DEPARTMENT OF FINANCE
Progress Report on the Department's Statement of Strategy for the Year 2002
To the Minister for Finance:
I enclose herewith, in accordance with section 4 of the Public Service Management Act 1997, a report of progress by the Department in the year 2002 in achieving the strategic priorities and associated high-level objectives set out in the Department's Statement of Strategy 2001-2003.
Thomas Considine
Secretary General
July 2003
Note
The Department of Finance has a central role in implementing Government policy and in advising and supporting the Minister for Finance and the Government on the economic and financial management of the State and the overall management and development of the public sector.
This is the second annual report on progress made in implementing the Department's Statement of Strategy 2001-2003. Where appropriate, brief references to developments subsequent to 31 December, 2002, have been included in the report.
CONTENTS
Introduction by the Secretary General
Executive Summary: Overview of Progress
1. Mission and Strategic Priorities
2. Strategic Priority I: Economic, Budgetary and Taxation Policy
3. Strategic Priority II: The Effective Management of Public Expenditure
4. Strategic Priority III: EU Policy Development, Financial Services and Wider International Economic Co-operation
5. Strategic Priority IV: Incomes Policy
6. Strategic Priority V: Enhanced Management of the Public Service
7. Supporting the Strategic Management Process within the Department
A Organisation
B Legislation prepared by the Department
Introduction by the Secretary General
The year under review - 2002 - marked a new phase in our economic development. The continued slowdown in economic growth, both at home and abroad, has required strategic adjustments in many areas of public policy.
The new Statement of Strategy prepared by the Department of Finance towards the end of 2002 reflects the changed economic circumstances. The Statement focuses in particular on the ongoing demands for improvements in public services and infrastructure, as well as demographic trends and their implications for pensions and health care.
Budgetary policy operated in a more constrained environment in 2002 characterised by lower economic and tax revenue growth, continued inflationary pressure and consequent risks to our competitiveness. Despite this, reasonable progress was made in implementing taxation policy objectives and additional resources were directed towards improving our public services. At the same time the position of the public finances remained sound.
Good progress was made during last year in advancing the key infrastructural elements of the National Development Plan. The Public Private Partnership approach was developed further and the National Development Finance Agency was established to assist in the financing of priority infrastructural projects.
Following the commencement of negotiations in 2002, a successor to the PPF - Sustaining Progress - was agreed early in 2003. Sustaining Progress provides for an eighteen month pay agreement and phased implementation of the increases proposed under benchmarking, which are dependent on verifiable progress on the extensive modernisation agenda for the public service.
Through the Euro Changeover Board of Ireland, the Department played a major role in facilitating the successful transition to euro cash in January, 2002. It also played a central role in the preparation of legislation to restructure our financial services regulatory authorities.
This report outlines the progress achieved by the Department in 2002 in fulfilling the objectives described in our Statement of Strategy 2001-2003. The report also outlines the steps that have been or are being taken to ensure that the Department continues to focus effectively on its strategic objectives and to adapt to the ongoing changes in our environment.
I would like to acknowledge the continuing high standard of work being done by our staff and their continuing willingness to respond flexibly to the changing needs of the Department. I would also like to acknowledge the support and active co-operation by other Departments, without whom many of our own objectives could not be achieved.
While we set ourselves a number of challenging goals, I am glad to report that we made very good progress during 2002.
_______________
Thomas Considine
Secretary General
July, 2003
Executive Summary
Overview of Progress
The Department is guided by its mission which, as set out in its Statement of Strategy 2001-2003, is to promote a high level of sustainable employment, social progress and living standards.
The Department made good progress during 2002 in advancing its five strategic priorities and their associated high-level objectives. A summary of the main developments under each is set out below.
Strategic Priority I: Economic, Budgetary and Taxation Policy
[pages 14-16]
During 2002, the economy, which was affected by the continuation of the international slowdown, developed as follows:
GDP grew by an estimated 6.9 per cent, while GNP grew by only 0.1 per cent.
Employment grew by 1.4 per cent, down from 2.9 per cent in the previous year; the estimated average rate of unemployment was 4.4 per cent compared to 3.9 per cent in the previous year.
The budgetary position remained sound with a marginal General Government deficit of 0.1 per cent and a General Government debt to GDP ratio of 33 per cent at end 2002.
Rising costs, including deterioration in relative wage costs and a strengthening euro have resulted in competitiveness being put under pressure; inflation fell slightly, from an average of 4.9 per cent in 2001 to 4.6 per cent in 2002
Despite a relatively tight budgetary position, reasonable progress was made in implementing taxation policy objectives.
Strategic Priority II: The Effective Management of Public Expenditure
[pages 17-21]
The Department continued to exercise a major role in advising the Government on the main aspects of public expenditure and related policy across all sectors. Notable developments during 2002 included the following:
further improvements to the system of expenditure management and control, including the introduction of monthly expenditure management reports to Government to facilitate the early identification of emerging trends.
net voted expenditure was slightly below target.
an increase in the share of the health sector in overall current spending from 23.5 per cent in 1997 to 28.5 per cent.
monitoring of the implementation of the National Development Plan (NDP) 2000-2006, with total estimated expenditure at end-2002 of over €20bn.
ongoing co-ordination of the Expenditure Review Initiative and oversight of a number of external evaluations of key areas of sectoral activity in the NDP.
enactment of the National Development Finance Agency Act 2002 and the State Authorities (Public Private Partnership Arrangements) Act 2002 to support the public-private partnership process.
development of proposals to promote e-procurement in the public sector by reference to organisational structure, procurement processes and practices, and the legal and technological frameworks.
active promotion of the Code of Practice for the Governance of State-sponsored Bodies, which was approved by Government in October, 2001.
Strategic Priority III: EU Policy Development, Financial Services and Wider International Economic Co-operation
[pages 22-27]
The Department played a major role, through the Euro Changeover Board of Ireland, in co-ordinating and facilitating the successful transition to euro cash in January 2002. The Department also continued to develop the strategic dimension of Ireland's participation in the EU, particularly in the context of enlargement, and to provide advice to both the Minister and the Minister of State on issues arising at Eurogroup and Ecofin and Budget Council meetings. Other notable developments in the period included:
publication of the Central Bank and Financial Services Authority of Ireland Bill 2002 and its enactment in 2003.
preparation of the heads of a second bill to provide for the creation of an ombudsman for the financial services sector.
enactment (in 2003) of the Unclaimed Life Assurance Policies Bill 2002.
implementation of North/South EU co-funded programmes and initiatives.
the drawing down of €650m of ERDF and Cohesion Funds in 2002.
Strategic Priority IV: Incomes Policy
[pages 28-29]
Progress under this strategic priority during the period included
a high level of industrial peace.
the negotiation of Sustaining Progress, the agreement with the social partners to succeed the Programme for Prosperity and Fairness.
the agreement of arrangements to implement the report of the Public Service Benchmarking Body.
Strategic Priority V: Enhanced Management of the Public Service
[pages 30-35]
Further progress was made during the period in advancing the programme of public service modernisation set out in Delivering Better Government and subsequent partnership agreements. Progress during 2002 included:
Promotion of modernisation
verification by the civil service quality assurance group of progress made by Departments during the period in achieving their modernisation targets.
the process of developing the next phases of partnership and modernisation is under way following completion of two service-wide reviews by outside consultancies.
the ongoing promotion of change across Departments through the Change Management Fund and the Information Society Fund.
Legislative elements
o progress towards the introduction of a new framework for civil service recruitment.
a major review of key provisions in the Freedom of Information Act 1997, leading to the enactment of the Freedom of Information (Amendment) Act 2003.
enactment (in 2003) of the Houses of the Oireachtas Commission Bill 2002.
