Committee Reports > List of Committees > Dáil > 1970 > Committee of Public Accounts > Interim and Final Report - Appropriation Accounts 1967 - 1968

FINAL REPORT

PART I-GENERAL OBSERVATIONS

Minute of the Minister for Finance Dated 5th February, 1970

1. The Committee will await the further observations of the Minister for Finance on paragraph 25 of its report dated 10th March 1966 and on paragraphs 5, 11 and 18 of its report dated 23rd July 1969.

Report dated 27th June, 1968

2. The Committee would like to be kept informed of the progress made towards the complete check of the summaries of turnover tax returns with audited accounts and other information furnished for income tax purposes and of the number of irregularities discovered.

Report dated 23rd July, 1969

3. The question of making available to the Committee the audited accounts of bodies which receive subventions from voted moneys has exercised the minds of the Committee for many years. It notes the observation of the Minister that he is making a reassessment of the question of a parliamentary review of the accounts of State-sponsored bodies in the light of the recommendations in relation to these bodies in the report of the Public Services Organisation Review Group.

4. In the course of evidence the Committee noted with appreciation that a number of Accounting Officers had as an act of courtesy made available for the information of the Committee the audited accounts of some State-sponsored bodies associated with their Departments. This was most helpful and, pending a solution to the problem adverted to in the previous paragraph, the Committee would like all Accounting Officers to extend to it a similar courtesy in respect of accounts of bodies sponsored by their Departments.

5. The Committee shares the Minister’s concern about the difficulties in recruitment of civil service staff. As indicated below (Paragraphs 6 to 9) it returned to this subject in its review of the accounts for 1968-69.

Qns. 949-962 Appendix 28.

6. A note to the account of the Vote for Transport and Power states that in respect of extra remuneration exceeding £100, three hundred and forty-four employees received sums varying from £101 to £1,206 for extra attendance and night duty allowances, The total amount paid in respect of overtime was £75,519. Commenting that £1,206 seemed to be a very large sum to have to pay to one person, the Committee proceeded to question the Accounting Officer on the particular staffing problems of his Department. It learned that the bulk of the extra remuneration was paid to radio operators and radio technicians and that it is difficult to secure the services of these people because of competition for qualified staff. Architects and engineers are also difficult to obtain. The Committee wonders whether recruitment procedures need to be revised; whether the remuneration is unattractive; or whether the training facilities, conditions of work and general atmosphere of the civil service need to be reviewed.

Qns. 977-1034 Appendix 29.

7. Staffing difficulties in the Estate Duty Branch of the Office of the Revenue Commissioners were brought to light by the Comptroller and Auditor General arising out of his report for 1967-68 which complained of delays in disposing of certain cases. The Committee considered in some detail the evidence of the Accounting Officer and notes that a reorganisation of the Branch took place recently which gave a higher ratio of senior to junior posts. However, this has not remedied the difficulties at the levels of Examiner and Assistant Examiner. In the first instance the latter are recruited from the open examination for Executive Officers in the civil service. In addition to on-the-job training, recruits are required to obtain a law degree after which they are eligible for promotion to the examiner grade. For a variety of reasons there is a rapid turnover of junior staff and this has caused vacancies in the examiner grade to remain unfilled for protracted periods. A suggestion was made that the difficulty might be overcome by direct recruitment of professional staff for the examiner grade until such time as assistant examiners were available but it did not appear to commend itself to the Accounting Officer. The Committee recommends that a forward plan should be drawn up for the staff requirements of the Estate Duty Branch and that this should contain detailed proposals to remedy the shortcomings of existing procedure.

8. The Accounting Officer of the Department of Posts and Telegraphs told the Committee that in practically every grade in the Post Office, as in the case of the whole civil service, there are difficulties in recruitment, either inability to get recruits when required or inability to retain them after recruitment. This has caused heavy pressure on existing staff and also certain accounting work has fallen into arrear with the danger of loss of revenue. The method of recruitment was explained and it appears that there is a collective responsibility between the Department and the Department of Finance. Measures taken to remedy the difficulties did not always prove satisfactory. The Committee deplores the fact that there is no evidence of a long term policy designed to overcome this disturbing situation.

