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Wednesday, 23 May, 2012.

Chairman, Members, I am pleased to appear before the Select Committee today and I welcome the opportunity to constructively engage on all aspects of the Defence and Army Pensions Estimates for 2012.

2012 represents the first year in which the Defence and Army Pensions Estimates will be evaluated within a ‘Performance Budgeting’ context. I welcome this development, which is a cornerstone of the overall Government initiative to transform and modernise the delivery of public services.

Reform of Budgets/Performance Budgeting
The combined Estimates for Defence and Army Pensions for 2012 provide for gross expenditure of some €903 million. This compares with actual expenditure in 2011 of €927 million.

The Government’s commitment to modernising the Estimates process has strengthened the focus upon performance and delivery. The Revised Estimates now include key output and context/impact information together with the normal financial and human resource inputs. This will improve transparency between Strategy, Programme outputs and costs.

The Defence Organisation shares a single high level goal, which is:
To provide for the military defence of the State, contribute to national and international peace and security and fulfil all other roles assigned by Government.

Strategies and performance indicators associated with delivering this goal are laid out in the Department of Defence and Defence Forces Strategy Statement for 2011-2014, which was published in April 2012.

The outputs of the Defence Organisation are encompassed in a single programme within Vote 36. This programme has three distinct but complementary strategic dimensions. These are: Defence policy, ensuring the capacity to deliver and Defence Forces operations. High level performance information and targets are included in the Revised Estimates and detailed information regarding the outputs from these three strategic dimensions will be contained in Annual Reports.

In line with the new approach to the estimates process, the two context indicators shown in the 2012 Revised Estimates are Defence Expenditure as a percentage of Gross Domestic Product (GDP) and the percentage of Defence Forces personnel serving overseas on Peace Support Operations.

The data published by the European Defence Agency (EDA) on an annual basis illustrates that of the 26 participating EU Member States, the percentage of GDP that Ireland spends on Defence (both Army Pensions and Defence Votes), has remained among the lowest of the member States. The 2011 data will be available from the EDA later this year.

Within the available resource envelope, Ireland has focussed on continuing to meet our responsibilities in the International community through participation in peace support operations. Throughout 2009 and 2010, Ireland deployed a significant number of military personnel overseas, while also maintaining a high level of operational activity at home.

Permanent Defence Force Strength and Recruitment

The Defence Estimate for 2012 includes provision for the pay and allowances of over 9,500 Permanent Defence Force personnel, 670 civilians employed with the Defence Forces and some 340 civil servants. It also provides for the pay of members of the Reserve while on full-time training.

The Army Pensions Estimate provides for the payment of service-related pensions and disability related benefits to over 12,100 former members of the Defence Forces and their spouses and children.

Arising from the Government’s Comprehensive Review of Expenditure, the strength ceiling of the Permanent Defence Force was reduced to 9,500 personnel. In response to this reduced strength, a major re-organisation of the Defence Forces was initiated. This will encompass a reduction in the number of Army Brigades from three to two and will necessarily include the Reserve Defence Force.

A three brigade structure has been in place since the 1990s when the strength of the PDF was set at 11,561. It was retained when the strength ceiling was reduced as part of the White Paper in 2000. It is no longer viable to retain a three brigade structure at a strength level of 9,500.

I have requested the Secretary General and the Chief of Staff to prepare detailed proposals for my consideration and work is ongoing in this regard. The aim of the re-organisation is to ensure that, within the strength level of 9,500 personnel, the operational effectiveness of the Permanent Defence Force is prioritised.

Pending the re-organisation, priority posts are being filled by promotion and recruitment. In addition, as the Defence Forces are currently below the agreed serving cadre of 9,500, I have recently approved the recruitment of general service personnel along with the induction of 42 cadets to bring the strength up to the approved level in 2012.

The total strength of the Permanent Defence Force as of 31 March 2012 was 8,899, with 7,192 in the Army, 947 in the Naval Service and 760 in the Air Corps.