Systems and structures
a major restructuring of Departments following a decision by the incoming Government in June, 2002.
significant progress by Departments with the specification and selection of new financial management systems under the Management Information Framework.
enhancement of training systems to support the civil service policy analysis capability.
active promotion of the new public sector procurement portal, etenders.gov.ie.
Equality
introduction of a civil service policy on equality and diversity.
Supporting the Strategic Management Process
[pages 36-39]
The Department is committed to improving its internal arrangements for promoting strategic management and modernisation. Developments during the period included:
further development of the Department's business planning process to support the alignment of high-level objectives with those obtaining at individual and section level.
creation of a new group, known as the AP Focus Group, to involve the AP grade as a whole more closely in the overall management of the Department.
continued implementation of the new performance management and development system, supported by appropriate follow-up training and development.
promotion across all Divisions of the new policy analysis training course and active participation by staff.
introduction of a detailed policy on equality and diversity for the Department.
introduction of guidelines on stress management.
completion of a comprehensive staff climate survey.
significant upgrading of the Department's IT infrastructure and desktop productivity software.
selection of an integrated financial management system for the Department.
promotion of the Department's quality customer service standards.
Chapter One
Mission and Strategic Priorities
Mission
The Department has a central role in implementing Government policy and in advising and supporting the Minister for Finance and the Government on the economic and financial management of the State and the overall management and development of the public sector. In formulating this advice the Department is guided by its mission which, as set out in its Statement of Strategy 2001-2003, is to promote a growing economy which will deliver a high level of sustainable employment, social progress and living standards.
This mission involves:
promoting policies which deliver international competitiveness and internal efficiency;
advising the Government on, and managing, the overall process of resource generation and its allocation between investment and consumption to secure sustainable economic and social benefits;
achieving ongoing improvements in efficiency and effectiveness across the public sector.
Strategic Priorities
Our Statement of Strategy, 2001-2003, outlined five strategic priorities for the Department:
I Economic, budgetary and taxation policy, covering
- economic growth;
- employment and unemployment;
- tax reform;
- price stability;
- debt reduction;
- international competitiveness.
II Effective management of public expenditure, covering
- the annual Estimates process;
- the National Development Plan;
- expenditure policy across all sectors.
III EU policy development, financial services and wider
international economic co-operation, covering in particular
- advice to Government on EU policy issues;
- promoting the Irish position at EU forums;
- EMU and the euro changeover;
- Structural and Cohesion Fund policy;
- North/South co-operation;
- EU budget;
- EU-wide financial services regulation.
IV Incomes policy development in both
- the economy generally and
- the public service
by reference to competitiveness, a sound budgetary position and social partnership.
V Enhanced management of the public service, particularly in relation to
- service quality and delivery;
- electronic government;
- performance management;
- financial management systems and procedures;
- accountability, flexibility and devolution of responsibility;
- human resource management;
- access to information.
[It should be noted that our new Statement of Strategy 2003-2005 includes a revised list of strategic priorities.]
Chapter Two
Strategic Priority I:
Economic, Budgetary and Taxation Policy
Economic Policy
Objective
Development and promotion of policies designed to secure a high degree of price stability, overall levels of taxation and expenditure consistent with economic and social progress, continued international competitiveness, and internal efficiency in the economy as a whole.
Progress achieved
General
Economic and employment growth slowed in 2002, mainly due to international economic conditions. Inflation fell slightly but remained high relative to the EU average, putting competitiveness under some pressure.
Economic and Employment Growth
Due mainly to a continuation of the weak international economic conditions which developed in 2001, progress in achieving the Department's economic objectives was somewhat mixed in 2002. GDP grew by an estimated 6.9 per cent, significantly above the average rate of 0.9 per cent experienced in the euro area. However, GNP grew by only 0.1 per cent. The large gap between GDP and GNP growth reflected the size of multinational profit flows. Employment grew by 1.4 per cent in 2002 (down from 2.9 per cent on 2001), compared with average employment growth of 0.3 per cent in the euro area. Slower employment growth led to a small rise in the unemployment rate which had an estimated average of 4.4 per cent in 2002 (compared to 3.9 per cent in 2001).
Inflation
Inflation, as measured by annual changes in the Consumer Price Index (CPI), fell slightly from an average of 4.9 per cent in 2001 to 4.6 per cent in 2002. On a harmonised basis, inflation in Ireland was higher than that of any other euro member in 2002. Our relatively high rate reflected, to a large extent, the higher rate of inflation in the services sector, which in turn reflected the relatively tight labour market in Ireland during the period.
Competitiveness
As a small open economy, which is highly integrated into the global economy through our strong trade and investment links, economic conditions in Ireland are largely determined by our ability to supply goods and services to our major trading partners. In 2002, the loss in competitiveness of the economy due to inflation was exacerbated by the recent strengthening of the euro. As a result, it is imperative that wage and cost developments adapt more to our changed economic circumstances. Failure to do this will result in a fall in output and a consequent rise in unemployment.
Budgetary Policy
Objective
Promotion of a budgetary strategy which will underpin competitiveness and employment and deliver a budgetary position which is in surplus or close to balance over the course of the economic cycle.
Progress achieved
In 2002, the budgetary position remained sound. At end-year there was a marginal general government deficit of about 0.1 per cent of GDP, in contrast to the projected surplus in the Budget of 0.7 per cent. This was due mainly to the adverse impact on tax revenue of the slower than expected domestic and global economic growth.
The General Government debt to GDP ratio fell further in 2002 from the already relatively low level of 36.8 per cent at end 2001 to 33 per cent at end-2002, the second lowest in the EU.
Taxation Policy
Objective
Provision of policy advice which will promote equity, employment, enterprise and efficiency by improving the structure of the taxation system, countering tax avoidance and evasion, broadening the tax base, reducing the burden of tax on the lower paid, removing a greater proportion of those on average incomes from the higher income tax rate, and integrating tax and income support policies to minimise employment and poverty traps and encourage greater labour market entry.
Progress achieved
General
Despite a relatively tight budgetary position, reasonable progress was made in implementing taxation policy objectives.
Income Tax Policy
Budget 2003 (delivered in December, 2002) maintained progress towards exempting the minimum wage from taxation. This is one of the Government's key fiscal priorities over the next five years as set out in the Government Programme. As a result of Budget 2003, those on incomes amounting to 90 per cent or less of the minimum wage - currently €247.65 per week - are exempt from income tax. The income level at which people enter the tax net increased from under €210 to €223 a week, while the entry point for a family with children on a single income was increased from under €430 to €443 a week.
Budget 2003 removed 37,400 income earners on lower income from the tax net, including 12,900 who are aged 65 years and over. Tax exemption limits for those aged 65 and over were increased for the second time in two years, to €15,000 (single) and €30,000 (married). After the Budget, 681,000 income earners - over 36 per cent of all income earners - will be outside the tax net.
Indirect Taxes
Increased rates of excise duty and VAT were introduced to raise additional revenue to fund public services.
Incentives for business to promote growth and employment
In line with Government policy, the standard rate of corporation tax for trading income was reduced from 16 per cent to 12.5 per cent with effect from 1 January, 2003.
Broadening of the tax base and anti-avoidance measures
In line with the general policy of maintaining low rates of taxation, Budget 2003 continued to make progress with broadening the tax base. A number of tax incentive schemes were earmarked for termination on 31 December, 2004. These include the Urban Renewal, Rural Renewal, Film Relief and Student Accommodation schemes. The special regimes in relation to capital allowances for hotels and holiday cottages were also discontinued from 4 December, 2002, subject to transitional provisions which provided, inter alia, that expenditure be incurred by 31 December, 2004. Budget 2003 and the Finance Act 2003 also included a number of anti-avoidance measures including the prevention of the transfer of capital allowances on buildings from companies to individual investors, a tightening of the tax regime governing various pension products, and the restriction of relief available to individuals who carry on certain trades in a passive way.
