Committee Reports > List of Committees > Dáil > 1958 > Committee of Public Accounts > Report - Appropriation Accounts 1957 - 1958

MIONTUAIRISC NA FINNEACHTA

(Minutes of Evidence)

Déardaoin, 20 Samhain, 1958.

Thursday, 20th November, 1958.

The Committee sat at 11 a.m.

DEPUTY DILLON in the chair.

Liam Ó Cadhla (An tArd-Reachtaire Cuntas agus Ciste), Mr. E. F. Suttle (Secretary and Director of Audit), Miss M. Bhreathnach and Mr. P. S. Mac Guill (An Roinn Airgeadais) called and examined.

VOTE 37—CHARITABLE DONATIONS AND BEQUESTS.

Mr. J. S. Martin called and examined.

52. Deputy Sheldon.—On the Appropriations in Aid, in regard to the fact that only half the amount was realised, was that due to half a year’s dividend not being received? There is a deficiency of half the amount estimated. It looks as if a half-year’s dividend had not been received on these Exchequer Bonds?—I do not think so. I think £38 is the figure returned.

Chairman.—Estimated?

Deputy Sheldon.—Realised?—That is probably what happened.

53. With regard to this holding, whose responsibility is it to make a change in the stock?—The Commissioners’.

54. The last change was not a very fortunate one, if I remember. It was 4½ per cent. and the old income was about £48 and, on conversion, the income dropped? — You will recall that at the time there was a general conversion of all the funds. At the time, about three or four loans were switched over and, on prevailing prices, I do not think we could have done better.

55. This is 1956 stock, these Exchequer Bonds, I think. Do the Commissioners really know about these stock changes or do they take advice as to when it is advisable to change? — Oh, yes. As a matter of fact, about three times a year they get a review of their stocks. This year, for example, they effected a variation in their investments which resulted in a capital increase of £8,500 and an increase in the annual income of £1,500—by switching one investment to a higher interest-bearing security.

56. There are stocks which do not appear in these accounts?—That is so. The only reason why this particular fund appears is that it is an Appropriation in Aid. It actually consists of an old fund which 147 years ago was transferred to the old Board of Commissioners from the Archbishops of Armagh and Cashel. Their Lordships held it as a fund to enable them to recover embezzled charities and when the old Board of Commissioners was set up the fund was transferred to them, as their Lordships said they had no further use for it.

Deputy Sheldon.—It always strikes me as rather odd that it had to appear this way. I presume that if some embezzlement did, in fact, take place it could easily be one which would exhaust this fund.

Chairman.—This fund, I understand, is to provide the costs of pursuing persons who may have embezzled sums, not for the purposes of recouping charitable funds embezzled.

Deputy Sheldon.—I know that, but when you think of what law costs can be now, what would happen supposing law costs did unfortunately crop up which would wipe this fund out? Would voted moneys then come in?—Quite so. The Department of Finance would, I hope, accommodate us on the Vote.

Chairman.—These gloomy prognostications that charitable funds are going to be regularly embezzled are somewhat depressing.

Deputy Sheldon.—Mr. Martin knows a good deal about this business and I think it is a pity we do not learn something new each time he is here.

The witness withdrew.

VOTE 64—DUNDRUM ASYLUM.

Dr. W. J. Coyne called and examined.

57. Deputy Sheldon.—On subhead D., on the question of the hospitalisation of patients outside the asylum, do I take it that the provision is made in the Estimate under Travelling and Incidental Expenses? —Yes.

Is it not a recurring item of sufficient importance to give some estimate of it on its own? Is this hospitalisation a regular occurrence?—This year there was a particularly long case. In this case the man was out for 97 days. He fractured his hip and was taken to St. Michael’s Hospital, Dún Laoghaire, and was in a caliper splint for quite a long time. They made an excellent job of him. A period of 97 days is most unusual; 15 days would be the average.

58. In relation to that, there is an Extra Receipt payable to the Exchequer which seems to refer to it. From whom was this recovery made?—This was a man who had money of his own and who made a will—it was not the same patient; it was a different patient who was in St. Michael’s Hospital a year before that. He made a will and had money of his own and his solictors gave us the money.

59. On subhead F., and relating that to Item 2 of the Appropriations in Aid, the discontinuance of pig feeding, it would appear here that there was a saving. The saving is only on the subhead. Can Dr. Coyne say that there was a real saving by discontinuing pig feeding, as the receipts would probably drop also?—It was done actually on the recommendation of the Department of Agriculture. Their inspector went into it with the auditors and accountants and they found that, on balance, it was not paying.

I was wondering about it, because our experience in Donegal, in St. Conaill’s, is that it is the only really profitable part of the farm. The conditions may be quite different, of course?—Actually, we had a man who was paid in charge of these pigs and we were able to dispense with his services as a result of this.

Deputy Sheldon.—That is quite different.

The witness withdrew.

VOTE 63—HEALTH.

Mr. P. Ó Cinnéide called and examined.

60. Chairman.—There is a paragraph by the Comptroller and Auditor General in his Report relating to this Vote. It is as follows:—

“Subhead L.—Loan to Voluntary Health Insurance Board

98. The Voluntary Health Insurance Board was established on 12 February, 1957, under the provisions of the Voluntary Health Insurance Act, 1957. Section 16 (1) of the Act provides that the Minister for Health may, with the consent of the Minister for Finance, make a loan to the Board to meet its establishment and preliminary expenses, and the charge of £13,200 to the subhead represents the amount lent during the year. The Minister for Finance has directed, by virtue of Section 16 (2) of the Act, that all sums received by way of repayment of the loan are to be brought to account as Appropriations in Aid. No amount was received during the year.”

Is there anything you would care to add to that, Mr. Suttle?

Mr. Suttle.—These loans are repayable, by annuities, over a ten-year period. The first instalment is payable on the 1st January, 1959. Interest on the loans, from the date of issue, up to the 30th June, 1958, has, I understand, been paid recently by the Board.

Deputy Sheldon.—Mr. Suttle has just said that the first annuity would be payable on the 1st January, 1959. Why has the Comptroller and Auditor General remarked that no amount was received during the year if the first annuity was not, in fact, due for six months after the close of this financial year?

Mr. Suttle.—I think that at the time the Report was drafted the terms of the annuity had not been settled and we had no information as to when these loans would come in for repayment.

Mr. Ó Cinnéide.—I had intended to make that point clear to the Committee. In fact, no repayment is due until the 1st January, 1959, under the terms laid down by the Minister for Finance when the loan was advanced.

61. Deputy Sheldon.—Regarding this charge to the subhead in this year, was that the total amount?

Chairman.—What charge do you refer to?

Deputy Sheldon.—Under subhead L., there is £13,200. It was estimated that £20,000 might be required by the Voluntary Health Insurance Board. Was that more than really necessary? Was the £13,200 sufficient for the purpose?—The £13,200 is the total amount which has been advanced. When preparing the Estimate we had no idea of the amount the Board might require over the first year, before it would get into business properly. The Act provided a maximum of £25,000. We provided £20,000 in the Estimate; and, in fact, in the first year they required only £13,200. There has been no further advance since then.

62. Deputy Haughey.—Is that the only way of dealing with the situation? It seems odd to make a loan to someone under a subhead and then bring the repayment in under the Appropriations in Aid?—It is the usual practice.

Chairman.—I understand it is the correct practice to let it out under a subhead and bring it back under the Appropriations in Aid?—I would not say it is the only way but it is the normal way.

Deputy Haughey.—It seems that you make a loan and then take credit when you get back the repayments?—Where a sum is advanced from a subhead of a Vote it is usual to bring it back by way of Appropriation in Aid in the same Vote. I think it is a long-standing accounting practice.

63. Deputy Booth.—On subhead A., could we have any information as to whether the savings which are referred to in the explanation on page 210 are permanent or whether they are merely short-term savings? The note given refers to the fact that certain posts were not filled, accounting for £5,000, and vacancies arose during the course of the year. Are any of these permanent savings or is it just purely by chance that they have arisen during the year?—They are all in the nature of casual savings arising from retirements during the year or officers leaving the Department otherwise. There was at least one fairly substantial saving in respect of an officer on loan to an outside body without pay from the Department of Health. There were also two vacancies for posts as medical inspectors, which were not filled in the course of the year. A number of vacancies occurred in the junior grades—Clerical Officers, Writing Assistants, Shorthand Typists and Typists. Vacancies of this sort occur in every Department every year.

64. Deputy Sheldon.—I think that what was exercising Deputy Booth’s mind was the nice distinction between “non-filling” of a post and a “vacancy”. Do I take it that a vacancy applies to junior posts? —Perhaps I did not put it properly. They are really all in the same category.

Deputy Booth.—They probably will be filled in due course?

Chairman.—You may be certain that they will all be filled in due course.

Deputy Booth.—That is what I was afraid of?—We will postpone the filling of them as long as possible, in present circumstances.