Croke Park Agreement
Turning to the Croke Park Agreement, I can inform the Committee that the Second Annual Progress Report on the Agreement was submitted to the Implementation Body on the 2nd May 2012. The main achievements were:
ˇ a continued flexibility to ensure delivery of tasks assigned by Government within the restricted resource envelope;
ˇ the redeployment of 1,080 serving military personnel across the organisation;
ˇ the introduction of new merit based promotion systems for Generals, Officers and Enlisted Personnel;
ˇ the delivery of additional services with the deployment of personnel to UNIFIL (Lebanon) and takeover of Command by the Defence Forces of the EU training mission in Somalia;
ˇ a reduction in the number of personnel on ‘acting’ and ‘substitution’ allowances from 350 in March 2009 to 101 in March 2012; and
ˇ the completion of a comprehensive review of Medical Services in June 2011.

Closure of Barracks
This year has also seen the closure of four barracks; an initiative which will maximise the effectiveness of the Defence Forces by removing the burden imposed by manning and maintaining unnecessary installations. The closures will facilitate the release of personnel from security and support functions in order to enable the operational capacity of the Defence Forces to be maintained, notwithstanding the fall in strength.

2010 saw the recommencement of promotions in the Defence Forces in order to fill key positions in the organisation. There were 139 officer promotions in 2011, and a further 120 to the end of April 2012.

A total of 219 Enlisted Personnel were promoted in 2011 followed by 27 to the end of April 2012. Promotions are on-going within the Officer ranks while, following agreement on the introduction of a revised Non-Commissioned Officer (NCO) promotion system, interviews have now commenced in order to fill NCO vacancies.

Review of Allowances
The Defence Organisation was of course encompassed by the Government decision of 14 November 2011, which required that additional pay saving measures should be undertaken to deliver further efficiencies in 2012.

All Departments were required to submit a business case in respect of each allowance and premium paid by it to the Department of Public Expenditure and Reform before the end of January 2012. Business cases were submitted by my Department by the closing date and the Department of Public Expenditure and Reform is currently deliberating on those business cases.

The acquisition of new equipment for the Defence Forces is a matter that is constantly under review. The prevailing economic climate dictates that prudence is exercised in relation to the upgrading and acquisition of all Defence equipment over the coming years. The priority this year, and in the coming years, will be to maintain the capability of the Defence Forces to deliver effective services across all of the roles assigned by Government.

Investment in new equipment for the Defence Forces is provided for under various subheads of the Defence Vote relating to defensive equipment, transport, aircraft, Naval Service ships and stores, communications and Information Technology equipment. The 2012 defensive equipment allocation provides for the acquisition of a range of essential Defence equipment, including Force Protection Equipment and Chemical Agent Detection Equipment. It also facilitates the implementation of the Steyr Rifle Enhancement Programme necessary to sustain Defence Forces capabilities.

Ensuring that modern and effective equipment is available for overseas peace support operations continues to be a key focus. In this regard, the personal equipment which the individual soldier in the Defence Forces has at his/her disposal in Lebanon is second to none and compares very favourably with the equipment in use by other countries.
With regard to the Naval Service, a very significant contract was awarded to Babcock Marine in the UK for the provision of two new Offshore Patrol Vessels (OPVs). The value of the contract is €99m, excluding VAT. Preparations for the construction of these new vessels have commenced and the first new vessel is scheduled for delivery in early 2014, with the second vessel following in 2015.

Last Friday afternoon, a significant milestone was reached in the build process for the first of two new ships for the Naval Service when a traditional Keel Laying ceremony took place in Babcock Marine’s Appledore Shipbuilding Yard.

The acquisition of these modern new vessels, combined with a continuous process of refurbishment and repair, will ensure that the operational capability of the Naval Service is maintained at a satisfactory level and that only the most up to date equipment is available to Naval Service personnel for their various roles.

