Committee Reports > List of Committees > Dáil > 1942 > Committee of Public Accounts > Interim and Final Report - Appropriation Accounts 1940 - 1941

MIONTUAIRISC NA FINNEACHTA

(Minutes of Evidence)

Dé Céadaoin, 20adh Bealtaine, 1942.

Wednesday, 20th May, 1942.

The Committee sat at 11 a.m.

DEPUTY DILLON in the chair.

Mr. J. Maher (Oifig an Ard-Reachtaire Cunntas agus Ciste), Mr. G. P. S. Hogan and Mr. L. M. Fitzgerald (An Roinn Airgeadais) called and examined.

VOTE 69—OFFICE OF THE MINISTER FOR SUPPLIES.

Mr. John Leydon called and examined.

345. Deputy Benson.—On Subhead A, is there any information to show the amount represented by the salaries of persons on loan to the Department?

Chairman.—Would the Deputy look at the footnote just above Mr. Leydon’s signature? Does that include the information he requires?

Deputy Benson.—The £48,000 has to be added on to the £6,000 and the £7,000?

346. Chairman.—Is that correct, Mr. Leydon?—That is correct, sir.

347. Is it proposed permanently to move the officers referred to in your note to the Vote for Supplies, or is it proposed to continue the temporary arrangement for the duration of the emergency?—That is a question to which I can only give a qualified answer, for the reason that it depends partly on the policy of the Department of Finance but, so far as I am in a position to reply, I should say that that will continue and, as time goes on, the proportion of loaned officers, as I explained last year, will diminish.

348. You observe, Mr. Leydon, that we bear in mind your observations last year, but this Vote does not seem to show much progress towards the diminution of the number of loaned officers. I suppose that partially arises from the increased duties your Department has to discharge?—Yes, sir. We have had to borrow quite a number of officers from other Departments since last year, but new staff coming in are carried on the Vote for the Department of Supplies.

349. Deputy Benson.—Are the bulk of the new staff brought in purely temporary?—The majority of them are on a temporary basis, that is to say, the staff that are coming into the Service for the first time—I assume that is what you mean by new staff.

350. Yes. I do not mean the borrowed staff, but the new staff taken into Supplies are mostly temporary?—Yes, sir.

351. Chairman.—Is it the intention now, Mr. Leydon, to move the whole of this Department out to Ballsbridge or will you retain headquarters in Earlsfort Terrace?—The headquarters of the Department and some of the branches of it are still in Earlsfort Terrace. There is no intention of moving the headquarters out to Ballsbridge. We have a number of branches out there, but the headquarters are more conveniently located in Earlsfort Terrace. The question will arise when the new building in Kildare Street is ready, but I think it would be premature for me to forecast the position then.

352. The reason I ask the question is that it is not always easy to discover, when you are inquiring, say, about tea, flour or lubricating oil, whether the officer responsible is in Ballsbridge or in Earlsfort Terrace. I suppose some of the officers are in one place and some in the other and that it must remain so?—The branch dealing with tea and sugar and the branches dealing with petrol and some other matters are located at Ballsbridge. The officers in charge of these branches have, of course, a good deal of responsibility and have power to give decisions up to a certain point, but if any major question arises it has to come into Earlsfort Terrace where the Minister and senior officers are located.

353. On Subhead D, while we all appreciate the immense burden of work the Department has to discharge at the present time, has your attention been directed to the fact that for protracted periods it is impossible to establish contact with the Department by telephone?— Yes, sir, I should say that that is not due to any lack of goodwill on the part of the Department of Supplies. There are difficulties about getting telephone lines. That has been represented and efforts have been made from time to time to remedy it.

354. I have no doubt you appreciate, Mr. Leydon, that while it is probably impossible to answer by telephone all the queries that the public attempt to make, still, there is great consolation in being able to get on and very great exasperation in being unable to get on to the Department of Supplies, sometimes for one or two days, owing to the telephone being permanently engaged?—Yes, sir. I fully appreciate that, and we have drawn attention to that ourselves on more than one occasion. Steps have been taken from time to time to remedy it by putting in additional lines. We got an additional line quite recently, but the traffic seems to be growing.

355. I take it the limitation is more one of the ability of the Post Office to provide the lines than your willingness to have additional lines provided?—That is very much the position, sir. We are always looking for lines. I think most other Departments are in the same position. There is difficulty on the part of the Post Office in meeting the demands of Government offices for additional lines.

356. I take it any assistance you could get to secure additional lines would then be welcome?—Yes, sir. If we could get priority we would be very glad.

The witness withdrew.

VOTE 30—AGRICULTURE.

Mr. D. Twomey called and examined.

Excess of Expenditure over Grant.

“16. The account shows an excess of expenditure, over the gross estimate. of £3,166 12s. 8d. and a surplus of Appropriations in Aid of £17,418 6s. 6d. The excess expenditure appears to be mainly due to the fact that the estimate under Subhead N 1 for compensation for animals slaughtered in consequence of the outbreak of foot-and-mouth disease was conjectural, the sum provided for this purpose, £40,005, being considerably less than the amount of compensation paid during the year.”

357. Chairman.—Was it in respect of this, Mr. Maher, that we had an Excess Vote earlier before the Committee?

Mr. Maher.—Yes, sir. That was discussed by the Committee and reported on to Dáil Eireann.

358. Chairman.—I take it that that discussion disposed of this paragraph?—That is so, sir.

Subhead G 3—Fertilisers Scheme.

“As in previous seasons, a scheme was in operation whereby farmers were enabled to obtain certain artificial fertilisers at reduced prices. It was again arranged that the members of the Irish Fertiliser Manufacturers’ Association should allow rebates on the current prices charged to retail merchants and co-operative societies, that the reduction should be passed on by the retailers to their customers, and that the rebates allowed should be recouped to the manufacturers on submission of certified statements of sales and auditors’ certificates.

A rebate at the rate of £1 per ton was allowed on superphosphate and compound and complete fertilisers supplied by the manufacturers during the period 8th October, 1940, to 30th June, 1941, inclusive, and the sums recouped under this arrangement during the year under review totalled £57,171 8s. 0d. The balance of the expenditure, £37,271 3s. 3d., related to the 1939-40 season.”

