Committee Reports > List of Committees > Dáil > 1968 > Committee of Public Accounts > Interim and Final Reports of the Committee - Appropriation Accounts 1966 - 1967

FINAL REPORT

PART I-GENERAL OBSERVATIONS

MINUTE OF THE MINISTER FOR FINANCE DATED 30th JANUARY, 1968.

1. The Committee will await the further observations of the Minister for Finance on paragraph 25 of its report dated 10th March 1966, on paragraphs 3, 12 and 27 of its report dated 17th November 1966 and on paragraph 20 of its report dated 14th July 1967.

Report dated 14th July 1967

2. The Committee is gravely concerned regarding the further increase of £75,000 on the estimate furnished to it in April 1967 for the rebuilding of the Abbey and Peacock Theatres. This brings the final cost to an estimated £725,000.

It wonders whether it has yet heard the last of this project, which is a striking example of incomplete planning and its financial consequences. It is extremely disappointing to the Committee that its suggestions regarding professional fees have been rejected and it recommends that this matter should be thoroughly investigated so that in the interests of the Exchequer expenditure on large building projects may be more rigidly controlled.

3. The Committee notes the measures taken, or about to be taken, to secure better control of drugs and medicines supplied for the health services. It would like to be kept informed of any review in relation to changes in the structure of these services.

4. The Committee, notwithstanding the Minister’s observations, finds it difficult to accept that a cheaper site could not have been procured for a fishery research station. In its view the price of £9,000 paid was exorbitant and scant regard appears to have been shown for the interests of the Exchequer.

Appendix 5.

5. The Committee wishes to be informed of the final outcome of the correspondence between the Department, the architect and the contractor regarding the defects in the swimming pool at the Garda Training Depot, Templemore.

PART II—PARTICULAR ACCOUNTS

Roinn na Gaeltachta

6. The grant-in-aid of £220,000 for Gaeltarra Éireann for the year under review was framed on the basis of £170,000 for current expenses and £50,000 to enable the Board to make grants of a capital nature towards developing minor productive projects. Such grants totalled only £5,145 in the year, and with the sanction of the Department of Finance the balance of £44,855 was used to increase the amount for current expenses. The Comptroller and Auditor General reported that in his opinion control by Dáil Éireann in cases such as this would be strengthened by providing for capital and non-capital expenditure in separate grants-in-aid. Notwithstanding evidence from the Accounting Officer and the Department of Finance advocating some flexibility within the overall limit of the grant-in-aid, the Committee reached the conclusion that it would be better to provide separately for capital and current items so that Dáil Éireann could exercise more effective control.

Public Works and Buildings

7. The “Fág an Bealach” a suction dredger, designed to handle sand and gravel, worked for a total of only 12½ weeks in the three years 1962-63 to 1964-65 and was not used in 1965-66 and 1966-67. In the five-year period referred to this dredger operated in Arklow harbour on a hireage basis. Receipts from hire charges amounted to £1,900 while expenses totalled £19,500, including £16,000 for labour. This is a very old vessel of limited utility and the charges for hire have not been revised for a number of years. If the full commercial rate had been charged the loss on operation would have been much less. The Committee trusts that the future of this vessel will soon be decided and it would like to be kept informed of developments.

8. Overtime payments amounting to £2,300 were made to 80 out of the labour force of 130 workers at Dún Laoghaire harbour during the five-week period ended 21st December 1966. The Comptroller and Auditor General inquired about the nature of the work and whether the productivity of the labour force was regularly assessed. The work related to the replacement in concrete of the sub-structure of the mail boat pier which was being carried out in sections, one of which could not be made ready for the Christmas traffic without overtime. No formal system for measuring the productivity of the labour force was then in use, but from 1st April 1967 a system on a trial basis was introduced, covering certain categories of work, which may be extended later to others.

The Committee was told that the Commissioners of Public Works had extended the system to most categories of work including workshop practice and carpentry work, but, pending the training of an engineer in work study, the outdoor maintenance work on the piers and on the harbour had not been included. The Commissioners were satisfied with the results so far; there had been a significant increase in productivity. The Committee would hope that with the extension of the system of work study there would be an improvement in efficiency with a consequential saving to the Exchequer. It wishes to be kept informed of developments.

9. Arising out of the work referred to in the preceding paragraph, the Comptroller and Auditor General also observed that extra manpower costs were incurred in mixing and transporting concrete by inefficient methods. From inquiries, he learned that because of the decision that expenditure on capital services should be curtailed it was not possible to proceed with the purchase of a mixer and two dumpers at a cost of some £3,400 for the economical execution of the work and consequently there was no alternative to manual labour. As this work has been in progress for some years, the Committee would like to know the amount of the extra expenditure involved through the inefficient methods referred to. It is glad to have the assurance of the Accounting Officer that this kind of procedure will not happen in future.

