Showing posts with label Irish public expenditure. Show all posts
Showing posts with label Irish public expenditure. Show all posts

Thursday, February 13, 2020

13/2/20: Civil Services Effectiveness Index 2019 and Ireland


Analysis of public sector efficiencies and effectiveness is a hard and empirically imprecise exercise, with severe risks of running against the very powerful interest groups. Nonetheless, with governments and public sector taking an ever expanding role in management of our society, economy and geopolitical spheres, this task is hugely important.

2019 International Civil Services Effectiveness Index is trying to do exactly that. The index can be accessed via https://www.bsg.ox.ac.uk/about/partnerships/international-civil-service-effectiveness-index-2019.

Ireland (score 0.62) ranks overall respectably above the 38 countries average, in the 14th place, below Switzerland (score 0.65), tied with France and Austria, and just ahead of Spain (score of 0.60). Chart below maps Ireland against Finland (ranked 4th with score of 0.88) in terms of overall index:

  • In terms of civil service Capabilities metric, Ireland (0.72 score) is closer to the average (0.61) than to Finland (0.85). 
  • In Crisis and Risk Management, Ireland (0.65) significantly underperforms Finland (0.98), ranking close to average (0.63). 
  • In Digital Services, Ireland (0.52) ranks well below average (0.61) and miles behind Finland (0.83). 
  • In Fiscal and Financial Management, Ireland scores on the average (0.59) and below Finland (0.73).
  • Surprisingly, Ireland performs strongly (score of 0.99) in terms of HR Management in the civil service. Or maybe not, given the strength of the unions in Irish civil service.
  • In Inclusiveness and Openness, Irish Civil Service is at or below the group average, and well below Finland.
  • In Integrity, Ireland scores 0.68, which is closer (somewhat) to Finland's 0.79 and well ahead of the average (0.54). 
  • In Policy Making, not surprisingly, Irish civil service score is mediocre 0.67, closer to the average of 0.56 than to Finland's 1.0.
  • Procurement systems are stronger in Ireland (0.69) than in Finland (0.57) and above average (0.54).
  • Regulation scores are one area where Ireland substantially underperforms the group average (see chart below).
  • Finally, Ireland performs well in Tax Administration.
Focusing on just the areas of major underperformance, here are summary charts for the five categories in which Ireland's civil service falls close to or below the group averages: 




Ireland's underperformance in Digital Services, Openness and Regulation are especially worrying, as these categories should be closely tied to the presence of major ICT leaders in Ireland. This presence has commonly been cited by the Irish officials as a source of technological modernisation of the Irish economy, giving Ireland an alleged competitive edge over the more traditionally-focused economies in terms of adoption, deployment and utilisation of digital services, data analytics, data intensification of decision making etc. If these claims are genuinely descriptive of the Irish reality (a massive 'if'), there is a puzzling lack of transmission of the technological capital intensification of the Irish economy to the civil service in the country. 

For all it caveats, the data presented by the study is interesting and points to a number of areas where Irish civil service and public sector can deliver some gains in efficiency and quality of services delivery. 

Friday, July 26, 2013

26/7/2013: Forfas Report 2012: A Handy Guide to 'Egg-Face' Collision


Ireland has been described as a 'Knowledge Economy", a science and R&D intensive economy, and island of Scholars (yes, while ago we also allegedly had saints). We have enough science development policy 'platforms' to fill TCD's Long Room. And we do spend some dish on funding science.

One of the organisations, responsible for shaping policy and assessing effectiveness of all of these and other 'platforms' is Forfas - a state body in charge of economic policy supports. You can read all the glorious descriptions of what Forfas does here: http://static.rasset.ie/documents/news/forfas-annual-report-2012.pdf

And this week, RTE reported the following nice stats about this beacon of knowledge and research (full article here: http://www.rte.ie/news/2013/0724/464489-forfas-pension/?goback=%2Egde_2825341_member_260797418)

  • "The pension scheme at State enterprise body Forfas has a net deficit of almost €1.2 billion" (to be more precise: €1,187,674,000 - up 22% from €972,389,000 in 2011). Note: "Forfas administers the pensions of a number of agencies including Forfas, Enterprise Ireland, IDA Ireland, Science Foundation Ireland and the predecessors of those agencies."
  • "The report also states that 78% of last year's €51.4m Oireachtas grant to Forfas went to pay pensions - with just 22% spent on policy activities, corporate and shared services."
  • "The cost of payments to pensioners rose from by over 23% from €35.3m in 2011 to just under €43.5m last year."
  • But wait, there's more: "'non-effective expenditure' of €1.4m relating to rents for unoccupied office space.