Tax Administration
The Budget and the Finance Act also introduced a number of improvements to the administrative structure and efficiency of the taxation system. For example, a 'pay and file' system was introduced for corporation tax, thus reducing the number of contact points for corporations with the Revenue Commissioners. A new general scheme covering both direct and indirect taxes was also put in place to deal with repayments of tax and to provide for interest thereon.
Expenditure Policy
Objective
Formulation of advice on expenditure priorities which optimise sustainable growth and social cohesion, management of aggregate public expenditure within the parameters set by Government, and encouraging the delivery of public services in an efficient and cost effective manner.
Progress achieved
Developments in relation to expenditure policy are addressed in the next chapter.
Chapter Three
Strategic Priority II:
The Effective Management of Public Expenditure
Expenditure Management
Objective
Promotion of the optimal use of public funds, effective management of the annual Estimates process and the National Development Plan within the limits set by overall Government parameters, identifying spending priorities which assist the economy in achieving the maximum sustainable output of goods and services, employment, and social progress, and, in conjunction with other Departments, ensuring the effective management of, and value for money from, public expenditure.
Progress achieved
Management of Public Expenditure
Further improvements were made to the system of expenditure management and control in 2002. The Minister initiated monthly expenditure management reports to Government to provide timely information on emerging trends and to enable early decisions to be taken in response to emerging pressures. Overall net voted expenditure came in slightly below target in 2002. Total net voted expenditure in the year was €28,885 million, an increase of 13.9 per cent over the 2001 outturn. This was compared to the Revised Estimates Volume provision for an increase of 14.4 per cent.
Net voted current spending was €23,376 million, an increase of 14.3 per cent on 2001. Nearly 70 per cent of this spending was on the key areas of social investment - health (at 28.5 per cent of the total), social welfare (nearly 22 per cent) and education (20 per cent). This distribution highlights the prioritisation given to spending on the health services. The share of the health sector in overall current spending increased from 23.5 per cent in 1997 to 28.5 per cent in 2002.
Pay and pensions accounted for half of net voted current spending, with the pay bill increasing by 12.8 per cent on 2001. Of this increase, 6.5 per cent related to increases in pay rates arising from the PPF, while 6.3 per cent was attributable to other factors, including 2.3 per cent for the higher numbers employed.
The Minister announced in his 2003 Budget statement that the Government had decided to cap the numbers employed across all sectors of the public service at their present authorised levels, with immediate effect, and also to reduce those numbers by 5,000 over the next three years.
The Government's budgetary strategy for 2003-2005, which was agreed in the middle of 2002, set clear priorities for expenditure on Health, Infrastructure and Social Welfare in 2003. The autumn Estimates process was assisted by the three-person Independent Estimates Review Committee which assessed the options available to achieve the expenditure targets approved by the Government for 2003 and made recommendations to the Minister. A copy of its report is available on the Department's web site.
The Minister for Finance recently announced further measures to improve the management and control of expenditure in 2003. These included the submission of reports every two months from the four large spending Departments - Health & Children, Social & Family Affairs, Education & Science, and Justice, Equality & Law Reform, as well as publication of yearly profiles of expenditure, the use of risk assessment, the review of demand-led schemes, and improved delegation arrangements in relation to capital spending programmes.
Net voted capital expenditure came to €5,509 million in 2002, an increase of 12.3 per cent on the 2001. As a result, public capital spending in Ireland now amounts to 5 per cent of GNP, nearly double that of the EU generally.
Over half of all capital expenditure relates primarily to roads, public transport, housing and environmental services. Significant capital resources were also allocated to the health and education sectors in 2002. Overall, about 80 per cent of all voted capital expenditure in 2002 was allocated to programmes covered by the National Development Plan.
National Development Plan
The Department has overall responsibility for monitoring the implementation of the National Development Plan (NDP) over the period 2000-2006. Total NDP expenditure at the end of 2002 was estimated at over €20bn, of which almost €18bn came from the Exchequer. In accordance with the priority given to investment in economic and social infrastructure, the Exchequer allocated over €3.6bn to the Economic and Social Infrastructure Operational Programme in 2003, bringing the total for this programme to €12.3bn in the period 2000-2003, or almost €2bn more than the original profile. This level of investment has resulted in significant physical output under the Plan to date and more details in this regard can be had from the NDP/CSF Information Unit (Telephone 353-1-6396280 or email csfinfo@ csfunits.irlgov.ie).
Demand-led measures in the productive sector made slower progress than expected due to a fall in private sector investment following the downturn in the world economy. Also, while progress was made in the key area of human resource training, tight labour market conditions led to a reduced demand for some measures.
Expenditure Review Initiative
The expenditure review process was initiated in 1997 as part of the financial management reform element of the Strategic Management Initiative. Its objective is to encourage Departments to improve the efficiency and effectiveness of their programmes by providing a systematic analysis of what is actually being achieved under each. The review process is led by a central steering committee chaired by the Secretary General of the Department of Finance.
In May 2002, the Government approved the expenditure review topics proposed for the first year of the current three-year cycle (2002-2004). The Committee for Public Management Research is also providing expert evaluation assistance in relation to two reviews, with a view to developing a review system for cross-departmental expenditure.
Evaluation
During 2002 the NDP/CSF Evaluation Unit commissioned evaluations of the national roads, public transport, and human resource development measures in the NDP. The reports on roads and public transport, while detailing financial and physical progress, also highlighted cost increases which have impacted adversely on the NDP investment programme. Action on the recommendations in the reports is being pursued by the Department of Transport and the relevant implementing agencies.
The Department also co-ordinated the implementation of a comprehensive communications and public information strategy in line with Government and EU requirements.
Public Private Partnerships
The Government is committed to utilising the public-private partnership (PPP) procurement option to contribute, where possible, to the accelerated delivery of priority economic infrastructure, to ensure value for money over the lifetime of each project, and to provide quality public services.
The Minister for Finance wrote to all Ministers in January, 2002, asking them to actively bring forward a number of appropriate PPP projects in each major investment area and significant progress was made during 2002 in developing the PPP process. The State Authorities (Public Private Partnership Arrangements) Act also became law in 2002. It put in place a legislative foundation for joint ventures, thereby ensuring that state agencies have the necessary legal authority to become involved in PPP projects.
The first school built under a PPP arrangement was officially opened on 2 December, 2002. The remaining four schools in this bundled PPP project are also close to completion. Other PPP projects, including the National Maritime College in Cork and the Kilcock-Kinnegad motorway, are at an advanced stage of procurement.
National Development Finance Agency
The Government decided in July to establish a National Development Finance Agency (NDFA) by January, 2003, and the NDFA Bill to implement this decision was signed into law by the President on 19 December.
As an alternative to direct Exchequer funding or less suitable forms of private sector funding, the NDFA will assist procuring authorities in evaluating financial packages and provide cost effective finance, where appropriate, for priority infrastructural projects. Its functions will be discharged through the National Treasury Management Agency (NTMA).
Sectoral policies
Objective
Promotion of sectoral policies which are consistent with the National Development Plan, the Programme for Prosperity and Fairness and the aims of sustainable economic and budgetary policy; developing and promoting the public private partnership process; supporting the goals of social cohesion, the alleviation of poverty, sustainable development and environmental protection.