Defence

10. Because of the erection of the bridge by Irish Steel Holdings, Limited between Haulbowline Island and the Mainland, the Department’s launches have been unable to ply between Cobh and Spike Island and an alternative boat service which cost £6,900 during the year was provided. The Department has no rights over the bridge and in the course of audit it was observed that delivering stores by boat was time consuming and that the loss in handling loose materials was substantial. On the initiative of the Comptroller and Auditor General representations were made to Irish Steel Holdings, Limited for permission to use the bridge for delivering stores to the Naval Base and this has been granted.

As the Company is wholly owned by the State, the Committee is perturbed that the members of the Naval Service engaged on the Island have not the right to use the bridge. In the Committee’s view there should be closer co-operation between the Company and the Department.

Agriculture

Appendix 16.

11. At a cost of £51,669, drainage works were carried out on the River Rye between 1955 and 1958 for the purpose of facilitating land reclamation in the counties of Kildare and Meath. It was the intention that the Office of Public Works would carry out maintenance and recover the expenditure from the County Councils, but the latter were advised in 1961 that they lacked the statutory authority to make the repayments. Maintenance ceased in 1962, by which time £3,620 had been spent by the Office of Public Works on behalf of the Department of Agriculture.

The Comptroller and Auditor General drew attention to this case because he felt that the failure to maintain had resulted in undue deterioration and consequently detracted considerably from the value of the original work. Meantime the Department of Agriculture has been in correspondence with the Office of Public Works asking whether the substantial amount of work requiring attention at May 1967 could be undertaken as an arterial drainage scheme under the provisions of the Arterial Drainage Act, 1945, after which future maintenance costs could statutorily be met by the two County Councils.

Somewhat similar cases have come before the Committee in the past where work, paid for by the taxpayers, has been allowed to deteriorate because of neglect of maintenance with the result that they have been called on again to pay for repairing the damage caused in this way. Clearly there has been waste of public money in the present case through letting the work which cost over £50,000 deteriorate. While the Committee accept that there may have been legal difficulties from the point of obtaining a contribution from the County Councils, it feels that maintenance should have continued until a way out of these difficulties had been found. Future developments should be brought to the notice of the Committee.

Lands

12. A number of tenants complained about defects in their dwelling houses which had been erected in recent years by the Land Commission using direct labour. In the case of a house built in 1960 at a cost of £1,654, expenditure amounting to £490 was incurred between 1962 and 1965 to remedy defects and in 1967 a settlement of £1,000 was made to meet the cost of further repairs plus professional fees. Offers of £200 and £300 were made in two other cases in settlement of claims for defects in houses built in 1961 and 1964 at a cost of £1,836 and £2,784, respectively; and expenditure of £723 was sanctioned in January 1967 to repair five houses built in 1964-65 at a cost of £15,567. The main factors leading to the deterioration of these houses may be summarised as follows. There were shortcomings in the sites coupled with working specifications which have recently been found to be less than adequate. Semi-skilled workmen were employed and there was inadequate supervision due to vacancies in the inspectorate staff. The Accounting Officer informed the Committee that the number of direct labour houses that gave grounds for complaint was only a small percentage of the total of such houses erected by the Land Commission. These houses cost significantly less than buildings erected under contract and with improved specifications, better supervision and the employment of only skilled labour there should be less room for complaints. The Committee trusts that these improvements will result in better returns being obtained from direct labour projects.

13. From the Comptroller and Auditor General’s report it appeared that a considerable number of the instalments of annuities being collected under the Land Purchase Acts were for very small sums and he had asked, if in the interests of economy in administration, redemption of annuities was encouraged and if any formal procedures towards this end were in operation. In evidence the Committee learned that there had been no fixed policy to encourage the redemption of annuities as there were many factors to be taken into consideration. But the Land Commission were prepared to undertake a pilot scheme and assess the results. It had selected Co. Donegal where there is a preponderance of small cases and if the response is promising, the scheme could be extended elsewhere, but all this would have to be on a purely voluntary basis. The Committee understands that there are approximately 23,000 annuities of less than 10s. and the cost of accounting for them is not insignificant. Also there are over 500,000 annuity accounts the average annuity being about £4 18s. 0d. so that it would be in the interests of economy in administration if redemption is encouraged. The Committee would like to be kept informed of developments.

Transport and Power

14. A tender amounting to £199,710 was accepted in June 1961 for the erection of the Technical Administration and Staff Catering building at Dublin Airport. This building was planned by departmental architects in 1958-59; and in the opinion of the Comptroller and Auditor General quite a lot of time was available to know what was being aimed at before placing the contract. However, he observed from a scrutiny of the bill of quantities prepared by a firm of quantity surveyors that it included provisional and P.C. sums totalling £77,000 and an item of £43,000 to cover sub-contracts for mechanical, etc. services, so that it eventually transpired that only work to a value of £80,000 had been specified in detail. When he undertook the examination of the final statement of costs for the building in question he found that variations on contract and adjustments of provisional and P.C. sums amounted to £136,396 (omissions) and £145,276 (additions), 86 per cent. and 92 per cent. respectively, of the entire contract, excluding the mechanical services.