359. Chairman.—Have you any further comment to make on that, Mr. Maher?— The total amount paid in the year was £94,442, which exceeded the provision in the original and Supplementary Estimates of £89,000 by £5,442. The total tonnage on which the rebate was allowed in the 1940-41 season was 110,048.

360. Was it impossible for you to foresee the quantity of manure that would be made available, Mr. Twomey?

Mr. Twomey.—That was the position, sir, that larger supplies of fertilisers than were anticipated did become available in that particular season.

Subhead H—Grants to County Committees of Agriculture.

“18. The charge to this subhead comprises normal grant amounting to £93,589, special temporary grant totalling £5,596, and payments, amounting to £32,606 7s. 6d., for the purpose of supplementing committees’ expenditure on the provision of lime for agricultural purposes.

The normal grant of £93,589 includes a sum of £73,417, approximately equivalent to the proceeds of the agricultural rate of 2d. in the £ under the Agriculture Act, 1931, and extra grants amounting to £20,172, equivalent to the amount of the income of committees from rates in excess of the statutory minimum 2d. rate.

In addition to the foregoing, a sum of £185 was paid to one county committee from funds derived from penalties imposed under the Corn Production Act, 1917.”

361. Chairman.—Anything to add, Mr. Maher?

Mr. Maher.—The final sub-paragraph relates to a payment made in connection with a cider orchard scheme. The first two sub-paragraphs are for information and show how the total charge of £131,791 7s. 6d. to the subhead is arrived at.

362. Chairman.—Are the funds derived from penalties imposed under the Corn Production Act, 1917, kept in a separate fund, Mr. Twomey?

Mr. Twomey.—Yes, and they are all paid out now, with the exception of sums due to three county committees. These had been dragging on for a long time and the amounts were quite small in some counties, such as £20 or £25. Eventually, in 1939, with the sanction of the Department of Finance, the amounts were paid over to the county committees to be used for the purposes of their general schemes. In the case of three counties, including South Tipperary, the amounts were fairly large, and before the sums are being paid over in these three counties, we require that a scheme, to be approved by the Minister, shall be put up for the expenditure of the money. In South Tipperary they put up a scheme for making payments to persons who are planning new cider orchards, to make them a payment at the rate of £3 per acre, to provide for special fencing of the cider trees and the money will be disbursed entirely in that connection.

363. Chairman.—And the fund will then be wound up, I take it?—It will, yes.

364. Has the Corn Production Act of 1917 been repealed?—Yes.

Subhead M 5—Improvement of the Creamery Industry.

“19. The Department of Finance sanctioned the purchase of a cooperative creamery, which had gone into voluntary liquidation, and the payment of such sum as would, with the amount otherwise realised by the liquidator, enable the outstanding principal and interest due in respect of loans made to the creamery by the Department of Agriculture, totalling £4,854 17s. 4d., to be discharged. Under this arrangement the liquidator surrendered a sum of £943 9s. 10d., which is included in the Appropriations in Aid, and a payment of £3,911 7s. 6d. was made to complete the purchase transaction; the latter amount was duly refunded by the liquidator, and is also included in the Appropriations in Aid.”

365. Chairman.—Have you any comment to make on that, Mr. Maher?

Mr. Maher.—This transaction was brought to notice owing to its unusual nature. The creamery was indebted to the Department since 1926-27 to the extent of £4,854, and this sum was repaid in the manner mentioned in the report.

366. Chairman.—Have you any further information to give us in regard to this transaction, Mr. Twomey?

Mr. Twomey.—The creamery consisted of a central and four separating stations on which over £8,000 had been spent originally by the Committee and it was taken over by the Dairy Disposal Company at a sum which would clear the accounts so far as the Department was concerned. It was well worth the money that was paid for it. The shareholders got nothing. They lost whatever money they had paid in, which was quite small per person.

367. Chairman.—And no guarantors were mulcted in the operation?—No.

368. Deputy Benson.—Is the Department operating these creameries?—Yes.

369. Chairman.—I think this refers to Scariff Creamery?—Yes.

370. I was trying to get some butter there recently for Ballaghaderreen?— Yes.

371. Chairman.—Paragraph 19 continues:

“The charge to this subhead also includes an ex-gratia payment of £10 made, with the approval of the Department of Finance, to a contractor, being a contribution towards expenses arising from an action taken against him by a local authority in respect of damage to roads during the building of a creamery.”

Was the creamery built for the Department?—Yes, for the Dairy Disposal Company. It was in fact the conversion of a separating station into a central creamery. The cartage of material on the road, which was a soft boggy one, had such an effect on it that the county council took an action against the contractor. On going into the matter the Dairy Disposal Company felt that it would be unfair to ask the contractor to pay the full amount and they made that contribution.

Mr. G. P. S. Hogan.—It seemed that, in the circumstances, the payment to the contractor might be looked on as part of the capital cost of the creamery. It was represented that owing to pressure by the company he had to carry heavy material over roads that were not suitable in order to finish the creamery in due time. When the Dairy Disposal Company assumed part liability for the legal costs we thought that payment should be added to the capital expenditure, and charged against the Vote.

372. Deputy McMenamin.—In entering into the contract did not the contractor know that he would have to get the material to the site?

Mr. Hogan.—Quite so.

Mr. Twomey.—I do not think he counted on an action being taken against him and on that account that was the justification for giving something towards this expenditure.

373. Chairman.—Is there any precedent for a contribution of that kind?—I do not think so. It was considered on going into the cost of the building and the contractor’s costs and the possible margin he would have, that it would be only fair and reasonable to meet him and that it would be a hardship on him to have to defray the whole of the county council claim.

374. Deputy Breathnach.—What was the total amount awarded against the contractor?—About £20.

Chairman.—I suppose when the Department of Finance and Mr. Twomey are satisfied and took the view that it was a proper payment the Committee will accept that view, although like the Comptroller and Auditor-General they are inclined to regard it with some suspicion.

375. The last portion of paragraph 19 reads:—

“Including the expenditure of £20,339 3s. 11d. in the current year, the total Vote expenditure to 31st March, 1941, from moneys provided for the improvement of the creamery industry amounts to £1,191,767 5s. 2d. Receipts amount to £229,185 3s. 10d., leaving a net charge on public funds of £962,582 1s. 4d.”