Overseas Missions
I would now like to refer to Ireland’s commitment to overseas missions. A key element of Ireland’s contribution to international peace and security is the commitment of personnel to international peace support missions under a UN mandate. Ireland is currently contributing 437 Defence Forces personnel to 12 different missions throughout the world.
The main overseas mission, in which 356 Defence Forces personnel are currently deployed, is the United Nations Interim Force in Lebanon (UNIFIL). The Irish Battalion is based in Sector West of UNIFIL’s area of operations, centred on the major towns of Tibnine and Bint Jubyal and the ‘Blue Line’, which separates Lebanon and Israel.

Planning for the deployment of a contingent of the Finnish Armed Forces with the Irish Battalion in UNIFIL has been ongoing over the past number of months. This has culminated in the formation of a joint Irish/Finnish battalion in UNIFIL, which will become fully operational with effect from the 1st June.

The deployment of the Finnish Contingent with the Irish Battalion has resulted in the rationalisation of the Irish contribution to UNIFIL from 454 to 356 Defence Forces personnel.

I might also mention that early last month, Brigadier General Patrick Phelan of the Defence Forces was selected by the United Nations as Deputy Force Commander UNIFIL from April 2012.

The other overseas missions, in which Defence Forces personnel are currently deployed, are the NATO-led International Security presence in Kosovo with 12 personnel, the EU Training Mission Somalia with 10 personnel, the EU-led operation ALTHEA in Bosnia and Herzegovina with 7 personnel, and the NATO-led International Security Assistance Force in Afghanistan with 7 personnel. In 2011, the EU Council appointed Colonel Michael Beary of the Irish Defence Forces as Mission Commander of the EU Training Mission Somalia.

Earlier this month, 6 Defence Forces personnel deployed to the United Nations Supervision Mission in Syria. The new Supervision Mission will monitor a cessation of armed violence in Syria. The mission will also monitor the full implementation of the six-point plan recently proposed by Joint Special Envoy for the United Nations and the League of Arab States, Mr. Kofi Annan, to bring an end to the crisis in Syria.

Planning is ongoing for Ireland’s participation in the Austro/German Battlegroup which will be on stand-by for the second six months of 2012. Ireland’s participation in Battlegroups is a further development in the Defence Forces capabilities and reflects Ireland’s desire to be able to respond across the whole spectrum of operations in support of, and in response to, requests from the UN for capable and interoperable forces.

The contribution of over 430 personnel to overseas missions reflects the Government’s continued commitment to our responsibilities in the area of international peace and security.

European Union
I would now like to refer to developments in the area of the EU’s Common Security and Defence Policy (CSDP). The primary and fundamental role of CSDP is to provide the Union with the capacity to support international peace and security in accordance with the principles of the United Nations Charter.

Our participation serves to enhance our position on the international stage as it is aimed primarily at conflict prevention, peacekeeping, humanitarian missions, crisis management and strengthening international security.
European Defence Agency
Ireland continues to participate in the framework of the European Defence Agency (EDA) and an annual contribution is made to the budget of the Agency. However, any participation by Ireland in any specific project or programme of the EDA is subject to Government and Dáil Eireann approval, in accordance with the requirements of the Defence (Miscellaneous Provisions) Act 2009.

Ireland is currently participating in two European Defence Agency Projects, one on Chemical, Biological, Radiological and Nuclear Protection (CBRN) and the other on Maritime Surveillance (MARSUR). In order to maximise the opportunities presented from Ireland’s participation in the CBRN and MARSUR projects, Dáil Eireann approval was granted for Enterprise Ireland to promote and manage Irish Research and Development participation in these projects in association with the Department of Defence and within the scope of its functions and areas of competence. This could ultimately give rise to commercial opportunities to Irish companies to supply products and services arising from the exploitation of new investment in research and technology.

The EDA continues to investigate methods and proposals for developing and optimising military capabilities with a special focus on the pooling and sharing of resources, services and maintenance across EU Member States. Under this initiative, the Irish Naval Service will play a lead role in a study on naval mariner training. The objective of the study is to review and evaluate what naval training is available across the Union with a view to consolidating EU capabilities in this area and deliver value for money training for our naval mariners.

