MIONTUAIRISC NA FINNEACHTA
(Minutes of Evidence)
Déardaoin, 30ú Iúil, 1953.
Thursday, 30th July, 1953.
The Committee sat at 11 a.m.
Mr. W. E. Wann (An tArd-Reachtaire Cuntas agus Ciste) and Mr. M. Breathnach, (An Roinn Airgeadais) called and examined.
VOTE 60—OFFICE OF THE MINISTER FOR SOCIAL WELFARE.
Mr. D. J. O’Donovan called and examined.
725. Deputy Hickey.—With regard to subhead I.—Health Embarkation Certificates—does this amount represent payments to doctors for giving certificates? How is it incurred?—The work in connection with the embarkation scheme— it has been dropped, by the way, in the past year—was done by Dublin Corporation and the payment here was a payment by us to Dublin Corporation. It is mainly the salaries of doctors and nurses who examined the workers who left here for England. It also covers the costs of disinfestation which, unfortunately, we had to provide at this end for a few years.
726. Was it demanded by the people on the other side that they should possess a certificate before landing on the other side?—They had to be examined by Dublin Corporation before they were given their permit to go to employment in Britain. It started during the war when many of our workers had to go to camps. It has been dropped now.
727. Chairman.—There is a note in regard to No. 6 of the Appropriations in Aid-a sum of £875 under the heading “Miscellaneous” which says: Receipts under this head cannot be forecast with any degree of certainty. That looks very obvious, but could you tell us how that sum is made up?—The main items making up the surplus are a sum of £300 received from the Department of the Taoiseach in recoupment of the remuneration of an officer seconded by us to the Committee of the Mansion House All Party Anti-Partition Conference and a sum of £300 received from the National Bank as a contribution towards the cost of printing cheques used in connection with the payment of benefits from the National Health Insurance Fund. That has its origin in the days when the National Health Insurance Society was functioning as a separate organisation, before the merger with the Department in 1950. When it was arranged with the bank to carry the account of the society, the society negotiated an agreement with them, one of the items of which was that the bank would make a contribution of £300 towards the cost of printing cheques. Ordinarily, a bank supplies its clients with cheques, but the society were issuing 26,000 a week—cheques for very small amounts from one or two shillings to a few pounds, and the bank would not supply the society with free cheques. They agreed, however, to make that contribution towards the cost of printing. These are the two main items.
VOTE 61—OLD AGE PENSIONS.
Mr. D. J. O’Donovan further examined.
728. Chairman.—Paragraph 94 of the Report of the Comptroller and Auditor General reads:—
“Subhead A.—Pensions and Supplements.
Consequent on the enactment of the Social Welfare Act, 1951, increased rates of old age pensions and pensions to blind persons became payable as from 5th October, 1951, the maximum weekly pension being increased from 17/6 to £1. From this date, also, a person whose yearly means exceeded £52 5s. 0d. but did not exceed £65 5s. 0d. became entitled to the minimum pension of 5/- per week provided the other statutory conditions were fulfilled; no pension had previously been payable where the yearly means were more than £52 5s. 0d. Certain modifications in the method of calculating means, which were incorporated in the Act, became operative as from 17th July, 1951.
The necessary additional financial provision was made by supplementary estimate.”
I take it that is for information, Mr. Wann?
VOTE 62—CHILDREN’S ALLOWANCES.
Mr. D. J. O’Donovan further examined.
729. Chairman.—What is the item of £13 realised under the heading “Miscellaneous” in the extra receipts payable to the Exchequer?—A sum of £2 15s. 0d. refers to over-issues, refunds of amounts received by claimants to which they were not entitled, arising from incorrect awards made by our own deciding officers, and a sum of £10 5s. 0d. to voluntary refunds by persons who for various reasons desired to have a child excluded from their claim and who refunded the amount already received in respect of such child. I cannot offhand say what reasons there were for wishing to have a child excluded.
Deputy McGrath.—Compassion for the taxpayer, I suppose.
730. Chairman.—Why did the £2 15s. 0d. not come under the ordinary recovery of the children’s allowance?— It was not recovered, but was repaid voluntarily.
731. Are these first ones statutory repayments?—This £2 15s. 0d. was an over issue, not a statutory repayment. The £10 15s. 0d. was payable but acceptance of it was refused. I am sorry that I cannot say offhand in what circumstances the claimant thought fit to refuse the payment. I can send you a note.
732. Do, please, if there is something extraordinary about it. It does look extraordinary?—It is. I have not heard of such a case before. I am afraid I should have looked the matter up.
733. Perhaps you would send a note? —Yes.*
VOTE 63—UNEMPLOYMENT INSURANCE AND UNEMPLOYMENT ASSISTANCE.
Mr. D. J. O’Donovan further examined.
734. Chairman.—Paragraph 95 of the Report of the Comptroller and Auditor General reads:—
“Subhead D.—Unemployment Assistance.
The internal departmental audit, hitherto carried out by the Department of Social Welfare, of sums disbursed on unemployment assistance and unemployment benefit was suspended in the course of the year under review and I am informed that it had been found that the amount concerned in the overpayments brought to light by this audit in no way justified the very high expenditure on staff salaries and costs of administration involved in detecting them. I understand, however, that proposals have been approved for the installation of a punched card system of control of payments and the necessary equipment ordered, and that this equipment will enable all the suspended checks to be revived.”
735. Have you introduced the punched card system?—We have just received delivery of the machines and the new system will be put into operation almost right away.
736. Is there a gap since the abandonment of the previous order?—There is undoubtedly a gap. We suspended the checks which previously existed. We have not yet substituted the new checks. We found that the old checks were not very effective and were very costly. The principal checks yielded evidence of overpayments and errors totalling £700 and £800 respectively over a period of ten years. The staff costs in each case in finding those overpayments over a period of ten years ran to about £50,000. It was felt that in view of that, and a reorganisation which happens to be proceeding in the Department generally at headquarters in connection with the occupation of new office buildings, it was necessary to end what we feel was an over-costly control and provide for the substitution of a more modern and more effective control through the punched card system as soon as we move into our new headquarters.
