There’s a reason the State gets away with wasting so much of our money

It costs twice as much to run Ireland today as it did 10 years ago. Total government expenditure in 2015 was just over €63 billion; today it is about €130 billion. I am saying “about” because no one is really sure of the exact figure. This year, the State will spend €15 billion-€20 billion on public procurement: buying stuff on your behalf from private contractors. The reason we can’t be more specific on amounts is that, as things stand, the State can’t say precisely whether it got what it paid for, at the price agreed, nor whether projects delivered what they originally claimed they would deliver. The reason for this messiness is there is no total figure for what the State is buying, from whom and for what. Yes, you read that correctly.

There is no aggregate accountability in Ireland because each spending department is its own fiefdom, with different systems and different budgetary procedures.

Nothing joins up. What’s more, no one is in charge. There is no one person whose job it is to add up all the departments’ expenditure and give a precise figure. In the turf war that is intra-departmental politics, the departments don’t give details unless forced to by public pressure. Within the public service, a culture of secrecy shrouds even the most basic transactions. Tax money seems to disappear into a black hole and what often comes out are second-rate services, budget overruns and projects that are not completed on time. The disparity between what we pay in tax and what we get from the State is a source of deep frustration, particularly relative to the public services delivered by similarly wealthy European social democracies.

The question is why is this happening?

When policies are announced in Ireland, is there any mechanism for measuring their success? This is particularly important when current expenditure is bigger than capital expenditure. At least with capital spending you can see the thing that was supposed to be built. With current expenditure, spending is far more amorphous, open-ended and driven by vague aspirations rather than specific outcomes. When the State is spending so much money, an unwillingness or inability to measure specifically how much is being committed to various projects means the country is simply drifting, buoyed up by American multinationals, allowing the State to get away with waste.

In recent months a group of young maths and physics graduates called The Problem Solving Association, working for purely altruistic, one might even say patriotic, reasons, came together to use their technical ability, data expertise and maths brains to assess what is happening to your tax money once it gets sucked into the bureaucratic vacuum that is the Irish State. They are doing this, making data available to the citizens, precisely because the State won’t.

These young, concerned citizens have created a vast public procurement tracker that, in their words, “generates vast amounts of transactional data, but this information remains fragmented across departments, agencies and reporting systems. The Public Payments Tracker consolidates this distributed data into a unified analytical framework, aggregating records from over 190 state entities covering €78.5 billion across 400,000+ transactions”.

The results are shocking.

They found that the Irish State can’t trace a euro of public money from the budget line that authorised it through to the supplier who was paid for it. Hundreds of thousands of tenders, contract awards, purchase orders and payments sit in disconnected systems that never join up. So the basic “contract delivery test" that every private company accountant requires to assess spending can’t be applied at any scale. The association asked every Government department a set of questions: how many tenders finished under, on or over estimate? How much was spent above award values? And what was total procurement spend over five years? Only a few departments answered all three completely. The departments of Housing and Justice answered none.

All accounting departments in big organisations follow a money trail, a sequence from buying the services to the delivery, which typically goes along the following sequential pattern: tender → contract award → contract → purchase order → invoice → payment. Once an organisation follows this basic pattern, everyone knows who paid for what and to whom; the purchase order accords with the invoice documenting what work was done and, on receipt of this, the contractor is paid. This is precisely how to run a company.

The Irish State can’t provide this for the running of government. We might as well be putting our finger in the air when it comes to assessing what is spent on what for what outcome. The national accounting system has evolved in a siloed manner, with every spending department looking after its own affairs and nobody aggregating any data in an easy-to-use format. There is no central organisation that aggregates all spending, which might give a top civil servant or campaigning politician a clear picture of how much is being spent on what.

Once the mathematicians started looking at the numbers they found a mess: there were no unique identifiers for suppliers, tenders, contracts or payments: nothing links them. Because of the use of wildly inconsistent formats such as different column headers, different structures and standardised reporting across bodies, it was almost impossible to readily compare and aggregate data. Many departments report data in a pdf rather than machine-readable format (excel/csv), even when the numbers originate in excel. According to the number crunchers, some departments even say this is deliberate “to avoid manipulation" – but manipulation is the whole point of the exercise to be able to compare and assess value for money.

I realise this may all seem technical, arcane and a bit remote, but the Government is a money in/money out system. Taxes come in and services come out. The upside to standardising all this information – knowing who is getting paid for what, how many suppliers there are and how many departments are using the same suppliers for similar tasks – is enormous.

From a value-for-money perspective the Irish State is the largest buyer in the country (€15–20 billion per year) but behaves like it is hundreds of small buyers. It is not benefiting from its dominant buyer position. Think of the deals it could get by negotiating as one. In principle it has more buying power than a retail giant such as Walmart in many categories; in practice it has almost none. A linked ledger is what turns “hundreds of disconnected buyers” into one big buyer that can actually negotiate. The State could also compare prices for similar goods and projects across bodies and regions. It can also see total exposure to a supplier, concentration risks and any supplier’s performance can be pooled instead of relearned separately by every public body.

The power of data is transparency. It is the power of the future. Let’s embrace it on behalf of all of us.