines to ensure Value for
Money in capital spending

Value for Money and Policy Reviews to ensure project spending is delivering the
results envisaged.

• NDP Programme Evaluation including the Mid-Term Review of the NDP

52. Capital Appraisal Guidelines and Cost Benefit Analysis Guidelines

The CEEU is also chairing and providing the secretariat to an Inter-Departmental Working
Group on Reflecting the Cost of Carbon Emissions in Cost Benefit Analysis. This Group was
established in November last year and is to report within 1 year.

Public Private Partnership Unit; Communications, Energy and Natural Resources Vote
Group
(PO: Stephanie O'Donnell)

53. Public Private Partnerships

The latest Multi Annual Capital Envelope published with the 2008 Public Capital Programme
on 21 February 2008 provides for public capital investment of €56.6 billion over the period
2008-2012. This investment will underpin the delivery of the National Development Plan. It
provides for €48.9 billion in Exchequer investment and €7.7 billion (13.6% of total) in PPP
investment funded by future Exchequer payments. In addition, the target for PPPs funded by
user charges is €1.6 billion.

There are 73 PPP projects with an estimated capital value over €20 million, which
Departments/Agencies advise have reached the stage of appointment of client advisors or later
- 12 of these projects are operational and 15 are in construction. In addition, there are a
number of PPPs with a capital value of less than €20 million, notably in the water investment

75
area, which will be developed on a Design, Build, Operate (DBO) basis with the capital cost
being funded by the Exchequer and operational and maintenance costs of the PPP provider
being funded by the relevant local authority.

This Department is not directly involved in the procurement of individual PPP projects; under
the system of delegated sanction these are the responsibility of the procuring
Department/agency. There are three main procurement agencies for PPPs: the National
Roads Authority (roads PPPs), the Railway Procurement Agency (light rail PPP projects, such
as the Metro), and the Centre of Expertise for PPP procurement in the National Development
Finance Agency (PPP projects in Vote funded areas procured on behalf of
Departments/Agencies). Local authorities procure their own PPP projects.

54. Energy
The White Paper on Energy (2007) sets out the main energy policies, in terms of market
structure, security of supply and targets for renewable energy, for the coming years.

Electricity prices are high here compared to competitor countries and are of concern to the
IDA. A number of measures, intended to reduce ESB dominance in the market, are due to
implemented shortly.

The ambitious targets for renewable energy production will give rise to costs, in terms of
various incentive schemes and strengthening of the transmission and distribution network. We
are not satisfied that these costs have been fully quantified.

D/CENR is seeking Exchequer funding for the construction of the East-West Electricity
Interconnected No provision has been made for such funding.

55. Communications: Broadband roil-out, the future of the Metropolitan Area

Network (MANs) Programme, and eircom's "Fibre Nation" Proposal.
Although Ireland lags peer economies in the roll-out of broadband, uptake has accelerated
significantly in recent months. DCENR identifies market competition as the most significant
driver of this. €435 million is earmarked in the NDP for ICT development, mostly to be spent
on the MANs. Results here have been mixed: An audit of Phase I (built and operating), shows
that some MANs have little or no traffic. The programme has been paused (where contracts
have not been signed) to allow auditing under the Capital Appraisal Guidelines.

The Minister for CENR will shortly bring a strategy to Government on the roll-out of Next
Generation Networks, to provide ubiquitous broadband at significantly higher speeds than
currently available, eircom has also approached Government with a proposal,

This proposal, primarily a matter for examination by ComReg, is

problematic in a number of aspects and can only be considered within the framework set by
Government's overall strategy for the sector.

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 57, Natural Resources: Remediation of former mining sites at Silvermines, Tipperary.
The Government assumed responsibility in 2005 for the rehabilitation of six former mining
sites at Silvermines at a cost estimated then to be €10.6 million over four years.

D/CENR has also costed the remediation of former mining sites at Avoca, County Wicklow
The Avoca remediation has
not yet been brought to Government.

Environment Heritage and Local Government Vote, and Valuation Office

(PO: Jimmy Doyle)

58. Environment Vote

59. Housing
A total of €7.7bn capital is provided for social and affordable housing over the period of the
capital envelopes. This financial commitment is set in a strategic framework provided by:-
• Building Sustainable Communities, launched in December 2005;
• Delivering Homes, Sustaining Communities, published in February 2007;
• NDP 2007-2013; and Towards 2016.

NDP 2007-2013 will sustain and escalate the social and affordable housing programme with
some €18bn available for housing programmes over the 2007-2013 period, rising to €21bn
when rent allowance expenditure is taken into account. Targets of 60,000 new units of social
housing have been set and it is estimated that some 40,000 affordable homes will be provided
over the period.

