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News : Irish Last Updated: Sep 20, 2011 - 5:41 AM

Fifty-three Irish public bodies binned survey on €15bn procurement bill; Interest on national debt at 21% of tax revenues in 2015
By Finfacts Team
Sep 19, 2011 - 2:36 PM

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Comptroller & Auditor General Report: The 2011 report from the C&AG reports that 17% of public bodies ignored a survey on the €15bn annual procurement bill. The report also says interest on the national debt will  consume 21% of tax revenues in 2015.

The National Procurement Service  undertook a survey of public bodies, asking them to report their ‘top 30’ suppliers of goods and services in 2009. Bodies were also asked to indicate the category of goods and services procured. The survey targeted 310 public bodies in respect of 2009 and by the end of June 2011, a total of 257 bodies (83%) had responded. Certain categories of goods and services were excluded from the scope of the survey i.e. professional fees, construction related activities, costs related to the purchase and rent of property and all payroll costs.

The NPS aggregated the results of the survey by expenditure type, which showed combined reported spend was €50m or over in 2009. The areas of highest spending were medical supplies, computing, fuel and water.

The fact that  53 bodies binned the survey query or the National Procurement Service acted as a shrinking violet in the face of inertia and laziness, speaks for itself.

Estimates prepared by the Department of Public Expenditure and Reform indicate that public expenditure on procurement of goods and services in 2010 totalled around €9bn, with a further €6bn being spent on capital works.

Departments reported that they placed contracts in 2010 to the value of €75m without pursuing competitive tendering processes. A further €4.4m of non-competitive procurement was identified in the
course of audits.

PPS: The total outstanding commitments of central government departments and agencies in respect of contracted PPP (public private partnerships) projects at end 2010 is estimated at €4.3bn. A further significant number of PPP projects were in development at the end of 2010 but had not yet reached contract stage. Estimates of the potential cost of those projects are not currently available from the Department of Public Expenditure and Reform.

The National Roads Authority had to make payments totalling between €5m and €5.5m this year to the private operators of the M3 motorway and the N18 Limerick Tunnel because of declining road traffic.

NAMA: €10.3m was incurred in respect of around 100 staff directly employed by the NTMA (National Treasury Management Agency) and assigned to NAMA (National Assets Management Agency: €9.2m) and the cost of NTMA employees operating shared services including IT, Human Resources and Finance (€1.1m). €4.6m was incurred in respect of other costs incurred by the NTMA including rent, office services and consultancy costs.

Bank Support: At 31 December 2010, 34% of the NPRF’s (national pensions reserve fund) resources were devoted to capitalisation of Irish banks and up to a further 44% had been allocated towards the State’s contribution to the EU/IMF Programme of Financial Support for Ireland. By April 2011, the NPRF had converted €10bn of its discretionary investment portfolio into cash and placed it on deposit with Irish commercial banks pending further direction from the Minister as to how this was to be invested.

For the year ended 31 December 2009, the NPRF valued the directed investments at cost under a direction of the Minister. At 31 December 2010, following revised directions from the Minister, the directed investments were valued at fair market value. For the ordinary shares and the cumulative non-voting shares, the market price at 31 December 2010 was taken as the fair market value of the shares. For the preference shares, which are not quoted on the market, the National Treasury Management Agency, on behalf of the NPRF, engaged Davy Corporate Finance (Davy) to provide a fair market valuation of the NPRF’s holding in the BoI and AIB preference shares as at 31 December 2010.

The Davy report, concluded that:

  • the BoI preference shares had dropped in value by around 20.6% from €1.84bn to €1.46bn;

  • the AIB preference shares had declined in value by around 41.5% from €3.5bn to €2.05bn;

Unrealised losses of €3.7bn have been reported in the accounts of the NPRF for 2010.

The State paid €979m on interest on the national debt last year - - up 37% on 2009.

€73.4m has been paid out on consultancy costs linked to the banking crisis. This amount includes €35.1m for financial advice, €22.5m for legal services and €15.6m for accounting-related services.

The value of bank liabilities guaranteed by the State at the end of June 2011was about €123bn. A further €74bn is covered by the guarantee on deposits held in the six Irish-owned banks provided in September 2008.

The Central Bank had provided €56bn of emergency funding to the banks at the end of June.

The State contributed €1.35bn to the European Union budget and received €1.88bn from Brussels.

The proportion of taxation required to service the national debt rose from under 4% in 2007 to over 11% in 2010.

The report estimates the national debt was €126.4bn at the end of July this year. Assets held by the State at the end of July were worth €13.6bn, giving a net debt of €112.8bn.

The cost of servicing the debt rose to  €979m, or 31%, last year. 11% of the money taken in by the State in tax now goes towards paying off debt. Some 21% of tax revenues will be required to pay interest on the national debt by 2015. The report says while a significant level, it is below the ratio experienced in the mid-1980s when around a third of the tax revenues generated in the State went towards servicing the interest on the national debt.

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