I ask everyone to turn off all mobile phones and devices or put them on silent.

Before we begin, I wish to explain some limitations to parliamentary privilege and the practice of the Houses as regards references witnesses may make to other persons in their evidence. Witnesses are protected by absolute privilege in respect of the presentations they make to the committee. This means that they have an absolute defence against any defamation action for anything they say during the meeting. However, they are expected not to abuse this privilege. It is my duty in the Chair to ensure that it is not abused. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction.

I wish to advise members of the constitutional requirements that they must be physically present within the confines of the Leinster House complex in order to participate in public meetings. In this regard, I ask any member partaking via MS Teams to confirm, prior to making their contribution to the meeting, that they are on the grounds of the Leinster House campus. Members are reminded of the long-standing parliamentary practice to the effect that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, I will direct them to discontinue their remarks. It is imperative that they comply with any such direction.

The purpose of this engagement is to discuss spending overruns, existing levels of service and the Supplementary Estimates. From the Department of Public Expenditure, Infrastructure, Public Service Reform and Digitalisation, I welcome Mr. Barry O’Brien, assistant secretary, expenditure policy, and Ms Niamh Callaghan and Ms Jessica Lawless, principal officers. The committee welcomes the opportunity to engage with them and I thank them for being here today.

I invite Mr. O’Brien to make his opening statement.

I thank the committee for invitation here today. By way of introduction, I am the assistant secretary general within the Department with responsibility for the expenditure policy division. I am joined today by Ms Callaghan, principal officer of the medium-term expenditure policy unit, and Ms Lawless, principal officer of the short-term expenditure policy unit.

The expenditure policy division has responsibility for developing and monitoring overall expenditure policy in line with Government objectives and agreed fiscal strategy, including the annual Estimates, and the medium-term expenditure framework. This includes leveraging our public expenditure to build the resilience of our economy and society and supporting transformation across the public service through public expenditure management.

As part of this opening statement, I would like to address the topics that we have been invited to discuss today, including existing levels of service, ELS, spending overruns and the Supplementary Estimates process, but first, I will give an overview of the role of the Department of public expenditure.

The Department plays a key role in developing budgetary parameters and monitoring overall expenditure in line with the objectives of the Government and agreed fiscal policy. It works closely with other Departments in the context of the whole-of-year budget process, culminating in expenditure allocations being agreed by the Dáil as part of the annual Estimates process.

The Department also develops robust guidance, codes of practice and circulars underpinned by legislation and informed by best practice in the pursuit of value for money. Recent developments in this space include the infrastructure guidelines and Circular 18/2025 on value for money obligations, which were published by the Department last year. Achieving value for money must be sought at all stages of policy formation and is the responsibility of every Minister, public servant and civil servant within all Departments. These tools are developed to assist Departments, which hold primary responsibility for managing expenditure in line with the agreed allocations and to deliver value for money. It is the responsibility of the Accounting Officer for each Department to ensure that they manage expenditure sustainably and in accordance with this allocation.

I will now explain why the approach to the presentation of this year’s budget package differs from previous years and, therefore, cannot be compared on a like-for-like basis. The information is no longer available in the previous format as the budget estimates for 2026 have been constructed in a different way from previous years. This new approach was undertaken to better reflect total expenditure, where this funding is being invested and what is being delivered for our growing population. This approach places a greater emphasis on reform, efficiency and ensuring value for money is at the centre of Government decision-making.

The focus of the Department has been on informing a strategic approach to medium-term expenditure planning. The Department undertook extensive analytical work for budget 2026 to assess total public expenditure to inform critical strategic policy statements including the review of the national development plan and the medium-term expenditure framework. The medium-term expenditure framework was published last September. This is a multiyear public expenditure planning exercise. The framework was developed using a whole-of-budget approach, which places a strong emphasis on total expenditure, linking investment to improved outcomes and prioritising value for money. To inform the development of the framework, the Department considered past trends and future options for the development of key policies across the largest expenditure policy areas, including the critical areas of health, social protection, infrastructure and the public sector workforce, delivering key services for our growing population.

This analysis underpinned resource allocation decisions for the period to 2030 to progress a range of current and capital investments. This was set out in the medium-term fiscal and structural plan, which was agreed by Government and published in December 2025. Voted expenditure is projected to increase to €147.3 billion in 2030. This represents an average growth rate of 6% per annum.

Moving on, I would like to discuss Supplementary Estimates. A Supplementary Estimate, as members know, is a request brought to the Dáil to either reallocate funding within the Vote, typically between programmes and subheads, without necessarily increasing the Vote’s overall total, which is known as a technical or token Supplementary Estimate, or to provide additional money for a Vote where the amount in the original approved Estimate is not sufficient, which is known as a substantive Supplementary Estimate.

A number of developments can occur throughout the whole-of-year budget process resulting in actual expenditure levels differing from the amounts initially set out in the Revised Estimates. These developments can include new decisions that require additional funding, responses to unexpected events, and higher demand for services or supports than previously forecast. Additional funding is provided through the Further Revised Estimates or Supplementary Estimates processes. The process for Supplementary Estimates is outlined in the public financial procedures. The difference between Revised Estimates allocations and final outturns for each Vote is set out in the Report on the Accounts of the Public Services, which is published by the Comptroller and Auditor General each year.

I wish to highlight that over the period 2022 to 2024, the total annual average of Supplementary Estimates amounted to an average of €7.1 billion. This was, in part, due to responses to the Covid-19 pandemic, the war in Ukraine and cost-of-living packages. In 2025, the total level of Supplementary Estimates was €2.9 billion. Extensive engagement occurs between Vote sections in the Department and their respective Departments. Vote sections conduct ongoing analysis of the cost drivers at departmental level throughout the year. This analysis feeds into budget negotiations that take place between Vote sections in the Department of public expenditure and reform and other Departments on all key budget issues. The Estimates, which are agreed by Government and presented to the Dáil, provide allocations for each Department for the following year.

