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Spending Reviews - Padraic REIDY, Ireland

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This presentation was made by Padraic REIDY, Department Public Expenditures and reform, Ireland, at the 15th Annual Meeting of OECD-CESEE Senior Budget Officials held in Minsk, Belarus, on 4-5 July 2019

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Spending Reviews - Padraic REIDY, Ireland

  1. 1. Spending Reviews in Ireland – Practical Considerations Pádraic Reidy 4 July 2019
  2. 2. Body Level One Body Level Two Body Level Three Body Level Four Body Level Five 2 An Roinn Caiteachais Phoiblí agus Athchóirithe | Department of Public Expenditure and Reform Irish Spending Reviews – Background • Ireland aligns with European-wide adoption of spending review following the Global Financial Crisis. • For initial spending reviews, spending cuts were required, more recently spending reviews have been used to promote spending efficiency and effectiveness in the context of fiscal space. • In total, there have been four spending reviews since 2009: 1. The Special Group Report 2009; 2. The Comprehensive Review of Expenditure (CRE) 2012-2014; 3. The Comprehensive Review of Expenditure (CRE) 2015-2017; and 4. The Spending Review 2017-2019.
  3. 3. Body Level One Body Level Two Body Level Three Body Level Four Body Level Five 3 An Roinn Caiteachais Phoiblí agus Athchóirithe | Department of Public Expenditure and Reform Economic context matters • Previous reviews focussed on deficit reduction, cutting expenditure to meet fiscal targets. • Latter reviews now focus on re-prioritisation within increasing spending base. • Focus in ‘normal’ economic environment should be on assessing the ‘totality of spending’ and not just the additional incremental amounts each year, the hidden fiscal space. 0% 10% 20% 30% 40% 50% 60% 70% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018(f) 2019(f) General Government Expenditure as a % of GNI* General Government Revenue as a % of GNI* Special Group Report 2009 CRE 2012-2014 CRE 2015-2017 Spending Review 2017- 2019
  4. 4. Body Level One Body Level Two Body Level Three Body Level Four Body Level Five 4 An Roinn Caiteachais Phoiblí agus Athchóirithe | Department of Public Expenditure and Reform Special Group Report 2009 – Context • Beginning in 2009, spending reviews were carried out to reduce government expenditure, meet fiscal targets and promote stability in expenditure policy. • Post-GFC, Irish economy rapidly shrank and large fiscal deficit became apparent • Nominal GDP fell by 4.8% in 2008 and 9.5% in 2009. • Surplus of 3% of GDP in 2006 turned to underlying deficit of 11% of GDP in 2009 and 2010. • Unemployment rose from 4.6% in 2007 to 12% in 2009 (peaked at 15% in early-2012). • Special Group Report set Irish precedent for intensive reviews which targeted large-scale savings to meet fiscal targets.
  5. 5. Body Level One Body Level Two Body Level Three Body Level Four Body Level Five 5 An Roinn Caiteachais Phoiblí agus Athchóirithe | Department of Public Expenditure and Reform Special Group Report 2009 – Conduct • Special Group was comprised of external experts and a MoF secretariat with Colm McCarthy, University College Dublin’s School of Economics, as chair. • The review exposed a lack of data and a base of incomplete information. Despite this, Special Group Report was comprehensive in nature, i.e. topics were not decided in advance. • Ex-ante estimates for the review were savings guidelines - €3 billion reduction in current spending and €1.75 billion in capital. • More centralised, formal and adversarial than subsequent spending reviews. • Government departments were tasked with drafting their own reviews, set against comparator MoF evaluations of relevant ministries. Each were presented to the Special Group. • The Special Group would subsequently produce its own paper, detailing potential efficiencies and savings to be made in respect of relevant ministerial vote groups.
  6. 6. Body Level One Body Level Two Body Level Three Body Level Four Body Level Five 6 An Roinn Caiteachais Phoiblí agus Athchóirithe | Department of Public Expenditure and Reform 2009 Special Group Report – Outcomes • Consideration was given to private outsourcing, streamlining, merging agencies and Departments to save money on service delivery. • Special Group Report was strategic – proposing cuts to ongoing expenditure, significant reductions in staff numbers as well as increased efficiency of existing services. • The Special Group proposed savings options of €5.3 billion, emphasising that such options did not represent the entirety of available policy options. • Of the Special Group Report’s 271 savings recommendations across all departments, 42 were implemented in full and 103 in part. • The estimated expenditure savings of these implementations amounted to €1.7 billion.
