Committee Reports > List of Committees > Dáil > 1966 > Committee of Public Accounts > Interim and Final Report - Appropriation Accounts 1964 - 1965

FINAL REPORT

PART I-GENERAL OBSERVATIONS.

MINUTE OF THE MINISTER FOR FINANCE DATED 4th JULY, 1966.

1. The Committee will await the further observations of the Minister for Finance on paragraphs 3 and 12 of its report dated 22nd February, 1961; on paragraphs 12,14 and 34 of its report dated 12th November, 1964; and on paragraphs 5, 17, 18, 19, 25 and 30 of its report dated 10th March, 1966.

2. The outcome of the investigations carried out by a departmental committee into procedures relating to Post Office Savings Bank accounts appear to be satisfactory. Since the Committee expressed its concern, in its report dated 22nd February, 1961, the incidence of fraud seems to have abated and no further action appears to be necessary.

General

3. The Committee notes that its suggestion that an amendment of the Standing Orders of Dáil Éireann should be made to enable it to review the accounts of State-sponsored bodies which receive subventions from voted moneys is being considered in the light of the comments of the Departments concerned.

Since the Committee of Public Accounts was first set up over forty years ago there has been no amendment to its terms of reference, notwithstanding the creation through legislation and administrative action of a large number of quasi-independent bodies with responsibility for spending substantial amounts of public money.

The present system of accountability for public expenditure has its origins in the last century when national budgets provided for the traditional services administered by Government departments accountable to parliament. All this has changed, public spending has greatly increased, governments have entered the fields of social and economic development, new institutions have been created with extensive powers, but beyond an obligation to present reports and accounts to the legislature, these new institutions are not subject to the disciplines of explanation and investigation imposed on the Accounting Officers of Government departments by the traditional system of accountability.

Clearly the system needs to be revised and extended to match the changes that have taken place in the modern machinery of government. The Committee suggested in its report dated 12th November, 1964, that as a first step the accounts of certain bodies could be referred to it for examination. Since that report it has consulted the Comptroller and Auditor General who expressed the view that accounts could only be a guide to financial control and public accountability. He considered them to be the starting off point for explanations and investigations without which public control is ineffective. The complex issues involved had, he stated, been debated at length by other governments and international bodies and the United States of America, France and Western Germany had evolved solutions which appeared to him to be working satisfactorily. In the opinion of the Committee the time has come for a detailed study of this subject, including the practices in other countries and it trusts that the Minister for Finance will agree and make arrangements accordingly.

Public Works and Buildings

4. In previous reports the Committee commented on the procedures employed in the planning, execution and financial control of the project for the conversion of Templemore Military Barracks to a training depot for the Garda Síochána. It is pleased to note that the Minister intends that the lump sum contract system should, as heretofore, be adopted, save in the most exceptional circumstances.

5. The Committee notes that the professional bodies representing architects, quantity surveyors and civil engineers have rejected the suggestion made in a previous report that it should be possible to negotiate a fee for large contracts. As the fees are generally proportional to construction costs there is little incentive to economy, and the Committee is not surprised at the reaction of these bodies.

6. Because of the recent evidence it is necessary to return to the project at Templemore. It appears that the swimming pool has not been satisfactorily completed, but it is not clear whether this was due to faulty design or defective work. Pending investigation payments have been withheld from the contractor. The latest development is disturbing, but the Committee will await the outcome before offering further comment.

Agriculture

7. The Committee was not unaware of the exceptional circumstances which gave rise to the difficulties encountered in disposing of reactors at the peak of the Bovine Tuberculosis Eradication Scheme. It is pleased to note that from 1st April, 1965 contracts for the purchase of reactors were allocated on the basis of competitive tenders received from individual canning firms. For important Government contracts entered into without competition there should always be safeguards to protect the public interest. The Committee further notes that the Minister shall have regard to its suggestion should there be any indication of a recurrence of a similar situation.

Defence

8. The Committee notes that the quantities of radiac instruments and rescue outfits held in store have been substantially reduced by issues to local authorities and that in the light of experience to date the Department considers that deterioration and obsolescence do not present a serious risk. The Committee would like to know to what extent the personnel targets for each branch of Civil Defence have been reached, and whether the disposal of equipment to the local authorities has resulted in its use for training purposes.