Deputy Booth.—Could we get any assurance that they will not be filled, as long as it can be avoided?

Chairman.—I think you may be assured that in the Department over which Mr. Kennedy presides, that is a sine qua non? —Thank you, Mr. Chairman.

There is never any unnecessary employment in the Department of Health. Is that not correct?—That is so.

65. Deputy Booth.—On subhead B., there is a note that travelling was restricted as a measure of economy. There is quite a considerable saving shown there. Was there any adverse effect from that; or does it mean that possibly some of this travelling could have been avoided?—It is a question of degree, really. We had one or two complaints from rural areas that because of the fact that certain inspection work had not been done, the service was suffering. We had to weigh the possible adverse consequences against the desirability of making economies. During this year we were asked to try to save as much as we could and there was a general instruction to our travelling staff to cut down on travelling as far as they could, and they have done so. Normally, we would like to see them doing more inspections but in this particular year we conformed to policy by cutting them down. I think you will probably find that in future years we will not be making a saving on this subhead.

Is there any connection between that and the slight increase in telegrams and telephones?—There might be a very slight connection.

66. Chairman.—On subhead E., does this figure tend to rise, expenses in connection with International Congresses, etc.?—No, it is very static. The bulk of that expenditure, practically £12,000 of the total, is our contribution to the World Health Organisation. It is fixed every year under the rules laid down by the organisation. The bulk of the other expenditure incurred represents the expenses of two representatives to the annual assembly.

67. Deputy Sheldon.—On subhead F.3. —this is allied to what Deputy Booth was talking about on subhead B.—was it really considered that such an important item as this was a suitable one on which to exercise economy?—We did think so. The value of the return we get for expenditure on certain types of advertising and publicity in connection with health matters is very doubtful and very arguable. You do not necessarily see the return in terms of £.s.d. or even in the mortality figures. The bulk of the expenditure is in connection with film shows run for us by the National Film Institute in the schools. We have a contract with them. They keep three units on the road all the year. They undertake to give a certain number of showings—a thousand, I think—every year. The actual number given is slightly in excess of that. That is probably the most rewarding form of publicity we can undertake because we are getting at the young people. There are four or five films of our own and a number we get from international libraries on health matters. They show these as well. Sometimes also they take advantage of the showings for children to have showings for adults in the same halls on the same evenings, very often in connection with Macra na Feirme or other local bodies.

The Estimate for this particular year is reduced from the previous year?—It has been steadily falling for a number of years, particularly since we stopped making films ourselves. We found that very expensive.

Deputy Booth.—Could we record some comment on that?

Deputy Sheldon.—We are only getting information.

Chairman.—We shall consider that when we come to consider our report. I do not wish to sound cynical, but I think Deputies might with propriety advert to the fact that this year there was a new broom in the Department and new brooms have a habit of exacting vexatious economies which, on review, settle down to a normal arrangement. We shall certainly consider it.

68. In regard to subhead H. is there any special reason for the reduction of £40,000 a year in grants to health authorities?—No, it is a very large subhead and there is always room for appreciable variation in the amount spent.

69. Deputy Booth.—In regard to subhead J., could we have any information about this expenditure? We do not get much information as to what agencies are covered by this?—The expenditure is under three heads. The first two are the Jubilee Nurses, and the Lady Dudley Nurses. The latter operate mainly in the west and the Jubilee nurses in the midlands, and, to some extent, in the west. The third head consists of Boarding-Out Agencies and Institutions. There is a number of agencies on our books but only two called on us for assistance in the year under review. There is also a number of institutions which look after unmarried mothers and children. The basis of repayment is 50 per cent. of their audited expenditure on children up to a certain age. I think it is five years of age. I will give you the names of the institutions if you wish, Deputy.

Deputy Booth.—No, I think all I want is a rough idea of what is covered there.

70. Chairman.—What is An Bord Altranais?—It is the Nursing Board, the former Central Midwives’ Board and General Nursing Council combined.

71. Deputy Booth.—In regard to the Appropriations in Aid, just as a matter of information—I am sorry if this matter has been raised before—I do not understand what these receipts are. No. 1 is receipts from local taxation accounts in respect of licence duties grants and estate duties grant?—These are receipts which under earlier legislation were payable through the then Department of Local Government and Public Health to local authorities in aid of certain specific health services. When the Health Services (Financial Provisions) Act, 1947, was passed, all these separate subventions were abolished and the Exchequer now meets 50 per cent. of all the expenditure of local authorities on health services. But under the provisions of the Act the Minister for Finance has directed that these receipts specially earmarked in aid of health expenditure should continue to come as Appropriations in Aid of the general Health Vote.

Deputy Booth.—It appears to be rather an anachronism that we should be financing the Department of Health out of licence duties and estate duty.

Deputy Haughey.—You may put down an amendment on the appropriate occasion.

Chairman.—The matter might appropriately be raised in Dáil Éireann on the discussion on the relevant annual Appropriation Bill.

72. Deputy Sheldon.—On the notes, perhaps we could have an explanation regarding these ex-gratia payments in respect of unvouched travelling expenses? —The Superintendent Registrar in question was entitled to claim annually the travelling expenses incurred by him in checking and certifying the quarterly returns of the local district registrars. He had continued doing this for a long number of years without making any claim in respect of travelling expenses. Then, for some reason which we have never been able to determine, he put in a claim covering a long period. He was unable to furnish proper vouchers as he had neglected to take any steps at the time to provide himself with them. We were rather doubtful about it. We considered it for a long time and we satisfied ourselves that, without any question of doubt, he had done the work. After consultation with the Department of Finance, as we were bound to have when vouchers had not been supplied, that Department agreed that payment might be made to him. His claim was covered by a statutory declaration.

I would assume, too, from what Mr. Kennedy said that if he had properly furnished his claim at the right time he would have received a great deal more? —He would. That is so.

Chairman.—Need we dwell on the note in respect of an ex-gratia payment of £3 made to an officer in respect of loss of personal property stolen from official premises?

Deputy Haughey.—We need not.

The witness withdrew.

VOTE 8—OFFICE OF PUBLIC WORKS.

Mr. Geo. P. Fagan called and examined.

73. Chairman.—Mr. Fagan is here to give us any help we may require. Paragraph 14 of the Report of the Comptroller and Auditor General reads as follows:—

“Insurance of Workmen

14. Reference was made in paragraph 11 of the report on the accounts for the year 1938-39 and subsequent reports to the Commissioners’ claim against the liquidator of the Irish Employers’ Mutual Insurance Association, Ltd., in respect of payments of compensation, etc., arising out of accident risks which had been covered by policies of insurance with that Association. As stated in a note to the account, the liquidation proceedings were wound up in the year under review and the Commissioners received £6,322 against their net claim for £19,720. Minor adjustments amounting to £72 reduced the loss to be borne by voted moneys to £13,326 for which provision has been made in 1958-59 (Vote 9).”

Is there anything you wish to add to this, Mr. Suttle?

Mr. Suttle.—No, except to say that these proceedings were very protracted but that they are now finally concluded.

74. Deputy Sheldon.—Just for the record—earlier there was a reference to claims made by the State having prior consideration over other creditors. Could we be told what happened about that?

Mr. Fagan.—I regret to tell you that the High Court and the Supreme Court decided that we had no priority.

Deputy Haughey.—I am very glad to hear it.

Chairman.—This matter is now finally disposed of?

Mr. Fagan.—Yes.

Chairman.—If there are no further questions on that paragraph we will turn to the subheads of the Vote itself on Page 15.

75. Deputy Haughey.—With regard to subhead B.—Travelling Expenses—is there any special reason why there was more travelling required than was anticipated?

Mr. Fagan.—I find it difficult to answer that question. Travelling is done as necessary by engineers and architects mostly. We try, at a very early stage, to estimate what it is likely to be. It is not very easy at any time to estimate in October or November the amount of travelling that is likely to be done in the succeeding 1st April to the 31st March. I do not think I can give any other explanation than the one that is here. We were just wrong in our estimate.

Deputy Haughey.—Except that the number of professional staff is down, but the travelling is up.

Deputy Sheldon.—On that point, where there was a shortage of professional staff the existing staff could very well have more travelling to do?

Deputy Haughey.—That might be it.

Mr. Fagan.—We estimated that for the architects we might spend £16,000 on travelling. Actually, we spent £17,900. In regard to the engineers, we estimated £17,000 and we spent £18,900. That accounted for £3,800 of the excess— approximately £1,900 in each case. There is also the other explanation given that subsistence rates were increased. That would account for part of the excess too. The excess is £4,453 on a total grant of £34,200.

Deputy Carty.—Twelve and a half per cent.

Chairman.—Does that dispose of your query, Deputy Haughey?

Deputy Haughey.—Yes.

76. Deputy Booth.—With regard to subhead D.—Telegrams and Telephones—the work appears to have been proceeding at a slightly lower tempo but, the expenses are up by 25 per cent.?