To conclude, the elements I have described form part of the whole-of-year budget process. In addition to these, the budget process also includes ongoing monitoring of expenditure and the monthly publication of the Fiscal Monitor, the publication of the annual progress report, the publication of the summer economic statement, mid-year publications, which last year included the medium-term expenditure framework and the national development plan, the expenditure report published on budget day, which provides details of voted expenditure allocations for each Department, and the Revised Estimates Volume, which provides a greater level of detail than the expenditure report, including subhead-level allocations. It is the Revised Estimates that are presented to the Dáil each year for approval. As part of the whole-of-year budget process, there is a review of expenditure and policy outcomes. The public service performance report provides a range of expenditure outputs and impact metrics across the total level of public expenditure.

I thank the committee again for its invitation and look forward to engaging on the topics I have outlined, or on any questions the committee may have.

I thank Mr. O'Brien. I will open it up to members to ask questions, and I will start with Deputy O'Callaghan.

Gabhaim buíochas leis an Leas-Chathaoirleach, agus cuirim fáilte roimh na finnéithe chuig an coiste. Ar dtús, ba mhaith liom ceist a chur faoi róchaiteachas san oideachas. Using the overruns in education as an example, I want to ask some questions. Will the witnesses give us information about why those overruns are occurring? This is happening each year. Why is it happening every year? Why is a sufficient budget not being set each year to meet the needs that are clearly there? How is this going to be resolved? What is the role of the Department of public expenditure and reform in resolving this? What approach is it taking? The Minister has talked about other Departments being levied. Is a levy on other Departments being worked on or is that being withdrawn? Will the witnesses please give us information around this?

I thank the Deputy for the question. There are a number of elements. First, the Government set out a medium-term fiscal strategy, which sets out the expenditure ceilings for the next five years, out to 2030. Those ceilings were agreed last December. In respect of Supplementary Estimates, which I referred to in the statement, there are things that happen during the year that may affect the level of resources a Department may need. Our Department engages closely with all Departments. We publish material monthly in regard to the level of spending and we also engage with the Departments in respect of what they require.

In regard to the Department of education specifically and the overall substantial investment that has been provided to the Department of education in recent years, between 2021 and 2025 expenditure has increased by €3.5 billion or 37%, from €9.3 billion to €12.7 billion in 2025. The Revised Estimates Volume, REV, 2026 allocation is €13.5 billion. That was an increase of 10% last year. The Government met this morning. There was a decision to allocate an additional €646 million to the Department of education. My understanding is that mostly relates to special education needs and some issues in relation to school transport.

Regarding the levy piece the Deputy talked about, the Government has decided to apply a levy of €446 million to all Departments, excluding the Department of education. The percentage rate applied varies across Departments, as some areas differ from others. I think there is a rate of somewhere between 0.02% and 1.4% applied across Departments.

That was decided this morning.

Yes. In regard to the overall levels, we will be writing to Departments in the coming days once we get details of the final Government decision, effectively letting them know. The levy applies in 2027. The 2026 allocations, as agreed by the Dáil, are effectively staying in place. What we are doing is asking Departments to look at efficiencies in respect of the 2027 allocation and we will be engaging with the Departments in the context of the overall budgetary process. I would point out that the 2027 ceiling will be increasing to €125.5 billion next year, which is a substantial increase on the ceiling that increased this morning from €117.7 billion to €118.5 billion. Next year, we will have Departments, in the context of the budget process, engaging with the Department of public expenditure.

They will be looking at efficiencies and reforms in the context of the overall budgetary process, and the budget process will then decide on what the allocations for the relevant Departments will be in the normal way.

Looking at this purely from a budgetary point of view - there are lots of other ways to look at it because it is very important that there is sufficient funding in place for children with additional needs in terms of education - the overspend in the Department of education this year, or meeting the unforeseen need or whatever way we want to put it, is being met out of next year's allocations. The 2026 unanticipated expenditure will effectively be backfilled from 2027 and contributions from all other Departments. That is what the Department of Public Expenditure, Infrastructure, Public Service Reform and Digitalisation is doing. Does that not just put 2027 until additional pressure?

The levy will require a moderation in expenditure across other Departments going into 2027 and this in line with international practice whereby efficiencies and reforms are sought ahead of the next budgetary process. This is what happens in a lot of other countries. It enables Departments to have time to plan how they can achieve those efficiencies going forward.

There has been the overspend - another way of putting it is the underallocation of the necessary resources - of €580 million last year and over €1 billion the year before. This is an ongoing issue every year. From the Department of public expenditure's engagement with the Department of education, is there anything to suggest that this will not happen in 2027? Will there be another €600 million overspend that will be pushed into levies on all the other Departments in 2028? What is there to suggest that will not happen?

Regarding the level of investment, there are things that have happened since the last budget in terms of special needs education, and those demands that have obviously arisen. We are looking at engaging with the Department of education. We have set up an expenditure budget oversight group to closely monitor the spend and engage with the Department to make sure that those priority investments are delivered effectively where it has been agreed.

I appreciate the frankness and transparency that the witnesses have brought to the committee by informing it of the Government's decision. I imagine that a memo was in preparation for quite some time. I am not aware of that matter being briefed to the media. It may very well have been, but I certainly have not seen it, so I appreciate the witnesses' frankness and the transparency they are bringing to the committee. It is important that we understand why this happened and how this cost overrun is being managed.