I take it that is the ordinary annual informative paragraph about the operations.

Mr. Maher.—That is so, and I understand the usual return of expenditure has been furnished to the secretary of this Committee.

Chairman.—We have it here.

376. Deputy O’Rourke.—Does that mean that the dairy industry was subsidised to the extent of £962,582 1s. 4d.? —The Dairy Disposal Company holds against that sum 17 central creameries, 106 separating stations, about 20 travelling creameries, one central condensory, and three sub-condensories.

377. Are there assets to meet this amount?—No, I doubt if the assets would meet the sum outstanding in full.

378. Deputy McMenamin.—There is also the annual production?—Yes.

379. Deputy Hughes.—What is meant by a travelling creamery?—A large lorry with a separator that calls at stops to which farmers bring their milk. These lorries stop at local cross-roads and the milk is separated on the spot.

380. Power separators?—Yes, there is a small engine on each lorry.

381. Chairman.—They are to be seen in the vicinity of Waterville in County Kerry?—Yes.

382. Deputy Allen.—Of the total amount of money charged to public funds what are the possession of the Dairy Disposal Company?—All the establishments I mention are in the possession of the Dairy Disposal Company.

Chairman.—I should say that I have here a very full and detailed account showing all the details of this sum, which, of course, is available to every member of the Committee for perusal at leisure. It will be included in the Appendix* to our Report.

383. Deputy Benson.—Would it be in the form of a balance sheet?

Chairman.—No, it is in the nature of an account showing the payments out and details of the assets held. Most of the details have been given by Mr. Twomey.

384. Deputy Benson.—Is there anything in the nature of a balance sheet available for that section of the Department’s work?

385. Chairman.—Does the Dairy Disposal Company present a regular profit and loss account?—Not in the ordinary way. The accounts are presented, but one could not say that a profit and loss account is presented in the same sense as if it were an ordinary company.

386. Are these accounts accessible to Deputies?—I do not think they are accessible because the Minister on more than one occasion has taken up the attitude that some day he will have to dispose of these properties, and in the meantime he does not wish to disclose facts regarding them which might prejudice their sale.

387. Deputy McMenamin.—But if the facts were favourable——

Deputy O’Rourke.—They may not be.

388. Deputy Benson.—The £962,582 1s. 4d., I take it, may be regarded as part of the capital of this body. Are there any profits made on the transactions of the company which would in any way relieve that capital or even pay the loan charges. Is the whole of it coming out of public funds?—No, the profits are used to reduce the indebtedness to the Exchequer year by year.

389. Chairman.—Is there an interest charge levied against this, even before profit, whereby the capital sum is reduced?—No.

390. Do the entire receipts go to the reduction of capital?—Yes.

391. In his note the Comptroller and Auditor-General says that the sum of £229,185 3s. 10d. has been appropriated to the reduction of the capital sum of £1,191,767 5s. 2d., leaving a net charge of £962,582 1s. 4d. to be levied, I take it on the Exchequer, subject to the setoff out of the assets that the Dairy Disposal Company hold?—That is so.

392. Deputy Benson.—I take it that the £229,185 3s. 10d. is not for one year? I appreciate that the total capital expenditure gives no idea of the period covered? —Yes.

Chairman.—In answer to Deputy Benson, the return which has been furnished to us by Mr. Twomey does set out that the £229,185 3s. 10d. is an accumulation of receipts from March, 1927, to 31st March, 1941.

393. Deputy McMenamin.—If there is not a certified balance sheet from these people every year giving information, which need not be disclosed, how can you be satisfied that these places are being properly run, and that all the moneys coming in are accounted for?—The accounts are subject to inspection by auditors.

394. Do they audit them?—Yes.

395. Do they give you a balance sheet? —Not an actual balance sheet.

396. Deputy McMenamin.—How can you be definitely satisfied that these places are being properly run without that information?

397. Chairman.—There may be some confusion about this. It is true that the Department receives the annual accounts, in a form that has been approved of by the Department of Finance in respect of the operation of the Dairy Disposal Company?—Yes.

398. And you take the view that these accounts do not happen to be in the form of what is commonly called a balance sheet or a profit and loss account as is understood in relation to ordinary joint stock companies?—That is so.

399. Deputy McMenamin.—Are these accounts in such a form as to show what has happened during the year. There is such a thing as depreciation of buildings and machinery. Is that set out?—Yes.

400. Is a copy of the audited accounts furnished to the Department of Finance? —Yes, and to the Comptroller and Auditor-General.

401. Can you say that depreciation is taken into account over the period since the company took over these places?— Yes, allowance is made for depreciation.

402. Deputy Hughes.—What is the annual liability of this company on public funds?—The annual charge on public funds is, for example, the £20,000 shown in the Vote for that particular year. The company utilises its receipts.

403. Chairman.—You are referring to Subhead M 5?—Yes. The company utilises these receipts to make its own payments. In that respect, it differs from an ordinary Government Department, which has to bring receipts into account as Appropriations in Aid and cannot utilise them for making payments out.

404. Deputy Hughes.—This is an annual charge for improvements to the property of the company? It does not cover subsidies or anything like that?— No. This sum of £20,000, for example, has reference to the building of new creameries in Kerry and the acquisition of one new redundant creamery in County Cork.

405. The property is every year becoming more valuable?—So far as new buildings are being put up, it is.

Mr. Hogan.—I think that there is also a charge on the Vote for the Dairy Disposal Company’s headquarters’ expenses.

Mr. Twomey.—There is—for the Civil Service staff employed. Civil servants have been seconded to the staff of the company and their salaries appear on the Vote.

406. Deputy Hughes.—Will these companies ever become an asset to public funds?—They are making a substantial profit at the moment.

407. That is still going to the writing-off of capital?—Yes.

408. How long do you expect it will take to complete that?—It will take a fairly long time. For two years, the condensories in Limerick were showing a considerable profit, but it is doubtful if they will show a profit this year because of the lower prices on the export market for tinned milk.

409. Chairman.—The policy is that, ultimately, these creameries, when reconstituted, will be returned to the co-operative societies, which may be available to manage them in the areas concerned. Is that policy being pursued?— It is, but it is very difficult to get co-operative societies organised in those areas to take over the creameries—at least, to take them over at a price which would recoup the State for the original cost of purchase plus the cost of improvements.