Mr. Fagan.—Would it help if I explained that we had endeavoured to estimate, in a full year, the effect of the higher charges for telephones which had just been introduced? We were wrong in our estimate of that. We under-estimated. If we had accurately estimated what the effect would be with the higher telephone charges, the real excess would be £500.

Deputy Sheldon.—I am surprised that Mr. Fagan allowed Deputy Booth to get away with the suggestion that the work was proceeding at a reduced rate.

Mr. Fagan.—I did not hear that.

Deputy Sheldon.—I thought you possibly did not.

Chairman.—We shall now turn to subhead E.—Appropriations in Aid.

77. Deputy Sheldon.—On Vote 10 there was a considerable saving on the schemes. Where Mr. Fagan’s Department finds it impossible to undertake works for Vote 10, is he able to tell them in good time so that they may make other arrangements? Is that what happened? There is a very considerable saving here—more than 50 per cent. It is not reflected in the expenditure on Vote 10?

Chairman.—How is it that, though Vote 10 reveals no substantial saving, your expenses in administering on their behalf is down by 50 per cent.?

Mr. Fagan.—With respect, Mr. Chairman, may I say that that would be a question for the Accounting Officer for Vote 10 rather than for me. I do not know much about the Vote 10 expenditure. I do know this. The Special Employment Schemes Office ask us to do certain works for them but I think they are only a fraction—probably a small fraction—of the amount of work which they do. They might overspend easily in other directions where we have nothing to do at all. If we have engineers available to do all the work which they ask us to do, then there would be no saving here. If we have not got them, it is just too bad. We cannot do it for them because of the staff shortage and because we have so much to do for the Department of Industry and Commerce, Fisheries, Marine Works generally, as well as drainage and so forth. Receipts are based on the expenditure which is borne on this Vote in respect of staff actually engaged on employment schemes and special emergency schemes.

Deputy Sheldon.—I appreciate what you say. I can see that something like that happened. I am wondering why an estimate was made where I would have expected Mr. Fagan to know it was very unlikely he would be able to undertake work for Vote 10 and why he would not be able to inform them in advance. This shortage of engineering staff is not something new?—Yes, unfortunately, if you like to put it that way, we over-estimated what we could do. That may be. We took an optimistic view—perhaps, unjustified in the opinion of some people—of the possibility of recruiting engineering staff to enable us to get on with the work. Our optimism proved unjustified in the result.

78. Chairman.—Is there any other question on the Appropriations in Aid?

Deputy Sheldon.—There is—a minor one. Under note 10 relating to Marine Works Maintenance Funds there is a receipt figure of £1,633—which I presume comes from Vote 9 under the special subhead B. B. opened during the year for the Rosslare coast protection. Therefore, this could not be anticipated either. Will it appear in future as a separate item in the Appropriations in Aid rather than turn up under Miscellaneous head or is that much regularity to be expected in future?

Mr. Fagan.—The answer to the first part of the question is in the affirmative. The receipt was not expected. It was a receipt of £1,600 which was for the works you state. If you happen to have a copy of the Volume of Estimates for the year 1958-59 you will see under subhead E.—Appropriations in Aid—item 4: “Amount recoverable from Vote 9 (subheads B.B., J.2. and J.5.) in respect of salaries and travelling expenses in connection with Coast Protection and Arterial Drainage Construction and Maintenance Works.”

Chairman.—Does that cover your inquiry, Deputy Sheldon?

Deputy Sheldon.—Yes.

79. Deputy Booth.—With reference to the Statement of Receipts and Payments by the Commissioners of Public Works on the non-voted services in the year ended 31st March, 1958, there is a receipt of £867 for the Marine Works Act, 1902, Maintenance Fund. I miss something there?

Chairman.—Do you advert, Mr. Fagan, to the capital stocks held by the Maintenance Fund under the Marine Works Act, 1902? They are set out as £11,582, £2,100, £1,550 and £1,000. How do we have only an income of £867 in 1957-58 from so large a capital?

Mr. Fagan.—I would not like to answer that without looking it up. I shall let you have a note if you wish.

Deputy Booth.—Are we correct in assuming this is a capital fund from which receipts are derived?—The question is how is the £867 made up,

Chairman.—How is the £867 receipts related to the stocks held by the fund as set out in note (a) at the foot of the page? —That would be very simple, but I cannot give the answer straightaway.

My feeling is that £867 out of that capital fund is not an unreasonable income?—I agree, as a matter of fact it does not come under the capital fund alone; but I cannot give the precise figures off the cuff.

I think it will emerge that the income from the fund is less than £867 and that there are other sources of revenue?— There are the statutory contributions by the County Councils concerned.

Chairman.—You can let us have a note at your convenience, Mr. Fagan.*

VOTE 9—PUBLIC WORKS AND BUILDINGS.

Mr. Geo. P. Fagan further examined.

80. Chairman.—Paragraph 15 of the Report of the Comptroller and Auditor General reads as follows:—

“Subhead B.—New Works, Alterations and Additions

15. I have been furnished with a detailed statement of the works on which the expenditure of £1,506,969 charged to this subhead was incurred. Additional expenditure amounting to £43,257 on buildings for the Department of Posts and Telegraphs was charged to Telephone Capital Account.

The principal works included in the statement are:—

Have you any further comment to make in that respect, Mr. Suttle?

Mr. Suttle.—No.

Deputy Sheldon.—We have the full details of subhead B. and it is a matter of whether we take them now on this paragraph or later on the Vote.

81. Chairman.—I think we had better dispose of the paragraphs first and when we come to the Vote we can deal with any matter that may arise. Paragraph 16 of the Report of the Comptroller and Auditor General reads as follows:—

“16. An ex-gratia payment of £1,300 was made in the year under review to a contractor to compensate him for extra labour and other costs incurred on the erection of a Telephone Exchange between the years 1949 and 1952 at the contract price of £75,000. It is stated in support of this payment that the work coincided with the erection of a Regional Sanatorium in the area and in consequence of the competitive demand for the skilled labour available the contractor was obliged to offer the inducement of “overtime work” to retain the services of his workmen. In addition it was represented that owing to the scarcity of skilled labour it was necessary to extend the period of the contract with a resultant greater outlay on supervision. As stated in a note to the account £203 has been charged to this subhead and £1,097 to the Telephone Capital Account.”

Have you anything to add to that, Mr. Suttle?

Mr. Suttle.—I have nothing further to add. That is the complete story.

82. Deputy Haughey.—The story is told there fairly fully all right, but I wonder is that sufficient justification for the payment?

Chairman.—You come to the conclusion that this ex-gratia payment was justified by the circumstances?—Yes, and we were fortunate to be able to persuade the Minister for Finance to agree with us. We thought the facts justified it. We put them before the Minister in complete detail in a letter and he sanctioned an ex-gratia payment of £1,300 which, of course, was not anything like the amount the contractor had claimed, but which was the amount which was thought to be reasonable to cover him for what you might call his loss through the peculiar circumstances in this case.

Deputy Haughey.—I would suggest that the circumstances are not unusual. Every contractor is all the time competing for skilled labour. I should like some more information as to how these circumstances could be attributed to the Department so as to make them liable.

Chairman.—I do not think Mr. Fagan can add much to what he has set out in the note, that is, that having considered all the circumstances it was thought reasonable to make the contractor some allowance for the extra expenditure he undertook in order to retain the labour and get the contract finished.

Deputy Carty.—Is it not rather a dangerous precedent to increase the contract price?—In effect that is what it means.

83. Chairman.—There have been cases of ex-gratia payments of this kind in the past where special circumstances suggested them?—Yes, perhaps not on all fours with this. In this case, as explained in the note, when our contract, which was one for over £75,000, for the Waterford telephone exchange, was undertaken, it happened that it was almost immediately followed by this big Ardkeen sanatorium job, which was a £700,000 contract. It was just outside the Waterford borough boundary and there was some difficulty about getting labour and about the employment of labour on that very big job. The contractor got over his difficulty by offering rates of wages above the recognised trade union rates with the result that the contractor on the Waterford telephone exchange could not get any tradesmen or labourers unless he resorted to some special measure. He tried to get outside labour and even when he got that outside labour they were not long there when they found out that higher wages were being paid in Ardkeen and they went off to that job. He got over his difficulty by employing his men more or less on continuous overtime at trade union rates; in other words it was an expedient to get on with the contract and he put it to us that the circumstances were exceedingly unusual and that he ought not to be at that loss.

84. I think the substance of the queries by Deputy Haughey and Deputy Carty is, is this not an ordinary hazard of a man who takes a contract, and I take it Mr. Fagan’s reply is that, in his considered judgment of all the circumstances of this case, it is not an ordinary hazard that the contractor can reasonably be asked to carry?—That is so, but there is a little more than that. Our line is and always has been that, as a Government Department dealing with contractors, we should be careful, while giving nothing away, to deal fairly with them and not to be too harsh or take too rigid a view. The goodwill of contractors is something that is worth having, without, of course, conceding anything ridiculous or absurd. Where you have special circumstances like this which are unusual—and we considered them to be unusual—I think it is justifiable to make a contribution to the loss the contractor would sustain through those circumstances.