The witnesses are essentially saying that the Department of education is operating under special measures. There is now a degree of oversight from the Department of public expenditure that has not been experienced in a number of years by any Department with regard to its day-to-day and, probably, capital spending approaches and how it is handling its budget.

Correct me if I am wrong, but we have anticipated spending increases next year, as laid out in the report published in December. While I accept that it is a political decision in the first instance, there could very well be less spending on other services next year because of the cost overruns that the Minister for education is responsible for. Will the witnesses put on the record the information regarding where precisely those cost overruns have emerged? It would be useful if they could do so.

Mr. O'Brien said that the €646 million was divided between the requirement to allocate additional resources for special education and what he termed the "school transport issue". Could the committee get a little more detail on what the breakdown is? What are the reasons those two particular areas require this additional expenditure? To the best of my knowledge, the only information that has been in the public domain to date relating to the additional resources that have been required around special education is the reported €19 million to get the Government out of a hole on special needs assistants, SNAs. Do the witnesses have more detail on those cost overruns that they are able to share with the committee? What does that €646 million comprise of? It would be useful for the committee members if the witnesses used the opportunity to put those details on the record.

The only pieces of information I have with me are effectively the two issues relating to special needs, where the Department of education is talking about additional staffing to support a workforce of 114,500 on a permanent basis. Those are whole-time equivalent figures. The Department of education is also talking about supports for the school transport scheme.

What does the Department of education mean by that?

Which piece is the Deputy referring to?

The school transport scheme.

That is as much as I have.

This is early in the year, and it is a significant failing of the Minister for education and the Department of education that there is such a significant cost overrun at this point in time. It is not what we might describe as a demand-led Department. It is not the Department of Health or the Department of Social Protection, and the fact that it does not have a handle on its annual budget is quite extraordinary.

To the best of my recollection, the bulk of the annual voted expenditure of the Department of education is on salaries. We can anticipate the number of teachers. We know the number of teachers, SNAs and other school support staff and so on in the system. We know the number of children. We can anticipate that year on year, so I am confused as to how the Department of education gets this so badly wrong every year. It is concerning. It is only April.

Does the Department of public expenditure anticipate that other Departments will experience significant cost overruns this year? Following on from that, does the Department anticipate that there will potentially be any substantial Supplementary Estimates from line Departments? The approach taken by the Government today essentially negotiated next year's budget to cater for and facilitate that overrun in the Department of education, which may see other Departments, like health, social protection and so on, lose money. What approach do the witnesses think will be taken next year? Will Supplementary Estimates be employed or will it be this levy that is being referred to? Ministers taking individual responsibility is what has to happen where there are cost overruns. Do the witnesses anticipate that there will be any Supplementary Estimates? Are there any other Departments that may be in similar difficulties at this point in time?

There are a couple of points, and I will ask Ms Lawless to come in on the state of play in relation to the spending across other Departments, as we see it, at this point in the year. I do not think that the Revised Estimate has been taken for education. I think it is the one outstanding Estimate, so that will obviously be due to be taken in the coming weeks and interrogated by the relevant committee.

I might ask Ms Lawless to come in on where we are with the overall spending position.

The allocation for 2026 as set out in the REV was €117.8 million, as Mr. O'Brien mentioned. As of this morning, that has increased to €118.5 million. In terms of where we were with expenditure at the end of March, which was the end of the first quarter, gross voted expenditure was €26.4 billion. This was €1.6 billion, or 6.4%, higher than the same period last year. It reflected budget 2026 decisions being implemented and increased capital investment.

At an overall level, the end-of-March spending was broadly in line with the spending plans submitted by Departments, with the aggregate variance from profiles showing an underspend of about 1.6%. To break it down into current, current spending was €23.6 billion, which is an increase of €1.4 billion, or 6.2%, on the end of March last year.

At this stage of the game, it is too early to determine the likely level of Supplementary Estimates that will be required later in the year. The increases that we are seeing so far reflect measures that were introduced as part of budget 2026 around social protection rate increases, front-line health, disability services and school places.

Compared with profile, current spending is about 0.9% behind the plan set out by Departments. The majority of Vote groups are under profile. The largest drivers of current expenditure make up about 70% of current expenditure at three Departments, the Departments of Social Protection, Health and education.

Capital spending at the end of March was €2.7 billion. Record levels of capital funding have been provided in 2026 alongside the major programme of reform being delivered through the accelerating infrastructure action plan. At the end of quarter 1, capital spending shows an increase of €200 million, or 8%, over the same period last year. Capital spending would tend to ramp up more as the year progresses, with highest spending levels in capital seen in quarter 4. Compared with profile, capital spending is 7.2%, or about €200 million, behind profile. Health is one of the main areas that is over profile on capital spending, with spending in all other areas lower than planned for the end of March. The main drivers of capital spending are again made up by three Departments - the Department of housing, which constitutes 41% of spending, and the Departments of Transport and education.

Deputy Nash can come back in again if he wants.

No, that is okay.

Just to clarify, because the Government has now allocated an extra €640 million next year to the Department of education for this year, there will be a levy on all other Departments next year. Is that what Ms Lawless has just told us? That is a decision that was taken this morning.

Yes.

Okay, so there will be less money for housing next year, because there is more money for special needs this year. Is that the case?

There are a couple of points. The levy is €446 million.

Across all Departments in 2027.

Except the Department of education.

It is €446 million in 2027.

The total ceiling for next year, 2027, is increasing from €118.5 billion this year to €125.5 billion. The total amount to be allocated next year is effectively €7 billion on top of this year's ceiling.

Is that more or less for existing service levels?