410. Deputy Hughes.—Is there any inducement to a co-operative society to take over a creamery when you are operating these creameries free of charge?—From the point of view of the supplier of milk, there is not, because he is getting as good a price for his milk as is paid by the co-operative creamery. There is, however, the point that the company is making an annual profit on practically all these creameries and, if the farmers took over the property, they would have that profit for themselves.

411. Does the profit much more than cover the risk which might be involved?— In practically all the cases, even if they had to raise all the money at 5 per cent., the profit would more than cover the interest.

412. Deputy Allen.—Are the farmers inclined to take over one of these creameries in any area?—They are, in a number of areas, but the prices they are offering are not satisfactory. We would have no difficulty in disposing of these creameries to new societies if we would give them at a low price. We are inclined to hold out for such price as will recoup the State for the original cost, plus the cost of improvements—new plant and new buildings —since they were taken over.

413. Deputy Hughes.—Where you have acquired these properties, did you act because of the failure of co-operative societies or are these creameries mainly new enterprises?—The bulk of them were acquired at the time of the reorganisation of the dairying industry in 1927. At that time, there was a large number of proprietary creameries and the Government decided that the dairying industry would have to be reorganised and all redundant creameries and plant shut down, all the milk supplies to be transferred to the creameries left working. The bulk of the properties were acquired at that time. Subsequent to that, there was a new development of the creamery industry, particularly in Clare and Kerry, where the industry had not existed before. The Dairy Disposal Company undertook the development there, because it was not possible to form co-operative societies in those areas. The new buildings erected have been erected mainly in those two areas.

Subhead M 7—Expenses in connection with the provision of Butter for winter requirements, etc.

“20. Payment was made from this subhead of allowances on production of creamery butter and cheese, acquisition and cold storage of non-creamery butter, and exports of bulk cream. The expenditure totalled £236,499 11s. 4d., viz.:—

The following rates of allowance were payable on the production of creamery butter:—

Equivalent allowances were payable, covering various periods, on the other items of dairy produce, and payment at the rate of 5/- per cwt. was made in respect of the cold storage of non-creamery butter.”

414. Chairman.—Are you satisfied, considering that a sum of £236,499 11s. 4d. was expended under this subhead for the provision of butter for winter requirements, that we got value for the expenditure, having regard to the fact that the country has been butterless, in greater or lesser degree, for many weeks?—The position would be infinitely worse if these arrangements had not been made. Instead of being a couple of weeks without butter, we might have been several months without butter.

415. All this butter would have been sold abroad?—It would.

416. May we assume, in connection with this subhead, that in future years sufficient butter will be retained to provide for all possible contingencies in the winter?—It is very hard to estimate requirements. Last year, we thought we had more than enough in cold store, but the consumption of butter increased to an extent that was not anticipated. We always counted on between 42,000 cwts. and 43,000 cwts. per month as being the normal consumption. Since December last, consumption has been at the rate of 52,000 cwts. per month.

417. Deputy O’Rourke.—Is any of this butter finding its way into the North?— Some of it would and would appear as “home consumption”, but the quantity would not be appreciable.

418. Chairman.—Has your Department allowed for the complete disappearance of margarine and the distribution of butter on outdoor relief food tickets, the combined effect of which would be to increase consumption very considerably?—We did make allowance for that last year. We counted on some margarine being produced and on other fats being available for cooking in greater quantities than they actually were.

419. Deputy McMenamin.—The complete disappearance of margarine and the substantial reduction in the supply of dripping and lard threw an enormous burden on the butter supply?—Yes.

420. There was also the cooking of potatoes to relieve the bread supply?— Yes.

421. Chairman.—May we take it that this year your calculations will be based on a figure of, approximately, 50,000 cwts.?—We propose to store this year on that basis.

422. Deputy McMenamin.—Do you not think that, if the wheat position becomes more acute, the cooking of potatoes in different forms may throw a great demand on the butter supply?—Yes.

423. Would it not be wise to take that into consideration?—We are thinking of that, too. Even if no butter at all is exported this summer, there is the possibility of shortage.

424. Deputy Hughes.—Have you cold storage facilities for a substantially increased amount?—Yes. Last year, we could not have stored much more than we did. There was a good deal of other material in cold store then—fruit, quantities of pressed beef and goat-flesh awaiting export. This year, a good deal more space is available. Furthermore, the Dairy Disposal Company has, in the meantime, made additional provision for cold storage at one of their premises.

425. Chairman.—In the event of their being any difficulty about cold storage space this year, will you turn your mind to availing of the cold storage of the bacon factories which, this year, will not be required at all, inasmuch as the supply of bacon may be insufficient to meet current demand? There must be very large cold storage available in the bacon factories?—It would need a good deal of adaptation to make it suitable for the storage of butter.

426. The cold storage of butter requires special accommodation?—It does.

427. Deputy McMenamin.—Did the non-creamery butter which came on the market here come from your store? Is it the butter that is referred to in this paragraph?—It was stored by the merchants and they got an allowance to cover the cost of cold storage.

428. Was there any check-up on the quality to ensure that it would be suitable for use?—There was but, unfortunately, it does not keep well. It is not pasteurised but it was reasonably good when going into cold store.

429. It was of bad quality coming out? —Some of it would be.

430. Chairman.—Have you considered factory butter as a substitute for oils in connection with the frying of potatoes? The Minister for Supplies said that one of the difficulties in preparing potatoes in cooked form, so that city dwellers could take them home for consumption and help the bread supply, was that he was unable to get suitable oils for frying potatoes. Would factory butter serve as a substitute?—Yes, and it is being used to a fairly large extent for that purpose. The intention is not to encourage the export of farmers’ or factory butter in so far as it can be absorbed here. There will be a peak period in summer, when there will be more factory butter available than can be absorbed on the home market. As Deputy McMenamin has observed, it is not very suitable for cold storage. I am afraid we shall be obliged to let some of it go. If held, it would, probably, be unsuitable for human consumption after some months.

431. Even if used for frying potatoes? —It would get rancid.

432. Deputy McMenamin.—Would additional salt help it?—Not very well. It would get rancid, anyway.

433. Is that because it is not sufficiently washed at making?—The cream is not sterilised, therefore the butter is not a sterile product. That is the difficulty. To get a really good-keeping butter you must have a practically sterile product such as is made in the creameries where there is pasteurisation of the cream.