85. Deputy Haughey.—Was time considered to be the essence of the contract? Was it important that the work should be done quickly or within a specified period and, secondly, did you say to the contractor while the job was in progress: “That is all right. You pay these special rates and we will see you will be all right” or did this not arise until the contract was completed?

Chairman.—Was it considered important that the telephone exchange should be built expeditiously?—Yes, but we would never promise the contractor in the course of the contract that we would see him right, not where ex-gratia payments are concerned. As far as we ever go is to say: “You are not entitled to any payment. You must finish the work but we will consider the question of an ex-gratia payment when the job is finished.”

Deputy Haughey.—Did it, during the course of the contract, arise that the contractor pointed this out and there was some discussion about it or did it only arise after the contract was finished?—As far as my recollection goes the answer is “no”, that is, it was raised by him afterwards.

86. Deputy Sheldon.—There is a side issue in this. Mr. Fagan may not know anything about it but Miss Bhreathnach is here from Finance and she might have some information on it. Would it be possible that the other contractor who would, I presume, come under the Department of Health, also got an ex-gratia payment because the charges went up?

Miss Bhreathnach.—I do not think any such thing appears in the Department of Health and I have no recollection of sanctioning anything like that for that Department. I do not know if it would come under Health or the Hospitals Commission. It might be the Hospitals Commission, in which case it would be built by the local authority with grants from the Hospitals Commission to which we might contribute.

Deputy Sheldon.—The Department of Finance did not consider that was a point they might inquire into before giving sanction in this case?

Miss Bhreathnach.—No, because this man was first with his tender.

Deputy Booth.—Would that not throw a new light on it? If the sanatorium was able to be built within the time and the telephone exchange was able to be built within the time does it not look as if the amount of labour was sufficient and that it was a matter of jockeying between the contractors as to who would get the men? It seems that only one contractor put up the rates.

Chairman.—I think Deputy Booth is overlooking the fact that the contractor for the telephone exchange, according to the paragraph, was obliged to offer the inducement of overtime work to retain the services of his workmen and he, in fact, effectively increased their remuneration by allowing them habitually to work overtime.

87. Deputy Booth.—Was any information forthcoming as regards the next highest tender? This contract was for £75,000. Was the next tender in excess of £76,300? I want to make sure that the man next in line for the contract would have no “come-back” there. If one man loses the contract on the question of price and then finds that the man who got it beat him on the question of price and subsequently got an ex-gratia payment, that would not carry much goodwill with the contractors, either.

Chairman.—Are we in a position to say whether there was more than £1,300 between the contract price accepted from this contractor and the next lowest tender?—There was a difference of £2,000.

88. Deputy Carty.—Was the contractor for the telephone exchange aware that the contract had been given for Ardkeen Sanatorium when he submitted his tender? Had he any knowledge of the proposal in relation to Ardkeen?

Chairman.—I am afraid we cannot press Mr. Fagan to say that. The only person who would be in a position to tell us that authoritatively would be the contractor.

Deputy Haughey.—Perhaps, Mr. Chairman, you might ask Mr. Fagan about it.

Chairman.—Did you ask the contractor, before accepting his tender, if he was aware that a tender was about to be or had been accepted for the sanatorium at Ardkeen?

Deputy Carty.—Perhaps the question might be put another way. Perhaps Mr. Fagan might be asked if the work had started at Ardkeen when tenders were invited for the telephone exchange?—I cannot answer that question now. My information is that they practically coincided.

Chairman.—They were both probably at tender at the same time?—I cannot say positively, but I think so.

Deputy Carty.—If the two of them were at tender at the same time, the contractor should have been aware of it and should be aware that labour would be scarce in the area and should have provided for that contingency.

Deputy Haughey.—There is no question of the same contractor in both cases.

Deputy Carty.—If they were different men they would be drawing from the same labour pool.

Chairman.—These are factors which we can consider when we come to draw up our report.

89. Deputy Haughey.—In the normal contract, presumably there was a contract price. What was the final figure in relation to the contract price? Were there extras?—I have not that information here. I shall let the Deputy have it.

Deputy Haughey.—I desire to know the final cost as related to the tender and how the extras, and so on, were arrived at.

Chairman.—Were any payments made to the contractor in excess of £75,000, other than the ex-gratia payment of £1,300 and, if so, on foot of what matters?—I cannot answer that question off-hand. The contract would contain the usual price variation clause.

May we have a note on the matter at your convenience? Were any payments made to the contractor over the £1,300 ex-gratia payment and the £75,000 stipulated as the contract price?—In other words, what did the final account show?*

90. Let us now turn to paragraph 17 of the Report of the Comptroller and Auditor General, which reads as follows:—

“17. Reference was made in paragraph 11 of the report on the accounts for the year 1954-55 to work carried out at Shelton Abbey estate in adapting the buildings for use as a forestry school. In the year under review £3,000 was paid to the contractor on an ex-gratia basis on the grounds that the “time and material” clauses of his lump sum contract were not designed to apply to the work carried out by him. The original contract was placed for preliminary work amounting to £2,899 and the amount paid thereunder was £88,643. It was recognised that the percentage addition to the cost of labour permissable under such contracts was not sufficient to cover insurances, annual and public holidays, and general overheads and allow a reasonable profit.”

Mr. Suttle.—Originally, this was a standard minor lump sum contract and it included the usual clauses setting out the rates of payment for extra works carried out on a time and material basis. But, owing to the magnitude of the extra works, carried out under these clauses, the Commissioners felt that strict adherence to the terms of the contract was unfair to the contractor and so this additional sum was paid on an ex-gratia basis. The time and material clauses were for extra works only and the extra works became the major portion of the contract.

91. Chairman.—Has this Shelton Abbey work been finished?—Yes. The Shelton Abbey job is finished. I mentioned that on the last occasion I was before this Committee.

92. Deputy Booth.—How did it come about that an original contract for £2,899 for preliminary work could be extended up to £88,000 without anybody looking back on the contract to see whether the contract could possibly cover such expenditure or such an amount of work? It seems extraordinary that such a contract should continue without anyone realising that, in actual fact, the contract could not cover that additional expenditure.

Chairman.—Is this not a case of dry rot?—Yes. This case has already been discussed in some considerable detail before the Public Accounts Committee at previous meetings. I think the question which I have been put by Deputy Booth is fully answered in paragraphs 424 to 438 of the Minutes of Evidence on the 1954-55 Appropriation Accounts by one of my predecessors as Accounting Officer. This is a case which, if I may try to put it briefly, has been gone into at great length and in respect of which there was a full investigation by the Committee. The late Mr. Ó hÉigceartuigh, the then Accounting Officer, was under very close examination about it. All the facts have already been sifted.

You would help us by recapitulating briefly the position as it is to-day?—What really happened was that the work here was to be divided into two stages the first of which would cover certain demolition works and the treatment of dry rot which, so far as our information and advice went —with, I may say, at that time the assistance of a dry rot expert—was not very extensive. It was estimated at about £1,000. The balance of £1,899 was for certain demolition and small works that would be done before the main stage of reconstruction and adaptation for a forestry school would be tackled. When they started to open up, they found extensive dry rot. Dry rot is incalculable. You just do not know where you are when you are dealing with it in an old building. It was an appalling case of dry rot in this building. They found further, on opening up—and this is a matter of some very particular importance—that when the old building was stripped as it was, bit by bit, to deal with dry rot, demolitions and so on, it had been very badly constructed. In the opinion of our architects, the building was one of the most poorly constructed buildings they ever saw. The architects were of the opinion that it was quite obvious that no skilled bricklayers could have been employed on the job. They came across a series of brick courses with baulks of timber to keep them in their places— and that is simply inviting dry rot. These baulks of timber were all concealed. The existence of the timber in that way made the building very vulnerable to dry rot. In the result, the treatment of this dry rot involved us in an expenditure of, ultimately, £70,000, out of a total expenditure of £100,000 or £110,000. I mentioned that at the last meeting.