Vocational Education

9. The Committee will await a further report from the Comptroller and Auditor General on his examination of the accounts of expenditure relating to the XII International Apprentice Competition.

Health

10. The analysis supplied of the receipts of the Health Authorities for the years 1958-59 and 1963-64 indicate that over the six years they increased by £792,500 to £2,963,100. Over the same period net expenditure increased from about £16 million to about £22 million. It is also noted from the statement supplied that while payments by patients towards the cost of institutional services increased by more than 60 per cent., payments by staff resident in institutions for accommodation, meals, etc., increased by 11 per cent. in the same period. It is not suggested that there should be a relationship between the figures for these two headings, nevertheless the committee wishes to be informed whether the cost of providing emoluments in kind has increased, and if so, whether the increased costs have been fully recovered in the payments by the staff.

Agriculture

11. Subsidies on fertilisers imposed a substantial burden on the Exchequer and it is important to ensure that adequate provisions are made so that their full benefit reaches the consumer. The Committee notes that its views, with which the Minister for Finance agrees, have been brought to the attention of the Department of Agriculture. The Comptroller and Auditor General will no doubt keep this matter under regular review.

Public Works and Buildings

12. The Committee notes that as a result of the examination of the costings for three completed intermediate river drainage schemes the indications are that there is little to choose between the contract and direct labour methods for carrying out the work. The Committee would be interested to learn the economic results of the two further contract schemes at present in progress.

13. In the case of direct labour employed on Major Drainage Schemes it appears that the incentive bonus system has proved to be well worthwhile judged from the cost reductions and time savings achieved.

Roinn na Gaeltachta

Qn. 274.

14. The Committee notes from the evidence appended that efforts are being made to dispose of the glasshouses damaged by storm to which reference was made in a previous report. It would like to be kept informed of developments.

Appendix XVI.

15. The observations of the Department on the committee’s comments relating to the returns received by tomato growers in Connemara as compared with Co. Donegal suggest that in Connemara there is some loss of interest in the Glasshouse Scheme or that it is not proving an economic proposition. Financial assistance from the Exchequer towards these schemes has not been inconsiderable but the results have been disappointing.

PART II-PARTICULAR ACCOUNTS.

National Gallery

16. Reference was made in previous reports to the question of an inventory of the pictures, etc., in the National Gallery. In his evidence the Director of the Gallery stated that he expected to have a complete record before he would be again examined by the Committee, that he thought it unlikely that any pictures had been stolen, but owing to the congestion in the Gallery upwards of six thousand pictures had been in store and a number of them had been damaged. He hoped that the accommodation problem will be overcome next year when the new building is completed; meantime he has set up a restoration department for the repair of damaged pictures.

17. Questioned about lending pictures to authorities outside Dublin, the Director pointed out that while they remained in the Gallery the risk of loss or damage was carried by the Government, but if valuable pictures were lent to outside bodies the Governors of the Gallery require them to be insured and premiums were so high as to create a problem for borrowers. While the Committee shares the anxiety of the Governors of the Gallery for the preservation of the valuable national collection of pictures, it feels that it is a pity to have such a large number not on exhibition. It notes that the problem of insurance is being given further consideration and it trusts that the outcome will make it possible to have the contents of the Gallery more widely exhibited.

Public Works and Building

18. Attention was drawn to the arrangment made by the Office of Public Works with the National Building Agency, Limited for the provision of houses for married members of the Garda Síochána. At 31 March 1965, 277 houses had been completed or substantially so and 150 houses were in course of construction. None of the houses had been taken over by the Commissioners of Public Works at that date, but in the course of his evidence the Accounting Officer said that by April 1966, 113 houses had been taken over for maintenance and the title deeds for seventeen had been sent in for examination. The Committee assumes that the National Building Agency, Ltd. acquired a satisfactory legal title to the lands and houses it acquired. It is there fore astonished that it taking such a long time to transfer title to the Commissioners and would like to know to what extent there is duplication of effort in the legal field and whether this could be avoided.