434. When I was a youngster in the country people made these big butts but they seemed to keep pretty well. Of course, the butter got a pretty stiff dash of salt but it kept quite well?—It would be more highly salted than you would get people to eat at the present time.

435. Deputy Breathnach.—Why not go back to that system?

436. Deputy McMenamin.—If the butter were used for the cooking of potatoes that would not affect it.

Subhead N 1—Diseases of Animals (Ireland) Acts, 1894 to 1938.

“21. The greater part of the expenditure incurred during the year in connection with the outbreak of foot-and-mouth disease in January, 1941, is charged to this subhead and totalled £100,922 16s. 3d., the main items being £87,267 18s. 6d. paid as compensation to the owners of 7,112 animals which were slaughtered, and £12,807 3s. 0d. remuneration of Temporary Lay-Assistants. Including £3,613 4s. 5d. charged to other subheads of the Vote, the total expenditure in connection with the outbreak amounted, during the period ended 31st March, 1941, to £104,536 0s. 8d. Sums totalling £11,447 11s. 9d. were realised from the sale of salvaged carcases and are included in the Appropriations in Aid. I am in communication with the Accounting Officer regarding these receipts.

437. Chairman.—Have you anything to add to that, Mr. Maher?

Mr. Maher.—The first part relates to the expenditure on foot-and-mouth disease which came in course of payment during the year ended March 31st, 1941. That would represent only two or three months of the existence of the disease. As regards the last subparagraph, the receipts represent sales by three separate firms. In regard to two of these firms, the Accounting Officer has satisfied us as to the accuracy of the amount received. The third case relates to the Dublin Emergency Meat Supply Committee.

438. Chairman.—Known as the “Big Five”, I think?—Yes.

Mr. Maher.—The gross receipts from this Emergency Committee from sale of meat, hides, etc., were £12,091 5s. 10d. Commission and various charges amounted to £1,409 3s. 0d., leaving net receipts of £10,682 2s. 10d. We have not got sufficient vouchers for these deductions amounting to £1,409 3s. 0d. and we propose to discuss the matter later with the Accounting Officer both as regards these items and similar items which will be included in the accounts for the following financial year, 1941-1942.

439. Deputy Hughes.—The policy of salvage was discontinued at a later stage?—Yes, as the animals would have to be brought too long a distance. It was felt that it was not safe.

Chairman.—Would I interpret the feelings of the Committee aright in saying that we elect to postpone examination of Mr. Twomey in regard to these matters until the Comptroller and Auditor-General has reviewed them in the light of the final payments? The question of vouchers has arisen. It seems to me idle for the Committee to bother Mr. Twomey now having regard to the fact that this matter will come up for review when the payments are completed.

440. Deputy Hughes.—In regard to salvage, you have stated that it was felt that it was too risky to continue it?—We carried out salvage operations whilst the disease was here in Dublin and the neighbouring counties and it was possible to get the animals into Dublin and sold. For the most part, it was exported as dressed or canned beef. When the disease spread into Kilkenny we were faced with the difficulty of transporting the animals to a suitable centre. It was too far to bring them to Dublin. We did bring a number of lorry loads to Dublin but the delay in getting them up was considerable and there was always the danger that if the disease reappeared anywhere along the road, farmers whose animals would be affected would say that it was our attempt at salvage which had brought the disease back.

441. Did you consider the provision of a portable slaughter-house?—We did not because, in a previous outbreak in 1913, that was tried and it proved to be a very difficult job. There was a marquee or tent moved around for the purpose and it proved so difficult to have slaughter carried out that the system was abandoned after a time. We decided not to employ a portable slaughter-house this time.

442. Chairman.—I take it that the meat was very carefully examined to see that only sound and good meat was exported?—There were no diseased animals or animals which had been in contact with the diseased animals salvaged. Salvage was only carried out in cases where there were animals on a farm or part of a farm which had been in no way in contact with affected animals. They were perfectly healthy animals which had no contact with diseased animals.

443. And you also took animals from farms which were contiguous to farms which became affected?—That is so.

Chairman.—Before passing from the subhead I think it right to say that the Committee will return to the question of vouchers next year in greater detail.

Deputy Hughes.—I should like to draw Mr. Twomey’s attention to the fact that in a number of cases towards the end of the period the compensation paid was not, I think, sufficient.

Chairman.—Might I ask the Deputy to reserve that query for the subhead. We can raise these general questions on the subhead and in the meantime dispose of the notes.

Subhead P—Appropriations in Aid. Levy under the Slaughter of Cattle and Sheep Acts, 1934 to 1936.

“22. As stated in previous reports, the provisions of the Slaughter of Cattle and Sheep Acts relating to the collection of levy in respect of cattle and sheep slaughtered for human consumption ceased to be in force as from 1st August, 1936. The amount collected in the year in respect of levy due but uncollected at the date mentioned was £3,294 13s. 5d., and the amount of levy outstanding at 31st March, 1941, was £15,743 15s. 6d. As noted in the account, sums totalling £4,496 3s. 5d. were written off with the sanction of the Minister for Finance.”

444. Chairman.—Do you wish to add anything to that, Mr. Maher?

Mr. Maher.—No, sir.

445. Chairman.—How long do you think it will take to wind up this levy business, Mr. Twomey?—We are still getting in some money each year and we feel that as long as we can recover some money for the Exchequer we shall continue to do so. Where it appears to us that amounts are entirely irrecoverable we seek approval for writing them off.

446. Might I suggest that the admirable example of the joint stock banks in dealing with frozen loans could be followed in these cases and that by offering to accept a composition from these people, they might be induced to pay up more quickly?—It will probably come to something like that eventually, but it would be a rather dangerous precedent to remit loans due to the State in cases such as these, because there are big sums outstanding in respect of other loans and loans due to other Departments. It might have the effect of making the people concerned slow in their repayments too.

447. Deputy McMenamin.—While one sees the force of that, is it not a fact that these fees are principally due by men of straw, men who went into the fresh meat business and got out of it just as quickly?—These are fees due by ordinary victuallers.

448. Who are still in business?— Wherever they have gone out of business and there is no hope of recovering, we have sought sanction for writing off the amount outstanding.