The way we present the numbers, and we changed this in the last budget, is that we effectively moved away from this idea of existing service levels. What we are trying to get to is a focus on reforms and efficiencies.

If Mr. O'Brien does not mind me saying so, I doubt those who need the services would see it that way. A lot of the increase in the amount of money available, the increase from €118.5 billion to €125.5 billion from this year to next year, or maybe even all of it that would account for demographics and ensuring service levels do not fall. Is that right?

Previously, we had an existing levels of service, ELS, model of presentation and when we looked at that, it was not being consistently defined or applied across Departments or over time. It embedded efficiencies into the system by building previous overruns into the base. It focused attention on a very small marginal portion of the budget rather than the total level of resources we are investing across the country and it provided little insight into the outputs, outcomes or value for money the Deputy is talking about. It did not support a meaningful trade-off analysis between or within sectors. When we presented the budget last year, we presented a new approach to reflect what is being delivered, not just how much is being spent. We tried to emphasise reform and efficiency, we centred on policy impact, service levels and population need and we were trying to improve the transparency on the composition of the total expenditure.

Sure, but if Mr. O'Brien does not mind me saying so, it is difficult to see how there being a levy and less money available in housing next year will do anything other than curtail investment in addressing the housing crisis.

Just to clarify, in designing the levy the priority has been to protect a number of essential areas. That includes safeguarding capital spending to address our infrastructure gaps and to ensure we can continue to deliver the national development plan, preserving social protection and social housing supports to ensure a strong social safety net for those who need it, and minimising the impact on front-line services, particularly in the areas of health, justice and disability. The levy is designed to protect certain areas and ensure efficiencies can be delivered in other areas across the totality of the Government's expenditure.

I get it. Still, squaring that circle smacks a little bit of austerity to me. What about the billion euro contingency fund? Why is the extra money that is going to education not coming out of the contingency fund, rather than coming out of the levies that will be imposed on other Departments next year?

The overall expenditure ceiling for 2026 includes a €1 billion provision for a contingency reserve to address potential expenditure on events and in-year expenditure pressures. That is in line with international best practice and with what the IMF has recommended.

It is to prevent more of these supplementary budgets happening all of the time.

Yes. Costs were allocated from the contingency reserve in 2026. The EU Presidency, which is €300 million, and an additional payday of €500 million were effectively funded from the reserve as part of the Revised Estimates allocation. The Department of education has received €200 million from the contingency and the remainder is applied to the levy.

So, €200 million has come from the contingency and the rest has come from the levy. Am I right in saying the money that is coming in from the increase in the corporation tax rate from 12.5% to 15% has turned out, despite what the Government said - some of us said different - to be a big boon? The Government predicted that increasing the corporation tax rate would lead to less corporation tax coming in. Some of us, and the Irish Fiscal Advisory Council, said it would lead to more. There is about €5 billion extra coming in now, is there not? The Department was predicting it would be minus €2 billion but actually it looks like it will be plus €3 billion as a result of raising the corporation tax level to 15%. Does that not mean we have a much bigger budget surplus, but the Government has decided to levy Departments next year to cover additional spending in education rather than actually use some of a surplus it did not even predict? Am I right? The Government did not predict this but it is now forecast.

Obviously, tax and revenue forecasts are matters for the Department of Finance. What we do have is Government policy that has clearly articulated the Government's ceiling over the medium term. That ceiling is due to increase with a moderate level of expenditure. Growth effectively will moderate over the medium term but there will be substantial increases. The figure I have used that it will grow from €118.5 billion this year to €125.5 billion next year, even with the increase in the ceiling for the Department of education.

I know I am slightly over time. Will Mr. O'Brien remind me what the projected surplus for this year is?

I do not have those figures.

This year it is €5 billion, I think.

That was the announcement, I think.

It was a €6 billion to €9 billion surplus.

It was €5.8 billion. I think it has been increased to €9 billion.

The surplus does not include money from PRSI, property tax and various things. Is that right?

The Deputy would have to ask the Department of Finance.

Okay. It is more for that Department.

Yes.

I thank the witnesses for coming before the committee. When groups come before committees we try to assess where everything fits together. As in the previous exchange, we see the various roles and responsibilities. I want to clarify whether I am understanding this correctly. The Department manages the spending. It checks the spending and makes sure everybody is spending within the constraints of their budgets. Is that a fair comment?

It is a great question. One of the key-----

I have never asked a good question in my life.

A key challenge is the role and responsibilities the actors have in our system. We play a key role in developing the overall budgetary parameters and monitoring the overall expenditure in line with the objectives of the Government and the fiscal policy.

I am a member of the Committee of Public Accounts and I had the good fortune a few weeks ago of looking at the numbers for the Department of education for 2024. It was €1.1 billion over budget at the time. It was €11.3 billion versus-----

Was this last year?

Yes, it was 2024. It was €1 billion over last year and this year it is also projected to be over budget. I asked about this and why it was missing the numbers so significantly. It was across every phase. It was more than 10% across the board. Why do we keep missing this? I get the issue regarding Ukrainian children, which came up as a reason at the Committee of Public Accounts.. When Ukrainian children come in, there are significant costs. It was a couple of hundred million overall for the extra teachers. When we multiply the number of teachers for the number of students coming in, we could see an additional cost of a couple of hundred million euros. That was for 2024 but surely all these run rates would be equalised now. Why are we still missing the target?

There are a couple of points. One is that the level of increase in the Department of education for 2026 was 10%. It got a big budget last year, well ahead of what the average was for Departments. That was coming into this year, effectively. In terms of the information we have, there is an issue with special needs education and staffing to deal with that challenge.

Of the €600 million missed, how much is capital? In a way, it is all current and year-to-year expenditure but how much relates to capital infrastructure versus, for example, salaries?