The Comptroller and Auditor General considers that the postponement of detailed planning encourages variations and has the disadvantage of leaving the exact cost of the works unknown until after completion. He mentioned that the practice in other countries, as he understood it, was to plan and specify in detail in advance of the invitation to tender because it was considered that this saved both time and money. The Accounting Officer’s view as expressed in evidence was different. The practice of his Department is for work appropriate to specialist suppliers to be covered by P.C. sums, for the reason that the only alternative would be to abandon competition and specify trade names, manufacturers, or sub-contractors which would be contrary to Government contract procedure. He added that the Department would need to be convinced that the alternative suggested by the Comptroller and Auditor General would be more economical and efficient.

The Committee has given full consideration to the conflicting points of view expressed in evidence. The practice being followed in large construction contracts leaves the architect too much freedom, with the result that the client, which in this case is the taxpayer, never knows in advance the extent of his commitment. From the Committee’s experience, this does not happen in the private sector of the economy where the businesslike approach dictates that the client knows the amount of money he can afford to spend and plans and specifications are prepared accordingly. On numerous occasions in recent years the consequences of loss of financial control through inadequate planning have been reported by the Committee. This is a serious matter and it deserves the earnest attention of all Departments concerned with building contracts.

Office of the Revenue Commissioners Income Tax (Pay as you earn)

15. The Comptroller and Auditor General found in the course of examination that the records of defaulting employers in tax deduction card cases were incomplete and that the existing computer resources were such that it would have been difficult to note against each case the progressive action taken. On inquiry he was informed that when the employers’ records would be transferred to the new computer, which had replaced the previous one, a comprehensive record could be maintained. There were 600 cases in train for recovery action and 1,000 cases of employers who had failed to send in monthly returns.

16. The Comptroller and Auditor General also found that final action had not been taken against any defaulting employer in stamp book cases and he was informed that this was due to the diversion of staff to work of a higher tax content.

In evidence the Accounting Officer explained in detail to the Committee the procedures involved. On 1st February 1968 there were 137 vacancies on the staff and the new computer was not in full operation. He also stated that in both cases, i.e., tax deduction card and stamp book, the Commissioners had had quite serious difficulties in the legislative field which if removed would enable the collection to proceed much more smoothly than heretofore.

Turnover Tax

17. The main check on the accuracy of the returns of taxable turnover is a comparison with annual accounts furnished for Income Tax purposes. This check had not been carried out to the complete satisfaction of the Comptroller and Auditor General. He observed particularly that no check had been made in the Dublin districts and that the comparisons which had been made covered only about one-third of all registered persons. The Accounting Officer explained that the checks were in arrear because of staff shortages and he went on to state that in the year under review they found undercharges and irregularities in a total of 320 cases in the areas then under investigation.

In his report regarding Income Tax (Pay as you earn) and Turnover Tax the Comptroller and Auditor General concluded that the arrangements by the Revenue Commissioners were inadequate to effectively safeguard the revenue and that while the Commissioners believed that they had their priorities right, he considered it unsatisfactory that a choice had to be made which involved the deferment of full enforcement procedures in the cases referred to.

The Committee fully appreciates the strains and stresses placed on the staff of the Revenue Commissioners which were caused through having to implement new and complex tax systems in recent years. Nevertheless, it feels that, in the light of the comments of the Comptroller and Auditor General and in fairness to the vast body of honest taxpayers, no effort should be spared in the pursuit of defaulters, and that any necessary legislation towards this end should be prepared without delay.

Health

Appendix 31.

18. The Committee wishes to be supplied annually with a comparative statement of lay administration costs, county by county, for the health services on lines similar to that appended to this report.

Appendix 32.

19. In its previous report, the Committee made reference to the provision of health services, free of charge, to persons other than those who have medical cards. One explanation given is that in some areas a person gets the attention of the doctor because the latter knows that he is treating a lower income patient and the card is not formally needed. While it is true that the number of such cases is reducing, the Committee considers that test checks should be made to ascertain whether there are abuses.

Appendix 33.

20. From the statement appended to the evidence it appears that receipts in respect of “Payment by staff resident in Institutions for accommodation, meals, etc.” decreased by comparison with the preceding year. Questioned about this the Accounting Officer explained that the rates had not been increased for some time; that there may have been an increase in the number of staff living out; and that even though there had been increases in pay, these had not been accompanied by an increase in the charges for accommodation, meals, etc. He added that when pay was being adjusted these charges were considered as part of the pay settlement, they were not varied. The Committee is dissatisfied with such an arrangement which, apart from the misleading impression it creates, is not right in principle.

Appendix 33.

21. Payments by patients towards the cost of institutional services have remained more or less static for years that covered a period during which the costs were continuously increasing. £1.5 million seems a very small contribution towards an outlay of over £34 million on health services.

The Committee wonders whether it would be feasible to ascertain the extent to which the services are availed of by the middle-income group and whether they are being paid for in accordance with approved scales.

PATRICK HOGAN (South Tipperary)

27 June 1968.