Committee Reports > List of Committees > Dáil > 1951 > Committee of Public Accounts > Report - Appropriation Accounts 1949 - 1950

MIONTUAIRISC NA FINNEACHTN

(Minutes of Evidence)

De hAoine 7ú Nollaig, 1951.

Friday, 7th December, 1951.

The Committee sat at 11 a.m.

Mr. W. E. Wann (An tArd-Reachtaire Cuntas agus Ciste), Mr. T. K. Whitaker, Miss M. Bhreathnach and Mr. M. Breathnach (An Roinn Airgeadais) called and examined.

VOTE 55—INDUSTRY AND COMMERCE.

Mr. J. Leydon called and examined.

680. Chairman.—Paragraph 53 of the Report of the Comptroller and Auditor General reads as follows:—

“Subhead J.—Food Subsidies.

The expenditure charged to this subhead, totalling £2,139,276 7s. 0d., was made up as follows:—

As stated in paragraph 50 of my previous report, subsidy on batch bread ceased to be payable after 1st November, 1947, and the payment of balances due to bakers for periods prior to that date accounts for the charge of £10,497 5s. 3d.

The amount of £1,276 11s. 11d., which was paid during the year as subsidy on oatmeal manufactured from native oats of the 1947 crop and sold by millers in the period 1st September, 1947, to 15th April 1948, related to two claims the examination of which was not sufficiently advanced for payment to be made in the previous year.

The subsidy on tea was paid to Tea Importers (Eire), Limited, and represented the difference between the cost price of tea plus overhead expenses and the selling price. The audited accounts of the company for the year ended 31st March, 1950, showed a net trading loss of £1,843,045, which, with a balance of £21,320 due from the previous account, made a total deficit of £1,864,365. Amounts paid as subsidy totalled £1,893,520, leaving a balance of £29,155 due by the company at 31st March, 1950.

Subsidy at the rate of 2d. per lb. continued to be payable on sugar sold for domestic consumption. The sum of £233,982 9s. 10d. charged to the subhead was paid to Comhlucht Siúicre Éireann, Teoranta, on the basis of statements certified by the auditors of the company. I understand that, consequent on certain adjustments in respect of the years 1948-49 and 1949-50, a refund of subsidy falls to be made by the company and I have asked for further information on the matter.”

Mr. Wann.—As a result of the adjustments in the sugar subsidy referred to in the paragraph an amount of £41,321 was found to be due to the Department from the company at 31st March, 1950. Of this, £32,922 was recovered in May of this year, leaving a balance of £8,399 outstanding.

681. Chairman.—Does the sum include interest or is interest charged on these balances?

Mr. Wann.—I do not think so.

682. Chairman.—Do you charge interest, Mr. Leydon, on balances such as this?

Mr. Leydon.—No.

683. Presumably because they are the subject of adjustment?—We do not pay interest either on amounts due to the Sugar Company.

684. Chairman.—The next paragraph, number 54, by the Comptroller and Auditor General, reads:—

“Subhead K.—Fuel Subsidy.

Only a token sum of £5 was provided under this subhead for fuel subsidy, and no payment in respect of subsidy was made in the year under review.”

Does that mean that there was no expenditure on fuel?—It means that there was no payment from the Vote, but it does not mean that there were no losses incurred by Fuel Importers. There was no provision made for payment to Fuel Importers.

685. Could you tell us the sum that actually was lost in the year?—I will give the figures for the three years starting 1948 in order to give you a picture. For 1948, the losses on coal were £52,779; on firewood, £266,695; and on turf, £413,745. In 1949, the losses on coal were £134,790; on firewood, £1,402,193; and on turf, £638,198. I should add that all the firewood stocks were cleared by the end of 1949. In 1950, the losses on coal were £406,905 and on turf £135,373.

686. These losses will have to be made good, so I presume that this merely meant putting off the evil hour?—That is what it did mean. The undischarged losses at 31st December, 1950, amounted to £2,557,323. I do not think there is much point in giving you the estimate of future losses. The Department did make provision for the losses in the draft Estimates but the Department of Finance decided to make only a token provision.

687. Deputy Davin.—Was any application made to the Department of Finance for a fixed figure for the year 1949-50?— We provided £1,000,000 in the Estimate for that year.

688. You applied for £1,000,000 and it was turned down by the Department of Finance?—We included it in the draft Estimate submitted to the Department of Finance.

689. Chairman.—That is tantamount to a request?—Yes. We drew the attention of the Department of Finance to the position on several occasions. A supplementary for something over £3,000,000 has now been taken to cover losses which have accrued to date.

690. Deputy Davin.—Was there a policy decision about this period or from any particular date to carry forward the losses?

Chairman.—It is hardly fair to ask Mr. Leydon whether or not there was a policy decision. All we can establish is the fact that his Department asked for money in the preparation of their estimates and the Department of Finance told them to put in a token estimate.

Deputy Davin.—They asked for £1,000,000, but we would not know that unless it came out here.

Chairman.—And it has come out here.

691. Deputy J. J. Collins.—You requested £1,000,000 from the Department but that would not be sufficient to meet the losses?

Mr. Leydon.—It was an estimate of the losses, and if our estimate was right it would have been sufficient to clear the bank overdraft of Fuel Importers. It was only an estimate.

692. And you got a token Vote of £5?— Yes.

693. Chairman.—Perhaps some of the Finance officials would care to say something on the point.

Miss Bhreathnach.—Most Deputies will have heard in another place certain matters about the fuel subsidy and will understand why a token Vote of £5 was provided. I think the intention was that this should be spread over as a capital charge.

694. Deputy Davin.—Could you say when that decision was taken by the Department of Finance? Was it taken before this particular period?

Miss Bhreathnach.—In connection with the preparation of the Estimate the Appropriation Accounts of which are before you, for the year 1949-50.

695. Deputy Davin.—Was there a sum carried forward from a previous year? When was it decided to carry forward the losses?

Miss Bhreathnach.—It was the first year in which there was a carry forward. There may have been a small carry forward from 1948-49. This is the first year in which the £5 token was provided. It was in that year the carry-over began.