I think it is all current.

It is all salary based.

It is all current expenditure.

So it is a miscalculation.

For 2025 there is current spend of €2.3 billion and capital spend of €1.6 billion.

On the detail, the point I made was the Department of education has not presented its Revised Estimate to the Dáil with the additional allocation in it. When it comes forward we will see. There is no capital as far as I am aware. There are elements of pay and non-pay, and the Department will have to set these out across the various subheads that will be presented to the Dáil.

Will that come through as a mini-budget in itself?

It will come through as an Estimate for the Department.

Which we will have to agree. That is fine; I was not sure of the process. With this, if we have an overspend of €600 million, what about the rest of the Departments? I get that the rest of the Departments will have to pay for this. We have gone through this previously. The rest of the Departments will have to pay for the €600 million overspend by the Department of education, the way it stands. Are there other overruns elsewhere?

At this stage of the year it is a bit too early to say what the final out-turn for any Department might be.

Are there trends?

All I can say is that at the end of March, gross voted current spending is broadly in line with the plans that have been submitted. At the aggregate level our variance from profile shows an underspend of 1.6%.

Is that in health?

No. It is at the aggregate level across all the Votes. We are 1.6% within profile at the end of the first quarter.

Something I am specifically interested in is whether there is a trend in the first quarter on capital spend versus underspend. Mr. O'Brien referenced the fact that a lot of this spend comes in during the latter part of the year. Do we have a number on the trends? With infrastructure, if we have €102 billion to spend over the next four or five years, and offhand I am not sure what the number is to spend in one year but let us imagine it is €20 billion this year, where are we trending on our capital spend in quarter one?

At this stage, in quarter one, we have spent €2.7 billion of the capital allocation for 2026, which is €19 billion.

What was the target for this stage?

I do not have the absolute amount but we are 7% behind profile. We are €200 million behind profile.

We plan to spend €19 billion in the year, we have spent €2.7 billion and the projected amount at this stage of the year is €2.9 billion.

Yes. Compared to profile-----

Is there any individual area where that €200 million is missing or is it across the board?

Broadly it is at the aggregate level. If we look at the drivers of capital spending, the three biggest Departments-----

I am looking for the driver of the lack of capital spending.

The three biggest are housing, transport and education. Housing is slightly behind where it is supposed to be at this stage but, again, capital expenditure is more lumpy and we tend to see the trajectory uptick as the year progresses.

At the same time, we start to see trends emerge.

Yes.

Realistically, the current spend is just the €600 million. I will clarify a point because someone else had asked a question and I could not clarify it myself. It is with regard to the health spend. The health overspend is positive on capital and with regard to current it is slightly below. Did somebody reference this?

At the end of the first quarter, health current expenditure is 7.2% up year on year. In terms of its performance against profile, it is 1.1% over profile on current expenditure. It is in or around where we would expect it to be at this stage.

There is always going to be a mismatch. I get that. I thank the witnesses. I know I went into a little bit of detail.

I thank the witnesses for coming before the committee. There was overspend in 2025 of €4 billion and it is projected to be €2 billion for the first five months of this year. Nothing irks the public more than a waste of public money. We have overspends of €1.5 billion on the national children's hospital, €1.4 million on a security hut and €9 million on phone pouches. Does the Department have a list of budget overspends all compiled in one document across all issues, whether health, housing, transport or education? Is there something the witnesses can share with us on this?

We publish a number of things. We have a monthly publication, the Fiscal Monitor, which effectively gives a breakdown of the spend across all Departments on a monthly basis against profile. It has the details Deputy Neville was just speaking about. Certainly, we can provide the committee with the details of the Fiscal Monitor, which will give the level of detail Deputy Guirke wants in terms of a Department-by-Department breakdown of the level of spend against profile in capital and current spending. This will answer Deputy Guirke's question.

My question is more on overspend on all projects that went out to tender and then cost more money. We need to know whether it is overspend or waste. When we deal with the public's money this is an issue that always comes up. We can go back years to see when money was wasted across Departments. There were e-voting machines and the oversized printer. Who is held accountable when this money is overspent or wasted?

The question that Deputy Neville raised around roles and responsibilities is really important in this regard. According to the legal framework that we operate under, the people accountable for voted expenditure in Departments and agencies are the Accounting Officers. It is the responsibility of the Accounting Officer for each Department to ensure that expenditure is managed sustainably and in accordance with the allocation.

Upon appointment, each Accounting Officer, who is generally the Secretary General of the relevant Department, receives a memo outlining his or her role and responsibility in the overall accountability framework for public funds and property. The responsibilities of the Accounting Officer include ensuring that internal audit arrangements and control mechanisms are in place to support financial security and requiring that all financial considerations, including in respect of value for money and efficiencies, are taken into account in the preparation and implementation of policy proposals. Accounting Officers are responsible for bodies under the aegis of their Department, and for ensuring that any expenditure is appropriately sanctioned by the Department of Public Expenditure, Infrastructure, Public Service Reform and Digitalisation. In addition, value for money is the responsibility of every Minister and Department. The overall position is that, at the end of the year, the Comptroller and Auditor General prepares an appropriation account and the relevant Accounting Officer has to appear before the Committee of Public Accounts in respect of the annual audit and the presentation of that account.

I thank Mr. O'Brien. We always seem to have massive State services contracts that cost more than they would in the private sector. More needs to be done to protect the public's money and ensure it is not wasted. Where there is a €2 billion overrun and you are only into the first five months of the year, with other people struggling to make ends meet, you just wonder.

Who decides whether funding within the Vote can be reallocated? I was often involved in some projects in my own constituency where a change would mean it might not be possible to use the money for what it was allocated for. Who decides whether that money can be used on a different project? Is it the Minister?