Now, we had employed a quantity surveyor for the second part of the work. When he came in and saw the situation, he said he could not possibly draw up a bill of quantities to meet a situation and conditions of that kind. We thought we were fortunate indeed to have an honest contractor and one who was willing to do the work on a time and material basis to completion. That created a situation for him which was very different from the ordinary time and material clause which you find in a bill of quantities in a lump sum contract. Where you have a lump sum contract and a bill of quantities the latter contains a time and material clause. I have a copy of it here, in fact. It says that no work of any kind for which payment is to be made in accordance with the record of time and material shall be executed unless the complete arrangements for such are specifically authorised by the architect in writing. We very seldom have to use that clause in a lump sum contract, but it is put in as necessary precaution for the purpose of meeting work which cannot be measured in accordance with the rates in a bill of quantities. Here is an example which I might give. You might be carrying out a reconstruction job on a building and, as happened once in my recollection, there might have been a small fire in part of the building. Where you have a fire, you may not be able to specify precisely what work has to be done until you start to open up there, and some of the work may have to come under the time and material clause. However, it is very rarely that that comes in. In this particular case the original lump sum contract became a time and material contract. Moreover, the terms and conditions usually attaching to a time and material contract—so much percentage on labour, so much on materials—had been under discussion between the Professional Institutes and Contractors and there was agreement between the Royal Institution of Chartered Surveyors and the Builders’ Federation on a very substantial increase in these percentages. Instead of our 25 per cent. on labour costs they agreed on 37⅛ per cent. We had been under pressure ourselves to the effect that our 25 per cent. on labour and 15 per cent. on materials were unreasonable, that they were too low, with the changing times. We were satisfied ourselves that that was so but we were so little involved that we never worried very much about it. However, when you come to a case like this you have to recognise that there is equity on the side of the contractor. We went along with him so far as to recommend what we considered would cover him for the claim which he made under the heads of the extra holiday payments which he had to make by reason of the contract’s extending over a vastly longer period than the £2,899 job.

93. Deputy Booth.—There appears to me to be something basically wrong with going on with work under a contract which, very obviously, could not possibly be held to cover the work which was being carried out. Surely it must be very obvious that once dry rot has been discovered, the original contract could not possibly cover what the contractor is being asked to do? We have placed the contractor in a very awkward position by allowing him to go on, and we have placed public funds in an awkward position by deciding what extra amounts ex-gratia should be paid. It is an unbusiness-like way of finalising it.

Chairman. — We have heard Mr. Fagan’s explanation and we shall have a duty to consider his evidence very carefully when we come to make our report, but I do not think we can prudently engage to-day in the kind of consideration we shall give it when we come to draft our report. I think we should confine ourselves to asking Mr. Fagan for any information required.

Mr. Fagan.—I am afraid my statement was very lengthy though I intended it to be brief.

Chairman.—It was most helpful.

Mr. Fagan.—I was responding to your request that I might summarise what was said to the Committee before. The Committee had all this information previously and they have considered it. I would not like, in recapitulating, from memory, to be taken as being more accurate in my survey of the position than my predecessor.

Chairman.—You may rest assured that when we come to consider this matter we will have due regard to the evidence given to the previous Committees in regard to this general matter of Shelton Abbey which, of course, is a large, complex and tedious problem, now, happily, I think, concluded.

94. Deputy Sheldon.—My recollection is that there was only one outstanding point on which the Committee had not been satisfied, and that was the service by the clerk of works. I do not know whether any more information has been received in that regard.

Mr. Fagan.—Is that matter not the subject of an exchange of notes between the Minister for Finance and the Committee at the present time?

Chairman.—I think we were hopeful that you, Mr. Fagan, would be able to give us some further information on the specific question of the checking of the accounts of the contractor before payments.

Miss Bhreathnach. — I think the minute of the Minister for Finance’s on the Committee’s last report will contain something on the subject of the checking, if that minute has not already reached you.

Chairman.—I do not think that minute has yet reached us. May we take it that the minute of the Minister for Finance will deal with that question?

Miss Bhreathnach.—You raised it on the last report and we shall be sending you a reply.

Chairman.—That, I think, was the specific matter left over.

95. Mr. Fagan.—For my guidance, though I suppose it does not matter very much as this is my last appearance before the Committee—

Chairman.—I had hoped I would be allowed to refer to that suitably at the conclusion of your evidence.

Mr. Fagan.—It is a matter of interest to me. Once a matter, or a case, passes into the realm of correspondence between the Committee and the Minister for Finance is an Accounting Officer entitled to come along here and speak afterwards?

Chairman.—I think so. This Committee is all-powerful. We can summon Ministers of State, Accounting Officers, Governments even, to our meetings and direct them to produce documents to us; and any reply you made here is under the cloak of a virtual omnipotent power.

Mr. Fagan.—My question was directed as to my power rather than that of the Committee’s?

Chairman.—I shall permit no query to be addressed to you outside the strict relevance of our proceedings and the ambit of your authority, but, if you would prefer to see a copy of the minute from the Minister for Finance to us in respect of this specific matter, the Clerk to our Committee will be happy to let you see it.

Mr. Fagan.—They should also let us have copies for our office.

96. Chairman.—If you address any communication to us in that regard we will be most happy to see it. If there is no other question on that paragraph, pending receipt of the communication from the Minister for Finance, we shall turn to paragraph 18 which reads:—

“18. A standard clause in the specification of works carried out by contract for the Commissioners provides for the examination of sites of proposed works by contractors prior to tendering, with a view to precluding the admission of claims for extra works on foundations. From time to time, however, the Commissioners have found it necessary to settle claims for extra work of this nature on an ex-gratia basis. In the year of account forty-two such claims were settled for sums ranging from £4 to £818 amounting in all to £4,971. The sites in question included those for thirty-seven national schools, three Garda Stations and two other buildings.

The Commissioners have now decided to revise the clause to permit of such works being dealt with as additions or alterations under their contract terms.”

Mr. Suttle.—The Office of Public Works contracts have, up to this, been drawn up on the assumption that the contractors were fully aware of all the difficulties they might meet in providing good foundations for building and, when the Commissioners paid for extra work on foundations then they had to make such payments on an ex-gratia basis.

97. Deputy Haughey.—That is the gist of what is in paragraph 18, but I want to clear my mind on one point. In contracts following the normal run, whereby you have a bill of quantities which would specify so much excavation, if there was any extra excavation involving an extra amount of money, would it come into the bill of quantities in the normal way as an extra?

Chairman.—What about the last paragraph in the Comptroller and Auditor General’s Report? It states:—

“The Commissioners have now decided to revise the clause to permit of such works being dealt with as additions or alterations under their contract terms.”

Deputy Carty.—That covers the point.

Deputy Haughey.—Am I to take it, therefore, that the contracts at present in operation—in other words before this proposed revision—were not as I think they were? Now there is a bill of quantities with specified rates?

Mr. Fagan.—I think there is something in the point which has been made by the last speaker, one which I might be able to explain. This whole business arises as the result of what I might call an accident. For years, we, in the Office of Public Works, in common with every other employer, as, in fact, the last speaker suggested, have proceeded on the assumption that where extra works on foundations had to be ordered, owing to unusual conditions which were only discovered, or were discoverable, when you started workmen digging, that was an extra on the contract entitled to be paid for in accordance with rates specified in the bill of quantities. We proceeded on that basis for years and then, one day, there was a reference to our legal advisers on a contract on another issue, another point, and in the course of the reference attention was drawn to the fact that there was a clause in the contract which was headed “Visit Site”. This clause was a direction to the contractor that he should visit the site to ascertain for himself the facilities available, the supply of labour and materials the district would afford, and the general conveniences for working. It read: “He shall be deemed to have made himself acquainted with the nature of the soil”—and this particular one had subsoil—“the nature, character, dimensions, levels and other features of the site, all existing buildings thereon, and all other things in so far as these may have any connection with, or effect on, the works. He must take all of the above matters into account when tendering, and no charge for any extra labour or materials will be allowed in consequence of the contractor’s failure to do so.”

The legal advice given was that under the strict interpretation of that clause we were not entitled to pay the contractor for any extra work done on the foundations, no matter how deep he had to go, or how wide he had to go. We knew that was not building trade practice, that extra work on foundations is quite a common thing, but I should state that the legal advisers pointed out at the same time that if that clause were to be strictly enforced the only way a contractor could ensure against under-quoting would be to dig the foundations practically in their entirety before tendering or, alternatively, the employers would have to dig not merely trial holes but practically the whole foundations to make sure of the nature of the soil underneath. The legal advice clearly stated that, in law, the contractor was not entitled to anything more than was laid down in the contract, and any extra payment we made would, therefore, have to be ex-gratia. We had no qualms about doing that and in seeking sanction for it. This is normally recognised as an extra in a contract, and we took steps, on the advice of our legal men, to revise the contract so as to permit the payments being made as extras in the appropriate cases.

Deputy Sheldon.—It was like the words in small print at the bottom of a hire-purchase document. You have to make sure to read them.

Chairman.—Does that answer your question?

Deputy Haughey.—Very fully.

98. Chairman.—Paragraph 19, Coast Protection, reads as follows:—

“Subhead B.B.—Coast Protection.

19. Provision was made by way of a supplementary estimate for a grant towards the cost of a survey and experimental works in connection with the prevention of coast erosion at Rosslare Strand. The gross expenditure incurred by the Office of Public Works amounted to £7,788 in the year, one-third of which (£2,596) was contributed by the Wexford County Council.” Have you anything to add to that, Mr. Suttle?