696. Chairman.—Perhaps we could have the figure which was carried forward in respect of 1948-49. Is it not true to say that, apart from anything else, the fact that there was a subhead with a token provision would allow a payment to be made during the course of the year?

Mr. Leydon.—It would technically if the money was in the Vote, but to meet anything like £1,000,000 a Supplementary Estimate would have been required.

Chairman.—I think that as far at this Committee is concerned the whole discussion is dangerously near policy and we ought to get away from that.

Deputy Davin.—That is why, in fairness to the Accounting Officer, I asked the question.

697. Chairman.—Could we have the figures of the carry-over from the previous year?—I think, with your permission, I should like to send you a note on that. I cannot tell you what the figure is at the moment. I can send you a note showing the position clearly. I should add, in order to clarify the picture, that the figures shown as losses are distorted, as I think, by substantial interest charges up to the end of 1950. There was paid in bank interest by Fuel Importers, Ltd., an amount of £667,000, so that they are not all trading losses but include substantial interest charges.*

698. Chairman.—If you would give us fairly full figures for two or three years back it would help us to see how much was carried forward from other years?—I will give you a picture from the beginning.

699. Deputy Gallagher.—With your permission, I should like to go back for the purpose of asking a few questions on subhead J., that is, if I am in order.

Chairman.—You could raise the matter on the subhead itself. We have not reached the subhead in the Book. If you like, you can wait until we come to the Vote itself.

700. Deputy Gallagher.—I have some questions to ask in connection with wheat. I want to know the quantity of wheat imported from the Argentine during 1948 and the price paid per ton. If necessary, I can give notice of the question?—

Mr. Leydon.—If you tell me what the point is I will see what I can do.

Deputy Gallagher.—There are several questions I would like you to answer.

Chairman.—By the way, this Department is not concerned with wheat but the Department of Agriculture.

Deputy Gallagher.—Surely the Department of Industry and Commerce has something to do with it?

Chairman.—Not in this particular year. You could, of course, get your information by way of question in the Dáil, but I am sure Mr. Leydon will oblige you.

701. Deputy Gallagher.—I want to know what quantity of wheat was imported from the Argentine in 1948 and the price per ton paid for it?

Mr. Leydon.—The quantity of wheat imported was 75,000 tons, in round figures. It might have been a few hundred tons less than that. The amount of wheat purchased was 75,000 tons.

702. Deputy Gallagher.—And what was the price per ton?—The cost was 60 pesos per 100 kilos, f.o.b. I believe that is equivalent to about £45 a ton, giving a landed cost of about £49 a ton.

703. Was the purchase of the wheat sanctioned by the Government and, if so, when?—The purchase of the Argentine wheat was sanctioned by the Government on 5th December, 1947, the reason, of course, being that we could not see any prospect of getting our requirements of wheat from any other sources. Actually, this subject had been discussed at great length between the Departments of Finance, Industry and Commerce and Agriculture. As it turned out, the forecast proved to be completely correct because, if we had not made that purchase, we would have been without wheat for a considerable period in 1948.

704. I take it that the purchase was recommended by Grain Importers, Ltd.? —Not only was it recommended by Grain Importers but they pressed us to buy more. They said 75,000 tons was not enough and thought we should buy 200,000 tons. Then they came down to 100,000 tons when we told them we had bought 75,000 tons.

Chairman.—We had better come back to the Appropriation Accounts, if the Deputy does not mind. That is our business.

705. Deputy Davin.—What is the understanding in regard to paragraph 54, subhead K.—Fuel Subsidies? Mr. Leydon frightened me when he mentioned the sum of £667,000 interest charges.

Chairman.—Mr. Leydon is sending us a full note.

Deputy Davin.—He might give us a brief account of how this very large figure of £667,000 is made up and of the period covered by it.

Mr. Leydon.—I will give you that certainly.

706. Deputy Gallagher.—With regard to this question of the wheat, could it have been purchased in any other country? —It could not have been bought at any price from any other source. It could not have been got at all at any price.

707. If we had not imported that wheat would the bread ration have been continued?—The bread ration would have had to be reduced from 6 lbs. to 3 to 4½ lbs, depending on how long the reduction was deferred. We would have had to reduce the ration from 6 to 4½ lbs. in December; if the reduction were deferred to April the weekly ration would have to be reduced to something less than 4 lbs.

708. What was the average price of bread and flour during the time the Argentine wheat was in use?

Chairman.—I suggest that these questions had better be settled by way of parliamentary question in the Dáil. I do not believe that we should ask questions seeking information which can normally be obtained in the Dáil by way of parliamentary question.

Deputy Gallagher.—You will appreciate that I am a new Deputy and that I am trying to learn as much as I can. I know the ability and the record of the witness. When you put down a question in the Dáil, you get an answer and you would want to be a lawyer to understand it.

Deputy M. E. Dockrell.—If the time of the Committee were to be overloaded with questions which could be more effectively answered in the House we could not get through our business.

Deputy Gallagher.—We are dealing with food subsidies and if we could buy the stuff cheaper anywhere else it would be better.

Chairman.—In respect of this year the Department of Industry and Commerce was not responsible.

Deputy Gallagher.—I appreciate that and I will be a good boy in future.

Mr. Leydon.—May I say that I brought this file with me every year for the last three years expecting questions.

Deputy J. J. Collins.—You were anticipating them. Would it have been in order to raise this matter?

Mr. Leydon.—That is not for me to say. I must be prepared to answer questions if the Chairman so rules.

Deputy Gallagher.—You were fully armed.

Deputy Davin.—It is not his first time here.

709. Chairman.—Paragraph 55 of the Report of the Comptroller and Auditor General in regard to subhead L—Miscellaneous Turf Production Schemes— states:—

“The amount of £23,560 4s. 5d. charged to this subhead was paid to. local authorities in recoupment of losses incurred on the sale of turf otherwise than to Fuel Importers (Eire), Limited, government departments or local institutions. The total amount recouped to 31st March, 1950, including £174,444 8s. 9d. paid in previous years, was £198,004 13s. 2d.”