I refer the Deputy to Circular 18/2025 on value for money. Ms Lawless might take the Deputy through the main points of that, which might help.

In July 2025, the Department published Circular 18/2025, entitled "Value for Money Obligations". It conveyed instructions to Departments and offices with regard to the value for money obligations of all civil and public servants. The paper attached to the circular set out the key mechanisms in place to assist civil and public servants in meeting their value for money obligations. The paper stated that value for money was a duty and a priority and must be at the forefront of all decision-making in all projects using public funds.

The value for money framework identified a number of key actors and roles that fulfilled important duties in ensuring and promoting efficiencies in public expenditure. The Department of public expenditure develops guidance, codes of practice and circulars and issues sanctions to Departments on behalf of the Minister for public expenditure to expend public moneys. Individual public sector bodies and their Accounting Officers hold primary responsibility for ensuring that value for money is achieved by their organisations and that sufficient administrative structures are in place to protect value in spending.

The Office of the Comptroller and Auditor General plays an important role through regular audits of public spending and independently reports on such audits to the Dáil at stated periods defined by law. Such scrutiny of public spending provides independent assurance and further promotes a culture of pursuing value for money and efficiencies across the public service.

The Committee of Public Accounts provides oversight and follow-up on these audits, seeking to ensure value for money in all aspects of public expenditure. It has a pivotal role in holding spending Departments and offices accountable for how public funding has been spent in terms of value for money and sustainability.

That is grand. We need to identify where the overruns are across the board and see whether that money can be saved. Everybody knows that we waste money. That money needs to be accounted for and somebody needs to be held accountable for it. The e-voting machines, mentioned earlier, cost €55 million of the public's money and there has been an overspend of €1.5 billion on the children's hospital. If we do not learn from these, we will do the same with the next hospital or issue that comes up.

I thank the witnesses.

I thank the witnesses for all of the information. I want to focus on two areas. We probably do not really have enough time today to cover them. The first concerns the accuracy of the budget and budgetary process and the second concerns cost control. I will start with the accuracy of our budget.

Could the budget produced in October be more accurate? How could it be improved? For example, is account taken in October of overruns that have happened right up to the date of the budget, to improve accuracy rather than leading to all the supplementary budgeting?

A couple of points arise. The budget documentation is published in October, but it is at quite a high level. The Revised Estimates Volume, published in December, has a huge amount of detail across all of the subhead levels.

And the numbers are a little bit different.

On the numbers, there are many decisions made. Departments must decide where the allocations go across the different subheads.

Is that process as accurate as it should be, or could be?

That is the document that is interrogated by the committee. Each committee, as the Deputy knows, has a Revised Estimate, and that is referred to committee before being voted on in the Dáil. That document is as accurate as possible. It is voted on and that is the final agreed document that is subjected to comparison and audited by the Comptroller and Auditor General the following year.

Does Mr. O'Brien believe the accuracy could be improved in any respect?

I believe the level of accuracy in the Revised Estimates is, following interrogation by the relevant committee, as high as it could be.

As it can be.

Yes.

Okay. On the phrase “value for money”, which Ms Lawless referred to in respect of the publications, how are things working in practice? I am thinking of how things are monitored in a private business. Do officials from all of the Departments sit down at the end of each month and examine what was spent? Do they compare it with the previous year's expenditure or the budget? In a private company, you would look at management accounts, go through every line and see how expenditure compared with what had been budgeted for and what had been spent the preceding year. It involves an overview. Do all of Departments, and all of the subsets of all Departments, go through that financial control process on a monthly basis?

On a monthly basis, Departments provide explanations to us for the level of spending. Where there are variances, in respect of which Ms Lawless mentioned the fiscal monitor, the relevant Vote section within a Department would interrogate them, identify emerging risks and outline mitigating measures to ensure it remains within the budget allocation.

On the wider value for money point, because value for money goes to the core of what our Department is about, all the documentation published over the budget cycle has a focus on value for money. Chapter 3 of the expenditure report relating to budget 2026 covers spending efficiencies and reforms to support value for money. Regarding the Revised Estimates we have just talked about, key performance information on outputs and impacts of each Vote are published, and that goes to the heart of the value for money question.

Mr. O'Brien and this committee are at a very high level in examining figures, but I am more interested in procedures and controls at the coalface such that people with authority to put through purchase orders, but not necessarily Accounting Officers, would have their work monitored on a monthly basis.

It is far too detailed a level for Mr. O'Brien to have any knowledge of that, but is there a culture or process at the day-to-day level in small units of the public service where that person's monthly expenditure is being monitored?

We have talked about the roles and responsibilities. Obviously, all public bodies have to follow frameworks. We have a set of rules in place to support the Accounting Officers in discharging their responsibilities. They include the code of practice for the governance of State bodies, the public financial procedures, the infrastructure guidelines, the public procurement guidelines and arrangements for oversight of digital and IT projects and initiatives. It is the responsibility of the relevant Accounting Officer to ensure their Departments and all the agencies under their auspices comply with that.

Each Department gets a budget. Do they feel like they have to spend that? Is there any kind of psychology of zero-based budgeting where you have to justify everything you spend? I know Mr. O'Brien referred earlier to how they were redoing the process, which appears to be an improvement, and they do not automatically assume that because they spent so much last year, they will spend all of that plus 5% or 7% this year. Do Departments feel they have to spend their allocations? I do not know how you would create an incentive for them not to spend their allocation. Is that culture or psychology still there where you have the budget and spend it before year end. Is it there and could it be improved to eliminate that or reduce that way of thinking?