737. What percentage of payments was checked?—In the particular cases to which I have referred, I think they were meant to check practically every payment. I have a note on this, and perhaps the Committee would give me permission to read it. The internal audit referred to by the Comptroller consisted mainly in applying certain checks when filing away the receipts for the weekly payments of unemployment insurance and unemployment assistance which are sent to our claims and records section at headquarters by the 32 employment exchanges and the 91 branch employment offices throughout the country. There are about 2,500,000 of those receipts in the year, and it was an extremely laborious task, requiring the services of a large staff— about 40 heads—to sort and file them so as to associate them with the relevant claims and be able to trace and produce them for examination as required.
This long-standing procedure was reviewed, and it was found to be so costly in relation to results that it was decided to suspend it and to release the staff for more necessary and fruitful work.
We found, too, that the main purposes of the old system could be achieved by a comparatively small staff equipped with a battery of Power-Samas punched-card machines. With this punched-card method, the various payments in respect of each claim can be associated and the vouchers in respect of them traced by punching a card for each voucher and then sorting and tabulating the cards through the machines. The mechanised system, in fact, should enable us to apply the former checks more accurately and efficiently, as well as more economically. It will make possible, also, important additional controls which were not previously practicable.
These machines have now been delivered and the new system is about to be put into operation. Apart from the economy of labour, it should provide all that is necessary in respect of the auditing, filing, tracing and production of the weekly receipts for payment. It will enable the weekly totals of benefits paid by each local office to be checked automatically instead of by hand, as formerly, and it will supply valuable statistical material which was not hitherto available.
It is true that some of the checks formerly applied to the receipts when they were being filed away can no longer be applied under the new procedure, but it is felt that, as the results they yielded were negligible, their continuance could not be justified. I should add, perhaps, that the elaborate and costly check at headquarters was additional to a careful check of benefit payments when they were being made at the local offices, where it is the rule that each payment must be calculated separately by two officers.
I might mention, also, that the branch employment offices—several of which come under the general supervision of each employment exchange—are subjected to four check inspections each year by officers of the parent exchange. The employment exchanges, in turn, are inspected periodically by officers from headquarters. At these inspections payments of unemployment benefit and assistance, made and in the course of being made, are subjected to close scrutiny.
Mr. Wann.—The extent of my audit is governed by the character of the departmental examination, and if this internal audit were indefinitely suspended it would probably be necessary for me to undertake a much more intensive audit than would otherwise be the case. If the present punched-card system of control, when in operation, enables all the suspended checks to be revived, as is anticipated by the Accounting Officer, the position, of course, would be satisfactory from my point of view.
Chairman.—All we can do now is to wait and see what happens.
Mr. O’Donovan.—I am afraid that is the position.
VOTE 64—WIDOWS AN D ORPHANS’ PENSIONS.
Mr. D. J. O’Donovan called.
VOTE 65—NATIONAL HEALTH INSURANCE.
Mr. D. J. O’Donovan further examined.
738. Chairman.—Paragraph 96 of the Comptroller and Auditor General’s Report reads:—
“Subhead C.—Investment Return.
Section 21 of the Social Welfare Act, 1950, empowers the Minister for Social Welfare to make payments out of the National Health Insurance Fund in respect of expenditure on the acquisition of lands, premises, furniture or equipment or the construction or reconstruction of premises, and provides that an investment return in the form of contributions to the fund shall be made in respect of such payments at rates to be agreed upon from time to time between the Minister for Social Welfare and the Minister for Finance. Such contributions fall to be made out of moneys provided by the Oireachtas.
Further payments amounting to £277,710 15s. 3d. were made out of the Fund under section 21 of the Act during the year ended 31st March, 1952, bringing the total payments to that date to £693,862 19s. 7d. As shown in the account, the amount of the investment return paid to the Fund from the vote in the year under review was £19,890 15s. 9d.”
Mr. Wann.—The payment from the Vote to the National Health Insurance Fund as investment return is calculated on 3.6 per cent. of the total expenditure incurred with an additional 3.5 per cent. on expenditure incurred for furniture and equipment.
739. Deputy Hickey.—Where was the money invested?
Mr. O’Donovan.—In the Store Street premises and their equipment.
740. Chairman.—How were these percentages of 3.6 and 3.5 arrived at?—The 3.6 per cent is apparently the recognised investment return for the time being. It is determined by the Minister for Finance and not by us. I am told by the Accountant that it represents the actual return being received from those investments which were realised for the purpose of the purchase and equipment of the Store Street building.
741. What about the 3.5 per cent.?— That applies only to such portions of the investment as is represented by equipment, and the additional 3.5 per cent. is to cover depreciation and ultimate replacement.
VOTE 66—MISCELLANEOUS SOCIAL WELFARE SERVICES.
Mr. D. J. O’Donovan further examined.
742. Chairman.—Paragraph 97 of the Report of the Comptroller and Auditor General reads:—
“Subhead A.—Grants under the Education (Provision of Meals) Acts, 1914 to 1930.
The sum of £73,850 16s. 11d. charged to this subhead represents recoupment to local authorities of one-half of the net amount expended by them out of the rates in providing meals for children attending national schools. Regulations made under the Education (Provision of Meals) (Ireland) Act, 1917, set out the conditions under which the grants are payable. Article 8 of these regulations provides that food shall not be supplied free of cost except to children whose parents or guardians are unable from their own resources to provide such food or to contribute towards the cost of the provision thereof. I have been informed that this article is still in force but that it is not generally operated by the local authorities owing to the difficulties of imposing a means test.”
743. —Have you any intention, Mr. O’Donovan, of regularising the position in regard to that?—A few months ago we made contact with the Dublin Corporation School Meals Committee and joint discussions have been proceeding since then on this question whether or not it is practicable to collect from school children. We have no result from it yet but I think that if the finding in the case of Dublin —which is the most important centre—is that it is not practicable to collect contributions, then the Minister probably will have to look at the regulations and see whether we should not legalise the position by altering the regulations.
Deputy P. A. Brady.—That will have to be done, to my mind. We discussed this at the Corporation recently and it is not possible to work the means test.
744. Deputy Mrs. Crowley.—Does this relate only to urban areas or does it apply to rural schools as well?
Mr. O’Donovan.—The school meals scheme operates only in urban areas.
745.—It rules out rural areas?—We have no scheme operating in rural schools.
746. Other than the Gaeltacht?—Yes, I beg your pardon, other than in the Gaeltacht.
Chairman.—Thank you, Mr. O’Donovan.
The witness withdrew.
Seán Ó Broin called and examined.