Extra Receipts payable to Exchequer.

“23. In my report on the accounts for the year 1936-37 I mentioned that an ex-gratia payment of £550 was made to a firm formerly engaged in the manufacture of canned beef whose activities in that business were terminated as the result of a monopoly granted to another concern. The firm having applied for a manufacturing licence under section 44 of the Slaughter of Cattle and Sheep Act, 1934, to enable it to resume the beef-canning business, the refund of the grant referred to was made a condition precedent to the issue of such licence. Arrangements were made for the acceptance of the repayments in half-yearly instalments of £50 and a sum of £100 was received in the year under review.”

449. Chairman.—Are these payments of £50 being maintained?—Yes.

The paragraph continues:

“The receipts also include a sum of £134 14s. 0d. in respect of the net proceeds of the sale of produce seized in connection with attempted exportation in contravention of the Emergency Powers (Control of Export) Order, 1940 (Statutory Rules and Orders, No. 149 of 1940).”

450. I take it that is a purely informative paragraph?

Mr. Maher.—Yes.

Dairy Produce (Price Stabilisation) Acts, 1935 and 1938.

Dairy Produce (Price Stabilisation) Fund.

“24. The net receipts, amounting to £251,120 2s. 11d., relate mainly to levy collected in respect of creamery butter sold on the home market, but they also include levies payable on home sales of bulk cream and cheese, and on creamery butter held by registered proprietors and butter traders on 1st April, 1940. In addition, extra statutory levy on exports of cream, totalling £3,208 15s. 2d., was paid into the Fund by direction of the Department of Finance.”

451. Chairman.—Can you tell us, Mr. Twomey, what is the extra statutory levy on exports of cream?—A limited number of creameries only engaged in the export of fresh cream to Great Britain and the price that was arranged on their behalf with the British authorities was relatively a better price than that obtainable for butter. The export was done through an association of these creameries set up for the purpose. In order to ensure that they would not be placed in a more favourable position than other creameries, they agreed that they would pay a voluntary levy to the Department on their cream exports which would bring them to the same level as creameries that were making butter only. These levies were received and brought to account.

452. It seems to be a rather odd way of levying—this unofficial arrangement between the Department and individual groups of persons in the country, does it not? Is there any precedent for the arrangement?—No, it was a rather difficult situation because the other way of putting it right would have been to have sold the cream to Great Britain at a price which would have brought these creameries to the same level as creameries making butter only. That would mean making a present to cream importers in Great Britain of that amount of money. The price fixed for cream for importers in Great Britain was 11/- per gallon. That was appreciably better than the guaranteed price for that year for butter. The creameries concerned agreed that, because of the fact that they were exporting cream, they should not be placed in any more favourable position than creameries who manufactured butter only.

453. Deputy Hughes.—What was the purpose behind it? Was it an anxiety to prevent creameries from making a higher profit?—Neighbouring creameries would complain bitterly if certain creameries were placed in a more favourable position because of the price arrangement we made with Great Britain.

454. You permitted only certain creameries to export?—That is so. There was not unlimited export of cream. We had only a limited quota. The creameries that had been normally engaged in the cream trade in years past had that quota divided between them.

455. Chairman.—How did you react to this proposal, Mr. Hogan?

Mr. Hogan.—Our reactions were post factum, because we were not consulted in advance about the arrangements, but when we were told about the matter we expressed some surprise that these arrangements had been made in this particular way. that is extra-statutorily and without prior sanction. However, we were impressed by the arguments of the Department, that the action taken was justifiable in the circumstances, and so we gave covering sanction to the arrangements and to the crediting of this voluntary levy to the Dairy Produce Price Stabilisation Fund.

456. Chairman.—Well, I suppose we must all be conscious of the very difficult times in which we are living, but I think you will agree that it is a rather peculiar procedure to adopt?

Mr. Hogan.—Which aspect of it are you referring to, Mr. Chairman?

Chairman.—To the extra-statutory character of the levy.

Mr. Hogan.—Oh, yes, very unusual; but it was purely voluntary, of course. You could not really call it a levy.

Mr. Twomey.—It was a voluntary payment on the part of the creameries concerned.

Chairman.—Paragraph 24 continues:—

“As will be seen from the account the net expenditure in respect of bounties amounted to £297,506 8s. 4d. The Butter Marketing Committee was the sole exporter of creamery butter, and as this was the only item of dairy produce on which bounty was payable, the expenditure related entirely to payments made to the Committee.

The contributions under section 41 (6) of the 1935 Act were also paid to the Butter Marketing Committee and include £2,228 for administrative expenses and £6,479 4s. 6d. in recoupment of the balance of a net-trading loss of £16,479 4s. 6d. incurred in the purchase and export of creamery butter during the period 11th November, 1939, to 31st March, 1940. A payment of £10,000 in partial recoupment of this loss was made in the previous year.

I am in communication with the Accounting Officer regarding the statutory authority under which certain refunds of levy, amounting to £1,877 10s. 0d., were made out of the Fund.”

457. Have you anything to add to that paragraph, Mr. Maher?

Mr. Maher.—Yes, we noticed that refunds of levy were made out of the Fund amounting to £1,877 10s. in respect of butter purchased before 24th November, 1939, for export. As doubt existed whether refunds of levy could be made in this way we asked the Accounting Officer for his observations on the course taken and we understand he has approached the Department of Finance for covering sanction.

458. Chairman.—Have you any information on that, Mr. Twomey?

Mr. Twomey.—This referred to levies in respect of butter, which was purchased for export and on which a levy at the rate of 11/- per cwt. was paid, being included in the purchase price. In the normal course, that levy would have been paid back to the persons concerned in the way of inclusion in the export bounty, but owing to the abnormal circumstances in September, 1939, the bounty scheme was suspended to the extent that the payment was reduced to a nominal rate of 1d. per cwt., and it was not, therefore, possible to give a refund to the merchants concerned by way of the export bounty. It was decided eventually that since the levy had been collected under a misapprehension, or since the intention for which it was collected no longer held, the simplest way to settle the matter would be to refund the levy out of the Price Stabilisation Fund directly to the people concerned.

459. Chairman.—This butter was, in fact, ultimately exported?

Mr. Twomey.—Yes, it was exported.

