Ministers divided on future of Public Expenditure department

The two favourites to take over from Taoiseach Enda Kenny are divided on whether the Department of Public Expenditure and Reform should be scrapped.

Social Protection Minister Leo Varadkar is adamant the department should be merged back into the Department of Finance as there is “eminent logic” in having income and expenditure under the control of one minister.

His main rival in the race to become the next leader of Fine Gael, Simon Coveney, said he is “not convinced” on such a move, at least in the short term.

The department was established in 2011 by the Fine Gael/Labour coalition. It took the spending side as well as reform in the public sector out of the Department of Finance.

Asked whether these responsibilities should now be given back to the Department of Finance, Mr Varadkar said: “I think the departments were split really for coalition reasons, to make sure that both Labour and Fine Gael would share that ministry, essentially.

“There is an eminent logic in any organisation that you would have income and expenditure in the same department, there are very few countries, I am not aware of any other countries where income and expenditure are in separate government departments.

“If you look at any big organisation, there is one chief financial officer who has overall responsibility for both the income and expenditure.”

Mr Varadkar did not give a full timeline for this, stating that he has “done a lot of deep thinking about how we could transform the party and make it into a fighting force again”, but that releasing his plans would be “premature”.

Mr Coveney, the housing minister, said the separation of Finance and the Department of Pubic Expenditure and Reform reflected “extreme financial management pressures” that existed when Fine Gael and Labour first went in to government six years ago.

He said he is “not convinced” that it would be right to merge the two again but would be keeping an open mind on it.

Mr Coveney said: “The key issue really is whether or not in terms of what we need to achieve in the programme for government, whether or not we are best placed to do that with a minister for expenditure and reform and a separate minister for finance focusing on what they need to do. They are linked jobs but they really are quite separate.

“Paschal [Donohoe, the public expenditure and reform minister] has been very successful at negotiating with the trade union movement, for example, around pay and pay expectations, and I think that is going to be a big job in the next 12 months as well.

“So I am not convinced that we should be merging the two just yet, but I have an open mind on it.”

It has been reported that supporters of Mr Coveney suggest that he offer Michael Noonan another year in the Department of Finance as they believe this would help him secure the leadership of Fine Gael.

Asked whether he had offered such an extension to Mr Noonan in exchange for his support, Mr Coveney said: “That story came out of the blue, certainly for me, that’s for sure.”

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