On top of the figures highlighted in the RTE article, here are the actual breakdowns from the annual report:

  • EUR79.052mln was total income received by Forfas from all sources in 2012, down on EUR79.229mln in 2011.
  • Pensions spending was EUR61.372mln in 2012 or 77.63% of total income. In 2011 the same was EUR60.424 or 76.27%.

So: EUR43.5m on pensions, EUR1.4m on wasted rent, our of EUR51.4m grant means that Forfas has managed to spend ca EUR44.9m from EUR51.4m on… err… being a well-housed pension administrator. Less than 12.65% of the organisation grant went to fund its activities.

Seriously, folks, this does not give one much confidence in getting 'value for money'…

Updated: A comment from a senior science body head in Ireland: "I was gobsmacked to see this figure. I wonder how much of the country's so-called €500m 'science' budget goes on pensions? This is not to begrudge retired public servants their entitlements, but we should be transparent about what we spend on science & what we spend on other things."

Saturday, January 7, 2012

7/1/2012: Irish Exchequer Results 2011 - Expenditure


In the previous post I looked at the tax revenues side of the Exchequer figures for 2011. The core conclusions emerging from that analysis was that:

Irish Exchequer tax receipts did not perform well in 2011 compared to both 2010 and the target, with most of the improvement (some 80%) accounted for by reclassification of the Health Levy as tax revenue and addition of the temporary, extra-Budget 2011 Pensions Levy.

Irish Exchequer tax revenues for 2011 cannot be interpreted as being indicative of any serious improvement. Factoring in Pensions Levy and delayed receipts (Corporation Tax receipts for December carried over into 2012), overall Exchequer revenue fell 3.1% short of the target set in Budget 2011, not 2.5% claimed by the Department of Finance.

The above shortfall amounts to 0.66% of the expected 2011 GDP and 0.81% of our expected GNP and comes after significant increases in taxation burden passed in the Budget 2011, suggesting that the economy’s capacity to generate tax revenues based on the current structure of taxation is exhausted.


Subsequent posts on the topic of Exchequer balance will focus on overall balance, capital spending dynamics and relative distribution of tax burdens. This post focuses on the expenditure side of the Exchequer balance.

In general, there are good reasons as to why discussion of the expenditure side of the Exchequer balance is a largely useless exercise, rendered such by:
-       Constant re-alignment and renaming of departments, and
-        Changes in the departmental revenues (as in the case with the Health Levy reclassification) impacting the Net Voted Expenditure on Health

Here’s a good post on the above caveats from Dr Seamus Coffey which is worth a read.


So let’s consider some of the higher level figures.

Overall Net Voted Expenditure for 2011 came in at €45.711 billion, or €723 million (-1.56%) below 2010 levels and with a savings of €3.602 billion (-7.3%) on 2008. The target for 2011 expenditure was set at €46.022 billion and the end outrun implies that the Government has under-spent the target by €311 million. Note: I am referencing the original Budget 2011 target, as referenced, for example, in End-June 2011 - Analysis of Net Voted Expenditure. The Department for Finance reference figure for the annual 2011 target is €46.151 billion or €129 million ahead of the original estimate. This discrepancy is reflected in part in the capital carryover figures for 2010-2011 and 2011-2012.



Year on year, 2011 marks the third year of declining cuts. In 2009 yoy spending fell €2.150 billion, in 2010 it declined by €0.730 billion and in 2011 the drop was €0.723 billion. In proportional terms, expenditure declined 4.56% in 2009, 1.57% in 2010 and 1.58% in 2011. Cumulated net expenditure ‘savings’ since 2008 are now standing at a miserly €3.602 billion. Given that over the same period we accumulated €81.017 billion of deficits clearly shows the inadequate extent of cost reductions in the public services. Whichever way you spin it, to cover just ½ of already accumulated deficits out of cost savings achieved so far would take decades, and that before we factor in interest payments and the fact that much of the ‘savings’ delivered to-date comes out of temporary cuts to capital spending. More on this in the forthcoming analysis of capital and current spending.