  7. 7. Body Level One Body Level Two Body Level Three Body Level Four Body Level Five 7 An Roinn Caiteachais Phoiblí agus Athchóirithe | Department of Public Expenditure and Reform Comprehensive Reviews of Expenditure (CRE) • Major consolidation post-2009 facilitated the establishment of the CRE. • This follow-up to the Special Group Report established the current Irish standard of ongoing spending reviews. • Two CREs, 2012 to 2014 and 2015 to 2017, further integrated spending reviews into the reformed budgetary framework. • While assisting Ireland to achieve fiscal targets, the CREs promoted enhanced efficiency and effectiveness of expenditure rather than focussing solely on expenditure cuts and numbers reductions. • CREs also served to build a significant base of spending data/analysis for future reference, and to promote a culture of evaluation within spending departments.
  8. 8. Body Level One Body Level Two Body Level Three Body Level Four Body Level Five 8 An Roinn Caiteachais Phoiblí agus Athchóirithe | Department of Public Expenditure and Reform Role of the Irish Government Economic and Evaluation Service (IGEES) • One of the key changes to the spending reviews conducted more recently has been the establishment of the Irish Government Economic and Evaluation Service (IGEES). • In place since 2012, IGEES has been integrated into the spending review process with IGEES economists and analysts involved in topic selection, producing reports and presenting analysis internally and externally. • Initially centralised in the Department of Public Expenditure and Reform (est. 2011), IGEES units are now integrated into all policy departments and provide economic services, including producing and reviewing business cases, undertaking policy analysis, spending review papers and other evaluations.
  9. 9. Body Level One Body Level Two Body Level Three Body Level Four Body Level Five 9 An Roinn Caiteachais Phoiblí agus Athchóirithe | Department of Public Expenditure and Reform Spending review in a ‘normal’ economic environment Comparison of Key Indicators, Crisis and Post Crisis Average 2009-2011 2018 Gross Voted Government Expenditure Growth (%) -2.7% 7.5% General Government Balance as a % of GDP -20% -0.1% General Government Debt as a % of GDP 86% 64% General Government Debt as a % of GNI Modified 113% 105% Numbers in Employment (000s) 1,919 2,281 Unemployment Rate (%) 15.0% 5.6% Nominal GDP Growth Rate (%) -2.9% 8.3% Nominal GNI Modified Growth Rate (%) -5.0% 6.1%
  10. 10. Body Level One Body Level Two Body Level Three Body Level Four Body Level Five 10 An Roinn Caiteachais Phoiblí agus Athchóirithe | Department of Public Expenditure and Reform Objectives of the Spending Review 2017-2019 • Create a larger stock of relevant analysis and evaluation across all Departments and Offices, and maintain momentum over a three year period. • Assess efficiency and effectiveness of expenditure programmes and identify areas of expenditure that require ongoing analysis if issues are emerging. • Provide the evidence base for reform efforts across Departments and the wider public service. • Spotlight areas of innovation and good practice, both in programme design and service delivery, that will be of wider interest and applicability. • Ensure that the spending review is more firmly embedded within the budgetary process.
  11. 11. Body Level One Body Level Two Body Level Three Body Level Four Body Level Five 11 An Roinn Caiteachais Phoiblí agus Athchóirithe | Department of Public Expenditure and Reform Characteristics of Spending Review 2017- 2019 • 3 year cycle supported and signed off at Ministerial Level and agreed by Government. • Process is managed by a senior level steering group in DPER. • SR 17-19 aims to cover a third of expenditure each year. • All papers are published with a disclaimer – they are staff papers and do not necessarily represent the views of the Minister. • Papers are strategically aligned with the Budget process, published in July each year ahead of Budget negotiation in September and October.
  12. 12. Body Level One Body Level Two Body Level Three Body Level Four Body Level Five 12 An Roinn Caiteachais Phoiblí agus Athchóirithe | Department of Public Expenditure and Reform Role of DPER • Vote Section role: • Sign off on selection of topics by end-January; • Liaise with policy Departments in developing evidence base, providing data and producing papers; • Liaise with Central IGEES in DPER for internal consultancy; • Options produced by both Departments and Votes based on evidence; and • Report to Steering Group, made up of DPER and external officials, through evidence gathering phase and final drafting phase. • DPER central secretariat to do day-to-day running of the review process (made up of IGEES staff). • IGEES support through internal consultancy and providing skillsets within votes.
  13. 13. Body Level One Body Level Two Body Level Three Body Level Four Body Level Five 13 An Roinn Caiteachais Phoiblí agus Athchóirithe | Department of Public Expenditure and Reform Role of Policy Departments • Engage in the process. • Collaborative approach but not one-size-fits-all. • Enhanced role for Finance Officers and departmental IGEES units. • Sharing of data / information. • Existing and planned analysis by Departments will also play a key role.