Mr. Wann.—The position at 31st March, 1950, was that out of payments totalling £198,004 13s. 2d. to local authorities, 37, totalling £100,234 13s. 11d., were final, and 4, totalling £97,769 19s. 3d., were provisional. The payments were in respect of years up to and including 1947-48. As from 1st January, 1948, the scheme was taken over by Bord na Móna (subhead O.2).

710. Chairman.—Paragraph 56 of the Comptroller and Auditor General’s Report reads as follows:—

“Subhead N.1.—Advances to Mianrai, Teoranta.

The charge of £34,955 7s. lid. to this subhead represents advances made during the year to Mianrai, Teoranta, under section 3 of the Minerals Company Act, 1947, as amended by section 2 of the Minerals Company (Amendment) Act, 1950. The total liability of the company for advances and for interest thereon, amounted at 31st March, 1950, to £134,445 18s. 3d.

In exercise of the powers conferred by sections 11 (2) and 12 (3) of the Minerals Exploration and Development Company Act, 1941, and section 8 (2) of the Minerals Company Act, 1945, the Minister for Industry and Commerce has, with the consent of the Minister for Finance, agreed to the postponement to 1st April, 1950, of the payment by the company of interest on advances and of the repayment of instalments of advances which fell due on 1st April and 1st October, 1949.”

Any comment, Mr. Wann?

Mr. Wann.—No, except that no payments in respect of interest or advances have yet been made by the company.

711. Deputy Davin.—May I ask what is the figure for the payment by the company of interest on advances as distinct from the repayment of instalments? What is the total liability of the company in respect of interest or what portion of that figure is interest?

Mr. Leydon.—I am afraid that I have not got that figure separately but I will send you a note of it.*

Mr. Wann.—It is £5,798.

712. Chairman.—Paragraph 57 of the Report regarding operations of Bord na Mona reads as follows:—

“The issues from the Grants-in-Aid during the year comprised £18,500 for experiment and research (subhead O.1) and £366,500 to meet the cost of the turf production scheme hitherto undertaken by county councils (subhead O.2). Production under the scheme was confined to machine-won turf and receipts from Bord na Móna in respect of sales amounted to £130,000 which is credited to subhead S—Appropriations in Aid.

Section 52 of the Turf Development Act, 1946, privides for the payment out of voted moneys during 1946-47 and in each of the nine subsequent financial years of grants towards expenses incurred by Bord na Mona on experimental and research work, subject to a limitation of £120,000. The total issues under this head, including £18,500 in the year under review, amounted at 31st March, 1950, to £118,800.

A sum of £1,500, which is included in the appropriations in aid, was realised from the sale to Bord na Móna of the residue of turf produced under the turf camps scheme, which was terminated in 1948. I understand that agreement has been reached on the terms of transfer to Bord na Mona of the turf camps and equipment, and that it is hoped to have the sale completed at an early date.

The exchequer extra receipts include a sum of £9,141 6s. 8d. received from Bord na Móna in respect of interest on advances made for the development of Clonsast bog. At 31st March, 1950, the amounts outstanding, including interest, for advances made from voted moneys for the development of bogs were:—

What has happened about the limit? At the end of the financial year mentioned advances were within £1,200 of the statutory limit, I take it?—You are thinking of the experimental and research work.

Yes?—That limit has been extended since then. The limit was extended by an amending Act from £120,000 to £250,000.

713. The legislation empowered some retrospective payment, I take it?—No.

714. In the third sub-paragraph, there is a reference to the sale of camps and equipment by Bord na Mona. Has that been completed?—Yes.

715. How does it arise that only in respect of Clonsast bog has there been an interest payment?—That was the only one that was in production.

716. Chairman.—Paragraph 58 of the Report of the Comptroller and Auditor General regarding subhead R—Repayment of Advances for Rural Electrification— reads as follows:—

“Section 41 (3) of the Electricity (Supply) (Amendment) Act, 1945, provides that one moiety of the total amount of the moneys advanced for rural electrification to the Electricity Supply Board out of the Central Fund shall be repaid to the Fund out of moneys provided by the Oireachtas. The sum of £325,000 charged to this subhead relates to the repayment to the Central Fund of one-half of the amount of £650,000 advanced during the calendar year 1948 for rural electrification.”

Mr. Wann.—The total amount advanced out of the Central Fund for rural electrification up to the 31st December, 1948, was £1,100,000. The limit imposed by section 41 of the Act on such advances is £5,000,000.

717. Chairman.—Paragraph 59 of the Report referring to the Industrial Development Authority is as follows:—

“Subhead R.R.—Grant towards the Expenses of Administration.

A provision of £10,000 was made by supplementary estimate for a grant to defray the remuneration and expenses of the members of the Industrial Development Authority and the amount issued in respect of the grant was £8,000. Expenditure amounting to £2,268 Is. 9d., which is charged to subhead B., Vote 10—Public Works and Buildings—was incurred on the adaptation of premises and the provision of furniture for the Authority, and furniture to the value of £104 19s. 6d. was supplied from stock. The Authority was established and the first members appointed by warrants dated 26th May, 1949, made by the Minister for Industry and Commerce, with the approval of the Minister for Finance. The establshment of the Authority was confirmed by the Industrial Development Authority Act, 1950, which became law in December, 1950.”

At the time of the introduction of the supplementary estimate, it was announced that there would be legislation?—I think so. It was certainly intended that there should be legislation but I am not sure whether it was announced.

718. Chairman.—Are the accounts of the authority audited by the Comptroller and Auditor General?

Mr. Wann.—Yes, but no accounts have yet been furnished for audit.

719. Chairman.—Have you any information on the delay?

Mr. Leydon.—I am afraid that I cannot give any explanation for the delay.