Mr. Suttle.—We have been given to understand that the State has no statutory power with regard to coast erosion other than prohibition of the removal of beach material. The Government decided, in the case of Rosslare Strand, to contribute towards the cost of a survey and experimental work, and the Wexford County Council are contributing one-third of the cost. £6,000 was provided in the year 1958-59 and the work is continuing.

99. Chairman.—If the Government has no statutory power to engage in such work how it is that they come to be engaged in it?

Deputy Sheldon.—The Appropriation Act.

Mr. Fagan.—I am afraid I heard the prompt.

Chairman. — You have got express authority under the Appropriation Act?— Once money is provided in the Vote and we get a direction, or sanction, from the Minister for Finance we are entitled to go ahead if the Dáil votes the money. The Appropriation Act covers the expenditure.

Deputy Sheldon. — That arrangement has never been satisfactorily settled as between the Minister for Finance and this Committee. The Committee formerly did not approve of the Appropriation Act being considered as sufficient authority.

100. Chairman. — With your long experience, Deputy Sheldon, you will realise that such a matter is appropriate for discussion when we are drafting our report. We cannot ask Mr. Fagan to arbitrate between this Committee and the Minister for Finance. Paragraph 20, Arterial Drainage—Construction Works, reads as follows:—

“Subhead J.2.—Arterial Drainage— Construction Works

20. The charge to this subhead includes expenditure of £406,116 on the Feale, Corrib-Clare and Nenagh catchment drainage schemes, which were commenced in June, 1951, April, 1954, and May, 1955, respectively. The value of stores and charges for the use of plant and machinery were assessed at £232,370, the total cost of the schemes to 31 March, 1958, being:—

A certificate of completion of the Glyde and Dee catchment drainage scheme was issued on 26 November, 1957, by the Minister for Finance pursuant to Section 13 of the Arterial Drainage Act, 1945. The cost of this scheme, originally estimated at £920,000, was £1,035,583. Expenditure incurred on the maintenance of the works after 26 November, 1957, is charged to subhead J.5, and is recoverable from the local authorities concerned under the Arterial Drainage Acts, 1945 and 1955.”

Have you anything to add, Mr. Suttle?

Mr. Suttle.—A certificate of completion was issued during the year in respect of the Glyde and Dee drainage scheme. This is the second scheme completed since the Arterial Drainage Act was passed in 1945. The three schemes referred to in the paragraph are financed from voted moneys, and the following schemes are being financed out of National Development fund moneys—Deele and Swillyburne drainage scheme, Owengarney embankment scheme, Shannon catchment survey and the Rye river drainage scheme.

101. Chairman.—Is there any question on paragraph 21, River Fergus Drainage, which reads as follows:—

“Subhead JJ.4. —River Fergus Drainage—Repairs to Fish Pass

21. The cost of automatic tidal sluices constructed at Clarecastle was charged to this vote in 1950-51 and subsequent years. A certificate of completion was issued in November, 1954, and by order dated 31 December, 1954, under Section 6 (2) of the District of Fergus Drainage Act, 1943, the sluices were embodied in the Fergus Drainage district works and their maintenance became the responsibility of the County Councils of Clare and Galway.

A fish pass which had been incorporated in the sluice barrage subsequently proved defective. As the defect was considered to be due to a constructional fault the Commissioners of Public Works were of the opinion that it would not be equitable to require the local authorities to carry out the repairs. Accordingly the work was undertaken by the Commissioners and the expenditure has been charged to this special subhead which was opened with the sanction of the Department of Finance.”

Mr. Suttle.—I have nothing further to add to that paragraph.

102. Chairman.—Why did the fish pass prove defective? The paragraph states that it was due to a constructional fault. Was that due to a fault in design or to a fault in the execution of the design?

Mr. Fagan.—There was a fault, not in the design, but in a particular bearing. As you know, you had this sluice barrage at Clarecastle. At the request of the Department of Fisheries, we undertook to provide a fish pass which was designed in consultation with that Department. You might be pleased to hear that it was fabricated at our central engineering workshops in Inchicore. This fish pass was planned to be operated automatically by the tide and in its fabrication it was fitted, following modern practice, with a bearing of Tufnol. It is a plastic or resin material which is used under water where it is self-lubricating. Briefly, the whole point is that there is a certain clearance for which you have to allow and this would have worked all right, I am advised, if the motion of the pass was circular instead of oscillatory. What happened was that the clearance was not sufficient. The result was that the bearing if you like, swelled and stuck and the fish pass did not work. That did not become evident immediately. It did work for a short time after the Statutory Order transferring the responsibility for maintenance to the county councils of Galway and Clare had been made. When they complained to us, our engineers examined it and they said that it was a constructional fault and it would be unfair to ask the county councils to put it right at their expense as it was not a maintenance job. We put the facts to the Department of Finance and they agreed. We have done the job and it is now working satisfactorily and it did not cost very much money.

103. Chairman.—If there are no other questions on that, we can turn to Paragraph 22 of the Comptroller and Auditor General’s Report, which reads:—

“Stores

22. In the reports on the accounts for previous years attention was drawn to the question of stocktaking at the Central Engineering Workshop and Stores which had not been carried out since 1947. Stocktaking commenced in October 1953 and was completed in June 1954. As indicated in a note to the account surpluses brought to light amounted to £56,577 and deficiencies to £51,983. It is stated in the submission to the Department of Finance that the discrepancies resulted from a number of factors which for some years preceding the stocktaking hindered satisfactory storekeeping at the Workshop while housed at Dún Laoire and later at Inchicore. These factors included—

(1) the sudden increase in the inflow of plant, machinery and other stores into the Workshop, following the expansion of drainage operations under the Arterial Drainage Act, 1945, at a time when the Workshop store records system was not adequate to cope with the increase and when neither sufficient suitable staff nor accommodation was available, and

(2) the transfer of the Workshop from Dún Laoire to Inchicore before a suitable set of storage bins and a satisfactory system of store records could be introduced at the latter centre.

With the sanction of the Minister for Finance the store records have been adjusted to bring them into line with the actual stocks as ascertained at the stocktaking. A second complete stocktaking commenced in January 1957 but the results are not yet available.”

Have you anything to add to that, Mr. Suttle?

Mr. Suttle.—This is the report of the first stocktaking since the expansion of the drainage works.

104. Chairman.—I observe that the last paragraph says—

“With the sanction of the Minister for Finance the store records have been adjusted to bring them into line with the actual stocks as ascertained at the stocktaking. A second complete stocktaking commenced in January 1957 but the results are not yet available.”

It is now November, 1958, and what is the position, Mr. Suttle?

Mr. Suttle.—The stocktaking began in January, 1957, but as discrepancies were discovered, they were immediately investigated and that slowed up the whole work.

Mr. Fagan.—The physical count of stocks has been completed and what is taking place is the reconciliation of that count with the balances on the stock records. That is pretty well advanced. Rather than wait for the whole job to be finished, in respect of some 30,000 items, the staff engaged on it are having a reconciliation carried on in sections. We hope that the report will be out within the next few months. It is a big job, Mr. Chairman.

105. Chairman.—It is. It appears to me, Mr. Fagan, that with stocks of this kind annual stocktakings are very necessary? — There is a continuous system of spot checks carried out periodically and irregularly, which of course is essential or otherwise they would not be very effective as spot checks. Personally, I am very hopeful that the result of that will show up in the result of the stocktaking which is just taking place. I do not like to speak in advance of the report, but from inquiries which I have made, I am told the position is satisfactory or, shall we say, not unsatisfactory, in regard to discrepancies.

106. Will the stocktaking report, when available, speak as of January, 1957, and show any shortage or surplus that existed as on that date? Does the stocktaking mean that we ascertain the physical stock and compare that with what the records show should be there?—As you can understand, we cannot have a physical count of 30,000 items as on a given date. You would require an enormous staff to do that. You start off the count as at a given date and when you have this count completed, you can see from the records the items which should be in stock.

That were in stock?—Yes, that were in stock. The record will say what should be in stock as at that date. That is all you can do in stocktaking.

107. How often have these reports to be made available?—So far as we are concerned, the stocktaking and physical count is a sort of continuous process going on practically all the time.

And reports made at stated intervals?— Yes. This count should be completed and a report made early next year. That is the best I can tell you at the moment about the present one. The report will show that we started in 1957 to count physically, that we finished in such and such a period and that we were reconciling as we went along. Very often items turn up in different bins, having been placed in wrong bins. There is also the question of the interchangeability of parts, which is a big problem.

108. Deputy Sheldon.—At one time the Committee visited the workshops and were later shown some of the reconciliations and the point that struck me was that, in regard to a great many items, the method used was unnecessarily fussy and protracted. There was, for instance, a physical count of quite small things like washers?—Things like screws would be weighed.

