The Cabinet has this evening discussed a major review of spending across all Government departments in a move that could lead to a significant reduction in the number of so-called quangos.
In addition to discussing plans by Minister for Public Expenditure Brendan Howlin for the comprehensive spending review, the Cabinet was to consider proposals to sell off State assets on foot of a report by economist Colm McCarthy.
Taoiseach Enda Kenny said today it was vital that significant savings are achieved because Ireland is now unable to borrow money from international markets. He said there will be “real scrutiny” about how public money is spent in the future.“In accordance with the IMF-EU deal there has to be real scrutiny of the monies that are being spent," said Mr Kenny.
“In the past, when the Department of Finance made allocations to individual ministers and therefore to their departments, there wasn’t really any oversight as to the effectiveness of the value for money of that spend,” the Taoiseach said. “We are not in a position now where schemes can be brought forward just like that.”
Mr Howlin said the Government was anxious to maintain the best possible public service with limited resources. "We need to do an awful lot more with less money and less people because we are also committed to reduce the overall numbers in the public service," he told RTÉ's News at One. "It is a daunting prospect."
On the Croke Park agreement, Mr Howlin said the public sector unions need to accept that money is finite. “We can’t think in the old way. The status quo is no longer acceptable,” he said. “This is a collective effort for this country to get to a place where we can pay our own way without borrowing and where we can provide decent standards for the people who depend on public services.”
The spending review will involve a root and branch examination of expenditure in Government departments and agencies, and will also set out options on how services can be provided in the future.
Sources have suggested that, in addition to quangos, the new spending review could look at the local authority system and, in particular, at reforms which were recommended last year, including a sharing of management functions between different bodies.
It is understood that each Government department would be asked to review how it spends its budget and how services were delivered. A steering group of secretary generals of Government departments will oversee the review process which will then feed into the new economic council made up of senior ministers and into the budgetary process for next year.
The blueprint for the future delivery of Government services, which emerges from the review process, is then expected to form the basis of talks with staff and unions on its implementation.
Meanwhile, Labour sources have insisted that no more than €2 billion of State assets will be sold off, despite Mr McCarthy’s recommendation to Government of a €5 billion figure.
In the agreed programme for government, the coalition partners said they would “target up to €2 billion in sales of non-strategic State assets drawing from the recommendations of the McCarthy review group on State assets, when available”.
A highly placed Labour source said: “In terms of economic parameters that we agreed, they were agreed with the knowledge of what was proposed by McCarthy, and the figure agreed was €2 billion”. The source insisted there would be “no political shift in the medium term”, adding: “Fine Gael agreed to this.”
Discussions are expected to centre on companies such as Bord Gáis and the ESB, which come under the remit of Minister for Communications, Energy and Natural Resources Pat Rabbitte.
Mr Rabbitte warned last night that public servants’ pay could be cut again unless significant savings were made under the Croke Park agreement.
"Frankly, the government needs to see tangible progress. We want to avoid, if we can avoid, the question of going back to cut basic pay. Public servants have taken two very serious reductions in their basic pay and we want to avoid that," Mr Rabbitte told The Week in Politics on RTÉ 1. "But if we're going to avoid that there have to be significant savings in the area of an end to demarcation, more flexibility, better ways of delivering quality public services by fewer people."