  14. 14. Body Level One Body Level Two Body Level Three Body Level Four Body Level Five 14 An Roinn Caiteachais Phoiblí agus Athchóirithe | Department of Public Expenditure and Reform List of Published Spending Review 2017 Papers SpendingReviewPapers:JulyPublication 1.AnAssessmentoftheRationale, EfficiencyandTargeting of SupportsinEnterpriseIreland 2.ClimateChangeRelatedResearchandFundinginIreland,2010 – 2015 3.AnalysisofCurrentExpenditureonHousing Supports 4.TheCentralVotes:Spending TrendsandKeyDrivers 5.AnalysisofFurtherEducation &Training Expenditureby EducationTraining Boards 6.SpecialEducationalNeedsProvision 7.FurtherEducation andTraining &EmploymentSupports OverviewPaper 8.ASelectionofIGEESOutput 9.EnvironmentFund 10.DefenceExpenditure 11.PublicServiceObligation (PSO)Funding forPublicTransport 12.ChallengestoInvestmentinPolicing:APublicExpenditure Perspective 13.ReviewofSocialProtectionEmploymentSupports 14.AcuteHospitalExpenditureReview 15.FutureSustainabilityofPharmaceuticalExpenditure 16.EvaluatingFurtherEducationandTrainingExpenditure: Strategic PilotInitiativeReport(SOLAS) 17.ReviewofCapitalExpenditureonResearch,Developmentand Innovation(2000–2016)(DepartmentofJobs,Enterpriseand Innovation) 18.CourtsServiceReform(CourtsService) 19.OverviewExpenditureTrendspiecealsotobepublished– TrackingTrendsinPublicSpending 2017 PublishedwiththeBudget: 20.TargetedAgriculturalModernisationSchemesII 21.DisabilityCostDrivers 22.Disability–SupportsandServices(Cross-Votepaper) 23.EqualityBudgeting (frameworkpaper)
  15. 15. Body Level One Body Level Two Body Level Three Body Level Four Body Level Five 15 An Roinn Caiteachais Phoiblí agus Athchóirithe | Department of Public Expenditure and Reform List of Published Spending Review 2018 Papers SpendingReviewPapers:JulyPublication 1.EfficiencyandDigitalisationwithintheOfficeoftheRevenue Commissioners 2.ManagementofExchequerPayBill 3.HSEStaffTrendAnalysis, 2014-2017 4.Policing Civilianisation inIreland: LessonsfromInternational Practice 5.ReviewofOvertimeExpenditureinAnGardaSíochána 6.PayExpenditure DriversatPrimaryandSecondLevel 7.Understanding thefunding needsofthethirdlevelsector 8.AnAnalysisofOlderPeopleServicesSpendandActivity, 2014-2017 9.PensionBillProjectionsforthePublicService:CashflowAnalysis 10.ReviewofCriminalLegalAid(DJE) 11.SupportsforPersonsonLowIncome 12.PublicEmploymentServices-Mapping Activation 13.AnAnalysisofReplacementRates 14.AnalysisofIDAIrelandExpenditure 15.AnalysisofEnterpriseSupportsandtheLabourMarket 16.AnAssessmentofDirectSupportsforStart-upsand Entrepreneurship(DBEI) 17.SportsCapitalProgramme(DTTaS) 18.AnalysisofPSOExpenditureonPublicTransport 19.Assessing theSplitBetweenCurrentandCapitalExpenditureon SocialHousing Delivery 20.AnalysisofOPWSpending onStateRents 21.SubsidisedFerryServicestotheOffshoreIslands(DCHG) 22.ReviewofRecentEvaluationsbyDTTaS(DTTaS) 23.ImplementationofrecommendationsmadeaspartoftheVFM andPolicyReviewundertakeninregardtotheArtsCouncil(DCHG) 24.ComparativeLevelsandEfficiencyofPublicSpending 25.AnalysisofHospitalInputsandOutputs,2014-2017 26.Nursing andMidwiferyExpenditure 27.TrendsinPublicExpenditure PublishedwiththeBudget: 28.ProjectedRetirementsFromtheCivilServicefrom2019to2028 29.DefenceForcesPensionsExpenditure(DPERandD/Defence) 30.AgricultureCashFlowLoanSupportScheme(DAFM)
  16. 16. Body Level One Body Level Two Body Level Three Body Level Four Body Level Five 16 An Roinn Caiteachais Phoiblí agus Athchóirithe | Department of Public Expenditure and Reform Practical Considerations • Economic and fiscal context influences the nature of the review process. • Political engagement is key to success. • Integrating the review process into budget cycle provides an audience for the analysis, aids in topic selection and raises the profile of the process more generally. • Early and continued engagement with Departments (including with regard to governance) normalises the process and drives culture change around the need for evaluation.

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