Deputy Sheldon.—If it is being done by weight, I am quite satisfied. Time was being wasted unnecessarily with counting things like 18 half-inch washers. However, if the change has been made, that is all right?—I am told that in relation to such small items we are not at all fussy about the counting.

Deputy Sheldon.—There were other things like iron rods and it struck me at the time that they could have been measured in a less time-wasting manner.

109. Deputy Booth.—I cannot quite see the value of a stocktaking which is so protracted. I can see that it is ideal that we should be able to do it, but in view of the fact that so many items are involved, you cannot even say that the stocks in January were ascertained to be such and such. You can only say that the stocks between January and September were approximately such and such. That has no value at all to me. I know this from my own business experience because we have the same stocktaking troubles in our own business with at least the same number of items. We have found, and our auditors accept the fact, that a physical count is unthinkable. The only thing is a constant stock check which is going on all the time. We have found that that is what is being done elsewhere, that no complete stocktaking is ever done, but that you work purely from your stock records, which are constantly checked. There is a margin of error but if your check is going on all the time you will be able to check the proportion of error.

Chairman.—I think what Mr. Fagan has said is that there is a constant check proceeding?—Yes.

Chairman.—And there is determined from that what the physical stock of certain items is and a comparison is made with the stock records to see if they correspond as of that day.

110. Deputy Booth.—Is there any proportion established as to the discrepancy between physical stock and the books?

Chairman.—I understand that is to be answered in the report which Mr. Fagan will be supplying and the stockkeeper’s explanations of any discrepancies?

Mr. Fagan.—I may have been responsible for misleading the Committee. The position is just as you have described it, that there is a physical count; there is the reconciliation going on all the time; and then there is a report. The point is at what date do you make your report? You do not make a report as you count and reconcile every item; you wait until you check every store. The report is to tell the Accounting Officer either that things are going well or that they are going badly and if well, how well, and if badly, how badly, and if there are discrepancies, great or small, and to get the authority to write off the losses or overlook the surpluses, as the case may be. The surpluses of course are much more dangerous things. That is the situation.

Chairman.—That cryptic observation, Mr. Fagan, I admit, passes over my head. In my experience, a surplus has always been a cause for rejoicing but you tell me that surpluses are very much more dangerous than losses.

Deputy Haughey.—That is because you are much more the business man that the accountant.

Chairman.—That has occurred to me.

Mr. Fagan.—Yes, accountants do not like surpluses.

111. Deputy Haughey.—It seems to me that from the set-up of these accounts a stocktaking, in the sense in which it is known in commerce, namely, to find the value of your stock at a given period for the purpose of accounting, is not necessary in the case of this organisation. Would I be right in assuming that the purposes for which we have stock records and the making of these checks are (i) to ensure there is no theft or waste and that things will not be unaccounted for and (ii) that the level of the stocks of any particular item will be maintained at an adequate level suitable for the smooth working of this organisation?

Chairman.—I understand that is the case.

Deputy Haughey.—That being so, in my experience, I have found there are generally different types of stock systems, of stock records, and ways of keeping and recording stocks. There are some modern systems which are really excellent and I would like to ask if the advice of any experts or people of that nature has ever been sought in relation to these stocks as to the best type of modern stock records to be kept, bearing in mind the only two objects which we have in view?

Chairman.—Has expert advice ever been sought on this matter?

Mr. Fagan.—Yes, Mr. Chairman. We had these business experts in with the Office of Public Works, I think within your own recollection, Mr. Chairman. They went to the Engineering Branch. It was mainly for what they call “preventive maintenance,” on the engineering side, and they did give us a report and full advice on the form of records we should keep. Our records are modelled on those: we did not follow them exactly but the stock cards were drawn up after consultation with them and a full discussion of their report. That goes back a long way now, but that answers the question, I think.

112. Deputy Haughey.—Was that done after this event we have been discussing, the sudden inflow of plant and machinery and other stocks at a time when there was not adequate storage accommodation?— Yes.

It was subsequent to that?—Yes. Originally we had very small stocks and our workshops and stores were at Dún Laoghaire. We had a very small staff engaged on the stocks at Dún Laoghaire prior to the Arterial Drainage Act, 1945, coming into operation and then there was this sudden descent upon us of plant and stores to service plant and machinery, and the urge to get on with drainage as quickly as possible before we had adequate storage, adequate trained staff or adequate records, or a proper recording system. That has already been fully explained to the Committee and I think it is appreciated that we just simply had to make the best of a very bad job. I myself went up to the stores at one time in the early stages and I must say I was horrified to see—although we could do nothing about it—that stocks and spare parts were lying around the floor because although we had ordered—in adequate time, we thought— cages and bins and so forth, they had not arrived.

113. Deputy Haughey.—I am only concerned that the records and stocks system which are in operation have been expertly devised and are regarded as satisfactory by the Accounting Officer and presumably by the consultants who installed them?

Chairman.—I understand that is so?

Mr. Fagan.—I can answer for the Accounting Officer. I think, in answering for the business consultants, my recollection is that they wanted a much more elaborate system, not in the actual form of records, but to extend the whole stocks control in this detailed manner over all the local areas where local drainage schemes, large and small, were being carried out. We decided it would be better to begin by applying the system to head-quarters stores. It is a system which has been devised in consultation with them. It is satisfactory from my own point of view and I think it will ultimately be seen to be satisfactory in the results.

114. Deputy Booth.—Does this also control the ordering of further supplies? Is it purely a stock record to show how much you have at any one time? Most systems include records of what are regarded as maximum and minimum stocks and some indication of the point at which further orders should be placed?

Chairman.—Can you deal with that, Mr. Fagan?

Mr. Fagan.—There is a system which provides for the keeping of a record of desirable maximum and minimum stocks. That is on the engineering record.

Deputy Booth.—Is it on the other records?—It is not on this particular one. This stock record we are talking about now is kept by the staff which is under the control of the Accountant for the purpose of providing the necessary independent check upon stocks in the stores.

When the stock reaches the minimum figure, where does the initiative pass at that stage? When someone in charge of stock records finds stock has reached the minimum, what is the procedure?—There is an advice that it has reached, or is approaching, minimum and the system provides for the ordering of more stocks.

115. Chairman.—There are two matters arising from previous proceedings on which, perhaps, you might be able to give us some up-to-date information. There was a question relating to the effort to sell lighting sets for excavators in respect of which we had a minute from the Department of Finance on 2nd May, 1958, and it was mentioned in paragraph 13 of the Report on the Accounts for the year 1954-55. Have these lighting sets been disposed of?—No, our efforts to dispose of them are continuing. Speaking from recollection, we have not succeeded yet in disposing of all of them: we have disposed of some but I was not anticipating this question, I am afraid, for the reason I gave already.

The Finance minute said that “the response to the advertisements for the sale of lighting sets had been disappointing and that efforts to dispose of them would be continued and the Committee would be informed of the results”? —That is precisely the position.

You are not yet in a position to advise us on this matter?—No.

116. We can raise it later in the year. Now, there was a rather complicated question arising in regard to the amalgamation of engineering stocks records held by the engineering branch and the Accountant’s Branch and I think the Comptroller and Auditor General was in correspondence with Accountant on the matter?

Mr. Suttle.—The Comptroller and Auditor General is of opinion that consideration of this matter might be deferred until the results of the second stock check are available. They might bring to light the value of the two sets of records.

Chairman.—Does that correspond with your view, Mr. Fagan?—Yes.

Chairman.—Then I suggest we adopt that course and leave the matter over for further consideration, in the light of the report when it is available. If there are no further questions on this section, we can pass to subheads of the Vote on page 18.

117. Deputy Sheldon.—So far, I have found only very minor points. On page 2 of the statement on subhead B*, there is this odd business—No. 22 (1)—concerning the improvement of the gates at the Botanic Gardens. The total estimate was £680; there is no expenditure but the work is completed?—A very reasonable question, but there is a very simple answer. No payment arose in the year of accounting. What it would mean is— and I am quite sure this is what happened although I am speaking now without the book—that the work has been done and probably completed towards the end of the year and it would be paid for in one lump and the payment would not arise until the succeeding year. That frequently happens: I think we had that question before.

118. Deputy Haughey.—About the Phoenix Park pavilions—how are they progressing and when do you think they will be finished?—They are finished now.

119. Deputy Sheldon.—On No. 82A. U.N.O. Residence of Permanent Representative, there is an item of £11,549, I presume, for the adaptation of the building. Is that, plus the £29,051, borne on subhead A. for the purchase of the residence, is that £40,600 the total cost of the residence, or will there be further adaptations?—It is subhead A. you are referring to?

Yes. There is part of it there and part in subhead B.?—I do not think that the sum of those two items is the total cost because I think there was a deposit paid in the previous year. Yes, that is right. The £29,051 to which you referred, is additional to a deposit of £3,200 which had been paid in the preceding year, and that, plus the £11,000-odd would make up the total. That £11,000-odd would be, as you say, for furnishing and adaptations.