720. Normally, as it is provided, they would have been sent for audit?—The Act requires the Minister for Finance to prescribe the form of the accounts. I was asking my friends from the Department of Finance whether they could tell me if the form of the accounts is prescribed. I shall have to make an inquiry and, if I may, I will send you a note of explanation on the delay. There is a statutory requirement in the Act requiring the authority to keep accounts, the form of which must be approved by the Minister for Finance and the accounts must be audited by the Comptroller and Auditor General. The Act was passed on the 20th December, 1950. That is nearly a year ago. I do not want to hazard an explanation. I prefer to make an inquiry and send you a separate note on that.*

721. Deputy Davin.—What is the expenditure under subhead Q.1 relating to the Institute for Industrial Research and Standards?

Chairman.—It is a Grant-in-Aid. There is a note in the Estimate explaining that.

722. Chairman.—With regard to number 4 of the extra receipts payable to Exchequer, page 190, how did it arise that such a great amount was realised under the Cement (Amendment) Act, 1938 in comparison with the fees estimated?

Mr. Leydon.—Because a lot more cement was imported than was anticipated. A licence fee not exceeding 5/- per ton is payable in respect of each licence.

723. Chairman.—In general, I have noticed looking through the Supplementary Estimates and the Appropriation Accounts that nowhere on the face of them is there any note regarding the transfer of the flour subsidies from one Vote to another. If, in the future, some person with an inquiring turn of mind happened to go through these Supplementary Estimates and the Appropriation Accounts for this particular year, he would be quite in the dark that there was a transfer. The only reference is in the Supplementary Estimate brought in by the Minister for Agriculture but not even there is there a note to show that there had been a transfer. The amount is very large. In the Book of Estimates, your estimate provides over £10,000,000 while the Appropriation Accounts provide only £500,000. Was it not considered that a note might be added to the Appropriation Account showing the reason for the great variation between the Book of Estimates and the Appropriation Accounts? Two Supplementary Estimates were brought in in the Department of Industry and Commerce but nowhere could I find the note. I beg your pardon, Mr. Wann has drawn my attention to where the note is in the revised Estimate which was published.

VOTE 56—AVIATION AND METEOROLOGICAL SERVICES.

Mr. Leydon further examined.

724. Chairman.—Paragraph 60 of the Report of the Comptroller and Auditor General is as follows:—

“Subhead G.—Constructional Works, including furnishing of Buildings— Shannon Airport.

Subhead H.—Constructional Works, including furnishing of Buildings— Dublin Airport.

Expenditure during the year on constructional works, including furnishing of buildings, at Dublin, Shannon (Rineanna), and Shannon (Foynes) Airports amounted to £216,607 12s. 7d., £152,531 6s. 7d. and £3,528 14s. 5d., respectively, bringing the total expenditure, as at 31st March, 1950, to £1,078,910 10s. 8d. for Dublin Airport, £1,738,583 5s. 3d. for Shannon Airport (Rineanna), and £166,791 12s. 10d. for Shannon Airport (Foynes), exclusive of expenditure on the acquisition of land.”

Mr. Wann.—As stated in the paragraph, the figures quoted do not include any expenditure on the acquisition of land. Including a sum of £5,615 charged to subhead E in the present account the total expenditure on the acquisition of land up to 31st March, 1950, was approximately £151,398.

725. Deputy M. E. Dockrell.—Has any of that been paid back?

Mr. Leydon.—No, Sir. The question does not arise. It would only arise if we sold it.

726. I mean is there any back payment to the Exchequer to set off against that? —There are landing fees. I am not sure against what you would set them off. I do not think it would be right to set them off against capital expenditure. There is a good deal of current expenditure also.

727. Chairman.—I do not think there is any statutory provision for repayment?— No, there is no statutory provision for repayment. The Appropriations in Aid amounted to £152,000. I am not sure that that would answer the Deputy’s question.

728. Deputy M. E. Dockrell.—I was looking at it from the point of view of a trading concern?—As a trading concern, of course, it would show a loss if you include the standing charges on the capital and the cost of various services like meteorological services, and so on.

729. Which you would have to, of course?—There is room for a good deal of argument about the meteorological services. It is not maintained exclusively for aviation.

730. No. I am thinking of the cost of buildings, and so on?—If you take Shannon, for instance, there are certain offices occupied by various Air Lines and they pay rental for those, and in the accounts of the catering department there is a rental charge.

731. That is what I mean. There are some payments coming back, even out of the capital charges, so to speak, as a result of the expenditure made by the State. There are certain revenues coming in?—Yes.

732. Certain receipts?—Yes. You see on page 197 there are particulars of the receipts at Shannon. It includes £36,000 from letting of accommodation and £96,000 for landing fees.

733. Chairman.—Paragraph 61 of the Report by the Comptroller and Auditor General is as follows:—

“Subhead M.—Catering Service— Shannon Airport.

Reference was made in paragraph 63 of the report for the year 1947-48 to the position regarding completion of agreed inventories of furniture and equipment supplied to the catering service. Copies of inventories of these articles, compiled from departmental records, have been furnished to me and I am in communication with the Accounting Officer regarding them.”

Mr. Wann.—The Audit Office was furnished with copies of the inventories in February of this year and a test check of the items included thereon against selected purchase vouchers revealed certain discrepancies, but the Accounting Officer’s reply to the points raised has disposed of these satisfactorily. I also inquired if any stocktaking of the furniture and equipment had been carried out and was informed that no such stocktaking had been undertaken for some considerable time but that it would be done at as early a date as possible.

734. Chairman.—Has anything been done about it yet, Mr. Leydon? Have you been able to make a start?

Mr. Leydon.—I have to confess quite frankly that I am not happy about the position in relation to this and I have given instructions that the inventories must be kept up-to-date and that there must be periodical stocktaking of the furniture and equipment as well as the stocks that are appropriate to the catering business.

735. We can only hope that the Committee will be able to hear next year that steps have been taken?—If you are not, Sir, I hope somebody else rather than myself will be answering to you for it. I think I can promise you that I will be able to give you, at any rate a more satisfactory assurance next year.

736. Chairman.—Paragraph 62 of the Report by the Comptroller and Auditor General, which is of an informatory nature only, is as follows:—

“Subhead N.—Management of Dublin Airport.