Under the terms of the National Agreement - Towards 2016 some 27,000 new homes for
people in need of social housing will be commenced or acquired and 17,000 affordable homes
will be provided over the period 2007-2009.

The overall housing package in 2008 is approximately €2.5 billion. This will support the
delivery of the Towards 2016 commitments entered into with the social partners, with some
9,000 social housing units to be commenced or acquired in 2008 and the provision of 5,500
affordable homes. Further households will be assisted through the continued roll-out of the
rental accommodation scheme and support for homeless services. In total, the aim is to
address the housing needs of some 20,000 households in 2008.

Affordable Housing
The Affordable Homes Partnership has produced a report recently on increasing affordable
housing supply. The report recommends a new affordable housing product, based on an
equity loan, which is a considerable change from the Government's current policy. The report
will be published shortly to facilitate a wide public consultation.

RAS
The objective of the Rental Accommodation Scheme (RAS) is to transfer responsibility for
long term rent supplement recipients with a housing need to local authorities using
accommodation based solutions. RAS is now being implemented in all housing authorities.
An interim review of the Scheme is currently being conducted

77
 60. Local Government
Local Government Reform
A recent Government decision approved the Minister for Environment's proposal to publish
the Green paper on Local Government: Stronger Local Democracy - Options for Change,
which presents a number of options for enhancing democratic local government and to
prepare legislation to provide for a directly elected mayor for the Dublin Region.

Local Government Financing

The Indecon report on Local Government Financing was published in March 2006. The main
recommendations include:
> more locally based sources of funding;
> economic charging for local authority services generally;
> a contribution from commercial properties not currently covered by commercial rates; and
> extension of water charges and the introduction of a new tax on non-principal private
residences.

The recently established Commission on Taxation will, as part of its mandate, consider
options for the future financing of local government.

General Government Balance

As the local authorities are part of the general government sector, any increase in their deficit
limit has an adverse impact on the General Government Balance. A deficit limit for local
authorities is therefore necessary in order to maintain overall fiscal discipline and to meet our
obligations under the Stability and Growth Pact.

61. Environmental Services

Water Services
Water services infrastructure improvements are being delivered through a rolling three-year
Water Services Investment Programme and the separate Rural Water Programme. Some €3.7
billion was invested in the water services sector over the last NDP period, of which the
Exchequer contributed €3.16 billion. Under the NDP 2007-2013, €4.75 billion is being
provided to upgrade and expand water and waste water treatment capacity to meet the needs
of a growing population and expanding economy, improve drinking water quality to meet
National and EU drinking water standards, treating waste water to achieve the highest level of
environmental protection and compliance with national and EU requirements.

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 63. Heritage
The Department of Environment provides funding to the Heritage Council and to the 'Irish
Heritage Trust'. The Trust is to receive donations of 'heritage' properties in return for write
offs of taxes due, subject to a cap of €6m. In addition, about €22m of Exchequer expenditure
would support an endowment fiind (to support five heritage properties over five years) -
which would also have a significant private sector funding element - to support the care and
maintenance of the properties. The Trust acquired its first property, Fota House and Gardens,
in December 2007.

64. Valuation Office

Global Revaluation of Commercial Property

Section 53 of the Valuation Act, 2001 makes provision for the valuation of the relevant
property of certain public utility undertakings on a global basis, that is, relevant properties
taken as a whole as respects the particular undertaking. Global valuations have been carried
out on the following bodies:-
• ESB - rates liability rose by €6m to €75m (2005)
• Vodafone, Eircom; 02; Esat BT; Meteor; Bord Gais; - rates rose by €9.15m (2006)
• Waterways Ireland - NIL. (Exempt from rates under British Ireland Agreement Act
1999 but Valuation Office required to value all "relevant property" in the State).
• larnrod Eireann - rates liability fell by €0.943m (2006)
• Hutchinson 3 G network (2007)
• Dublin Port Tunnel - NIL valuation entered as cost of operating the Tunnel exceeds the
income to be derived i.e. does not create a profit.
• RTE, Chorus, and NTL -increase in rates liability €0.5m(2007).
• Special Projects - valuations were completed in respect of M4 Motorway tolls, M8 tolls,
NDP/e-net broadband facilities in 19 towns and municipal water and sewerage networks
in 7 rating authority areas.

General Revaluation of Commercial Property throughout the country.

A Revaluation Unit has been established in the Valuation Office to conduct the national
revaluation project. A commissioned report estimated that revaluation of the country (approx.
150,000 properties) may take in the region of five years and cost €18 million. The report also
advised that thirty additional valuers (operating on a contract basis) would be required for the
duration of the project. New IT systems, including computer aided valuation (CAV) models
to enhance the efficiency of the programme, have been developed and these are being
upgraded and enhanced on an ongoing basis.