Deputy Sheldon.—It appears to have been expeditiously carried out?

Chairman.—I think I am right in saying this was an apartment purchased in New York and that the £11,000 is mainly for furnishing?—Yes, mainly furnishing. Certain electrical work had to be carried out.

Deputy Sheldon.—The value of the property would be enhanced by the work, presumably?—I do not know, in the case of New York.

120. Deputy Jones.—I notice, on No. 42, that £1,550,000 was estimated and a sum of £1,206,000 was spent. That would leave a balance of £344,000. Could Mr. Fagan tell us if there was any work to absorb that amount or whether that amount was surrendered, or if in the following year we start off again with something of the same kind of estimate?— What you do not spend in a Vote is surrendered, unless of course, it is a Grant-in-Aid that is not surrendered. This is not a Grant-in-Aid, but I think perhaps, the Deputy’s question might be answered if I indicated that, contrary to my own expectations, having regard to the awful weather we have had, the expenditure for the first half of the current year, has been extraordinarily high on national school grants. We spent £735,000 out of a total Vote of £1,400,000 which is a good deal more than half and it looks as if the £1,400,000 may be exceeded. Progress with the building of national schools is, like any other building, something that is more or less unpredictable. It is affected by all sorts of things, the weather amongst others, competition in contracts, the ability to get contractors, etc.

121. Deputy Jones.—The point I wanted to get is whether in actual fact, when we make provision for the expenditure of £1,500,000 in a particular year, would the projects ahead take up that amount in that particular year?

Chairman.—If we provide £1,500,000 in a given year is it customary for firm contracts for that amount to be let out in that year even though they do not fall to be paid for in that year? Am I right in believing that, when you fix a figure of £1,550,000, that really represents what you expect will fall to be paid in that financial year?—Yes.

A variety of circumstances might mean postponing payments into the following year, but that figure is arrived at in relation to the volume of work which you are handling in the building of schools? —Yes. It is arrived at after the most detailed examination of all the information in relation to the present stage of each proposed new school, improvement work, either major or minor, or whatever it is. It is astonishing the amount of detail that is gone into and I have often thought myself that it is a little bit unnecessary. But it is done on that basis. One has to do it about the month of October; one has to try to estimate what one is likely to pay out in the financial year following by way of school grants on the building of schools, new schools, improvements and so forth, major and minor. As I say, it is to a large extent incalculable since one does not know what is going to happen.

Deputy Haughey.—It is a completely different figure from the total value of the contracts on hands?—Certainly. It is only the amount of the grant expenditure.

122. Deputy Sheldon.—Under subhead B., Minor New Works, No. 57, my imagination boggles as to what questions might properly be asked on this: provision of two silence cabinets for Fine Gael Party rooms.

Chairman.—The industry and zeal of the Members of the Fine Gael Party is such that special additional telephone accommodation had to be provided so that the business of the electors might be expeditiously disposed of.

123. Deputy Booth.—On No. 20A. Dún Laoghaire Harbour—£9,999 was spent this year out of a total estimate of £39,500. The work on one side of the pier appears to be completed. Is further work in hands or projected on the arrival side or is the work which has been done to date the entire work for which the Estimate was originally passed?—I do not know whether or not that represents all the expenditure. The job of work for which provision was made is completed. I believe there are other works contemplated or under discussion. They have not reached the stage of final decision yet.

They would not be covered by the estimate for £39,500?—No.

124. On No. 52—New Central Sorting Office—estimate £800,000. During the year we appear to have spent £1 3s. 3d. Planning is in progress. Are we making much headway on that? In the previous year we spent £828. There was not very much progress. Is the whole thing deferred for the moment or is there any chance something will be done?—There is no question of its being shelved. This is a very big job. The £800,000 estimate is very optimistic, I think personally. The scheme is the subject of constant consultation between our architects and the Post Office engineers.

Chairman.—That is not the premises in Pearse Street?—This is the new Sally Garden site around in Amiens Street which has been purchased for the erection of a new central sorting office. It will be a very big sorting office. The intention is to equip it with all the modern up-to-date devices and architects from our Office and the engineers from the Post Office have, in fact, been sent abroad to study methods, both of construction and the conveyance of parcels and mails, and so forth, as used elsewhere. Several designs have been prepared and discussed between our architects and the Post Office engineers. Discussions are going on constantly. It has not been shelved.

Deputy Booth.—It will be very involved?—Very involved, and a very big job as the amount of the estimate will show.

125. On No. 74, an estimate for £47,000 for Cathal Brugha Barracks—dining hall and cookhouse—

Deputy Haughey.—It is badly needed.

Deputy Booth.—I accept Deputy Haughey’s assurance, but I cannot see how you could spend that amount of money on a dining hall. The proportion of men living out in Cathal Brugha Barracks appears to be very high, judging by the number of men one meets going in and out at lunch time.

Chairman.—Planning is in progress: I take it that is not a final and definitive estimate?—You will not know that until your working drawings and specification stage is reached. It is only then you will know what it is going to cost when you go to tender.

126. Deputy Booth.—It seems an enormous figure. Hangar gates at Baldonnel, £18,000. Half the original estimate has been paid and a further stage is in operation?—Another gate.

How does that expenditure arise just on gates?—The old hangar gates fell to pieces.

All the hangars pretty well fell to pieces, too, did they not?—I do not know about that. The original gates were worn out and simply had to be replaced. In addition to that, they were obsolete.

127. Under “Urgent and Unforeseen Works”—bench marks at Phoenix Park, Ballinrobe, Enniscrone, Ballysodare, etc., £856; I cannot see how that amount could be expended on bench marks.

Chairman.—I understand this is for the provision of a stone with blue arrows erected by the Ordnance Survey. It means that the Ordnance Survey know the particular height above sea level at the particular place. Will you give us a note, Mr. Fagan, as to how this £856 was spent?—Yes, Mr. Chairman.*

128. Deputy Booth.—On the question of accommodation for petrol rationing, we did not have any petrol rationing?

Chairman.—You remember that during the Suez crisis it was thought that it might be necessary to revive petrol rationing. We all got coupons, which we never used, but provision had to be made and Mr. Fagan was directed to provide accommodation, etc., should petrol rationing become necessary. Happily, it did not.

Deputy Sheldon.—It is a matter of policy.

129. Deputy Haughey.—On Extra Receipts payable to the Exchequer, there is a very big discrepancy between the amount estimated and the amount realised?—Yes.

Chairman.—Have you any observations to make on that, Mr. Fagan?—We were wrong in our guess. We estimated that we would sell and dispose of property under the State Property Act, 1954, and would get certain receipts in the year of account. We were wrong.

Deputy Haughey.—Might I point out to Mr. Fagan that there is a very valuable and new American word called a “guesstimate”?—Perhaps I should make a slight correction there. That estimate of £45,000 was framed in the expectation that payment would be received from the Land Commission for the transfer to them of property at Moore Park, Lusk Government Farm and Ballyfair Estate. We did not receive the payments in the year.

Chairman.—The Deputy can have a canter on that with the Land Commission Accounting Officer, Mr. O’Brien.

130. Chairman.—I would direct the attention of members of the Committee to the Bourn Vincent Memorial Park Account, with which you have been furnished.*

131. Chairman.—I direct attention also to the memorandum on Registers and Rentals of State Lands and Buildings, which has been furnished and is an exhibit here.** Is there any question in respect of that?

Deputy Booth.—Yes, there are a couple of points. I cannot quite see the necessity for this amount of legal work as set out on the first page—“Abstracts of all deeds affecting each property and a short Epitome of Title.” That is a very long period of time. I do not know the exact value of it, but presumably when the property was taken over, there was some abstract of title. I cannot quite follow why some further work should be necessary at this stage.

Chairman.—Why have the Commissioners thought it expedient to prepare abstracts of all deeds affecting each property and the short Epitome of Title? May I suggest the answer—because the Committee of Public Accounts asked them to do so?—Yes. I wanted to say that as politely as I could.

Chairman.—I have saved you that difficulty.

132. Deputy Booth.—This also says that the perambulation of property proceeded periodically. Is there any indication as to how often the complete number of buildings is covered? Are they covered once a year or once in six years?—Our instructions are that each local assistant architect, as we call him, should endeavour to cover each building in his district once in each year.

That is the aim?—Yes, that is the aim.

Chairman.—There are no further questions. Gentlemen, we have to reconcile ourselves to the fact that this is the last occasion on which we will have the pleasure of having Mr. Fagan with us. I am sure I speak for you all when we offer him our cordial and best wishes for many years to enjoy his retirement, and when we express the hope that we will see a lot of him around the town.

Mr. Fagan.—Thank you very much. Mr. Chairman.

The witness withdrew.

The Committee adjourned.

* See Appendix VII.

* See Appendix VIII.

* See Appendix IX.

* See Appendix X.

* See Appendix XI.

** See Appendix XII.