The agreement between the Minister for Industry and Commerce and Aer Rianta, Teoranta, provides, inter alia, that the Minister, with the approval of the Minister for Finance, shall determine the actual loss arising out of the management of Dublin Airport by the company. The loss so determined for the year ended 31st March, 1950, was £10,593, of which £10,000 has been made good from this subhead. The balance of £593 due to the company will be charged in the next account.”

737. Chairman.—Paragraph 63 of the Report reads:—

“Subhead O.—Subsidy in respect of Air Services.

It was stated in paragraph 58 of my previous report that as subsidy up to the limit of £750,000 prescribed by section 19 of the Air Navigation and Transport Act, 1946, had been paid to Aer Rianta, Teoranta, no further payments could be made pending the enactment of legislation. The Air Navigation and Transport Act, 1950, became law on 15th March, 1950, and section 25 provides that the Minister for Finance may from time to time by order authorise the payment of subsidies to Aer Rianta, Teoranta, on such terms and conditions as may be specified in the order, but that no such order may be made after the expiration of five years from the passing of the Act.

Under the terms of the Subsidy (Aer Rianta, Teoranta) Order, 1950, made on 28th March, 1950, the sum of £473,162 charged to this subhead was paid to the company. This amount is the aggregate of the balances of subsidy, £163,595, due in respect of losses incurred by the company and its subsidiaries in the years 1946-47 and 1947-48, £205,067, being the amount determined to be the losses incurred in the year 1948-49, and £104,500 in respect of estimated losses for the year 1949-50.

Including the charge in this account, the total subsidy paid to the company amounted to £1,223,162 up to 31st March, 1950.”

I just noticed, Mr. Leydon, in the note in the account itself on subhead O, that it was decided to pay losses from the subhead instead of meeting them from the profits realised on the sale of that company’s assets. I know it was apparently a policy decision but could you let us know what type of reason motivated them?—No, Sir, I am afraid not. I shall have to pass that question to my friends from the Department of Finance. My own view is that the losses should have been met from the profit. There was a profit of £457,000 made on the sale of the assets of Aer Linte. I personally felt the simple straightforward course would be to meet the deficit from the accrued profit. Actually it paid for all the development expenditure and there was a substantial balance after paying all the outgoings of every kind that were incurred in connection with the Transatlantic Air Service. The Department of Finance felt that there should be a supplementary to meet the deficit.

Mr. Whitaker.—The view the Department of Finance took was that the profit that was realised on the sale of capital assets was a windfall and was in the nature of a capital profit and that it would be a concealment of the true position to reduce the revenue losses of the companies by applying that profit in relief of them and that the proper course was to show what were the true operation losses and ask the Dáil to vote a subsidy of that amount.

Mr. Leydon.—If I may make a comment on that—there was never any operating loss because the service never started in the technical sense.

738. Chairman.—I was about to ask how it was established what the losses were due to.

Mr. Whitaker.—The subsidy is paid to Aer Rianta, which is the parent company. At that time there were two subsidiaries, Aer Lingus and Aer Linte, the transatlantic service, and in accordance with the Order under which subsidy is paid to Aer Rianta, it covers the losses also of its subsidiaries, and these were expressed to be operating losses. In fact, what we provided for by way of Supplementary Estimate was the actual expense incurred on all three companies, ignoring any element of windfall profit on the sale of the assets of Aer Linte.

Chairman.—You do not think that the father’s eating of sour grapes should make the children’s teeth on edge?

739. Deputy Gallagher.—The assets were sold. Where did we get the windfall?

Mr. Leydon.—The Constellations.

740. Deputy Gallagher.—It looked on the sale of Constellations as a windfall?

Mr. Whitaker.—The Constellations cost a certain amount of money, provided not through the Vote, but direct by the Exchequer by way of subscription of shares. They cost a certain amount. When they were sold, by the accident of good fortune, there was a substantial profit made on the sale as compared with the cost price.

741. Chairman.—Did that profit include the sale to the Department of Public Works of the new Consul-General’s Office in New York?

Mr. Whitaker.—I am afraid I cannot answer that question.

Chairman.—In a way, the money which was recouped through Aer Linte in respect of that was an operational loss, and it at any rate would have been fairly borne out of the profits.

742. Deputy M. E. Dockrell.—What happened to the actual profit, the sum of £457,000. Where did that actually go?

Mr. Leydon.—Of course, part of it offset what I call development expenditure. I do not want to prolong the argument on what is a technical point but I think it could be maintained that all the expenditure on development and all that kind of thing was a form of capital expenditure, wherever it came from. There were never any operations. I do not want to prolong the argument. The whole of the money, of course, was held. It was transferred on what I may call indefinite loan, free of interest, to the Minister for Finance.

743. Deputy M. E. Dockrell.—He is holding it?

Mr. Whitaker.—We are holding it.

Mr. Leydon.—If he has not spent it.

Deputy M. E. Dockrell.—I must say that I would agree with the Department of Finance on this occasion. I do not know whether I am on the side of the angels or the reverse, but I think it gives a clearer picture, a fairer picture. After all, the sale of the Constellations was in the nature of a windfall and could not be regarded as an operational profit while the losses could be regarded as operational losses. The function of the company was not to sell its Constellations and make a profit. I think for the moment it looks as if it is bad for Aer Rianta, but I think in the long run it will turn out to be a very sound piece of accountancy. That is my opinion.

744. Chairman.—I would be interested to know whether the payment made by the Board of Works for the offices in New York, which was made out of voted moneys, has been held by the Minister for Finance as part of these profits on capital?

Mr. Leydon.—I think it would be included in the total. If my assumption is correct, I believe it was paid over to Aer Linte and in that event would be merged in whatever was transferred to the Minister for Finance. I should like to verify that and send you a note.*

I should like to have verified in some respects whether the windfall came from voted moneys.

745. Deputy Gallagher.—These Constellations could not be bought for love or money at the time and that is how you came to get such a huge profit?—Yes.

746. I think the profit was £457,000?— Yes, it was a sellers’ market. That was the profit on the Constellations and on the equipment and spare engines and spares of one kind or another which could not be got for immediate delivery at the time.