19. The Royal Hospital, Kilmainham, which is one of the oldest secular buildings in Ireland, was declared unsafe in 1950 and vacated. Following a decision to restore and adapt it to provide accommodation for the National Museum a contract on a time and material basis was placed in 1957 for the first stage of the work, viz., repairs and eradication of dry rot and woodworm in the North Wing, which was estimated to cost between £20,000 and £40,000 and take about two years to complete. The work on this stage of the project was still in progress at 31 March, 1965 when expenditure had amounted to £145,000 including £30,000 for hire of non-mechanical plant-scaffolding, planks, etc. Work on the second stage comprising the other three wings is in planning and in 1964 the whole job was estimated to cost £500,000.

When the Articles of Agreement of the contract were being drawn up, the Commissioners of Public Works fixed the hireage rates for scaffolding, planks, etc. on the assumption that the work would take two years to complete. It is now in its ninth year and it is admitted that it would have been prudent to have provided for a scaling down of the unit hireage charges when extending the time for the completion of the contract. The evidence also indicates that the amount already paid for hiring is in excess of what it would cost to buy the equipment outright. The Accounting Officer stated that the architects had no idea when they started of the extent of the dry rot infestation.

The Committee recalls a somewhat similar case, that of Shelton Abbey, to which reference was made in its reports on the accounts for 1954-55 and 1955-56, and where the cost of eradication of dry rot escalated from an estimated £3,000 to a final figure of £57,000. While appreciating the difficulties in ascertaining in advance the extent of an infestation of dry rot without completely opening up the buildings, the Committee feels that the earlier experience should have been a warning to the Commissioners as to the ultimate cost of the Kilmainham project.

It is a fundamental principle that financial commitments should be based on realistic estimates and financial control is weakened by the practice, which the Committee has noticed, of understating requests for funds and counting on a subsequent vote for the further amounts necessary. The Committee wonders whether this work would have been undertaken if the ultimate cost of the project had been known in advance.

20. The Commissioners of Public Works acquired premises in O’Connell Street, Dublin in 1941 for use as offices for another Department Part of the building was sub-let under an agreement made in 1940 and the Commissioners’ title was subject to the sub-lease which provided for a rent of £400 per annum inclusive of rates and internal maintenance for a term of seven years with a right of renewals on similar terms. The Comptroller and Auditor General observed in the course of his audit that the outgoings exceeded the income derived from the letting, and in reply to an inquiry he was informed that the Commissioners were unable to impose revised terms on the lessees. He also observed that the lessees had assigned in 1946 their interest with the consent of the Commissioners and that the latter had a right to object to the transfer or to agree under revised terms, but did not do so. This is a most unsatisfactory state of affairs involving a continuing loss of public funds. The Committee would like to know whether there are similar cases on the rental of the Office of Public Works, or affecting other Departments.

Local Government

21. The Committee learned that there was a possibility of overlapping of functions between An Foras Forbartha Teoranta and the National Building Advisory Council and that the matter was under investigation. It wishes to be informed of the outcome.

Transport and Power

22. As from 1 April, 1962 a passenger service charge of 7s. 6d. became payable by passengers embarking for abroad at Shannon, Dublin and Cork Airports. The charge is collected mainly by Aer Lingus, Teoranta, and the net proceeds after deducting expenses are passed over to the Department. The cost of collection of this Airport Tax appears to the Committee to be considerable, ranging from about 10 per cent. in 1962-63 to about 7½ per cent. in 1964-65, and it questioned whether the tax could not be incorporated in the cost of the travel ticket. The Accounting Officer stated that all the air companies had objected to such a course, that the tax had been abolished in England and landing charges increased, but that our landing fees were already comparatively high, and business would be lost if we increased them. The Committee would like details of the basis on which the cost of collection is calculated.

23. Under the heading of Extra Remuneration a note to the account states that 367 employees received sums varying from £51 to £913 in respect of extra attendance and night duty allowances. In its report dated 12th November, 1964 the Committee noted that 276 employees received sums varying from £51 to £538 as extra remuneration during the year 1962-63 and it was told that there were exceptional circumstances during that year. The Committee is perturbed that notwithstanding its recent strictures regarding the volume of overtime, it continues to increase in a number of Departments. The annual salary of the officer who received £913 extra remuneration in the year under review was £1,200.

The Committee suggests that in the interests of economy and efficiency the Department of Finance should undertake a survey of the incidence of overtime and extra duty payments in all Departments.