9. The foregoing paragraphs serve to illustrate the incredible deterioration in recruitment for the public service. The Devlin Report has also adverted to this problem. Clearly in the interests of efficiency and economy a positive plan, designed to resolve these difficulties within a short space of time, is required. The Committee feels that such a plan should be prepared and communicated to the Committee.

PART II-PARTICULAR ACCOUNTS

Office of the Minister for Finance

Payments to Special Regional Development Fund (Grant-In-Aid)

10. This fund is related to the activities of the county development teams which were established to foster economic development in the west to the extent that development could not, it was felt, be done appropriately or effectively by any of the existing State agencies. The grants and loans made from the Fund might to some extent seem appropriate to the services provided by the Industrial Development Authority, but the schemes financed through the county development teams were in most cases relatively small and some related to quasi-agricultural projects, to small hotels, to handcraft industries and similar undertakings which would not normally be supported financially by the I.D.A. It is of the essence of this type of activity that the local authorities should be closely involved with expenditure and the development teams consist of the county manager, the county engineer, the Chief Agricultural Officer, the Chief Educational Officer and the Chairman of the county council in question. The Fund is administered by the Minister for Finance who employs the teams’ secretaries.

The Committee feels that it is administratively untidy and perhaps inefficient to have the Department of Finance involved in operations which seem to be more appropriate to the enlarged functions of the Industrial Development Authority. It also questions, from the point of financial control, the expediency of paying grants from the Fund for a type of activity which is clearly within the sphere of Bord Fáilte Éireann, simply because the latter’s funds were fully committed in the year under review.

Public Services Organisation Review Group

Qns. 91-93, 95-111 Appendix 6.

11. The Committee notes that of the total expenditure of £124,000 relating to the activities of the group, £100,000 was paid to consultants. It further notes, from the memorandum furnished by the Department of Finance and appended to this report, the services rendered by the consultants, but it would like to have further information about the scale of fees paid to them and the precise period of their employment.

Defence

12. The Committee notes that there were substantial short-falls in the expenditure as compared with the provisions for mechanical transport, general stores, naval stores and buildings. While it accepts the explanation that the saving in the case of buildings was due to the strike of maintenance workers, it would like a breakdown of the savings on the provisions for the purchase of stores with particular reference to the flow of carry-overs and the degree to which they are anticipated when the estimates are being framed.

13. In the course of evidence the question was raised of duplicate control by military and civilian personnel of certain activities of the Department of Defence. Reference was made to the Devlin Report and to its recommendations on this subject and both the Accounting Officer and the Comptroller and Auditor General contributed to the discussion. The Committee’s primary concern is with efficiency and economy in the expenditure of public moneys and it accordingly recommends that the necessity for the dual structure in the areas of contract administration, store accounting and internal auditing should be investigated to ascertain whether economies could be effected without loss to efficiency.

Social Welfare

Qns. 667-676 Appendix 16.

14. Overpayments of social assistance amounting to £77,616 were not recovered at 31st March, 1969. During the year twenty-three individuals were prosecuted for irregularly obtaining or attempting to obtain social assistance and convictions were secured in twenty-two cases. These figures, which do not include social welfare benefits, are a matter of grave concern to the Committee.

The measures taken to prevent fraud were briefly outlined in evidence by the Accounting Officer who subsequently furnished a detailed memorandum on the subject which is appended to this report. This throws further light on the incidence of fraudulent claims and on the measures in force and contemplated to deal with such irregularities. The division of responsibility between the Departments of Social Welfare and Labour in the field of unemployment benefit and assistance has seriously militated against fully effective control and supervision of claims and disbursements. The Committee feels that the Department of Finance, which is responsible for order and regularity in the public finances, should investigate this aspect of the matter and should also look into the other problems mentioned in the memorandum.

Health

Qns. 697-747 Appendix 18.