The chapter I am referring to in budget 2026 asked Departments to outline reforms and efficiencies within them. That is a departure. That did not happen in budget 2025. Departments are required to look at efficiencies on an ongoing basis to ensure that mindset is at the core of what they are doing. We talked about the levy earlier. That will also require Departments to look at efficiencies to deliver that.

Are they doing that? Are they measuring outputs? Mr. O'Brien mentioned how we were below spend in quarter 1 up to the end of March. Does he compare that to outputs so that he can say a spend is below budget because outputs are below budget? Obviously, budgets are all about money but more important are the outputs for the money. It is not just about spend. That should be intricately related to the budget figures. How is that compared to their outputs? I think that should be done on a monthly basis, but is it done at all?

Where the allocation is set out on a subhead basis, that also sets out performance metrics linking outputs with the allocation that has been provided for the year ahead. A retrospective document is published in May, which is the public service performance report. It is a key policy document, and its aim is to improve transparency and accountability for public expenditure. It provides a comprehensive account of how each Department performed against delivery targets set on a programme basis.

How often is that done?

That is an annual report published every May.

It is not done throughout the year.

It is done every year.

My whole point is that you monitor these things on a monthly, or at least a quarterly, basis so that you pick up inefficiencies and where we are running behind. It is too late at the end of the year. That is my view.

On that question, the witnesses might ask individual Departments, or maybe the Department of public sector reform knows how it puts that document together and how it is done. That document is coming out in the next few weeks, so it will be May. Our committee will have to deal with that.

Will the Department remind me whether the workforce of 114,000 whole-time-equivalents for the Department of education is based on the new special needs projections as well as existing stuff? What is that an increase on?

I do not have the details of that. I just have the high-level pieces.

Are they available? Where would I get them?

They will be available when the Revised Estimate is presented to the House. There will be more details about what that expenditure is for.

Is it likely that it is a significant increase in permanent staffing for SNAs and so on?

Yes.

Okay.

The Irish Fiscal Advisory Council has been critical of the Department on a couple of issues. Somebody asked earlier about the monthly reports. Maybe this is not the same thing, but the witnesses might clarify. The council states:

It is hard for the Council to discern what the likely overrun in 2025 will be. Despite requesting the monthly departmental spending profiles on several occasions, the Department of Public Expenditure ... has failed to provide them to the Council. [It says] based on recent trends, current spending could be as much as €0.7 billion higher than forecast in Budget 2026 [which has turned out to be the case]. These post-budget overruns are a fundamental budgetary failing ...

I am interested to hear comments on that. Things may have changed since this was written, but on the horizon for budget forecasts, it stated that the budget 2026 forecasts were the shortest forecasts. For example, for budget 2025, forecasts went out six years and four years for budget 2024. However, we only have one or two years for budget 2026. Will the witnesses comment on that as well?

In December 2025, the medium-term fiscal structural plan was published, which sets out macro and fiscal figures to 2030. That includes the expenditure ceilings that the Irish Fiscal Advisory Council, IFAC, is referring to.

That is since this was said.

Yes. We have also published a medium-term expenditure framework, which fed into the Government deciding those ceilings. It looks at cost drivers across the total amount of expenditure and sets out a scenario analysis looking forward. Subsequent to that feedback, there is now lots of information published out to 2030.

What about the monthly stuff?

On the third working day of each month, the Fiscal Monitor is published, which compares expenditure by Vote group against their profile for the year and their year-on-year position. It provides detail on the additionality year on year and sets out the detail of whether they are within their expected position at that time.

Would Ms Lawless say that IFAC’s criticism is not fair?

That is what we publish in the Fiscal Monitors.

That is fine. I thank the witnesses.

I return to my earlier point. It is this whole area of cost control and monitoring how we are doing versus budget and last year. It is about getting away from this assumption that you must spend. In a private company, you might have things like overtime reports or expense reports by employees. There are detailed examinations of costs based on outputs. Does stuff like that happen or is there a procedure for things like that to be done?

It is the responsibility of each Accounting Officer to ensure that the relevant systems are in place in the relevant Department to have control mechanisms in place to support the overall financial systems in the Department. They are obviously responsible for recording that all financial considerations, including the value for money and efficiencies we have been talking about, are taken into account with regard to the preparation and implementation of policy proposals.

We publish a number of guidelines and there are the public financial procedures that the relevant Accounting Officers are responsible for. That will put the onus on them to monitor and manage their expenditure in a way consistent with the approach I have outlined.

There is no real incentive for them to do that, apart from it being their job.

They are audited by the Comptroller and Auditor General every year. They have to present the Appropriation Account to the Committee of Public Accounts to ensure they are compliant with those circulars and guidelines.

Does Mr. O'Brien have any thoughts on procurement and whether there could be better methods of procurement to reduce costs?

We are not the procurement experts in the Department, but we can certainly get material for the Leas-Chathaoirleach around the procurement issue and things that are being delivered.

That is key to expenditure, controlling it and reducing it.

We have the Office of Government Procurement in the Department. There is expertise there. We can get the Leas-Chathaoirleach more information on that.

Has the idea of zero-based budgeting been considered at all, where all Departments must justify their expenditure from scratch rather than assuming that they get the same next year that they got this year plus a certain percentage? Has that been looked at? Each Department would have to come forward and justify the existing expenditure.

There is a huge level of interrogation of budget lines at a great level of detail. We work closely with Departments in challenging them to ensure that every line is justified. That takes place on an ongoing basis with that whole-year budgetary process.

I mentioned outputs in my previous contribution and that outputs need to be matched to expenditure. I suggest that be covered as practically as possible, to get it done on a monthly basis in order to be able to see where outputs are going. As I said earlier, by the end of the year it is too late. It should be monitored each month and adjusted as it goes along.