747. Chairman.—Paragraph 21 of the Report of the Comptroller and Auditor General reads as follows:—
“Subhead K.3.—Grant in respect of the Development of the Manufacture of Milk Powder.
The expenditure charged to this subhead, for which provision was made in a supplementary estimate, represents a payment in settlement of a claim by a co-operative creamery for subsidy on sales in this country in the years 1941 to 1948 of certain milk foods manufactured in the United Kingdom from milk powder produced by the creamery.
With a view to assisting in the initial stages of the development of this enterprise it was decided to pay subsidy at the rate of 6d. per lb. tin and 3d. per lb. carton on sales of such foods, and payments at these rates were made on the sales for the period July, 1938, to February, 1941. Formal intimation of the termination of the subsidy was not, however, conveyed to the creamery which maintained that cessation of payment was a breach of the original arrangement and claimed subsidy on sales effected subsequent to February, 1941. Following negotiations the sum of £14,682 12s. was accepted in full and final settlement of the claim.”
748. Could you say why the payment of the subsidy was discontinued in February, 1941?—Our record of that is not very full and, unfortunately, the officer who dealt with it has since died. Generally, I think it was considered that the creamery was doing fairly well and that the justification no longer existed for continuing the subsidy. The matter was left in suspension, to be gone into at a later stage.
749. When did the company make the claim?—Not until 1950 or so.
750. So from 1941 to 1950 there was no claim?—Yes, the matter was in abeyance.
751. That seems extraordinary. Could you say what claim they did make and why did they make it?—We paid them £14,000. They made a claim that was considerably more than that—about twice that.
752. Mr. Wann.—£46,000?—I have not got the actual amount of the claim here at the moment.
753. Chairman.—I presume sanction was got from the Department of Finance?
Mr. Ó Broin.—I may say that the sanction was the most absolute sanction we could get. This was specifically put to the Dáil by the Minister, who got specific sanction for this purpose after he had explained it to the Dáil. We thought our function then was to pay.
I appreciate that, though I must say I have read the debate in the Dáil and would not say it was a very clear one. However, if the Dáil was satisfied it is not for me to question it. I would not like to go into it again.
754. If they claimed £46,000 and you got away with £14,000, I am sure it is reasonable?—I have not got the claim here but I know it was considerably in excess of the amount paid.
Mr. Wann.—I think that the claim for the period 1941 to 1951 was over £46,000.
755. Deputy D. O’Sullivan.—Was it not strange that formal intimation of termination was not made at the time to the people concerned?
Chairman.—I take it the history of this is rather vague?
Mr. Ó Broin.—Yes. It might have been better to have formally conveyed an intimation of suspension or termination at the time. I cannot say why that was not done.
756. Chairman.—It may have been that the officer concerned was satisfied that no claim was made by the creamery?—I think he was perfectly satisfied that the justification for a review, at any rate, of the whole position, warranted him in suspending the payment of the subsidy.
757. Chairman.—Paragraph 22 of the Comptroller and Auditor General’s Report states:—
“Subhead M.10.—Farm Buildings Scheme.
The charge to this subhead comprises £99,925 5s. 10d. for administrative expenses and £238,780 15s. 8d. for grants paid to rated occupiers for the construction and improvement of farm buildings and for certain allied works. The grants include £148,482 0s. 5d. towards the cost of newly constructed farm buildings or extensions at rates varying according to the nature of the work undertaken; £23,263 15s. 7d. for improvement, repair or conversion of farm buildings on the basis of 50 per cent. of the approved estimated cost of the labour required, subject to a maximum grant for each building equal to three-fifths of the grant for a new building of the same class; and £67,034 19s. 8d. for other approved works on the basis of 50 per cent. of the approved estimated labour cost.”
That note is for information only.
758. Chairman.—Paragraph 23 by the Comptroller and Auditor General gives a tabular list of expenditure on the Land Rehabilitation Project and Water Supplies. It is for information and reads as follows:—
“Subhead M.11.—Land Rehabilitation Project and Water Supplies.
The expenditure on this service was made up as follows:—
759. Chairman.—Paragraph 24 of the Report of the Comptroller and Auditor General reads:—
“The Land Reclamation Act, 1949, authorises the Minister for Agriculture to carry out land reclamation, field drainage and other works and provides for the payment by the occupiers of a contribution towards the cost, the contribution being payable when the Minister certifies that the work has been completed or, if an occupier has so elected, by means of an annuity. Under the arrangements made for the operation of the project an occupier may have approved work carried out by the Department on agreeing to pay two-fifths of the estimated cost plus the cost of fertilisers supplied, subject to a maximum of £12 per acre, or alternatively, he may carry out the work himself and receive a grant amounting to two-thirds of the estimated cost, subject to a maximum of £20 per acre less the cost of fertilisers supplied.
A scheme was introduced in 1950-51 to enable occupiers of land to obtain supplies of lime and artificial fertilisers on credit, and to have them spread by the Department with the object of rehabilitating land deficient in soil fertility but not needing the specific works already provided for, i.e., field drainage, etc. It provides for the testing of land to establish its need of lime and fertilisers on payment by the occupier at the rate of 1s. per statute acre. A farmer who elects to avail of this scheme is required to deposit at least 10 per cent. of the cost and to repay the balance by means of an addition to his existing land purchase annuity.”
760. Could you give us the cost of the two sections of this scheme to the end of the year concerned, or to a later date?— I think the tabular statements in the preceding paragraph give an idea of the relative amounts spent in each case.
761. You might have later figures. Could you give anything which would show the relationship between the cost of the two schemes and the acreage involved —the A and B sections of the Land Reclamation Project?—No, I have not got that with me.
I wonder could you give us a note to say the acreage involved under both sections and the cost—that is, the cost to your Department. Some of the cost, of course, could not be shown, coming under section A.*
762. Chairman.—Paragraph 25 of the Report which is for information states:—
“A scheme for the installation of water supplies in farm dwellings is also in operation. Fifty per cent. of the approved estimated cost of installations is allowed, subject to a maximum grant of £100, but no grant is payable for any work or combination of works estimated to cost less than £10”.
