Revamp the Department of Public Expenditure and re-establish it as a separate entity to give it real teeth to rein in overspending, says Kyran Fiztgerald
There is much about the business of Government that bores the average citizen silly.
The plumbing of the State, the business of the transformation of taxpayer funds into tangible buildings and services, the day to day stuff, those rows of numbers with lots of zeros attached, millions and billions, a transformation occurring by means of a process, involving plenty of paper pushing, known as public procurement.
Nobody cares until the plumbing, the procurement, ceases to work properly and then, it really starts to matter and people start noticing.
The unfolding saga of the Children’s Hospital project represents one of those moments when a collective lack of attention to dull matters of cost control and resource allocation on the part of top politicians and officials shines out in harsh relief.
Of course, at the end of the day, the buck — and much of the blame, too — stops with us. If we care little about such matters, if we show by our inattention that we have other priorities, most of the politicians whom we elect and later dispose of, will do likewise.
Over a long period of time, it would appear, a lot of people were asleep at the wheel as the great black hole down near St James’ Hospital grew in size.
Not literally sleeping of course. Presumably, those involved were kept pretty busy — just not paying attention to some of the stuff that really matters.
Earlier this month, Fianna Fáil spokesman on health Stephen Donnelly sought a breakdown on the costs of the project from his Government counterpart, Simon Harris.
The response sets out, in some detail, the cost architecture of the Children’s Hospital. Here, we learn about the difference between gross construction costs, capital build and what is known as the grand total.
Gross construction costs include Vat payable back to the State. These amounted to €717m in 2017, but had risen to €1.09bn by 2018 — less Vat which had jumped from €85m to €130m. Are you still with me?
Next, we have the capital build, surging from €983m in 2017 to €1.43bn last year — this includes planning costs at €13m, design team fees, up from €43.7m to €71m and a catch all category called ‘other costs’ which rose from €221m to €290m.
Finally, we have the grand total which has soared like an angel, or a swallow, from €1.26bn to €1.7bn.
Here we have included, €52m for ‘electronic health records’ and a separate heading of €88m for ICT expenditure.
Opposition politicians have focused on timelines seeking to establish evidence of evasiveness on Mr Harris’s part.
Let’s not go there except to express some regret at not being a fly on the wall in the Taoiseach’s office when Mr Harris broke the bad news to his boss, early last November.
The wringing of hands must have been mighty.
Cost overruns on projects are hardly new. We had plenty of them during the years of the Celtic Tiger. Abroad, the Germans have sunk untold millions into an airport in Berlin that remains empty and way over budget a decade after its opening.
The first two Luas lines were initially costed at €330m. They ended up costing around €800m back in 2004.
At the time, a report by the National Institute of Transport and Logistics questioned why new roads in Ireland were costing far more than in the UK.
That said, Irish construction and engineering firms have proved themselves more than capable of bringing complex projects, commissioned by multinational clients, in on time and within budget. They built up a strong export business during the downturn.
Are we losing out as a result of a failure to put in place a strong corps of experts whose daily job is to serve the Irish State in bringing to fruition public projects In a satisfactory manner?
It has been done in the past. Witness the impressive programme of public housing building carried out in the cash-strapped 1930s and 1950s.
Labour Party leader Brendan Howlin served for five years as the country’s Minister for Public Expenditure — in effect as the second Minister of Finance working alongside Michael Noonan from 2011 to 2016. His job was to ensure that there was a minimum degree of financial slippage in Government.
As the key aim was national recovery and an escape from the clutches of the Troika, Mr Howlin had the full backing of his Government colleagues.
He believes that a strategic error was made when the task of expenditure control was absorbed back into the Department of Finance.
This was arguably done, in part to help create a new Ministry of Children, ironically.
Paschal Donohue acquired a new bureaucratic empire and soon suffered from issues of imperial overstretch, a problem greatly aggravated by the UK referendum result. Brexit really has distracted people around the cabinet table.
Mr Howlin believes that re-establishing his old department as a separate entity is the way to go as it would ensure restoration of focus on key areas of expenditure control.
“We used to have presentations on capital programmes across all departments every week, or fortnight,” he said.
“It is clear that there has been no such ongoing oversight over the past year. We are almost undoing the lessons learned in the crash.”
He would also like to see a revival of the New Era concept under which reviews of the operations of independent State companies were initiated.
Reports were issued containing assessments as to which quangos or bodies should be left to stand alone, and which should be reabsorbed into Government departments.
“There has been no such reform initiative in the current administration,” he said.
He agrees that the real concern is that the notion of true value for money has disappeared and that we are back to where we were a decade or so ago.
Certainly, the tendency of the Government to unveil grand PR strategies posing as capital plans has re-emerged.
Last week, the Taoiseach was back with his hard hat chucking sods up at Dublin Airport. Old habits die hard.
The Children’ Hospital saga, rather like the recent rugby match in the Aviva stadium, is literally one of those ‘back to the drawing boards’ moments, but will real lessons be learned?
We have had plenty of recrimination. Some opposition politicians have been more constructive, but the sound of crowing, in particular, from certain hurlers on the political ditch is almost as hard to take as the self-serving waffle emanating from the Department of Health high command.
We need a cold analysis of how best to ensure no repetition of this fiasco.
Re-establish the Department of Public Expenditure and Reform as a separate entity. Pack it with plenty of sharp minds given free rein. Let’s restore those old accounting officers of bygone days.
With a booming economy, recruiting experts combining engineering and financial nous will be no easy task, but it must be done, arguably through a body that is not subject to central civil service pay limits and diktats.
The National Treasury Management Agency (NTMA) model has worked well in the field of national debt management.
Its activities have grown with the addition of NAMA, the National Asset Management Agency, the National Development Finance Agency (NDFA) and New Era.
The NDFA acts as statutory financial advisor to State bodies on public investment projects.
It has its critics. Some say that NDFA officials are insufficiently aware of the need to ensure timely completion of projects. New Era provides a dedicated centre of corporate finance expertise.
Elsewhere, there exist successful models such as the IDA, Enterprise Ireland and IFSC. There have been failures, too, such as the docklands development authority.
That said, it surely cannot be beyond the wit of man to put in place a body which attracts into Government service at an arm’s length, the ‘bravest and brightest’ willing to help politicians national and local, and permanent
officials to put in place the sort of high-end infrastructure which a country at our stage of development both requires and demands.