South Dublin County Council has been evaluated and on 12 th December 2007 the Valuation
Office issued 6,247 Valuation Certificates [final] to ratepayers in the SDCC area. The new
rates were placed on the Valuation List with effect from 1 January 2008.

The Commissioner has made a valuation order for the revaluation of the rating area of Fingal
County Council. The Order provides for publication of the new valuation list (post
revaluation) for Fingal on 31 December, 2009. This exercise will involve in excess of 5,600
properties.

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C&AG Report on Valuation Office
The Office of the Comptroller and Auditor General undertook an examination of the valuation
services provided by the VO over the period 2001 to 2006 and the final report, Special Report
No, 60, was presented to the Dail on 22 February 2008.

On 3 r d April 2008 the Valuation Office appeared before the PAC to discuss the Appropriation
Accounts 2006 and Special Report No. 60 and issues including escalating costs and delays in
completing the national revaluation exercise are being examined.

65. Electoral Expenses

General Election 2007

The cost of the General Election held in May 2007 was circa €30m euro. This figure
comprises €t4.7m which has been paid to An Post for the delivery to the electorate of election
communication from candidates, postal votes and polling cards with approximately €15m in
respect of Returning Officer expenses. The total in respect of Returning Officers expenses
will be confirmed when the General Election Accounts have been finalised.

66. Forthcoming Referendum

That date for the Referendum is expected to be June 12. SPD have estimated the approximate
cost of a Referendum will be circa €12.5m.

Climate Change Unit

(PO Pat Ring)

Summary

• We are obliged to meet certain climate change targets under the current Kyoto agreement.
A national Climate Change Strategy published last year outlines how this will be done.
We have doubts about the likelihood of success but D/EHLG is doing work at present that
will better inform us.

• The EU Commission has proposed new targets for 2020 - among other things this
requires a 20% reduction in emissions over a 2005 base for Ireland - this is one of the
highest Member State targets in the EU. The suite of directives to achieve the goals in
this area are being discussed in Brussels at present and the aim is to finish the discussions
this year.

• The proposals contain changes for the system (the ETS) for big energy users and
generators where there will be an EU run system of allowances with auctioning.

• In the non-ETS area - effectively the Transport, Agriculture and residential and other
industrial areas of the economy we face the most difficulty since transport emissions are
rising, the scope for reductions in agriculture are limited without reduction in livestock
and the residential area alone will not be sufficient to meet the target.

80
• There is a Cabinet Committee that meets on the issue and a Senior Officials group to co-
ordinate this area.

• Work is continuing in this interdepartmental forum but it is clear to us that it will be

difficult to meet the target for reductions and that to get to them will mean significant
changes to policies that will have costs and economic and social implications.

• The Department's role is to seek to ensure that the various line Departments, in suggesting
policies to achieve the targets, do so on the basis of the most cost efficient manner and to
ensure the economic and exchequer impact of proposals are not greater than what is
needed.

• To date we have received little support in the negotiations for any changes that will make
things easier for us. In addition, Departments have not yet been able to give a costed menu
of alternative polices that might be considered by Government to achieve the reduction
goals.

• Some more detail is set out below.

67. The EU's 2020 Climate Change Package

On 23 January the Commission unveiled a range of inter-linked proposals aimed at putting the
ED at the forefront of combating climate change. The key elements are:
• A commitment to reduce emissions by 20% by 2020 compared to 1990 levels, to be
achieved by
> 21% reduction in ETS emission from 2005 levels
> 10% reductions in non-ETS emissions from 2005 levels (the 10% is met by
different national targets as set by the Commission)
• the EU ETS will move to an EU-wide cap on allowances instead of national
allocations
• 20% of all energy to be from renewables by 2020
• more auctioning rather than free allocation under ETS; 60% to be auctioned from
2013 with proportion to increase in subsequent years

68. The Headline implications for Ireland

• The EU non-ETS reduction target of 10% is expressed in 27 national targets and on the
basis of GDP/capita as used by the Commission. Ireland has been given the most
stringent target of a 20% reduction. This 20% reduction applies to agriculture, industry
and residential. Power generators and large emitters are under the ETS.
• The Commission will effectively take ownership of the ETSfrom 2013. Under the
current process, which is in place till 2012, Member States determine the total quantity of
allowances to be issued - the cap - and how these would be allocated to the installations
concerned. The Commission now proposes to set a single EU wide cap and to allocate
allowances on basis of harmonised rules. A much larger share of allowances will be
auctioned (and all power gen) instead of allocated free of charge.
• National targets for renewable energy have also been assigned reflecting different
capabilities at national level. 16% is the renewable energy target for Ireland by 2020.