Green Paper/White Paper
The Green Paper on Defence is another key output planned for 2012, and preparation is underway. This will form part of the process of producing a new White Paper on Defence.

The Green Paper will be published towards the end of 2012 and is intended to initiate and inform a broad public consultation process regarding Ireland’s future defence policy. This will inform the preparation of a new White Paper on Defence, publication of which is planned for the end of 2013.

Aid to the Civil Power /Aid to the Civil Authorities
While domestic security is primarily the role of the Dept. of Justice & Equality and the Garda Siochana, the Defence Forces continue to provide invaluable support to the civil power, as required, on request.

This support was particularly evident during the visit of Queen Elizabeth II and the President of the United States to Ireland in May 2011; an occasion in which the Defence Forces assisted hugely in what was an extremely complex, comprehensive and ultimately successful security operation.

This support provides valuable reassurance for the State and other examples of this highly effective form of inter-agency collaboration can be gleaned from the vast array of ATCP operations completed in 2011, which included amongst other things: 2,039 Cash-in-Transit Escorts, 2,024 Garda Air Support Unit air missions, 237 Explosive Ordnance Disposal callouts, 127 prisoner escorts and 18 Naval Service diving operations.

The Defence Forces also provide invaluable assistance to the civil authorities to deal with a variety of events, both occasional and ongoing, e.g. severe weather emergencies, gorse fires, maritime patrols, air ambulance missions and missing person searches. In general, where services are provided to other Departments and Agencies, agreements in the form of a Memorandum of Understanding or a Service Level Agreement exist to provide the framework and structure necessary for the provision of services.

These agreements are regularly reviewed, amended and adapted and, the Defence Forces response to both local and national call-outs has been exemplary throughout 2011 and to date in 2012.

Reserve Defence Force
A Value for Money Review (VFM) of the Reserve Defence Force is ongoing and the recommendations arising from this review will inform future plans for the Reserve. The major re-organisation of the Defence Forces will necessarily include the Reserve.

The Steering Committee undertaking the VFM review is progressing the Review, having regard to the wider re-organisation. Clearly any recommendations regarding the future organisation of the Reserve must dovetail with those for the overall Defence organisation. The outcome of the Comprehensive Review of Expenditure has set the Defence resource boundaries for the coming years and recommendations arising from the VFM review must have regard to the reduced resource envelope available for Defence. As I stated in my appearance before the Joint Committee last week, I expect this work to be completed by the end of September.

Army Pensions
Finally, I would also like to refer to the Army Pensions Vote.

Expenditure on military pensions has been increasing year on year. This is largely demand-led and non-discretionary, with over 95% going on superannuation benefits for former members of the Defence Forces and their dependants.

The net expenditure has risen from €182m in 2007 to €217m in 2011, an increase of almost 20% over four years. Longer life expectancy is a major contributory factor to growing public service pension costs. Other factors include the rising numbers of military pensioners in line with public service trends, linked to the overall fiscal strategy of reducing employee numbers.

As indicated in the Committee’s briefing documentation, there are currently almost 12,100 pensioners of all categories paid by my Department under the Army Pensions Vote. The majority of these are Defence Forces occupational pensioners.

During 2011 and in early 2012, the numbers who retired from the Permanent Defence Force with entitlement to pension and retirement gratuity were considerably higher than anticipated. Up to the end of 2011, a total of 498 military personnel of all ranks retired on pension. A further 510 personnel retired on pension in the first two months of the year, that is, by the end of the ‘grace period’ on 29 February 2012. These recent retirements far exceeded expectations, considering that retirements in 2011 were already above average.

While we are some way from the end of 2012 and the number of retirements is not yet concluded, it is my intention that the eventual shortfall on the Pensions Vote will be met from payroll and other savings on the Defence Vote.

I have broadly summarised the key objectives, outputs, achievements and challenges encompassing the Defence Sector and I now commend both Estimates to the Committee.

Committee members have been provided with briefing material on the individual subheads for both the Defence and Army Pensions Estimates and I look forward to dealing with any questions that arise. Thank you.

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