Progress achieved
Social Inclusion
The Department sought to support the aims of social inclusion on a sustainable basis through the formulation and promotion of sound economic policies. It participated in the review of the National Anti-Poverty Strategy which resulted in 2002 in the adoption of a new strategy, Building an Inclusive Society, and the agreement of key targets.
Corporate Governance in State-sponsored Bodies
In 2002 the Department promoted the Code of Practice for the Governance of State-sponsored Bodies, which had been approved by Government in October, 2001. It did this though the provision of advice to parent Departments and public sector bodies, participation at seminars on corporate governance, and, in conjunction with the IPA, the publication of a guide for board members of public sector bodies on the implementation of the Code.
Regulatory Reform
The Department has been supporting the process of regulatory reform, primarily through its membership of a high level group on better regulation chaired by the Department of the Taoiseach and an interdepartmental group which is examining ways in which the impact of regulations can be better assessed.
Electronic Procurement
The eProcurement Strategy made recommendations in several key areas - organisational structure, procurement processes and practices, and the legal and technological frameworks - to develop procurement capacity across the public sector
A new policy unit was established in 2002 to help develop procurement capacity across the civil service in the medium to longer term. In addition, the Government contracts committee was re-configured into two committees, dealing with construction and general procurement respectively.
A funding initiative was also established to promote strategies in developing sectoral procurement. Both the Health and the Local Government sectors made significant progress in this regard in 2002. Utilisation of the eTenders website (etenders.gov.ie) by both awarding authorities and suppliers continued to grow during the year [See also the section entitled Electronic Tendering Web Site in Chapter Six below] .
Cross-Departmental Co-operation
Promotion of sectoral policy by its nature involves the Department in close co-operation with other Departments. In some instances this is formalised through the creation of working groups and interdepartmental committees. The Department contributed to the work of these forums in 2002, including the Cross-Departmental Team on Housing, Infrastructure and PPPs, the Interdepartmental Committee on the National Spatial Strategy, the Senior Officials Groups on Social Inclusion, and on EU Policy.
Chapter Four
Strategic Priority III:
EU Policy Development, Financial Services and Wider International Economic Co-operation
EU Policy Formulation
Objective
Contributing to general EU policy formulation, mainly through the EU Economic and Financial Committee, the Economic Policy Committee, Eurogroup, Ecofin, Budget Council and European Council meetings, as well as through the Senior Officials Group and the Cabinet Committee on EU Affairs.
Progress achieved
Economic and Finance Council/Eurogroup
The Department provided advice to the Minister and Minister of State for their attendance at meetings of the Economic and Finance Council (Ecofin), Eurogroup and Budget Council in 2002. It also played an important role in the provision of advice and briefing for meetings of the European Council of Heads of State/Government and participated at regular meetings of both the Economic and Financial Committee and the Economic Policy Committee.
Among the major policy items addressed were EU economic policy co-ordination, structural economic reform, European integration, and EU budgetary matters.
The Department also contributed to preparations for the European Council meeting in Barcelona, co-ordinated the Irish position on the EU Broad Economic Policy Guidelines, and fulfilled EU requirements to publish both the annual Progress Report on Structural Reform of Product and Capital Markets and the Stability Programme Update for 2002. The Department also initiated its preparations for Ireland's EU Presidency in 2004.
EU Enlargement
The Department provided substantial input into Ireland's policy stance on enlargement. In particular, it provided advice on the financial aspects of enlargement in the context of the Brussels and Copenhagen Summits. The financial arrangements for the accession of ten new Member States in 2004 were agreed at the latter Summit. The Department continues to advise on the financial implications of enlargement for Ireland.
Following the successful twinning arrangements with Estonia and Slovenia, which concluded in 2001, the Department commenced a new twinning arrangement with the Czech Republic in July, 2002, and continued with a second twinning arrangement with Estonia. Under these arrangements, officials from the Department provide expert advice to the countries concerned.
Policy Formulation
The Department was actively involved in general EU policy formulation, primarily through the Senior Officials Group (now reconstituted as the Interdepartmental Committee on EU Affairs) and the provision of advice to the Minister in his role as a member of the Cabinet Committee on EU Affairs. In addition to participating at these forums, the Department also provided advice on issues arising in the Convention on the Future of Europe.
EMU
Objective
Ensuring a successful changeover to the euro and that Ireland makes an effective contribution through the Economic and Financial Committee and the Ecofin Council to the formulation of exchange rate policy, associated policies, and the stability and growth pact requirements in the euro-zone.
Progress achieved
Economic and Financial Committee of the EU
The Department contributed to the work of the EU Economic and Financial Committee and its subcommittees and the Economic Policy Committee. Among the important topics considered were a review of the operation of the Stability and Growth Pact; the development of the Financial Services Action Plan, particularly in areas such as banking and insurance; enhanced co-ordination of the EU position on International Financial Institutions; the budgetary cost of ageing; and structural reform.
The Euro Changeover Board of Ireland (ECBI)
The ECBI was established by the Minister for Finance in May 1998 to oversee the detailed implementation of the changeover to the euro and to provide public and consumer information. The Department provided both the chairperson and the secretariat to the Board.
The extensive preparations by the Board, involving legislation, practical matters and the provision of information, were outlined in previous progress reports. The changeover, which began on 1 January 2002, put these preparations to the test. The Board had built up extensive contacts with the main stakeholders during the previous year and was able to monitor progress closely.
The changeover to euro cash was completed smoothly and rapidly, with minimum disruption to business and consumers. Briefly, accounts with financial institutions were converted to euro over the night of 31 December 2001 / 1 January 2002, along with automatic teller machines (ATMs) and retail point-of-sale systems. Most ATMs were dispensing euro notes on 1 January and retail outlets were giving change in euro only. On 2 January, when the financial institutions reopened, the public began to exchange IR£ cash for euro cash in very large numbers. In addition, social welfare payments were made exclusively in euro from 2 January.
These processes continued over the following days and the cash changeover was virtually complete by 8 January, with almost 90% of transactions being carried out in euro by that date.
A detailed account of the Board's activities, including the progress of the changeover, may be found in its reports, the last of which was published in April, 2002. These reports are available on the Board's website, www.euro.ie. Following the changeover, the Board was dissolved and its staff reassigned to the Department of Finance.
Wider International Economic Co-operation
Objective
In promoting economic and social development, to represent Ireland's interests before international institutions and forums at which the Department is represented and to make an effective and constructive contribution to international debate in the economic and financial arena.
Progress achieved
The Department continued to ensure effective Irish participation at relevant international forums, as a member of important International Financial Institutions, and through contacts with external observers (EU, OECD, IMF, Credit Agencies).
EU Budget
Objective
Provision of policy advice and implementation of Government policy on all issues pertaining to the EU Budget.
Progress achieved
The Department represented Ireland in negotiations on a comprehensive and consolidated financial regulation governing expenditure from the EU Budget and on the new European Solidarity Fund which will help alleviate the distress and damage caused by disasters of the scale experienced in central Europe in August, 2002.
Structural and Cohesion Funds
Objective
Efficient management, application and draw down of Ireland's Structural and Cohesion Fund allocations and promotion of sound and efficient management of EU funds across all Departments and implementing agencies.
Progress achieved
EU Structural and Cohesion Funds
The Department continued to contribute to the development of Regional and Structural Funds policy through its participation on the EU Committee for the Development and Conversion of the Regions and played a leading role in developing and promoting policies for the sound, efficient and effective management of EU funds at both EU and national level. It also managed the draw-down of €650m of ERDF and Cohesion Funds in 2002 and organised a seminar in Dublin for the Commission and all member states on the financial management and control of the funds.