On a separate matter, I raise the issue of capital expenditure. I think of Irish Rail, for example, wanting to procure train carriages going into the next five or ten years. One of the issues that is often raised is that State bodies cannot make long-term capital commitments or budgetary adjustments year to year. Clearly they sign contracts that extend much further than one or two years. Is there room for giving more assurance to those State bodies? If they can do long-term capital planning, it means that they can put the infrastructure in place. It means the people they are procuring against can know that these projects are coming down the tracks. We cannot guarantee where the next ten years' budget will be, but we can guarantee it subject to the State being able to finance itself and give more assurance to our State bodies, like Irish Rail, that are involved in large capital infrastructure projects.

The medium-term fiscal structural plan sets out high-level ceilings out to 2030, both current and capital. In relation to capital more specifically, last year, the national development plan was published which sets out departmental ceilings which aims to give certainty to different sectors about their allocation over the next five years. In relation to transport, the Department of Transport has published its sectoral plan, which sets out its investment intentions over that period. There is a level of certainty to allow different sectors to plan out to 2030.

I want to view it from an overall context. I must be careful in how I say this. There is also a narrative that public spending is increasing significantly. Would Ms Callaghan agree with that statement? Are we getting bang for our buck? The Leas-Chathaoirleach was alluding to a similar point. He used the term "zero-based budgeting", but how do we ensure that we are getting value for money?

I will give an overview. Last year we published the medium-term expenditure framework. That set out expenditure trends over the last five years. Total expenditure grew by over 9% over the period 2019 to 2024. In terms of what that is delivering, it highlights some key trends. There were high levels of adequacy in areas such as social protection and health. This has been reinforced over the past number of years with high levels of investment delivering good citizen outcomes. We have also seen a broadening of supports across a range of sectors through-----

We have also seen significant spending on the likes of IPAS accommodation, at €1.2 billion a year. IPAS accommodation has had a billion spend on it. Another billion has been spent on accommodation for Ukrainians. We seem to spend billions here and there. How do we encapsulate that in ensuring it is value for money? Ultimately, a lot of those do not turn out to be value for money and people benefit from it in the State. That is not necessarily a good thing either. I see it from the other side in the public accounts committee as well because we go through different items. Where we do see waste in spending, we get to go through that. Do we monitor that after? How do we ensure that those issues are captured and monitored by the Department? What sort of a review does the Department do with the Comptroller and Auditor General on those areas of expenditure?

As I said, I see it in the outcomes of the different Departments which overspend after the Comptroller and Auditor General does his report. What sort of tie-in does the Department have with the Comptroller and Auditor General to ensure that issues like that can be caught earlier and do not happen again? I am looking at the education one. It keeps popping up. It is €1.1 billion one year and €600 million another year. As I said, there are all these other items where Departments cannot be sure what will happen but the money is just found for it. As the money is there, Departments can keep spending it. That is a dangerous situation for anyone to be in. Is it a case that the corporation tax receipts are covering for that?

I will deal with a couple of the issues the Deputy raised. The level of expenditure for the next five years has been agreed by the Government in the policy last December-----

It was announced last week that we are going to spend another €750 million. I am sure that was not in the document six months ago.

Over the medium term, there is an expectation that the overall level of expenditure will moderate. That is set out in the overall strategy document. I will explain to the Deputy what the agreed policy around the overall expenditure limits is. That overall strategy is really important, as is how it is delivered.

It is. What we are talking about here are guardrails, but if the guardrails can be consistently moved, what is the point? What is the point of a budget if you can keep moving it?

That is a matter for the Government in terms of its decision. In relation to the other piece-----

Even as a member of the Government, I should reflect on that as well. I am asking that question from the perspective of somebody who is a member of the Government. At the same time, I see the outputs in the public accounts committee from previous Governments. I want to make sure that I am not sitting in PAC with Departments dealing with issues when I was there.

I raise the importance of the Committee of Public Accounts. Our Department attends all the meetings of the Committee of Public Accounts and is aware of the value for money considerations of that committee. It is an important part of what we do in terms of delivering on our overall mandate.

I get that. In fairness, Mr. O'Brien said it earlier on, and I am conscious of it as well as an accountant and somebody who has been in those positions. There are individual financial officers in those Departments as well. I know there is only so much responsibility that goes back to the Department of public expenditure and reform and how that works. I am just trying to figure out how that functions all together. The Department is keeping an eye on it, but how much can it actually slap someone down for overspend?

As I always say, what are the consequences, no more than for a child, for bad behaviour? Ultimately, the consequence for the Department of education will be that all the other Departments are going to have to pay for it. Is that a consequence? Not really but that is the reality.

I have a small question relating to the Department of education. Last year, I asked the Parliamentary Budget Office to cost what an extra €75 per child would be to add to the capitation grant to bring it to €284. Year 1 was 2026 was €40 million; the following year it was €39 million. Clearly then, the figure was dropping slightly so they must have expected the number of kids in primary schools to drop. Is something like that built in? When the Department is doing a budget for the Department of education and it budgets the cost of running primary schools, salaries and all the ancillary costs, does it consider when there are fewer kids that the cost of running them should drop, obviously subject to inflation, adjusted salaries for teachers and so on? Does the Department look at that? The the cost does not just go up; there are reasons to go down here.

Yes. The point is well made. Obviously, in considering that overall approach and that interrogation of the overall policy, the numbers are a key part of that. We would absolutely engage with the Department of education on each line, including around the numbers of children who are being educated across various parts of the system and how much they cost. We would interrogate the Department around those issues.

This concludes the session and I thank the witnesses for attending here today.