Comment: Public expenditure and value for money is a topic that everyone has a view on, some people often supporting their own prejudices.
On the one hand, there are those who believe that the public sector is incapable of getting anything done on time and point to the cost over-runs on major capital projects such as the Dublin Port Tunnel, the PPARS computer debacle in the health service and the chronic state of hospital accident and emergency services.
On the other hand, there are those who believe that while there are some notable instances of waste and cost over-runs, in general the public sector gets good value for its spending. This group cites the fact that most public sector capital investment projects and road projects are completed in line with or under budget and ahead of schedule.
Indeed, Minister for Finance Brian Cowen cited the recent good record in bringing in road construction projects under budget and ahead of schedule in his recent Certified Public Accountants (CPA) Annual Business Lecture. The message from the Minister was that, apart from the occasional over-run, the public service record in getting things done on time and on budget is pretty good and will get better when a series of initiatives already in place begin to bear fruit.
That may turn out to be the case but, apart from the value-for-money initiatives detailed by the Minister, CPA believes there are other measures that should be introduced - and these are based on the concept of individual accountability by public sector executives, the reward system within the public service and particularly the outdated concept that the Minister of the day is held directly responsible for every item of expenditure within his department and every instance of waste.
What is important is not that we become obsessed with absolute public expenditure - unless that expenditure is totally at variance with the national budgetary situation. In this regard, there is no question that since the government bit the bullet in 1987 and confronted our catastrophic budgetary situation, successive governments have in general lived within their means.
What is important, however, is that even in situations where the government is awash with funds, the value for money argument remains at the forefront of every decision on public expenditure.
While some might raise their eyebrows at the cost of a particular project, in most cases what is of real concern is the amount of money spent as compared with the end result. In some cases, the end result simply does not stack up with the resources applied. In a number of well-publicised cases, the output has been lamentably short of what should be reasonably expected.
It is time that the long-established situation where a minister is held individually responsible for all spending and waste in his department is changed. The role of the minister must change from the traditional one of acceptance of all operational responsibility to one of holding those charged with delivery to be accountable for that delivery.
The reality is that many decisions on public spending are taken by senior civil service management without any ministerial or Government agency involvement. It is these civil service managers who should be held accountable and carry the can for poor decision-making which results in waste and cost over-runs.
Similarly, senior civil servants should be rewarded for sound decision-making - those public servants who brought in the various sections of the M1 motorway ahead of time and on budget deserve tangible rewards.
Given that we are on the brink of the next benchmarking exercise, it is reasonable that we should simply benchmark public sector salaries against the private sector, but we should also introduce a system of incentivisation for those involved in decision-making on major public expenditure.
Call it payment by results if you wish, but it is eminently fair that the many excellent public servants who make sensible decisions which result in savings should be rewarded just as those who make poor decisions costing money are held accountable for their actions. In our view, payment should only be made after delivery of results. Professional public service executives should be allowed to get on with their jobs subject to government policy but there are few if any cases where the can for poor decision-making is carried at all.
Equally, politicians cannot simultaneously delegate and interfere with the process to the extent they do now. Somewhere in the bowels of the Department of Finance is probably a dusty copy of a tome known as Guidelines for the Appraisal and Management of Capital Expenditure Proposals in the Public Sector, first issued in 1994 and updated in 2005. This is a most worthy document but fatally flawed in that it is simply a "guideline".
There is nothing in this document to prevent ministers approving projects and expenditure "independent of the detailed application of these guidelines". In other words, ministers if they so wish can simply ignore their own guidelines. "These are our guidelines and they remain our guidelines until they don't suit us and then we will do what we like!", seems to be the message.
These guidelines should not be left open to being ignored to suit a minister's personal whims.
Accountability and reward for delivery of success are part and parcel of private decision-making. There is no reason the public sector cannot work on the same principles.
Padraig O'Feinneadha is the new president of the Institute of Certified Public Accountants in Ireland.