The Department also played an active role in monitoring progress with the closure of the 1994-1999 round of Structural and Cohesion Funds in order to ensure their successful draw-down.
EU transnational programmes
Interreg is a Community Initiatives Programme for promoting cross-border, transnational and inter-regional co-operation. During 2002, the Department assisted with the launch and implementation of the new Interreg III Programmes, 2000-2006, including the Ireland/Wales programme and three other programmes. It also ensured that structures were put in place for the implementation of all Interreg programmes in Ireland.
The Department also oversaw the closure of the Interreg II Programmes, 1994-1999, for which the last ERDF payments were made in 2002. This included the organisation of verification audits on expenditure to ensure that the closure of these programmes complied with EU regulations.
North/South co-operation
Objective
Building on the new institutional framework under the Good Friday Agreement.
Progress achieved
The Department worked closely with the North/South Bodies and a number of other Departments, both North and South, in promoting North/South co-operation in 2002. It assisted the Minister at meetings of the North South Ministerial Council (NSMC) and participated in the North/South Steering Group, which oversees the development of North/South co-operation. Under the auspices of the NSMC, the Department also jointly developed, funded and supported activities with its Northern Ireland counterparts and the Special EU Programmes Body in a number of areas, including:
finalisation of the 1994-1999 round of the Peace and Ireland / Northern Ireland Interreg programmes;
roll-out of the new Peace and Interreg programmes for the period 2000-2002;
supporting the Special EU Programmes Body in promoting North/South Co-operation under the National Development Plan and the Northern Ireland Structural Funds Plan.
Policy in relation to Financial Services
Objective
Development of policies which underpin the effective prudential and systemic regulation of the financial services sector. Consulting appropriately within Ireland and participating at EU level in the consultative and decision-making processes on EU-wide financial services regulation.
Progress achieved
Financial regulation - EU dimension
EU Directives
Through its Financial Services Action Plan, the EU aims to achieve a single market in financial services and to strengthen their regulation in line with market developments. The Department assisted in this process, representing Ireland's interests at EU level, contributing to the formulation of policy on related EU regulations and directives and introducing any necessary legislation at national level.
A regulatory regime was introduced in 2002, on foot of two EU Directives, for institutions issuing electronic money. The Department prepared draft legislation in 2002 for the implementation of Directives on financial collateral and the winding up of credit institutions. Directives on insurance mediation and financial conglomerates were also adopted during the same period.
Cross-border payments
The Department also introduced measures to create an enforcement procedure and appropriate penalties (up to €3,000) for failure to comply with the EU regulation on cross-border payments in euro, including cash withdrawals from ATM machines and card payments. Under the regulation banks are required to levy the same charges on cross-border payments in euro as are levied on similar payments at national level.
Financial Regulation - domestic developments
IFRSA
In April 2002, the Government published the first of two bills - the Central Bank and Financial Services Authority of Ireland Bill 2002 - to restructure the supervision of the financial services industry in Ireland (the Bill was enacted in 2003). The Minister also appointed the interim Irish Financial Services Regulatory Authority (IFSRA) to manage the transition to the new arrangements. Under the Act, the IFSRA is responsible for the bulk of the regulation of the financial services industry. It operates within the legal structure of the Central Bank which has been renamed the Central Bank and Financial Services Authority of Ireland (CBFSAI). The responsibilities of the IFSRA include both consumer protection and the prudential regulation of financial service providers.
The Department also prepared, and sought submissions on, the heads of a second Bill to provide for the creation of an ombudsman for the financial services sector, to establish consultative panels for the IFSRA, and to accommodate a number of recommendations by the Review Group on Auditing. The Bill is due to be published later in 2003.
Unclaimed Life Assurance Policies Bill 2002
The Department continued work on the second phase of the dormant accounts scheme by extending its application to mature life assurance policies which have remained unclaimed for some time. This legislation (enacted in 2003) applies to all life insurance undertakings in the state, as well as policies issued to Irish residents.
Financial Services (Miscellaneous Provisions) Bill
This Bill was designed to effect a number of technical changes to existing financial services legislation. A draft was produced in 2002 and consultations with the industry have continued. However, it has now been decided to incorporate the provisions of this Bill into other draft legislation currently being prepared in the Department.
Irish coin issue and euro windfall
The Finance Act 2002 transferred from the Central Bank to the Exchequer the benefit accruing from the right to issue coin, thereby bringing Ireland into line with the norm in other EU countries. This led to a once-off transfer of €360m to the Exchequer in 2002. Transfers in future years will be less. The Exchequer also received an amount of €240m which materialised from the non-return of Irish bank notes after the changeover to the euro.
Chapter Five
Strategic Priority IV:
Incomes Policy
Incomes policy
Objectives
Our objectives during the period were - subject to the overall aim of maintaining macroeconomic stability and promoting competitiveness - supporting the evolution of pay and conditions of employment in the economy generally in accordance with the terms of the Programme for Prosperity and Fairness, supporting the restructuring of the public service pay determination process, ensuring full and ongoing co-operation with the public service modernisation programme, and making a significant contribution to the determination of arrangements to follow the Programme for Prosperity and Fairness.
Progress achieved
Programme for Prosperity and Fairness (PPF)
The Programme for Prosperity and Fairness and the benchmarking process continued to provide a high degree of stability to public service pay in 2002 and increases under the former have been implemented.
The terms of the PPF committed the parties to the delivery of the modernisation programme in the public service, with payment of the final phase pay increase of 4% (in October 2002) being conditional on the achievement of sectoral objectives. The relevant implementation bodies approved sectoral performance indicators for each of the sectors identified in the agreement, while a number of quality assurance groups subsequently assessed the progress in their respective sectors and decided that payment of the final phase increase was warranted.
In addition, an outside consultancy was commissioned to carry out an evaluation of progress with the modernisation programme in the civil service, which reported in March 2002. In response to its recommendations the Government asked the implementation group of Secretaries General to oversee development of a new vision statement, strategy and action programme to 2007.
Private Sector Pay
Sectoral earnings data suggest a slowing in the rate of wage increases during 2002. The international economic slowdown, reduced domestic demand growth, the easing of labour market conditions, and the relatively low final phase increases under the PPF were key influences. While overall figures are not yet available, the indications are that the average increase in private non-agricultural earnings was approximately 6.5 per cent in 2002 (compared to an estimated euro area average of 3 per cent), down from approximately 9 per cent in the previous year.
Industrial Relations
Issues arose affecting teachers (particularly negotiations on 'supervision and substitution' in schools) and childcare workers in the health sector. However, no major industrial disruption was experienced during the year.
Post-PPF
Negotiations on a new national programme commenced in October, 2002. These dealt primarily with the issues of pay, compliance, and trade union recognition. When talks ran into difficulties in December, it was agreed to defer further discussions until January to allow the parties to reflect on their respective positions. The new programme, Sustaining Progress, was subsequently agreed early in 2003. It provides for an eighteen month pay agreement and phased implementation of the increases proposed under benchmarking, which are dependent on verifiable progress on the extensive modernisation agenda for the public service.
Benchmarking
The report of the Public Service Benchmarking Body was published in June, 2002. As noted above, discussions on the implementation of the pay recommendations in the report and the associated public service modernisation agenda were incorporated into the discussions on the new national agreement, while discussions on the parallel benchmarking processes are ongoing.
Commission on Public Service Pensions
In September 2001, the Government accepted the thrust of the package of public service pension reforms recommended by the Commission on Public Service Pensions, and set up a working group comprising the public service unions, relevant Government Departments and other appropriate parties to advise on the implementation of its recommendations. The working group continued its work in 2002 and is expected to report to Government by the middle of the year.