747. Deputy M. E. Dockrell.—Had devaluation taken place then?—That was before devaluation and it was a straight profit.

748. Deputy J. J. Collins.—Would devaluation at any period interfere with the sale?—That is a hypothetical question. Devaluation did not take place until many months afterwards. I would hate to try to estimate what the effect of devaluation would be.

749. Deputy Gallagher.—I hate to think of what it would cost to get them back now?—It would cost very much more.

750. Chairman.—Paragraph 64 of the Comptroller and Auditor General’s Report reads:—

“Subhead W.—Appropriations in Aid.

This subhead includes a receipt of £931 2s. 7d. for rent derived from the letting of buildings and a concrete parking apron which had been constructed at Shannon Airport, at a cost of £20,859, for the purpose of being leased as an aircraft repair depôt. The letting conditions provided for a minimum tenancy of two years subject thereafter to yearly renewal, and for an annual rent of £2,650, being the economic charge calculated on a twenty-year period of amortisation of the capital cost. The premises were vacated on 7th May, 1949, on the expiry of the first term of two years, the amount of rent received from the tenant for that period being £5,212 5s. 11d. Portion of the site and buildings were subsequently leased to an operating company at an annual rent of £1,375.”

Have you anything to add, Mr. Wann?

Mr. Wann.—Certain buildings and a concrete apron were constructed at Rineanna in 1946-47 for the purpose of being leased to an American corporation for use as a repair depôt. The corporation gave notice of termination of the lease in August, 1948, and a second letting to an operating company was made in January, 1950, of portion of the site and buildings.

751. Chairman.—This change in rent, I presume, .seriously affects your hopes of getting back the money which was invested?

Mr. Leydon.—Yes, although the total of the present rents is £1,875. That, of course, falls short of the actual amount of the previous rent. That is not a long-term lease, not the whole of it in any case.

752. When this construction was first undertaken was it the view that the first company to whom it was let would require it for some considerable time?—Yes, it was. The Lockheed Aircraft Corporation came in to establish a repair depôt there. The Lockheed Aircraft Corporation make the Constellation aircraft. They hoped it would be possible to develop a considerable business at Shannon Airport with the various air lines using the Lockheed aircraft. There was also a definite maintenance contract with Aer Linte to have a base there for their aircraft to be repaired, overhauled and maintained. The Lockheed Corporation never really got going because, amongst other things, when the transatlantic air service was abandoned the contract with Aer Linte disappeared.

If there is any loss, you had better look after that windfall in this respect also.

753. Deputy Davin.—As to subhead E. —Acquisition of Land, Buildings, etc.—. there is a very heavy overestimation there?

Chairman.—The point that strikes me is that there was a very considerable saving here and that turned out to be very useful when you come to subhead O, where there was very considerable overspending. I am wondering if there was not a rather wide use of virement in this case. It is difficult, at first sight, anyway, to see how money saved on the acquisition of land, buildings, etc., to such an extent could fairly be used to offset an increased subsidy on the air services. Would you not have thought of having a Supplementary Estimate to draw attention to these changes in subhead spending? Subheads E, G and H all show very considerable savings which were used to meet a very large excess under subhead O. There does not seem to be a very close connection between the purpose of these?

Mr. Leydon.—I submit respectfully that it is not necessary to introduce a Supplementary Estimate to draw attention to a substantial saving. The question is whether it is necessary to introduce a Supplementary Estimate to provide for the excess expenditure. There was nothing novel about the service. It was merely a proposal to expend more on the subsidy already provided for in the Estimate.

Chairman.—The difference is very considerable in this case.

754. Deputy P. A. Brady.—Has the position altered under subhead E? It is due to delay in fixing up the awards. Is the position still the same? Has anything been done about that since?—Yes, that has been cleared up now.

755. Chairman.—My own view is that where there is a substantial difference it would be preferable that the Dáil should be informed. It has been done to a very considerable extent in other Votes?—I do not know that there is any hard-and-fast rule. Where there is no novelty about the service but merely a difference in amount, even though it may be substantial, I do not think there is any hard-and-fast rule.

Mr. Whitaker.—I think I might confirm what the Accounting Officer has said. It was accepted policy for years that the Dáil would meet the operating costs of the Air Company. In this year, however, we were held up until 15th March, which was the date on which an amending Act was passed. Until that date we could not make an Order providing for a subsidy payment in that year. On the 15th March, as there were savings on the Vote, the considered view was that, when the principle of settling losses was fixed, the exercise of virement by the transfer of savings was justifiable.

756. Chairman.—As to subhead U.— Equipment—I think the delay that caused this saving was something completely outside your control—the delay in getting equipment?

Mr. Leydon.—It was completely outside our control. It could not be got.

757. Deputy Seán Collins.—To go back to subhead O, is there any explanation for the 50 per cent. underestimation?

Chairman.—There has been considerable discussion here on the paragraph of the Comptroller and Auditor General on the subject and you will find it all there.

758. Deputy Davin.—As to note (8) on page 197—“The staff contributions were increased to meet increased charges by Córas Iompair Éireann”—the receipts from the road services have been in excess of the estimated figure of £3,100. Is that due to an increase in fares?

Chairman.—The explanation says that it was due to increased charges by Córas Iompair Éireann. You will find that reflected in the subhead which deals with travelling expenses—subhead L.—Road Services. The Shannon Airport also shows that there was a slight increase.

759. Deputy Davin.—Am I correct in interpreting the explanation to mean that the staff have been asked to contribute something in excess of what was regarded as reasonable in the original Estimate?

Chairman.—You will notice from the figures that the staff are getting a subsidy of £10,000 towards the expenses of road transport. The total expenditure by the State on the provision of these services was £13,000 odd and the staff contribution was £3,000 odd, so that they are getting a subsidy of £10,000 towards road transport.

Deputy Seán Collins.—Is there any reason why, because of an extern thing over which the staff have no control, they should have to bear the increase?

Chairman.—I think the staff contribution is a percentage one.

Deputy Seán Collins.—If it is a percentage one, it is understandable.