Defence

24. The evidence given to the Committee discloses a most unsatisfactory state of affairs relating to State properties administered by the Department of Defence. A complete register of the properties held is not available and there was no regular procedure for perambulation reports. Of some 300 properties to be registered entries have been made in only 57 cases.

At intervals during the past thirty years the Committee has urged the Department to take steps to complete this important work. The Comptroller and Auditor General’s evidence on the present occasion points out what is essential for the proper safeguarding of public property against unauthorised infringements of title or irregular encroachments. Indeed, the Committee would not be surprised if there have been encroachments which had not been brought to light because of the prolonged inertia of the Department.

Stationery Office

25. Claims totalling £3,421 which a contractor submitted in 1960 and 1961 in respect of printing work for the Irish Manuscripts Commission had not been settled by the 31st March, 1965. The Comptroller and Auditor General was informed that because the work had been carried out on the basis of contract conditions fixed over twenty years ago, it was necessary to negotiate a settlement with the contractor. The delay it appears was not the fault of the contractor but was due to difficulties in making the material available for printing. Agreement on the terms of settlement has recently been reached and the Committee trust that the matter will be brought to an early conclusion.

Office of the Revenue Commissioners Turnover Tax

26. The Comptroller and Auditor General’s report states that the monthly returns of taxable turnover received from registered persons in respect of appropriate accounting periods ended on or after 31st October, 1964 had been aggregated and were in process of comparison with the figures shown in annual accounts for Income Tax purposes. The Accounting Officer informed the Committee of the progress made. Six provincial districts have been completed and the results checked by the Inspectors of Taxes, the remainder of these will be completed in the current year and a start will be made with the Dublin districts. Forty-six cases had been reported for prosecution, twenty of these cases have been disposed of by the courts and penalties imposed. Cross-checks will be a continuous process and the Committee would like to be kept informed of developments.

Industry and Commerce

27. A Grant-in-Aid of £58,000 was issued during the year to the Irish National Productivity Committee. This is one of a number of grants which are made from voted moneys towards improving productivity. Technical Assistance grants are paid directly from the Industry and Commerce Vote towards the cost of industrial consultancy schemes to increase productive efficiency, and for courses of training and visits abroad to study aspects of industrial organisation. Similar assistance for agricultural industries is provided in the vote for Agriculture, and for the improvement of fuel efficiency in the vote for Transport and Power. In addition An Foras Tionscal and the Shannon Free Airport Development Company, Ltd., assist financially in the training of workers, and Coras Tráchtála make grants available for export marketing research and consultancy projects.

The Comptroller and Auditor General undertook an examination of the possibilities of duplication of functions and overlapping of efforts by the bodies concerned. He states in his report that in the accounts of the various bodies that came under his review he was satisfied that financial assistance had not been rendered by more than one agency in respect of the same scheme, but that in the case of the Irish National Productivity Committee the accounts were not audited by him and accordingly he was unable to give a similar assurance.

The Accounting Officer defined for the Committee the functions of the various bodies interested in the improvement of productivity which were working under the aegis of his Department. He did not think that there was a probability of overlapping but there was a danger that some of them might exceed their functions and he would take steps to bring to the particular notice of the Irish National Productivity Committee the comments of the Comptroller and Auditor General. The Committee trust that the general question of overlapping of functions between the numerous semi-state bodies operating in the productivity field is kept under review.

Agriculture

28. Charolais cattle from France and Friesian cattle and Texel sheep from Holland were purchased by the Department for breeding purposes and the charge to the vote includes £60,000 on the purchase, importation, insurance and maintenance during periods of quarantine. Four out of forty-three cattle purchased failed to pass the Purbright test prescribed by the British Ministry of Agriculture which was applied at Rotterdam during the period of quarantine, although these animals had all passed the European test at the farms where they were purchased. In fact there was no evidence that the animals were developing or had developed foot-and-mouth disease, but as a precautionary measure the Department disposed of them at a loss estimated at £1,650. The insurers refused to accept liability because of the absence of evidence of disease and the Committee was told that the possibility of insuring against the risk of failure to pass the Purbright test was being investigated. It would like to be informed of the outcome.

(Signed) DENIS F. JONES,

Chairman.

17th November, 1966.