Chapter Six
Strategic Priority V:
Enhanced Management of the Public Service
Public service modernisation
Objectives
Our objectives for the period involved the ongoing development and implementation of the public service change programme (in conjunction with other Departments) to secure further improvements in the quality of customer service. The programme incorporates the modernisation objectives set out in Delivering Better Government, the Programme for Prosperity and Fairness, the programme of eGovernment, and the new system of performance management and development.
Progress achieved
Review of the Strategic Management Initiative (SMI)
The goal of improving the efficiency and responsiveness of the civil service remains a priority. Following the evaluation of progress with SMI in the civil service, which was conducted by an outside consultancy in 2001, the Government asked the Implementation Group of Secretaries General to oversee the development of a vision statement, strategy and action programme to 2007. This process is under way.
Improvements in service delivery
The civil service quality assurance group verified the progress reported by Departments in relation to the overall levels of performance, effectiveness and accountability achieved in 2001 and 2002 and accordingly decided that payment in full of the third phase pay increase under the terms of the PPF was warranted. Most notably it found that the quality of services provided to customers of the civil service had improved and that significant progress had been made in advancing the aims of strategic management, for example through improvements in the partnership and business planning process.
Review of Partnership Arrangements
The review of partnership in the civil service, which was completed by an outside consultancy in January, 2002, confirmed that valuable progress had been made by Departments in developing the partnership process. However, the review also concluded that further improvements were needed. To assist with the continuing development of partnership in the civil service, Sustaining Progress included a commitment to consider the recommendations of the review and to present proposals by staff and management for the development of partnership.
Management Information Framework (MIF)
The MIF is aimed at modernising the financial management and accounting arrangements and management information systems in the civil service. Departments are proceeding with the specification, selection and installation of appropriate financial management systems and are on schedule to complete their installation by the end of 2004.
The central MIF unit issued guidance to Departments on management accounting, cost allocation and accounting standards in 2002. Work has also begun on the development of a training programme and a communications strategy. While attention to date has focused mainly on financial issues, Departments are also considering the performance reporting aspect of the MIF.
HRM Aspects
Legislative Reform
The introduction of a modern framework for public service recruitment will require a change in legislation. Accordingly, it has been agreed in Sustaining Progress that the Public Service Management (Recruitment and Appointments) Bill will be introduced by the summer of 2003. The Bill will replace the Civil Service Commissioners Act 1956. Similarly, the full realisation of the HRM reforms envisaged in the Public Service Management Act 1997 will require the amendment of the Civil Service Regulation Act 1956. It has been agreed in Sustaining Progress that the legislation amending the Civil Service Regulation Act will be introduced by the end of 2003.
Equality and related issues
Equality
Implementation of the new civil service policy on gender equality is progressing. Departments are implementing measures to support their strategic equality objectives and best practice initiatives are being identified. In addition, the proportion of women in Assistant Principal posts increased from 27 per cent in June 2000 to 30 per cent in March 2002 (The Government target is 33 per cent by 2005).
In July, 2002, the Minister launched Diversity in the Civil Service, the civil service policy on equality of opportunity which addressed the nine possible grounds of discrimination identified in the Employment Equality Act 1998.
A review of the civil service policy document, A Positive Working Environment, which deals with harassment, sexual harassment and bullying, is under way at present. The review aims, among other things, to see whether investigative procedures can be brought more into line with private sector practice.
The Department and the Civil Service Commission have been involved in a joint initiative with Traveller organisations aimed at making employment in the civil service more attractive and accessible to members of the Traveller community. A small number of Travellers applied for Clerical Officer positions in late 2002 and Pavee Point was used as one of the test centres. The Department, the Commission and Traveller organisations are currently considering further actions which could be taken to increase the participation of members of the Traveller community in civil service competitions.
Employment of people with disabilities
Under Government policy Departments are required to meet a staffing target of 3 per cent for the employment of people with disabilities. As part of a review into the operation of this policy, the Department commissioned research into the career progression of people with disabilities in the civil service which it will publish in the near future.
Civil Service Childcare Initiative
The Minister allocated €12.7m in the 2001 Budget to provide up to fifteen civil service crèches over a two year period. An interim management board has been established to manage their development and the appointment of operators. In due course it is proposed to establish a civil service childcare agency on a statutory basis. Operators have been appointed for the existing crèche in Lower Mount Street, Dublin 2, and for the new crèche in Marlborough Street, Dublin 1, which has just opened. Another crèche in the Dublin 1 area is also planned, while construction work has started on new crèches in the Government complexes in Ennis and Athlone. Proposals for crèches in Sligo, Cork, Limerick and other locations are also being examined.
Staff Development
Performance management and development
A number of Departments completed the first annual cycle of the new performance management and development system. A guide to competency development, which was compiled by CMOD, was distributed to staff in all Departments. The guide, which has been well received, will assist both jobholders and managers in deciding how the competencies required for their respective roles can be developed.
Training and Development in the Civil Service
There was a significant increase in the overall training output by CMOD in 2002. The number of training days delivered for short courses increased by approximately 39 per cent to 370. New courses to assist with preparations for Ireland's Presidency of the EU in 2004 were introduced, along with a new course in public procurement.
Preparation of a medium-term civil service training and development strategy was well advanced. Following consultation with Departments and other interests, the strategy was expected to be finalised and implemented in 2003.
Policy Analysis Training
As part of the commitment to enhancing the policy analysis capability of the civil service, delivery of the basic CMOD course in policy analysis was increased in 2002. The design and delivery of a new Master's and diploma training programme in policy analysis was also submitted to public tender.
Other HRM developments
Human Resource Management System
A further five Departments and Offices completed the implementation of the Human Resource Management System (HRMS) in 2002 and implementation is under way in two other Departments.
Code of standards and behaviour
The new Joint Oireachtas Committee for Finance and the Public Service, which was established in November, 2002, will shortly consider the draft Civil Service Code of Standards and Behaviour.
Civil Service Personnel Code
An electronic version of the civil service personnel code was placed on the Department's network in April, 2002, and an Internet version has since been developed. This went live early in 2003.
Organisational Development
In order to assist with the implementation of the public service modernisation programme, a new organisational development unit was established in CMOD. The aim of the new unit is to focus on organisational development and change management opportunities arising in the main from human resource management, financial management and eGovernment initiatives.
Change Management Fund 2002
The Change Management Fund was established to assist with the implementation of the modernisation agenda. Funding in excess of €5.7 million was provided to thirty Departments and Offices in 2002 to assist with initiatives relating to equality and diversity, human resource management, performance management, financial management, quality customer service and regulatory reform.
Freedom of Information
The Department continues to provide training, guidance and assistance to Departments and other public bodies in meeting their obligations under the Freedom of Information Act. Application of the Act has been widened progressively over the period since it came into force in April, 1998, and the number of public bodies covered by the Act is now approaching 400. The Government has also directed that the Act be extended by end-2005 to the remaining public bodies appropriate for inclusion. An interdepartmental working group prepared a response to the report by the Information Commissioner in July, 2001, on compliance by public bodies.
In June, 2002, the Government established a review group comprising Secretaries General of a number of Departments to review how some key provisions in the legislation have operated in the four years since the Act came into effect. The group reported to the Government in December, 2002, and the Minister brought forward draft amending legislation giving effect to some of the report's recommendations and to certain other provisions. The resulting Freedom of Information (Amendment) Act 2003 was signed into law on 11 April, 2003. The Department has now embarked on a series of measures required for the implementation of the new legislation, including the making of regulations and the provision of guidance and training.