760. Chairman.—When they have a subsidy of £10,000 it is not too bad for a start?

Mr. Leydon.—When Córas Iompair Éireann fares go up in Dublin all the personnel in the Dublin departments have to pay the increases themselves.

761. Deputy Seán Collins.—You will agree also that the staffs in Dublin have got increases which help them to bear the increased transport charges. Is the situation the same in Shannon?—It is exactly the same at Shannon, yes.

Chairman.—I think you will probably find the employees there did not lag behind those in Dublin in looking for increased remuneration.

762. Deputy Davin.—But the cost of transport on staff in public corporations of this kind is not always on the same basis as it is in Dublin or anywhere else. It is part of the emoluments. It is attached to the conditions of service in some cases?—Not in this case. There may be room for argument as to whether or not employees ought to get to their work at their own expense. In all Government departments they definitely have to; those in Government departments in Dublin do not get a subsidy or any other financial assistance in connection with transport charges.

763. Do the people at Shannon get a concession by way of cheaper transport as a condition of service?—No. I think it is only railway employees, if I correctly understand the position, who get concessions of that kind.

764. Is it not a fact that Aer Lingus employees get travelling concessions at cheaper rates than the ordinary public?— Some of them.

765. Deputy Seán Collins.—Is this a privilege as distinct from a condition of employment?—It is a privilege. Conditions of employment are the conditions applicable to any civil servant in so far as they are Government officials, which to all intents and purposes they are. They are employees of the Department. There is no condition of employment in connection with cheap transport.

766. It is not held out as an inducement in connection with recruitment, is it?— It is not.

767. Then it is a privilege?—That is so, and if they return to Dublin from Shannon Airport they get no concession.

768. Deputy M. E. Dockrell.—Is it the position that the Department, anticipating inaccessibility, made this provision?— That is the position. These officials have to live in Limerick or Ennis.

VOTE 58—TRANSPORT AND MARINE SERVICES.

Mr. Leydon further examined.

769. Chairman.—Paragraph 65 of the Report of the Comptroller and Auditor General reads:—

“Subhead AA.—Payments to Córas Iompair Éireann.

Payments totalling £4,091,000 for capital purposes and to meet operating losses were made to the company, which was incorporated on 1st January, 1945, by section 9 of the Transport Act, 1944. £2,462,369 was advanced in respect of capital expenditure, and will be repayable on such terms and conditions as the Minister for Finance may determine by the Board established by section 5 of the Transport Act, 1950. The Minister has agreed to defer a decision on the conditions of repayment until May, 1952. The balance of £1,628,631 represented a non-repayable grant to cover operating losses up to 31st March, 1950, and included £561,347, being the amount required to enable the company to repay to the Central Fund sums previously advanced under section 18 of the Transport Act, 1944, on foot of interest under the State guarantee of debentures, and £209,000 in respect of interest payable on guaranteed debentures.

Section 18 of the Transport Act, 1944, provides that all moneys required from time to time by the Minister for Finance to meet payments under the State guarantee of debenture stock shall be advanced from the Central Fund, and that sums so advanced shall be repaid to the Central Fund by the company within twelve months from the date of the advance. The section also provides that where repayment has not been made as prescribed any amount remaining outstanding shall be repaid to the Central Fund out of moneys provided by the Oireachtas and, further, that such repayment from voted moneys shall not exempt the company from the liability to repay to the Central Fund, with interest, the full amount of any advance made from the Fund. In view of these provisions, I have communicated with the Accounting Officer regarding the payment from the Vote of the non-repayable grants of £561,347 and £209,000.”

Mr. Wann.—Two points arise here. The first is the issue from the Vote of the non-repayable grant of £561,347 to enable the company to repay to the Central Fund sums already advanced from the Fund on foot of interest under the State guarantee of debentures. This grant is non-repayable. The Transport Act, 1944, provides, however, that such repayment from voted moneys shall not exempt the company from its liability to pay to the Fund the full amount of any advances made from the Fund. The reply to my inquiry simply stated that the non-repayable grant of £561,347 was charged to subhead AA. in accordance with the terms of the Supplementary Estimate passed by the Dáil and that the conditions of the repayment were approved by the Department of Finance.

The second point relates to the non-repayable grant of £209,000 from the Vote to meet current debenture interest. It appeared that this procedure was in conflict with section 18 of the Act, which prescribes that the money required to pay debenture interest shall be advanced from the Central Fund. The Accounting Officer has informed me that it is recognised that the treatment of this advance was not in accord with the Act.

770. Chairman.—Would you like to add anything, Mr. Leydon?

Mr. Leydon.—I would hate to become entangled in an argument with the Comptroller and Auditor General about the technical legal point involved here. If I may, as a mere tyro in these matters, explain the situation from the practical point of view, I would say that the procedure adopted was adopted with a view to giving the Dáil a complete picture of what the position really was. It is true that the Act provides for one procedure. I would suggest, with all deference, that does not necessarily preclude an alternative procedure, if that procedure is itself fully legalised eventually. In this particular case we did consider the question of making a provision for subsidy payments in the Act when it was being prepared; we considered it in consultation with the Department of Finance. Eventually our view was that it was undesirable to enshrine in this statute a provision which appeared to contemplate subsidy payments for an indefinite period, perhaps, to Córas Iompair Éireann. The intention was that Córas Iompair Éireann should make every effort to get back to a paying basis so that it would not require a subsidy. Now, when the Government decided to go to the Dáil for the necessary funds to put Córas Iompair Éireann into a liquid position again, these provisions were included. It is true they might have been omitted and the procedure under this Act could have been followed; but it was necessary, in order to give a complete picture to the Dáil, to explain the situation fully, and I think it could be argued that the financial position of Córas Iompair Éireann was brought home more forcibly to the Dáil by the method that was adopted whereby the Dáil was asked to vote money. The Minister did explain in the Dáil, when introducing this Estimate, at col. 1545 of Vol. 118 of the Official Report of 30th November, 1949, how the amount was made up. He said it included interest on debentures of £770,000:—

“Taking the first item, namely, debenture interest, £770,000. This figure is made up of £561,000 which fell due during the year 1948 and the first half of 1949, and which the Exchequer has already paid under guarantee given in accordance with Section 18 of the Transport Act, 1944. The balance of £209,000 is required to meet debenture interest which will fall due on the 15th January next.”