763. Chairman.—Paragraph 26 of the Report of the Comptroller and Auditor General reads as follows:—
“The Office of Public Works acts as agent of the Department for carrying out certain works in connection with the project. Under this arrangement the Office was requested to undertake certain river improvement works and to purchase the necessary plant. Tenders were accordingly invited for the supply of six excavators and the types offered in four of the tenders received, which varied in amount from £30,936 to £51,125, were considered suitable. The delivery terms specified in the three lowest varied from one to two years, whereas completion of delivery in two months was offered in the highest tender, which was accepted and a contract placed in March, 1951, for completion in May, 1951. The contractor, however, failed to complete delivery until May, 1952. It appears that the work for which the excavators were purchased has not so far been undertaken and I am in communication with the Accounting Officer on the matter.”
Have you anything to add, Mr. Wann?
Mr. Wann.—The Accounting Officer has given me a very detailed reply to my inquiries and perhaps I may be allowed to read some extracts:—
“Arrangements were made with the Commissioners of Public Works under which they would undertake, on request from the Minister for Agriculture, as his agents, certain river improvement works with the object of providing adequate outfall facilities for the purposes of the land project. In January, 1951, the Minister requested the Commissioners to undertake the necessary engineering surveys and works on certain specified rivers, including the Rye River (County Kildare), ... and authorised them at the same time to purchase all such items of plant and machinery as might be required for the purpose of such surveys and works. It was the desire of the Minister for Agriculture that these river improvement works should proceed as rapidly as possible. . . Works on the Rye River, however, had to await the formulation of proposals based on a separate engineering survey and, in addition, the purchase of certain essential machinery; these were the six excavators referred to in the query.
The Commissioners of Public Works have informed me that it was expected at the time that the preliminary stages of survey and preparation and approval of a scheme of river improvement works would be completed in time to permit of actual commencement of works on the Rye in the Spring or early Summer of 1951, and they accepted the tender for £51,125 as affording the only prospect of commencing the works by that time. It was known that the supply position was extremely difficult and, while the Commissioners’ previous experience with the firm of contractors as regards their promises of delivery was that they were comparatively satisfactory in that regard, the delay in delivery which subsequently occurred had to be accepted as unavoidable.
The question of modifying the Contract arrangements was considered by the Commissioners in November, 1951 (by which time only one of the six machines had been delivered) when the firm notified the Commissioners of an increase in the price of the machines; but as the preparation of the Commissioners’ report and estimates of cost of alternative schemes had reached an, advanced stage at the time they decided to let the contract stand, as any alternative contract arrangement would have involved considerable additional delays in delivery of the essential machinery and postponement of the commencement of works for at least 12 months beyond the Spring or early Summer of 1952.
The Commissioners’ report, with estimate of cost of alternative schemes, was received by the Minister for Agriculture in February, 1952; and as the last of the six machines was delivered in May, 1952, the Commissioners would have been in a position to commence work then. The Minister for Agriculture, however, decided on consideration. of the Commissioners’ report to postpone the works pending consideration of the costs involved. Accordingly, when the Commissioners proposed on the 29th July, 1952, that the machines should be taken over by them for use on their own works under the Arterial Drainage Act, 1945, the Minister agreed.”
764. Chairman.—It is not a very happy position. One thing I do not like about it is that an increased payment was made for the five excavators which had not been delivered by November of 1951, because the firm to whom the contract was given said they could deliver in two months. I presume this part of it is not exactly your responsibility?—This part was done by the Board of Works. I think they were in a serious difficulty. They tried to get the machinery as quickly as possible. They did not succeed in doing that, and when they found in November that the machinery would cost more, they were faced with the prospect of either going on with that contract or making a new one which would involve still further delay.
Mr. J. C. Cullinane (Oifig na nOibreacha Poiblí) called and examined.
765. Chairman.—Could the representative of the Board of Works say what form of contract was entered into for the acceptance of machines at a high price because of the promise of an early delivery when they could not enforce that delivery or inflict penalties?
Mr. Cullinane.—Speaking generally, in or about that period it was impossible to place any contract in which you could insist on delivery of supplies by a particular date or at a particular price. All kinds of machinery, and particularly all kinds of engineering supplies were very difficult to get, and all contracts we made for the type of machinery we were looking for contained a price variation clause such as “subject to alteration without notice” or some such clause. We had no option but to accept. Actually, our experience of the particular firm with whom we had this contract was satisfactory in the matter of supplies largely because they got their stuff from the United States. It was impossible to get anything of that nature from Britain quickly. In regard to the contract for the delivery of these machines they told us they had one in stock and five for delivery after a two months’ period. The one in stock was unfortunately held up by reason of a strike in the works in Dublin which caused a delay of some months. However, that did not affect the issue really. The other five machines were held up for reasons beyond anybody’s control on this side of the world, because in or about that time the United States Government introduced a Control of Materials Order which covered the type of machinery for which we were looking. It was necessary to get a Defence Order Priority Rating before the machines would be released for export from the U.S.A., and we had to supply the usual guarantees that they were wanted for use in our own country, indicate the purpose for which they were required and so on. The contracting firm put that through E.C.A., and ultimately they did succeed in getting the Export Order, but they could not get it any earlier. That was the difficulty in regard to delay in supply.
766. Chairman.—What terms of delivery were in the lower tenders?
Mr. Cullinane.—One offered delivery in 18 months; another in 12 months and another involved a delivery over a period from October, 1951, to January, 1953. I might add that our experience with British firms at that time was that they were not able to go near fulfilment of their promises in the matter of delivery dates.
767. Have the machines been put to work yet?—Since we took them over they are all working on various schemes throughout the country.
768. How long were they idle?—They arrived at various periods. The first one was paid for in October, 1951—it arrived shortly before that. The second machine came in February, 1952, the third in March, the fourth in April, the fifth in May, and the sixth in June, 1952. We were not in a position to make any use of these machines until such time as the Department of Agriculture gave us the go-ahead signal. When we found that there was delay in proceeding with Department of Agriculture work, we sought Finance sanction to take over the machines for our own purposes. We put them to work gradually. There was a need for them for particular jobs. Although they did not go out in a block, they went out rather quickly one after another.
769. My information is that some of the buckets for these excavators did not arrive until May, 1953?—That may be, I am not sure. In any event it would not have held up the use of the machines because we do carry stocks of buckets which are interchangeable in the various machines.
770. Can you say in regard to this type of machinery whether you are now able to make a firmer contract in regard to delivery dates?—We have not placed any further contracts for machines of this type, but I think the same conditions would still apply. In all contracts there is a price variation clause.
