Page 15 - Linkline Summer 2016

Capital expenditure by the State will only have a positive impact on the economy and on the quality of public services if it is invested in the right projects and managed in the right way. Having the Public Spend- ing Code, produced by the Depart- ment of Public Expenditure and Re- form, in place is very important. It provides a comprehensive and uni- form approach for project apprais- al and evaluation by all State bodies that are charged with delivering pro- jects – see Box 2.
Table 1: Exchequer Capital Envelope, 2016 - 2021 (issued in September 2015)
Figures in € mn.
2016
2017
2018
2019
2020
2021
Total
Transport, Tourism & Sport
1039
1015
1167
1238
1607
2000
8066
Employment, Community & Local Govt.
539
623
709
685
700
700
3956
Education & Skills
545
599
623
654
700
700
3821
Health
414
454
473
550
570
600
3061
Jobs, Enterprise & Innovation
495
525
490
500
500
500
3010
Agriculture, Food and the Marine
217
208
208
208
208
208
1257
Other Departments
551
546
560
765
715
692
3829
TOTAL
3800
3970
4230
4600
5000
5400
27000
However, a Public Spending Code
of itself is not suf cient. It is also essential that individu- al public investment projects are carefully planned and appraised to ensure that the business cases are robust and that the right mix of projects are prioritised. All ap- praisal stages for aspiring projects have to be satisfac- torily passed, and nal approval obtained, before any contract is placed or public money drawn down. Not all projects will pass the evaluation tests. Such projects should be rejected. The Investment Plan published last September pointed out – “Where necessary, Depart- ments and State Agencies should be prepared at any stage, despite costs having been incurred (in apprais- ing, planning and developing a project), to abandon a programme or project if continuation would not repre- sent value for money”. Future investment pans should continue to include this structure.
about the status of investment projects. In particular, there should be transparency as regards the results of cost-bene ts analyses required for major projects.
SOME OBSERVATIONS
Is more required?
A useful addition to the current investment process would be an independent project review committee, which would ensure that there is no subjective bias in the evaluations being undertaken by line Departments and that projects are advanced according to a planned timetable. Another function of such a review process would be oversight of training programmes for public of cials in the areas of project evaluation and manage- ment techniques. It would also be very useful if the com- mittee were publish information on an on-going basis,
Conclusion
The recent European Commission Working Document made a strong case for Government raising the levels of public investment, especially in transport infrastructure, over the coming years. In addition, it is important that a robust appraisal system continues to be in place to en- sure that all investment proposals meet the criteria of consistency with the strategic goals of government. The greater the investment, the more robust the assessment must be. If projects fail to meet the evaluation tests that have been set, they should be rejected.
Tom Ferris is a consultant economist. He was Pres- ident of the CIT and is formerly the Department of Transport’s Senior Economist.
[1] EUROPEAN COMMISSION STAFF WORKING DOCUMENT, Country Report Ireland 2016, 26 February 2016 http://ec.europa. eu/ireland/press_of ce/news_of_the_day/european_commission_ country_report_for_ireland_en.htm
One way of ensuring greater transparency is to have a central government website, similar to the one for the Peer Reviews of Information and Communications Tech- nology (ICT) Projects - www.peerreview.gov.ie Such a central website would make cost-bene t analyses more widely available; ensuring that the lessons of experi- ences are learned, communicated, and applied when assessing new proposals. The website might be best managed by the Department of Public Expenditure and Reform. However, speci c location is not the critical is- sue. Rather it is a matter of having a ‘one-stop-website’ so that those wishing to study models of completed cost-bene t analyses can easily nd them.
The publication of investment project information on an on-going basis would ‘spread the message’ about cost-bene t analyses highlighting the basis upon which investment decisions are taken for projects in the pub- lic sector. Of course, the real test comes when there is a ‘look-back’ on completed projects to see how actual costs and bene ts measure-up against the original fore- casts. Such outputs and outcomes need to be shared with the public, as it is essential to demonstrate that pub- lic sector projects do in fact bene t the State’s citizens and facilitate socio-economic growth and development.
Some Key Features of the Public Spending Code
The Code contains:
• Rules, procedures and guidance to ensure that ex- penditure appraisal and value-for-money standards are upheld across Public Service.
• Guidance on conducting economic appraisal and prescribes updated values for evaluation parame- ters to assist practitioners in completing robust ap- praisals.
• Centrally set values for technical parameters such as the discount rate, the shadow price of public funds, and the shadow price of labour.
Source: Public Spending Code, Department of Public Ex- penditure & Reform. Http://publicspendingcode.per.gov.ie/
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EUROPEAN INVESTMENT