Now, since we cannot clearly de-alienate actual spending, let us at the very least consider the spending priorities. These have changed over the years and changed in the direction that, while inevitable in the current crisis, is worrisome nonetheless.


Please keep in mind that although I did try to adjust as much as possible for changes in departments compositions, the data below is not fully reflective of these. Nonetheless, it does present some interesting changes in the overall spending dynamics.

As shown above,
-       Agriculture, Food and the Marine net voted spending constituted 3.36% of the total spending in 2008. This now has fallen to 2.28%.
-       Tourism, Culture and Sport accounted for 1.43% of the total spending in 2008 and is now down to 0.60%.
-       Communications, Energy and Natural Resources share actually rose from 0.54% in 2008 to 0.55% in 2011.
-       Defence saw a relatively shallow decline from 2.16% in 2008 to 1.93% in 2011.
-       Education and Skills – the third highest spending department in 2008 and 2011 – remained relatively static with 18.31% of total spending in 2008 and 18.07% in 2011.
-       Jobs, Enterprise and Innovation share of total spending fell from 2.94% in 2008 to 1.73% in 2011.
-       Environment, Community and Local Government spending fell from 6.41% in 2008 to 3.39% in 2011 – the drop that largely reflects changes in the departmental composition.
-       Finance share of spending declined from 2.83% in 2008 to 0.75% in 2011 – a dramatic fall.
-       Foreign affairs and Trade, despite gaining a new function of Trade have seen their share of spending decline from 1.99% in 2008 to 1.51% in 2011.
-       Health – the largest spender in 2008 at 27.45% dropped to the second place in spending distribution with 28.25% in 2011 despite having lost a number of functions. Adding back Children function to the DofH, the department spending share rose to 28.7% in 2011.
-       Justice and Equality accounted for 5.25% in 2008 and this dropped to 4.84% in 2011.
-       Social Protection rose from being the second highest spending department in 2008 with 19.06% (virtually identical share to that of Education) to the first highest spending department in 2011 with 29.16%.
-       Public Expenditure and Reform – a new department that, at least in my opinion is failing to show much value for money so far – has managed to rake in spending amounting to 1.71% of total net voted expenditure in 2011 – higher spending priority than Foreign Affairs and Trade, almost identical priority to Jobs, Enterprise and Innovation, more than double the spending priority of the Department of Finance. Let us presume - for a moment - that the Department has two important, related, but not fully coincident functions: bring down current spending (since bringing down capital spending is no-brainer) and produce longer-term reforms of public services (which is not all about cuts, of course). Given the numbers achieved to-date - see forthcoming post on capital and current expenditure reductions - one should have serious questions about the new department value for money.
-       Taoiseach group saw its spending priority virtually unchanged over the years, declining marginally from 0.38% in 2008 to 0.37% in 2011.
-       Transport – the department with significant compositional changes – has seen its spending share decline from 6.47% in 2008 to 4.18% in 2011.


So overall, top 3 departments accounted for 64.83% of total net voted spending in 2008 and this figure rose to 75.48% in 2011. The rate of increase in these expenditure shares has accelerated over the years. Year on year, share of the three top spending departments in overall expenditure rose 2.97 percentage points in 2008-2009, 3.80 percentage points in 2009-2010 and 3.89 percentage points in 2010-2011. Once Children function is added back to Health, the rate of increase in 2010-2011 jumps to 4.34 percentage points.

Top 4th and 5th ranked departments (Justice and Equality and Transport) saw their combined share of spending declining from 11.71% in 2008 to 9.02% in 2011. This largely reflects changes in composition of the Department of Transport.

Together, Social Protection, Health and Children accounted for 46.51% of the spending in 2008 and this now is up at 57.88% in 2011. In other words, almost €6 per every €10 spent by the state goes to finance the two functions that constitute in traditional nomenclature social welfare benefits and social benefits (note that private spending on health is netted out via departmental receipts in the net expenditure figures). Education accounts for roughly the same share – ca 18% of total spend – in 2011 as in 2008. Economic sectors departments (other than Transport) used to account for 6.84% of the total spend in 2008 and this is now down to 4.56% in 2011.

In short, the priority of the Government spending over the years of the crisis has shifted firmly away from supporting economy’s productive capacity and delivering structural subsidies to ‘social and environmental pillars’, to serving social welfare functions and preserving as much as possible public health spending. It is worth noting that the latter, of course, has been achieved by shifting more costs burden onto the shoulders of health insurance purchasers.