771. It is not so much the price variation clause that bothers me as the fact that one tender should be accepted because of short-term delivery which the contractor fails to fulfil. If they gave him the preference and it was not an advantage at all, it is a very serious position from our point of view?—We have been up against that problem, and it is very difficult to cure it. The only thing we can do is to watch closely coming up to the contract date and to press the contractor as much as possible to fulfil his contract. However, if he does not we are thrown back on accepting the second lowest tender with the prospect of a still further delay.
772. Apparently it is not possible to introduce any clause into the contract which will enable you to impose a penalty for failure to deliver? That, I suppose, would only become possible when the delivery position would ease?—Yes. When there was a buyer’s market.
Mr. Cullinane withdrew.
773. Chairman.—Paragraph 27 of the Report of the Comptroller and Auditor General reads as follows:—
“Reference was made in paragraph 32 of my last report to the inadequacy of the system of accounting for machinery and stores purchased for the land rehabilitation project. In the course of the audit for the year under review a test examination of the accounting system now in operation at the central stores was carried out with satisfactory results. I have inquired as to the present position regarding the introduction of a standard system of store accounting at local Land Project Offices.”
Have you anything to add, Mr. Wann?
Mr. Wann.—The Accounting Officer has informed me that a standard system of store accounting has been introduced in all Land Project District Offices. Also, that a recent decision of the Government that the Department’s units of machinery should be disposed of to private contractors will obviate the necessity for maintaining stores in districts throughout the country in the future.
774. Chairman.—Have you been able to progress with the disposal?
Mr. Ó Broin.—We have advertised a number of these machinery units and we have received tenders, some of which we have accepted. We have one batch of machinery in the process of being sold at the moment.
775. Are you able to store machinery in the meantime?—We try to keep it working up to the last moment, and we are indicating in our advertisements where the machinery can be seen. The machinery is in various parts of the country.
776. Deputy Hickey.—Out in the open?—They are being worked. We try to keep them at work as long as possible.
777. What is the difference in the sale price as compared with the machinery you did sell?—We cannot say at the moment because we are only selling some of them.
778. What about the machinery you have sold?—The Minister was asked a question in the Dáil about that, and he was not in a position to give the information.
779. You will be able to tell the Minister?—I am afraid the information is not available yet.
780. How long is the machinery sold? —Some parts of it are not sold yet.
781. What is the latest date when machinery was sold?—Just the last few weeks.
Chairman.—No one will have to go as far as Donegal to look at any of them?
782. Chairman.—Paragraph 28 of the Report of the Comptroller and Auditor General reads as follows:—
“Subhead M.14.—Ground Limestone Subsidy.
The expenditure charged to this subhead, £198,060 3s. 8d., relates to a scheme to subsidise delivery costs of ground limestone and sugar factory lime. With effect from 12th March, 1951, the cost of delivery of ground limestone from the production centres to the farmers’ holdings was paid to the carrying companies, a condition being that the producers undertook to make the limestone available, loaded on the carrying companies’ vehicles, at a price not exceeding 16/- per ton. The subsidy in respect of sugar factory lime at the rate of 4/- per ton was paid to Comhlucht Siúicre Éireann, Teoranta, with effect from 15th September, 1951.”
783. Have you been able to get over a difficulty where some lime is still being brought extraordinarily long distances, in fact, past other lime works?—Yes, undoubtedly, that is a difficulty which we are trying to overcome. At the present moment we are engaged in examining the whole question to see whether we cannot avoid these very long hauls.
784. I know it happens that they are still coming up to North Donegal from Ballina while there are two or three companies operating in the county. You are pursuing that matter?—Yes.
785. Chairman.—Paragraph 29 of the Report of the Comptroller and Auditor General reads:—
“Subhead 0.5.—Agricultural Produce (Cereals) Acts, 1933 to 1939, and Emergency Powers (Cereals) Orders, etc.
Reference was made in previous reports to arrangements whereby growers who sold wheat of the 1943, 1944, 1945 and 1946 harvests were enabled to obtain, in exchange for dockets which they had received from authorised purchasers of the wheat, fertiliser credit vouchers for 2/6 per barrel of wheat sold, and the fertiliser suppliers were recouped the amount of the allowances made by them on submission of monthly claims supported by the relevant credit vouchers. These arrangements continued in operation during the year under review and were extended to growers of the 1947 crop. Including expenditure of £235,313 19s. 0d. charged to this subhead, the total paid to fertiliser suppliers in connection with the redemption of the 1943, 1944, 1945, 1946 and 1947 dockets amounted at 31st March, 1952, to £1,146,054 10s. 5d.”
786. Have you yet decided. Mr. Ó Broin, whether or not you will be able to put a final date on these?—Yes, we issued advertisements some time ago telling people who had these vouchers on hands that they should send them in by a particular date. We do not expect that we will be able to get them all in, but we are doing our best to finish it up.
787. I hope you will not be too late in my own county. Can you say whether such a notice would have real legal force? —We have not approached it from the purely legalistic point of view. We are trying to get people to realise that this cannot go on for ever, and that we must put an end to it sometime.
788. Are you able to make an estimate as to what would probably be outstanding?— We know the total liability if everybody sent in his vouchers would be in the neighbourhood of £1,700,000. We have paid to date £1,292,000, so that there is something over £400,000 still in suspense, as it were.
789. Of course, some of them are probably lost?—I think a good many of them will never send in the vouchers. They probably have lost them and cannot establish any claim of any kind.
790. Chairman.—Paragraph 30 of the Report of the Comptroller and Auditor General reads:—
“Subhead P.—Flour and Wheaten Meal Subsidies.
The functions of the Minister for Agriculture in relation to flour and wheaten meal subsidies were transferred to the Minister for Industry and Commerce as from 1st October, 1951, by the Wheat and Flour (Transfer of Ministerial Functions) Order, 1951 (Statutory Instrument No. 284 of 1951). In addition to the amount charged to this subhead, further expenditure on these subsidies is charged to the vote for Industry and Commerce (No. 50) and is referred to in paragraph 54 of this report.”
The Committee has already dealt with that subject.
791. Chairman.—Paragraph 31 of the Report of the Comptroller and Auditor General reads:—
“Subhead Q.—Subsidies, Allowances, etc., for Dairy Produce.