Standards in Public Office Act 2001
Following the enactment of the Standards in Public Office Act 2001, which builds on the Ethics Act 1995, a framework for the extension and updating, by regulation, of the application of the Acts in the public sector received Government approval in July, 2002. The Department is currently assembling the necessary information to enable the regulations to be made.
Agreement of Administrative Budgets 2002-2004
As an integral part of the SMI initiative, the Administrative Budget system is designed to improve co-ordination between this and other Departments, while at the same time providing the latter with greater flexibility in the use resources for local priorities. This is achieved by delegating greater authority to Departments on staffing and financial matters, subject to the introduction of enhanced standards of accountability. This includes compliance with the prevailing Government policy on staffing in the civil service.
Following extensive consultations with existing holders of Administrative Budgets, 27 in all, a new round of agreements, including enhancements on previous rounds, was put in place for 2002-2004. The Office of the Comptroller and Auditor General was included in the Administrative Budget process for the first time in 2002 and the possibility of extending the scheme to other administrative areas will continue to be explored.
Restructuring
Transfer of Departmental Functions
Following a decision by the incoming Government in June, 2002, 21 orders for the transfer of Ministerial functions were completed, signed and published. Arrangements were then made for the transfer of staff from:
broadcasting, communications, energy and the Geological Survey of Ireland to the Department of Communications, Marine and Natural Resources;
rural development and social inclusion to the Department of Community, Rural and Gaeltacht Affairs;
horse and greyhound racing, arts, film and cultural institutions to the Department of Arts, Sport and Tourism;
the Meteorological Service, Dúchas, and nuclear safety to the Department of the Environment and Local Government.
A new Department of Transport was also established, bringing together many transport functions for the first time.
Revenue Appeal Commissioners
Following the recommendations of the DIRT inquiry and the report of the steering group on the review of the Revenue Commissioners, a new Vote (including staffing structures) was established for the Office of the Revenue Appeal Commissioners.
Oireachtas
The Houses of the Oireachtas Commission Bill was enacted in July, 2003. It provides, inter alia, that the Oireachtas be funded, not from voted monies, but by an amount charged on, and paid from, the Central Fund for a period of three years. It also provides for the transfer to the Commission of virtually all powers of the Minister for Finance in relation to the number and grading of staff of the Office of the Houses of the Oireachtas.
Ordnance Survey Ireland
On 4 March, 2002, following negotiations with staff representatives on the transfer of staff to the new body, the Minister for Finance signed the establishment day order under the Ordnance Survey Ireland Act 2001.
Electronic Government
Electronic tendering web site
The public sector procurement portal (etenders.gov.ie) was launched in December 2001 and a campaign to market the site was carried out during the first quarter of 2002. Workshops were held for users in awarding authorities and presentations were made to senior managers. Around 10,000 suppliers and over 1,000 users had registered with the site by the end of 2002. In addition, around 4200 notices were published on the site in the course of the year, 22 per cent of which included tender documentation. [See also the section entitled Electronic Procurement in Chapter Three above.]
Virtual Private Network
As an element in the infrastructure which will support the eGovernment programme, a draw-down contract offering substantial savings for the public service on a range of telecommunications services was put in place in May, 2002.
Systems to support eGovernment
A draw-down contract for a set of XML systems development products and associated development expertise for the public service was signed in December, 2002. This product family will be used to build a wide range of eGovernment systems such as e-Cabinet, eLegislation, and OASIS/BASIS.
Information Society Fund
The Information Society Fund (€55.9m) continued to provide support to Departments in 2002. Most of the fund (€45.5m) was devolved to Departments through the Estimates process, while the balance was used in the main to support common electronic government requirements across Departments. A total of 103 projects were funded, including the Revenue Online Service, the Public Services Broker being developed by the Reach agency, the online recruitment system in the Civil Service and Local Appointments Commission, the online access system in the Land Registry, and the e-Cabinet project in the Department of the Taoiseach. The fund also provided further resources to expand the Internet access facilities in public libraries throughout the country.
Chapter Seven
Supporting the Strategic Management Process within the Department
Introduction
The Department is continuing to monitor the effectiveness of changes made in recent years to support the strategic management process and to focus more clearly on the achievement of strategic priorities. We have sought to involve staff at all levels in this process as much as possible and to strengthen the mechanisms for co-ordinating work across all divisions. These changes have also ensured that greater attention is given to customer and client needs, both on a day-to-day basis and in the context of policy formulation. In particular, we have sought to strengthen our linkages with other Departments and Offices, to improve transparency, and to consult widely when framing policy advice.
Since the Department is involved in a wide range of activities affecting all sectors of the economy and society at large, we must foster and retain a corresponding breadth of skills and expertise. In a fast changing environment, this has proven, and will continue to prove, a challenging task. The steps we have taken in recent years to support the strategic management process have helped us to identify our needs in these areas and to develop an appropriate response.
Our use of the partnership process to facilitate dialogue at all levels of the organisation has enabled us to frame human resource management and business planning policies which support our current Strategy. It has also deepened the level of internal debate on our overall approach to strategic management and public service modernisation.
Steps taken to support the strategic management process
During 2002 we continued to build on the changes initiated in recent years to improve the way we do business:
Performance management and development
The new performance management and development system for the civil service is being implemented throughout the Department. This was the first complete calendar year in which the new system was used. By placing the evaluation of individual performance in a more structured framework, the new system is expected to strengthen the lines of communication between layers of management, promote the more systematic development of relevant skills, and identify areas of work in need of further attention.
Business planning
In order to improve the alignment between the Statement of Strategy, which takes a high level view of the work of the Department, and the Divisional Business Plans, which deal with the day-to-day work of the Department, the Assistant Secretary Group produced a business planning document for the Department as a whole for 2003. This document, which draws from the PMDS role profile forms completed by each Assistant Secretary and Director, enables staff to identify a more direct link between their individual or personal objectives and those obtaining at a higher level.
AP Focus Group
In order to involve the Assistant Principal (AP) grade as a whole more closely in the overall management of the Department, a new group has been created, representative of the grade across all Divisions. Known as the AP Focus Group, it will provide a dedicated means of ascertaining the collective views of APs on a range of change management issues, support communication and delegation within the Department, and facilitate the identification and examination of cross-cutting and cross-divisional issues.
Policy on equality and diversity
The Department's partnership committee produced a detailed policy on equality and diversity which was approved by management and published in September. This document, which was well received by staff, set out standards and guidelines on the equality dimension behind a wide range of human resource issues, including promotion, deployment, development, and attendance, as well as the Department's stance in relation to the categories of discrimination cited in the Employment Equality Act 1998.
Stress management guidelines
The Department's partnership committee also prepared a set of guidelines on stress management which were circulated to staff in May. These were designed to raise awareness generally of stress as an occupational hazard and to identify practical steps which can be taken by jobholders, whether managers or staff, to reduce stress in the workplace.
Annual Conference
The Department's annual conference, which was held in September, focused on change management and the effective management of public expenditure. The conference has proven to be a valuable forum for discussing a range of issues affecting the overall management of the Department.
Staff Climate Survey
In order to establish staff attitudes to change in a more systematic manner, the Department carried out a detailed climate survey in November. An outside consultancy assisted with the design of the survey and the evaluation of results. The survey sought to elicit staff attitudes on such issues as management style, motivation and development, organisational climate, the management of performance, communications and consultation, customer service, equality and work-life balance, and overall clarity and direction. The results of the survey will be used to assist in the formulation of internal management policies which address both the needs of staff and the organisation as a whole.