In other words, provision was made there to enable Córas Iompair Éireann to meet its interest charge when it fell due.

771. Chairman.—The only point is that he certainly omitted to point out to the Dáil that what he proposed to do was contrary to the provisions of the Act. Personally, I would consider it a very serious precedent. An Act can only be amended by statute and if a statute can be amended in any other way very dangerous things could happen. However, I shall not express a personal opinion on this. The Committee will probably have to consider the matter?—I can see that a point could be made for the argument that the section should have been quoted on the face of this Supplementary Estimate but, as far as the legalisation of this is concerned, of course it was entirely legalised by the Appropriation Act so that from that point of view there is nothing illegal about it. It is a case of a choice between two procedures. It was done purely and entirely to bring the situation clearly before the Dáil, as I think it had to be brought before the Dáil no matter which procedure we adopted.

772. Deputy Seán Collins.—I think the point that arises here is purely one of technique?—I think it is a technical point. I do not know whether the Department of Finance would like to add anything on the subject to clarify it and perhaps introduce some fresh consideration.

773. Chairman.—I would like to hear the Department of Finance on the point that the Appropriation Act can be used as an overriding statute?—I do not want to be misunderstood. I am not saying it overrides or amends any other statute. What I did say is that it does legalise the procedure that we adopted. The Dáil voted money for a purpose for which this other procedure was provided.

Deputy Seán Collins.—I trust we will not be called upon to exercise our minds on an argument as to a conflict of laws.

Chairman.—I think we will have to consider it. After all, we are supposed to ensure that the ordinary financial machinery of the State operates in the ordinary way. In this case, admittedly, it did not quite.

774. Deputy Seán Collins.—Has the Comptroller and Auditor General any further observations to make on this particular matter?

Mr. Wann.—In view of the conflict between the procedure adopted and that prescribed in the Act of 1944 I thought it my duty to report on the matter.

775. Chairman.—I think if the Department of Finance officials would care to say something, it might clarify the position.

Mr. Whitaker.—The Department of Finance are very definitely of the view that the procedure which was in fact adopted was more virtuous than strict compliance with the Act. The consideration that weighed most with us was that mentioned by Mr. Leydon, that this was the first time the Dáil was asked to vote moneys to meet the losses of Córas Iompair Éireann, and it was therefore desirable that a full account of these losses should be given. It would be completely unrealistic to exclude from the losses the debenture interest payments which, quite obviously, could not be met by the company. I also want to endorse the view expressed by Mr. Leydon that it is open to the Dáil, exceptionally, by way of a Supplementary Estimate which afterwards receives confirmation in the Appropriation Act, to vary or modify the provisions of the statute. I emphasise “exceptionally”. This was, I think, an exceptional instance.

Chairman.—I think that the Committee probably has now all the facts which it needs. We can consider the matter again at our final meeting.

776. Deputy Davin.—With regard to the figure of £4,091,000, could Mr. Leydon tell us what period that covered—from the coming into operation of the Act to what date?

Mr. Leydon.—The sum of £2,462,369 was required for capital works, and the balance was for operating losses.

777. I know, but what I am anxious to get is the period from 1st January, 1945, to what date?—The 31st March, 1950.

778. The paragraph in the Report of the Comptroller and Auditor General says: “The Minister has agreed to defer a decision on the conditions of repayment until May, 1952.” Does that position still stand?—Yes, but May, 1952, has not arrived yet.

779. I thought that there might have been a reconsideration of that position for other reasons?—No.

780. Deputy Seán Collins.—On subhead C.—Salaries, Wages and Allowances—I notice a reduction in expenditure under this subhead. Does the reduction mean that there has been an actual reduction in staff?

Chairman.—That is the explanation given in the note to the subhead—“Saving due to staff vacancies”.

781. Deputy Seán Collins.—Are these vacancies for permanent staff which are not going to be filled?

Mr. Leydon.—Not necessarily. Some of them were for professional, or technical, posts, which it has not been possible to fill.

782. Deputy Seán Collins.—On subhead L.—Medals and Certificates—the footnote to the subhead indicates that some unforeseen technical difficulties arose in proceeding with the scheme. Has the scheme been abandoned, or is it likely to be proceeded with?—The scheme has not been abandoned. What happened was, there was a difficulty about the designs. The first designs were not acceptable. A fresh design was obtained which seemed to be all right, but the technicians told us that, from a technical point of view, it was not suitable for reproduction, and there was some delay. Since then, they have all been delivered.

VOTE 60—INDUSTRIAL AND COMMERCIAL PROPERTY REGISTRATION OFFICE.

Mr. Leydon called.

No question.

The witness withdrew.

VOTE 4—COMPTROLLER AND AUDITOR GENERAL.

Mr. W. J. Kiely called.

783. Deputy M. E. Dockrell.—Who audits the accounts of this Department?

Mr. Wann.—They are audited independently by an officer who is not connected in any way with the payments made from time to time.

784. Deputy Seán Collins.—Have you been able to get staff?

Mr. Wann.—You will see from subhead A. that the expenditure on salaries, etc., was £3,338 less than granted. We have not been able to fill all vacancies.

785. Deputy Seán Collins.—That is a feature that disturbs me, that you cannot get staff at the fountainhead of our financial system.

Mr. Wann.—We try to get people from the top of the examination lists, but, of course, there is keen competition for them.

786. Deputy P. A. Brady.—Does that also apply to subhead B, that owing to staff difficulties you were not able to carry out local audits to the extent anticipated?

Mr. Wann.—Not quite. The saving is simply due to the fact that we did not find it necessary to carry out as many local audits as was anticipated.

The witness withdrew.

The Committee adjourned.

* See Appendix XIII.

* See Appendix XIV.

* See Appendix XV.

* See Appendix XVI.