Allowances on the production of creamery butter were payable at such rates as enabled the price of milk supplied to creameries to be maintained at 1/4 per gallon for the period ended 30th April, 1951; 1/3 per gallon for the period 1st May, 1951, to 30th June, 1951; 1/4 per gallon for the period 1st July, 1951, to 31st October, 1951, and 1/6 per gallon for the period 1st November, 1951, to 30th April, 1952. The sums disbursed on allowances on creamery butter produced on and after 1st April, 1951, amounted to £2,731,049 8s. 6d. In addition to expenditure of £2,666,089 19s. 2d. in the year 1950-51 for allowances on creamery butter produced in that year, payments amounting to £97,093 3s. 0d. were made from this subhead during the year under review, bringing the total cost of these allowances for the production of the year 1950-51 to £2,763,183 2s. 2d., as compared with £2,786,757 12s. 8d. for the year 1949-50.
A deficiency in the trading account of the Butter Marketing Committee for the year ended 31st March, 1951, arising mainly from expenditure on the cold storage of butter for winter consumption and from losses on sales of imported butter, amounted to £121,085 12s. 4d. This deficiency was made good to the Committee, £40,000 having been paid on account from the Vote of the previous year and the balance from this subhead in the year under review, £199,000 was also paid to the Committee from this subhead in addition to the sum of £101,000 paid from the Dairy Produce (Price Stabilisation) Fund, as mentioned in paragraph 33, to meet an anticipated deficit in the Committee’s accounts for the year 1951-52. The remainder of the expenditure charged to the subhead comprises £48,189 13s. 9d. paid to creameries in connection with the Department’s scheme for the cold storage of creamery butter; £16,272 8s. 0d. for paper, etc., and printing of butter wrappers, and £15,218 8s. 10d. for subsidy on farmers’ butter. The latter subsidy was introduced from 23rd July, 1951, and was paid to the proprietors of registered butter factories at the rate of 6d. per lb. to enable these concerns to pay producers 3/- per lb. for first-quality butter and 2/9 per lb. for second-quality butter.”
Is there anything you would like to add, Mr. Wann?
Mr. Wann.—No, I do not think I have any further information.
792. Chairman.—Can you give us figures separating the cost of cold storage from the loss on sales of imported butter? I think that last year you queried the use of the word “deficiency” as referring to cold storage?
Mr. Ó Broin.—This is really a payment for services they rendered. I think that in the accounts of the Butter Marketing Committee there was a sum of £221,809 attributable to the loss on imports of butter in that year ending 31st March, 1951.
793. The whole sum was only £121,000 so that must refer to more than one years? —There is an over-lap between years. As you come to the end of a year there is something over. That £121,000 was for the previous year 1950-51.
794. So there is £191,000 as well?— Yes.
795. Chairman.—Paragraph 32 of the Report of the Comptroller and Auditor General reads:—
“Regulations made under the Dairy Produce Act, 1924, provided for the use at registered creameries of a prescribed form of wrapper issued by the Minister for Agriculture for the wrapping of creamery butter in rolls for sale off the ration. The Butter (Maximum Prices) Order, 1950 (Statutory Instrument No. 135 of 1950) prescribed that creamery butter contained in wrappers issued by the Minister should be sold at the rate of 3/6 per lb. and in any other case at the rate of 2/8 per lb. The wrappers were sold to creameries at the rate of 10d. each.
It was decided to discontinue the issue of official wrappers for the sale of unrationed butter as from 4th May, 1951. I accordingly inquired regarding the circumstances in which an outstanding order for the supply of 9 tons of vegetable parchment was confirmed on 31st May, 1951, and an order for the printing of 2,250,000 wrappers was issued on 10th November, 1951, and was informed that the decision of 4th May, 1951, was a temporary one rendered necessary by the low level to which butter stocks had fallen at that time, and that it had been the intention to reintroduce the sale of off-ration creamery butter if and when the supply position so warranted. It was hoped that arrangements which were made for importing from abroad would enable some butter to be sold off the ration but before off-ration sales could be reintroduced butter rationing was abolished.
It appears that 30 tons of vegetable parchment, costing £9,541, and approximately 3,250,000 printed wrappers, remain on hands, and I understand that the question of the disposal of these stocks is under consideration.”
Have you anything to add to that, Mr. Wann?
Mr. Wann.—I understand that the question of the disposal of the parchment and the surplus wrappers is at present under discussion with the Dairy Disposals Company, Limited.
796. Deputy Hickey.—They will not improve by keeping too long in stock, anyway, I am sure. What is the need for any great consideration in disposing of that kind of stock?
Mr. Ó Broin.—The parchment can be readily enough disposed of, I think. It is not so clear what we can do about the printed wrappers yet, but we are looking into it, and I think we may be able to dispose of them, too.
797. Is not 10d. each very dear for the wrappers to the creameries? They were sold to the creameries at 10d. each?—Of course, that included an element of payment for the butter. That was a means or collecting the 10d, from the creameries to make up the difference between 2/8 and 3/6.
Rather a successful way of doing it.
798. Chairman.—Have you been able to sell any of this stock?—We will have no trouble in disposing of the parchment. The printed wrappers are not quite as easily got rid of, but we are looking into that and we may be able to get rid of them, but I am not sure.
799. I presume the printing was fairly costly?—Well, paper and printing were both very costly. It was very difficult to get this paper at the time, and we pressed the Stationery Office hard at the time to get these wrappers ready, and they found it very difficult to get that particular sort of parchment. It was very scarce.
800. You had to use it more or less the same way as a bank has to use special paper for notes?—Yes, you have to have special paper for wrapping in order to avoid collection of moulds and things of that sort.
801. This was not the ordinary paper that butter is wrapped in?—It was a special sort of paper.
802. You had to take obvious precautions?—Yes.
803. The only other matter with regard to this is the question of the time when you ordered more after the scheme was suspended?—Well, as I say, we were pressing the Stationery Office right through the autumn. Arrangements were made to get in some New Zealand butter, but unfortunately that was held up and we were not able to get it in as quickly as we thought we would. And we did not want to have butter there and no wrappers for it. We pressed them very strongly to get the wrappers.
804. I presume that if butter rationing had not been abolished you would probably have had to use them then?—Oh, yes, we would have used those wrappers.
805. Chairman.—Paragraph 33 of the Report of the Comptroller and Auditor General reads:—
“Dairy Produce (Price Stabilisation) Fund.