Staff Training
The Department's training unit continued to support our internal HRM policy by responding to the skills needs identified through a training needs analysis and PMDS. In particular, it enhanced and developed formal training courses for clerical and administrative grades up to and including AO/HEO and sourced a formal training course at management level for AP/PO grades.
IT Services in the Department
The Centre for Management and Organisation Development made a number of important enhancements to the Department's IT infrastructure in 2002, including:
the replacement of the network infrastructure to provide greater resilience and stability and more efficient security;
the installation of a new server platform using state-of-the-art servers to provide better service, access, back-up and built-in redundancy;
the installation and development of a new information management solution;
the phased replacement of the Department's desktop computers by more powerful models;
the phased installation of new productivity software on all desk-tops.
Quality customer service
The Department is strongly committed to providing its customers with a high standard of service and significant progress was made during 2002 towards achieving the targets set out in our customer service action plan, Improving Customer Service Standards 2001-2004.
Our codes of practice address the needs of customers who call in person to the Department, as well as those who contact us in writing or by telephone and adherence to the codes was monitored during the year by our customer service officer. For example, 78 per cent of correspondence addressed to the Minister was replied to within 20 working days, while 93 per cent of correspondence received by two randomly selected sections of the Department was replied to within a similar period.
The Department also continued to provide timely and detailed support to public representatives and other persons in 2002. During the year we replied to some 1,300 Parliamentary questions, 4,670 items of Ministerial correspondence, and 326 requests for access to records under the Freedom of Information Act.
- surveys
Two major surveys were carried out on behalf of the Department by external consultants in 2002. The first, the climate survey mentioned above, included a number of elements relating to customer service and change management generally, while the second was commissioned by the civil service equality policy unit to examine the issue of career progression in the civil service for people with a disability.
- complaints
We are committed to maintaining a well publicised, accessible, transparent and simple-to-use system for dealing with complaints about the quality of our services. This includes a right of appeal by customers who are dissatisfied with the Department's initial response to their complaint. Only a handful of complaints have been received since the publication of our action plan, none of which was subject to appeal.
- Irish language
The Department has the practice of translating key documents into Irish, either in their entirety or in summary form, and making them available to the public through our website. These include publications relating to the Department's high-level strategic direction, the public expenditure Estimates, the Budget, the National Development Plan, customer service standards, and civil service policy on equality and diversity.
- Office of the Paymaster General
In response to issues identified in an earlier survey, the Office of the Paymaster General introduced a number of improvements in its services, including the preparation of an information booklet for bereaved spouses and the circulation of an information note to all pensioners detailing changes in payments and the reasons for such changes. An Irish version of the annual newsletter to pensioners was also circulated.
Management Information Framework (MIF) - Internal
The internal roll-out of the MIF continued with the selection of an integrated financial system with a dual cash and accruals capability. This is intended to provide enhanced management information and costing and to promote an effective control environment. An external consultancy has been engaged to provide support and advice on the implementation of the new system which is scheduled to take place over the course of 2003.
APPENDIX A
Department of Finance Organisation
July 2003
Organisation
The work of the Department is carried out by six Divisions:
Banking, Finance and International Division deals with banking policy and financial regulation; development of EU policy on the regulation of the financial services sector; implementation of the National Development Plan and draw down of EU Structural and Cohesion Funds; co-ordination of EU policy; the EU Budget and EU Regional Policy; North/South co-operation; Irish membership of international financial institutions; debt management policy; financial management and government accounting policy; co-ordination and implementation of the Management Information Framework; and accounting, payroll, banking and financial services for various Departments and Offices.
Budget and Economic Division deals with overall budgetary policy, taxation policy, economic policy and forecasting, the International Financial Services Centre, and servicing EU and OECD committees on taxation policy and budgetary and economic co-operation within EMU.
Corporate Services Division deals with the internal staffing, accommodation and organisational policy of the Department, co-ordination of the strategic management process in the Department and (in conjunction with the Department of the Taoiseach) in the civil service generally, staff training, implementation of human resource policy measures (including performance management and development), customer service standards, and operation internally of the Freedom of Information Acts.
Organisation, Management and Training Division deals with civil service organisational issues such as systems, structures, staff numbers, administrative budgets, the application of information technology, and staff training and development.
Personnel and Remuneration Division deals with policy on pay and superannuation in the public service and other conditions of service in the civil service, including recruitment, promotion and equality, and arrangements for ensuring the effective implementation of Freedom of Information in the public service.
Public Expenditure Division deals with public expenditure management and policy issues, infrastructural investment and the NDP, aspects of policy in relation to commercial state bodies, and policy on Government contracts, e-procurement, the national lottery and public-private partnerships.
___________________________________________________
Minister for Finance
Charlie McCreevy, T.D
Private Secretary
Hannah O'Riordan
Minister of State
Tom Parlon, T.D.
Private Secretary
Aengus Ó Riain
Secretary General
Tom Considine
Personal Secretary
Josephine Duignan
Press Officer
Dermot Ryan
______________________________________________
Banking, Finance and International Division
Second Secretary General
Noel T O'Gorman
Assistant Secretaries
Kevin Cardiff
Stephen O'Sullivan
Head of Finance Directorate
Philip Hamell
Principals
Robert Bradshaw
Judith Brady
Colm Breslin
Aidan Carrigan
Jimmy Doyle
Billy Hawkes
Jim Higgins
Dermot Keane
Niall MacSweeney
Pat McBride
Brendan Ryan
Phil Ryan
Budget & Economic Division
Second Secretary General
Donal McNally
Assistant Secretaries
Brigid McManus
Derek Moran
Principals
Niamh Campbell
Fred Cooper
Michael McGrath
Dermot Mulligan
Liam Murphy
Stephanie O'Donnell
Barra Ó Murchadha
Vincent Palmer
Corporate Services Division
Head of Division
Carmel Keane
Principals
Tony Gallagher
Pat Murphy
Organisation, Management & Training Division
Secretary General PSMD2
Eddie Sullivan
Assistant Secretaries
Jim Duffy
Colm Gallagher
Principals
Tim Duggan
Michael Errity
Paddy Howard
David Hurley
John Thompson
Dave Ring
Áine Stapleton
Tom Walsh
Personnel & Remuneration Division
Secretary General PSMD2
Eddie Sullivan
Assistant Secretaries
Ciarán Connolly
John O'Connell
Principals
Pat Casey
Patricia Coleman
Brendan Duffy
Ronan Fox
Sarah Kyne
Marie McLaughlin
Des O'Leary
John Reilly
Pat Ring
Cloda Ryan
Public Expenditure Division
Second Secretary General
David Doyle
Assistant Secretaries
Jim O'Brien
Aidan Dunning
Michael Scanlan
Director of PPP3 Unit
Eamonn Kearns
Principals
Paul Byrne
Robert Carey
Fred Foster
Tom Heffernan
Michael Manley
Gráinne McGuckin
Mary McKeon
Joe Mooney
Ann Nolan
Pól Ó Duibhir
Jim O'Farrell
Dermot Quigley
APPENDIX B
Legislation prepared by the Department
Legislation enacted in 2002
Finance Act 2002
Appropriation Act 2002
National Development Finance Agency Act 2002
State Authorities (Public Partnership Arrangements) Act 2002
Legislation enacted to date in 2003
Unclaimed Life Assurance Policies Act 2003
Capital Acquisitions Tax Consolidation Act 2003
Finance Act 2003
Central Bank and Financial Services Authority of Ireland Act 2003
Freedom of Information (Amendment) Act 2003
Houses of the Oireachtas Commission Act 2003
Statutory Instruments in 2002
A total of 58 Statutory Instruments were prepared by the Department and signed by the Minister in 2002.
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