460. Chairman.—And the difficulty was that a nominal export bounty was payable at the time of export, because of something that was not anticipated at the time of purchase?

Mr. Twomey.—Yes.

461. Chairman.—You said that it was factory butter, but was it not rather re-worked creamey butter?

Mr. Twomey.—It was re-worked creamery butter.

462. Chairman.—Have you any comment to make, Mr. Hogan?

Mr. Hogan.—Yes. Again, I may say that we heard about the transaction only after the event, that is, in February last, and then the Department of Agriculture approached the Department of Finance for covering sanction for this payment from the Fund. Since then, we have been in correspondence with the Department of Agriculture and have got additional information which satisfied us that on grounds of equity these particular exporters were entitled—not legally, but on grounds of equity—to this repayment —whether you call it a refund of levy or a bounty specially related to these particular exports. Of course, the levy had not been paid into the Fund by the exporters but by the creameries, and so it was more a special bounty for these exporters than an actual refund of levy. As I say, however, we thought that the equities proved that these exporters should get this relief, and on that issue we are satisfied. We have not yet made up our minds as to the propriety of charging the payment against the Dairy Produce Fund, and we deferred that matter until after to-day’s discussion here.

463. Chairman.—And I take it that it is still a matter for the Department of Finance?

Mr. Twomey.—Yes.

Chairman.—Well, while I am sure you understand that this Committee appreciates the immense difficulties that you have in administering these various funds, I think it would be well to mention the desirability of consulting the Department of Finance before any extrastatutory payments are made.

Mr. Twomey.—Yes.

Chairman.—We come now to the Vote itself.

464. Deputy Breathnach.—With regard to Subheads F I and F 2, what is the distinction between the agriculture schools and the other ones?

Mr. Twomey.—The agricultural schools and farms are run directly by the Department of Agriculture, while the private agricultural schools are run mainly by religious bodies or institutions to which we pay grants.

465. Deputy Breathnach.—How many schools have you under subhead F 1?

Mr. Twomey.—We have three schools under our own control, and I think that, under subhead F 2 there are 15 schools, to which grants are paid. These are mostly schools for girls.

466. Chairman.—Full particulars, Deputy, will be found on page 123 of the Book of Estimates for the year we have under review. You will find details of all the schools there. With regard to subhead M 3, I see that you did not take my suggestion about publishing a leaflet on the use of straw for feeding purposes, Mr. Twomey?

Mr. Twomey.—We did a good deal of publicity in connection with it, which we thought would be more effective at the time.

Chairman.—I think that Deputy O’Rourke is to be congratulated on getting the agricultural instructor in Roscommon to advocate the use of straw. Now, with regard to subhead N 1, Deputy Hughes wanted to ask a general question.

467. Deputy Hughes.—Yes. Did you make any review, Mr. Twomey, in all those cases that I mentioned before as to the matter of compensation for slaughtered animals, at a time when prices were low because of the prohibition of export? Some farmers, particularly around Carlow and Kilkenny, when it came to the question of restocking their land, found that the price had appreciated very much, and, besides that, they had to buy cattle in a highly competitive market. As a result, the money that they got by way of compensation was not by any means adequate when it came to a question of the restocking of their land, especially in the case of cows, the price of which had appreciated very much.

Mr. Twomey.—We have given careful consideration to the question of whether there should be any revision of the sums paid in compensation, but there are two things against it. One is, in the first place, that generous compensation was paid and the amounts were not related to the rather depressed market values at the time the outbreak occurred in this country and when the export of cattle was not possible. The compensation fixed had relation to what would be the normal values of the cattle if export had been possible. So that the compensation was very fair and reasonable, and there was no attempt made to use the rather depressed values at the time as a basis for compensation. The second reason is that in cases such as those to which Deputy Hughes refers it would be very difficult to review the whole lot right back to the beginning. There would be claims from every owner, right back to the beginning, for a revision of the compensation paid, and on the whole we think that the owners whose cattle were slaughtered have been fairly treated.

468. Deputy Hughes.—I agree that was so in the majority of cases, particularly in the early stages, because the people got an opportunity of restocking from a limited market when prices were law. It is quite possible that some of the compensation paid was, in fact, generous, because of the opportunity of the restricted market that was there. But my experience has been that people who got compensation towards the end—people in the County Carlow and in parts of the County Kilkenny—had to go into a keen competitive market when prices had appreciated very much, and because of that they were unable to restock within the amount of the award. I appreciate, of course, the fact that the Department of Agriculture is there to hold the scales between the individual and the State. If the Department felt, because of what I have mentioned, that cases of hardship arose there should, I think, be some responsibility on it to review that type of case. Otherwise, very severe hardships may be inflicted on some individuals.

Chairman.—This Committee must be very careful to define clearly the Accounting Officer’s responsibility in the matter as distinct from that of the Minister. The Accounting Officer has told us that, as regards the policy laid down, he carried it out. I take it, as at present advised, that that policy is open to review. If, however, that policy is altered, I have no doubt that the Deputy will have an opportunity, perhaps in another place, of dealing with individual cases.

469. Deputy McMenamin.—There were some people very heavily penalised for, as alleged, not notifying the disease. Outbreaks, of course, should have been notified promptly because it was a question of life or death for the State. Will the Accounting Officer say if any consideration will be given to people who were heavily penalised in certain areas?

Chairman.—That question is clearly not one for the Accounting Officer to deal with. It is not within his discretion to alter a decision in that matter, which is one for the Minister. If there is no other question, we may pass to the next Vote.

470. Deputy Hughes.—What about the question that I proposed to raise and for which there is no subhead?

Chairman.—We have constructed a subhead so that Deputy Hughes may raise a question about the pressed-beef trade.

471. Deputy Hughes.—I merely wanted to ask the Accounting Officer if there is any likelihood of a resumption of the pressed-beef trade?—I am afraid that during the summer months, at all events, there is no hope of a resumption of that trade. We have been in almost constant negotiation with the authorities on the other side to see whether we could satisfy them in regard to the conditions of manufacture here. We find it very difficult to do so.

472. Were you satisfied at the time there were good grounds for complaints by the British authorities?—Yes. There is no doubt about that.

VOTE 31—FISHERIES.

Mr. D. Twomey further examined.

Subhead G 3—Advances for Boats and Gear.