The income of the fund was made up of £98,652 10s. 6d. from levies, mainly on home sales of creamery butter and raw cheese, and £29,180 9s. 5d. received in respect of butter sold under permit. With regard to butter sold under permit the Creamery Butter (Prices for Catering Establishments) Orders (Statutory Instruments Nos. 130 of 1950 and 117 of 1951) provided that on the issue of permits payment should be made to the Minister at the rate of 9d. per lb. This figure was increased to 10d. per lb. with effect from 5th May, 1951, under the Butter (Prices for Butter sold under Permit) Order, 1951 (Statutory Instrument No. 130 of 1951). From 1st July, 1951, receipts from the issue of permits have been applied as appropriations in aid of the vote for Agriculture (No. 27) in accordance with the Butter (Prices for Butter sold under Permit) (No. 2) Order, 1951 (Statutory Instrument No. 178 of 1951).
The payments out of the Fund were made to the Butter Marketing Committee and comprised £101,000, in addition to the sum of £199,000 mentioned in paragraph 31, in respect of an anticipated deficit in the Committee’s accounts for the year 1951-52, and £7,505 to meet administrative expenses.”
Have you anything to add to that, Mr. Wann?
Mr. Wann.—No, Sir.
806. Chairman.—Why was the change made, Mr. Ó Broin, in bringing these receipts to account as Appropriations in Aid?
Mr. Ó Broin.—Rather than crediting them to the fund? I think that was a direction we got from the Department of Finance.
807. Chairman.—Can the Department of Finance give us any idea?
Mr. Breathnach.—I must plead ignorance, Mr. Chairman. I was not dealing with it, and I am not familiar with the reasons
Mr. Ó Broin.—The tendency of the Department of Finance would perhaps be to bring these to the credit of the Vote rather than to the credit of the fund, although in the long run it is the same thing. It is saving the Vote ultimately.
Now we turn to the Vote itself. I must thank you for your very extensive notes, Mr. Ó Broin, on the subheads.
Mr. Ó Broin,—Thank you, Sir.
808. With regard to subhead M.6.— Improvement of the Creamery Industry —is it not correct to say that the Dairy Disposals Company and its associated companies seem to be in a reasonably prosperous position?—Yes.*
809. Has it been considered whether or not a payment might be made out of the profit and loss account to the Exchequer? —No. That has not been considered. Of course, the profits that they have been making have been put into the business. Quite a lot of development has been going on. If the moneys were paid to the Exchequer they would have to be supplied with capital some other way.
810. Is the standing balance to the profit and loss account not almost £500,000? Could you say how much came into it in the year?—I could not say how much came in during the last year.
Mr. Wann.—About £60,000.
811. Chairman.—With regard to subhead M.12.—Prevention of Contagious Abortion and other Diseases in Cattle —have you any idea as to why the demand for vaccines declined?
Mr. Ó Broin.—It is difficult to say precisely why the demand went down. Probably there were a number of causes. One may be that farmers expected too much from this vaccine. They probably thought it would remove all the causes of sterility, but there are others besides contagious abortion. I think that is a large factor in the decline. Another may be that, in the beginning, we gave the doses free and later we decided to charge 1/- per dose. That might have affected the number of people interested.
812. What was the trend subsequently this year?—There has not been any upward trend, I think. It has been more or less the same.
813. Deputy Hickey.—At the bottom of page 61, in the note giving details of the miscellaneous receipts, there is an item of £12 9s. 5d. in respect of bank interest allowed on sub-accountants’ balances. Is that the only place where interest is mentioned in the accounts? Is that the only interest submitted to us?—We have sub-accounts. That is the interest on these sub-accounts. For instance, we have sub-accounts in Athenry. This is interest we received from the bank.
814. Is there anything to show what interest you have paid out to certain organisations?—That would not be in these accounts at all
815. But the Department of Agriculture paid £38,000 to the banks for fertilisers. Is that not so?—That was a particular subhead of the Vote. The banking operations affecting the Department of Finance would not appear in these accounts; they would be in the finance accounts.
816. Where would I expect to find particulars of the £38,000 that was paid by the Department of Agriculture by way of interest to the bank?—I do not quite follow that.
817. I have a document showing that the Department of Agriculture paid that amount of money by way of interest to the banks in respect of fertilisers. I was, looking for particulars of that transaction here, but I do not see any reference to the bringing in of fertilisers. Can you give me any further information on the matter?—Was it in this particular financial year?
818. It was in 1951—52. Can you tell us anything about it?—There was an arrangement with the Sugar Company whereby the Sugar Company were to bring in fertilisers for the Minister. The Sugar Company’s arrangements with the bank to finance that transaction involved the payment of interest to the bank. We had to provide the money. However, I do not think that that is in this particular Vote. It is in the Vote for the following year.
819. I have in mind the year 1951-52. Have you no particulars about it in regard to that year?
Chairman.—The transaction might take place in one year and be settled in the subsequent year. That is probably what has happened. Do you agree, Mr. Ó Broin?
Mr. Ó Broin.—Yes.
820. Chairman.—Could you say, Mr. Ó Broin, how many creameries you have on hands? I see you did not sell any this year. Is that so?—We have about 17 groups. We have not sold any for quite a while now.
821. Deputy D. J. O’ Sullivan.—You will still have them. The farmers are very loath to take them over. Have you tried to sell them?—Yes. We have tried to sell them.
Deputy Hickey.—I thought they were to be handed over to the farmers after a time.
Deputy D. J. O’Sullivan.—You cannot compel them to take them if they do not desire to take them.
Deputy Hickey.—What about other organisations and co-operatives in the country?
Deputy D. J. O’Sullivan.—Well, it is a credit to the Dairy Disposals Company if you like.
822. Chairman.—Why are the receipts under the land rehabilitation project so much below the estimated figure, Mr. Ó Broin?—That estimate for £90,000 was based on an assumption that the scheme for the provision of fertilisers on credit would be availed of to a very much greater extent than turned out to be the case.
Seán Ó Broin further examined.
823. Chairman.—Paragraph 34 of the Comptroller and Auditor General’s Report reads as follows:—
“Subhead F.5.—Compensation, etc.