15. For a number of years grants have been paid to supplement the finances of the Hospitals Trust Fund for building purposes the amount of the grant in the year under review being £1 million. Accounts of the Fund are not required by law to be presented to the Oireachtas but were made available to the Committee by courtesy of the Department. It appears that the Fund is committed to a grant of 100 per cent. of the cost of the construction of the new St. Vincent’s Hospital at Elm Park, Dublin. The Committee was informed that the main construction work was completed early in 1969 but that the hospital would not be fully operational until the end of 1970. Delay seems to have taken place in the completion of the kitchens, theatres and a nurses’ home. The Committee wonders about the extent of the planning and supervision of this project and would like to be informed of the Department’s responsibilities in this and similar cases, particularly where subventions are provided from voted moneys. In general, the Committee feels that in the case of capital projects involving interdependent units it is imperative that steps be taken at the planning stage to guarantee full utilisation of the capital investment by securing co-ordinated development of the whole project and the simultaneous completion of the various units.

Transport and Power

Qns. 838-887 Appendix 26.

16. Flight checking of navigational aids at State airports is carried out by aircraft hired periodically by the Department from the American Federal Aviation Agency at Frankfurt. In 1964 and again in 1965 it was proposed as an alternative, that an aircraft suitably equipped should be purchased at a cost of £100,000 and operated by the Army Air Corps for carrying out the flight checks and also for training radar operators. These proposals were turned down but in January 1967 sanction was obtained to purchase an aircraft equipped for the training of radar operators at an estimated cost of £60,000. This figure included £20,000 for the aircraft, which was of 1961 manufacture and was lying in the maker’s factory, £11,000 to bring life expired components up to date and approximately £30,000 for instrumentation and a spare power unit. A later proposal to instal full flight checking radionic equipment was approved in July 1967 thereby increasing the estimate to £82,000.

Before the work on the aircraft was completed, the contractors went into liquidation; the most suitable tender received for the completion of the work amounted to £36,000 bringing the estimate of cost to £100,000. This was further increased to £140,000 in October 1968 when provision was made for a flight checking unit on the ground at Air Corps headquarters, then regarded as essential if the aircraft was to be effectively used for the flight checking of navigational aids. Up to 31st March, 1969 some £56,000 had been paid out on foot of the project.

Operating costs were estimated at £10,000 per annum, apart from major overhauls, and it was expected that savings of the order of £16,000 per annum could be achieved on hireage charges.

17. The Comptroller and Auditor General questioned the economy of the project and sought information why the necessity for the flight checking unit on the ground had not been adverted to when the decision in July 1967 was taken to instal full flight checking radionic equipment in the aircraft. He informed the Committee that in his opinion the planning of this project had gone forward in a somewhat haphazard fashion and that the estimates on which the original decision was made were incomplete. The Accounting Officer informed him that, following a request in April 1969 from the Department of Finance, the whole project had been re-examined and that it was proposed to complete it in two stages. The first stage to enable the aircraft to be used for training air traffic staff and for a limited testing of navigational aids was estimated to cost £30,000. The second stage, to make the aircraft suitable for full flight checking would, it is estimated, cost a further £58,000. On the question of the relative merits of purchase or hire for this work, the Comptroller and Auditor General was furnished with figures which suggest that the cost of hireage would not differ materially from the cost of acquisition, but he was informed that other important factors such as the possible non-availability of Federal Aviation Agency aircraft when urgently required had to be taken into consideration. The Committee learned that most countries in Europe at present have their own flight checking service.

18. The Committee went into this complicated matter in some detail. What concerns it most is the inordinate delays in proceeding with the project and, the fact that the pace of decision making is not in any way related to modern standards. It considered this as an interesting case study and called for a chronological report indicating when each delay occurred and the reason for it.

19. From the chronological memorandum submitted subsequently by the Accounting Officer, further light is thrown on the slow progress from 5th January 1967, when the supplier was informed of the intention to purchase the aircraft, up to April, 1970 at which stage the final adaptations and the installation of equipment were being put in hand. While making due allowance for the fact that the original contractor found himself in financial difficulty and unable to complete his contract, the Committee sees no reason to modify its comment in the preceding paragraph.