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 72. Staffing and Redeployment issues arising from Decentralisation Programme
The decentralisation programme involves the replacement of a significant number of staff in
their existing roles by staff new to the work concerned, so issues of retraining and staffing
overlaps are arising for departments (as they did in previous programmes). In the light of the
numbers policy above, there is very little room for manoeuvre on this. Also, there could well
be a (temporary) surplus of administrative staff at more senior levels (Assistant Principal and
above). It will be a matter of redeploying these staff to other areas. The redeployment of
professional and technical staff will require a wider range of options and initiatives.

73. Staffing / Organisation Reviews, etc.

There are at any time a number of such reviews on hand. The most important currently in
play are an organisational review of the Department of Agriculture and Food; a major review
of the structures of the Irish Aid programme of the Department of Foreign Affairs; a review of
the sectoral response on Crime and Legal structures; an examination of the staffing levels of
the National Council for Special Education (NCSE) and the National Educational
Psychologists Service (NEPS) in the light of special education needs legislation (EPSEN); the
proposed transfer of the Community Welfare function from the HSE to the Department of
Social and Family Affairs; and the development of the MABs (Money and Budgeting Advice
Service) as a statutory body. This Department is represented on each. Any significant
recommendations will be brought to your attention in due course. Proposals are being
formulated for a review to assess appropriate staffing reductions in the Department of Health
and Children following the transfer of many of its functions to the HSE.

74. Use of Consultants by Departments

Following major concern at failures to properly control consultancy costs in some high profile
projects, new Consultancy Guidelines were introduced in 2006 after discussions with
Departments. It is proposed to keep this matter under review and ensure that Departments
continue to monitor expenditure in this area closely.

75. Efficiency Reviews

The AB Directorate will be responsible for implementing the programme of efficiency
reviews (as approved by Government) within the civil service.

Finance Vote Group, Foreign Affairs Vote Group; National Public Procurement Policy
Unit
(PO: Dermot Quigley)

The main items arising here are:

76. Defence

Replacement of Navy Vessels

83
 77. Office of Public Works
The major task facing the Department with regard to the Office of Public Works is to ensure
that:
• the Office fulfils its role of providing sites and buildings for the Decentralisation
Programme in the most cost-effective manner; (See page 15 in the SPD section )
• the work carried out by the Office's Architectural and Engineering Services and Property
function can be benchmarked favourably with similar work undertaken in the private
sector;
• the Office, which has had considerable success in recent years in disposing of elements of
its property portfolio no longer required by the State, continues to review the potential for
maximising receipts from disposal of State property while taking account of the recent
deterioration in the property market.

78. Foreign Affairs Vote

Expansion of Irish Aid's Programme

In accordance with the White Paper on Irish Aid, a review of the management of the Irish Aid
programme is being carried out by the Department of Foreign Affairs in conjunction with this
Department.

79. Public Procurement Reform

The Department of Finance is responsible for procurement policy development for the public
service. In this capacity it represents Ireland at EU meetings on procurement and develops
and implements policy in this area. Over the last five years a programme of procurement
reform has been ongoing. This has included the development and continued running of an e-
procurement website, the running of a number of pilot programmes on centralised purchasing
to illustrate the saving that can be achieved (e.g. electricity) across the public service and the
provision of advice and training for officials involved in procurement throughout the public
service. There are currently two major ongoing initiatives.

80. Construction Procurement Reform

New standardised Construction Contracts for Public Works, and Conditions for the
Engagement of Construction Consultants (i.e. engineers, architects etc.) have been
developed following consultation with representatives of the construction industry, the
professions and the public sector. The fundamental changes involve a re-balancing of risk
and the introduction of incentives to encourage greater value for money outcomes, and greater
cost certainty at tender stage, for capital projects. Low value projects (under €!/am) are
catered for by a shorter form of contract.

A centralised training programme on the new Construction Contracts and the Conditions of
Engagement, which commenced in November 2006, was conducted over a number of months
by your Department for key public sector practitioners to ensure that the new contract
conditions are used appropriately across the public sector.

The industry whilst accepting the introduction of the new contracts still has difficulty with
their introduction. Also the Construction Industry Federation (CIF), on behalf of its members,
indicated last year that it was going to complain to the Commission about their introduction.
However to date, no action has been taken.

81. Proposed Public Procurement National Operations Unit

To continue progress on Public Procurement Reform proposals are being formulated for the
development of a National Operations Unit (NOU). The aim of the NOU will be to facilitate
best value for money across the whole range of public procurement. It is envisaged that the
NOU will provide professional procurement advice and best practice to the public sector as
well as facilitating centralised arrangements for the acquisition of up to €500 million of
commonly used goods and services (e.g. personal computers or fuel).

85