“25. Including the advances charged in this account, the total of advances for boats and gear to 31st March, 1941, amounted to £122,500. The half-yearly instalments of the annuities set up to repay these advances falling due to 31st March, 1941, amounted to £49,579 8s. 2d., while the sums collected by the Sea Fisheries Association from borrowers and transferred to the Department in payment of the annuity instalments amounted to £33,200 12s. 3d. The annuity instalments were, therefore, in arrear at 31st March, 1941, to the extent of £16,378 15s. 11d.”

473. Chairman.—Have you any comment to make on that paragraph, Mr. Maher?

Mr. Maher.—We understand that there has been a considerable improvement recently in the collection of these arrears.

474. Chairman.—Is the Accounting Officer in a position to confirm that?

Mr. Twomey.—The arrears would be very small but for the fact that on the outbreak of war the Association thought it well to look for advances for the purpose of purchasing considerable reserve quantities of gear and material. They increased their indebtedness very much on that account. A good deal of that gear and equipment is still held by the Association. The position in future years will be that that gear will be sold to the members and if, as we hope, it realises a good price the arrears will be practically wiped out.

Deputy O’Rourke.—It was a very good investment to make at the beginning of the war.

Chairman.—I agree.

Subhead G 4—Advances for General Development.

“26. No advances were made from this subhead during the year under review.

The total of advances made to the Sea Fisheries Association for general development amounted, at 31st March, 1941, to £1,552 14s. 3d. As stated in previous reports this amount is repayable over a period of 20 years by half-yearly instalments, covering principal and interest. Sums totalling £127 4s. 1d. were repaid during the year and are included in the Appropriations in Aid.”

Chairman.—That is purely informative.

Fishery Loans.

“27. As noted in the account, the Minister for Agriculture, with the consent of the Minister for Finance, has made conditional remissions during the year amounting to £570 16s. 11d. under section 2 of the Fisheries (Revision of Loans) Act, 1931, and has written off as irrecoverable under section 4 of the Act a sum of £82 8s. 2d. Repayments during the year, which are accounted for as Appropriations in Aid, amounted to £269 3s. 11d., and the balance outstanding on these loans at 31st March, 1941, was £20,371 14s. 0d., including arrears of £20,334 3s. 8d.”

475. Chairman.—Have you any comment to make on this, Mr. Maher?

Mr. Maher.—No. The position shows an improvement on the previous year when the arrears were £1,000 more.

476. Deputy Benson.—Does this relate to sea or inland fisheries?

Mr. Twomey.—Sea fisheries.

477. The present price for fish is very high. In that situation one would think there should not be much difficulty in liquidating those loans?—Unfortunately, the persons concerned in these loans are not, I am afraid, deriving very much benefit from the present high price for fish. Their indebtedness is in respect of loans issued before 1930. Most of the boats and gear purchased with these loans have perished and are not available at the present time for catching fish.

478. Deputy Hughes.—The boats were not replaced?—No. During the very bad period they were allowed to get into disrepair. That was a period when the fishermen could not make any money and the boats and gear rotted. On the whole, we find that fishermen are very good to pay when they have the money. It is only during a bad period, such as occurred during the early part of 1930, that these arrears accumulated.

479. Deputy Breathnach.—When they do get into arrears in the payment of annuities are they not allowed to use the boats?—What happens is, that when a man fails entirely in the payment of his annuities, the boat is taken over.

480. What is done with the boat?—In some cases, if the boat is in good condition, it is sold.

I was in the Aran Islands some years ago and saw boats lying derelict on the beach. They were not being used, and the reason given to me was that the people were deprived of the use of them because they had failed to pay their annuities. I think that is a ridiculous position.

481. Chairman.—I take it that if a boat were taken over from a fisherman it would be promptly disposed of?—It would not be allowed to lie on the beach. It would be reissued to somebody else.

VOTE 63—EXPORT SUBSIDIES.

Mr. D. Twomey further examined.

Subhead A—Subsidies on Exports of Dairy Produce.

“Expenditure in respect of the balance of subsidies payable on exports of dairy produce during the previous year totalling £3,769 7s. 10d., is included in this account.

In the year under review, the Butter Marketing Committee was the sole exporter of creamery butter and from 28 June, 1940, of cheddar cheese. It was arranged that any deficit which might arise in connection with the trading activities of the Committee should be met from the Vote for Export Subsidies and from the Dairy Produce (Price Stabilisation) Fund, and sums totalling £72,134 18s. 2d. are charged to this subhead in respect of the partial recoupment of a net loss of £73,801 16s. 4d. Subsidy amounting to £14,947 8s. 0d. was paid to factory proprietors and non-manufacturing exporters on exports of non-creamery butter.”

482. Chairman.—Have you anything to add to this paragraph, Mr. Maher?

Mr. Maher.—No. The main functions are now being carried out through the Butter Marketing Committee.

Subhead B—Subsidies on Exports of Potatoes.

“76. Subsidy at the following rates was paid on seed potatoes exported to countries other than the United Kingdom:—

Subhead C—Minor Disbursements under Subsidy Schemes of Prior Years.

“77. The payments under this subhead totalled £418 6s. 10d., viz.:—

483. Chairman.—In connection with paragraph 75 I want to say that Cheddar cheese manufactured in this country is not now being wrapped in tinfoil because it is not available, apparently. Has the attention of the Accounting Officer been directed to the consistency of the cheese, because it seems to me to have got very soft and malleable recently as compared with what it was three months ago?—We have not had any complaints. It is being made by one creamery only.

484. From my personal experience I am in a position to say that up to recently the quality was excellent. But I have noticed recently—possibly it is due to the absence of the tinfoil—that the cheese has become very difficult to handle in that if you put it into quarter pounds it is likely to lose its shape altogether and become like a Welsh rabbit?—As I have said, I have not heard any complaints, but I shall have inquiries made.

485. I think it would be well if you did look into it lest any difficulty should arise as to the condition in which it arrives on the other side.

486. Deputy Hughes.—Are we still maintaining our exports in seed potatoes?—Only to Great Britain.

487. The volume has not declined in any way?—No. The increased exports to Great Britain make up for the loss of the foreign markets.

The witness withdrew.

The Committee adjourned at 12.30 p.m.

* Appendix V.