The charge to this subhead includes compensation amounting to £30,560 paid to owners and £336 11s. 0d. paid to employees under section 35 of the Fisheries Act, 1939, which provides for the restriction of the use of nets in freshwater and for the payment of compensation to the owners of nets and their employees. Sections 3 and 4 of the Freshwater Fisheries (Prohibition of Netting) Act, 1951, empower the Minister for Agriculture, with the approval of the Minister for Finance, to pay interest to owners on the amount of compensation awarded and sums amounting to £2,143 6s. 4d. in respect of such interest are also included in the charge to the subhead. The remainder of the expenditure consists of ex-gratia grants of £1,300 to an owner and £843 9s. 9d. to employees pursuant to sections 2 and 4 of the Act of 1951, which authorise the Minister for Agriculture, with the consent of the Minister for Finance, to make such grants in certain circumstances to persons not entitled to compensation under the Act of 1939.”
With regard to this matter of interest, is it paid on the amounts between the time the matter arises and completion?— Yes. I think the interest is calculated on the period between the beginning of the fishing season in 1948—that was the year in which the prohibition of freshwater netting occurred—and the time of payment.
824. What were the circumstances under which the owner got this ex-gratia grant? How did it come about that he was not entitled under the Act?—The provisions for compensation in the 1939 Act were very rigid. Some people who were getting their living from fisheries found that they could not apply in view of the very rigid conditions of that Act. The 1941 Act relaxed these conditions Somewhat. I do not know the circumstances of this individual case but generally the 1941 Act relaxed the provisions of the original legislation and enabled people to come in and get compensation who were previously debarred.
825. Deputy Mrs. Crowley.—Are these cases nearly finished yet? How many are outstanding?—There were 342 claims for compensation. We have paid 136 and we have rejected or made offers of compensation in 87 other cases. There are about 120 of the 342 cases still under consideration.
826. Chairman.—Paragraph 35 of the Comptroller and Auditor General’s Report reads:—
“Subhead F.6.—Inland Fisheries Trust.
The Inland Fisheries Trust was incorporated under the Companies Acts, 1908 to 1924, on 7th May, 1951, with the object of fostering and developing brown trout fisheries. It is managed by a council consisting of seven members, four of whom, including the chairman, are nominated by the Minister for Agriculture and three elected by the members of the Trust. The expenditure, £3,207 7s. 10d., relates to salaries, travelling expenses and development work.”
Have you anything to add, Mr. Wann?
Mr. Wann.—That is merely for information.
827. Chairman.—Paragraph 36 of the Report of the Comptroller and Auditor General reads as follows:—
“Subhead G.2.—Repayable Advances for Boats and Gear.
Including the advances of £80,000 charged in this account, the total advances for boats and gear to 31st March, 1952, amounted to £393,500. The half-yearly instalments of the annuities set up to repay these advances, falling due to 31st March, 1952, amounted to £199,316 10s., whilst the sums collected by the Sea Fisheries Association from borrowers and transferred to the Department in payment of the annuity instalments amounted to £165,791 5s. 2d., including £16,500 credited to appropriations in aid in the year under review. The repayments were, therefore, in arrear on 31st March, 1952, to the extent of £33,525 4s. 10d., as compared with £25,307 on 31st March, 1951.”
I notice there has been an increase in arrears, Mr. Ó Broin?—There has. It is almost inevitable on account of the existing arrangement that there would be a growing arrear and it is a matter that will have to be taken up and considered specially with the Department of Finance. The present arrangements are not satisfactory.
828. Have you made any approach to the Department of Finance about it?— That is a matter that will have to be taken up by the new Fishery Board, an Bord Iascaigh Mara, to adjust these accounts vis-a-vis the Exchequer.
829. Chairman.—Paragraph 37 of the Comptroller and Auditor General’s Report, which is for information, reads as follows:—
“Subhead G.3.—Repayable Advances for General Development.
The total advances for general development made to the Sea Fisheries Association amounted to £39,465 on 31st March, 1952, including £15,315 charged in this account. These advances are repayable over a period of 20 years by half-yearly instalments covering principal and interest, and sums totalling £1,510 7s. 9d. were repaid during the year and are included in the appropriations in aid.”
830. Chairman.—Paragraph 38 of the Comptroller and Auditor General’s Report reads as follows:—
As stated in a note to the account, sums amounting to £4,564 4s. 10d. in respect of outstanding loans were written off with the consent of the Minister for Finance under the Fisheries (Revision of Loans) Act, 1931. There were no repayments during the year under review, and the balance of loans outstanding on 31st March, 1952, was £15,984 10s. 9s., including arrears of £15,984 9s. 7d.”
Have you yet come to any decision regarding the writing off?—These have all been written off.
831. On subhead E.3, what service do the Guards give in regard to sea fisheries protection?—They have occasion to take possession of boats or fish or gear that have been forfeited and make arrangements for the carriage of these things, storage, and so on. They are under some expense in that way. They also bring witnesses to court.
832. That is where something illegal is presumed to have taken place?—Yes, where a foreign fishing vessel is apprehended and brought in for infringing the law.
833. Would that not be considered as the ordinary duty of the Guards—why is payment made?—Well, as a matter of fact there is very little in it. We do not seem to have made any payment.
834. The amount voted is not large?— There would be certain expenses connected particularly with gear or fish or apparatus which we think should fall on this Vote rather than on the Garda Síochána Vote.
835. On subhead F.4—Scientific and Technical Investigations, etc.—How did it arise that it was only possible to carry out these experiments in two of the four centres provided for?—Well, this work was in charge of one particular scientific officer who found that it would involve a good deal of personal attention and it was not possible for the officer to get around to all four lakes concerned in the time. Besides, the time of the year was unfavourable.
836. Where are the lakes that are used?—There is one near Westport, one near Clifden, one near Glenties and one near Kenmare.
837. On subhead G.3-Repayable Advances for General Development-was the fish meal factory established subsequently this year?—Yes, Sir, it was.
838. On subhead H your accounting was very close on your Appropriations in Aid. It was less than £14 out on a sum of £35,000, which is very good.
The witness withdrew.
VOTE 5—COMPTROLLER AND AUDITOR GENERAL.
Mr. W. J. Kiely called and examined.
839. Chairman.—On subhead E, did you recover the full cost of these audits?
—Yes, the actual cost of audit, plus certain percentages to cover overheads.
The witness withdrew.
The Committee adjourned.
* See Appendix XV.
* See Appendix XVI.
* See Appendix XIX.