Posts and Telegraphs

20. In 1965 a contract of £70,000 for the supply and installation of certain tele-communication equipment was placed with an Irish manufacturer whose tender was not the lowest even after allowing the normal limits of preference for home manufactured goods. The same firm was awarded a contract amounting to £340,000 in 1966 without competition, and in 1967 it obtained a further contract for £260,000 although its tender was again not the lowest. In reply to his inquiries the Comptroller and Auditor General was informed that the departures from normal procedures were made by direction of the Government as an emergency measure to protect employment in a comparatively new industry which was the sole manufacturer of this equipment and appeared to depend to a large extent on Post Office contracts.

The Committee are not concerned with the particular case but with the implications for the future. It is clearly undesirable to give a monopoly to the only home manufacturer without applying the general rules relating to the limits of preference, otherwise there is a disincentive to charge reasonable prices.

Forestry

Qns. 1181-1194 Appendix 32.

21. The Comptroller and Auditor General reported that payments amounting to £44,000 had been made to Bord Fáilte Éireann towards the cost of improvement works including tourist amenities at Lough Key Forest Park, Boyle, Co. Roscommon. The estimated overall cost of the project was £196,000 and the Department of Finance agreed to a contribution of £53,000 from the Forestry vote in respect of certain aspects relating to forestry. The Comptroller and Auditor General contended that the amounts paid from voted monies were excessive in relation to the amount of work completed by 31st March, 1969 and should have been of the order of £18,000 instead of £44,000 and he noted that the overpayment was refunded in the following year. The Accounting Officer agreed that from the purely accounting point of view the Comptroller and Auditor General was correct but that as a matter of convenicnce the Department did not consider it necessary to make payments on a strictly proportionate basis and that the payments made constituted a contribution at a level agreeable to both parties to expenditure already incurred and an element of funding against further pending expenditure. Convenience of time entered into this as the Department had money available and Bord Fáilte had not. The Accounting Officer in elaboration of his oral evidence supplied a memorandum which is appended to this report. Notwithstnading the arguments put forward on behalf of the Department, the Committee feels bound to uphold the view of the Comptroller and Auditor General that, save in very exceptional circumstances, expenditure charged to the vote should be in respect of fully matured liabilities in the year of account. It accordingly deprecates the departure from normal procedure referred to above.

Agriculture

Qns. 1248-1287 Appendix 34

22. In April 1962 the Government approved in principle—

(a) the purchase by University College, Dublin, of Lyons House and Demesne at Celbridge, Co. Kildare,

(b) the sale by the College of property at Glasnevin, Dublin, which had been leased from the State in 1926, and

(c) the application of the proceeds of the sale to the necessary capital development of the Faculty of General Agriculture, any surplus after completion of the development to be paid over to the Exchequer.

£442,000 was realised from the sale of the Glasnevin property. Although it had been stipulated that the new farm buildings, equipment, etc. at Celbridge should be provided on the most economical lines having regard to modern educational requirements, the Comptroller and Auditor General observed that expenditure by the University had exceeded £500,000 at 31st March, 1967 and that the works had not been completed. On further investigation he found that the original estimate of the cost of the project had been made in the absence of detailed plans; that a comprehensive estimate of £581,415 had been prepared in 1965 and that the present estimate of capital expenditure including working capital is £851,517. The reasons for the increased estimates are stated to be increased costs in the building trade, especially at Celbridge, unexpected high cost of site development and land reclamation works, and the provision of more facilities because of an increase of student and staff numbers.

23. In evidence the Accounting Officer explained that University College, Dublin was an autonomous body and this fact had to be borne in mind by the Department. In the year 1969-70 the Department had contributed £48,000 towards the development, this was over and above the proceeds received from the sale of the Glasnevin property. The Department was at present trying to sort out with the university the problems arising from the escalation in costs. He understood that there had been dramatic developments in the past decade in the standards of equipment, etc., which the university people believed they require and that this factor, in addition to these previously referred to, caused the original estimate to be drastically revised. Asked whether there had been a serious attempt to draw up a positive plan for the development in the initial stages or whether it had taken place in a haphazard manner, the Accounting Officer replied that he thought the position had been between the two extremes.

24. A particularly expensive item in the development programme is the provision of pig and cattle buildings. As may be seen from the evidence the Committee was particularly critical of what seems to it an unwarranted extravagance and called for a special report on this matter.

25. The development of the Lyons estate is intended to provide facilities for practical experience for fourth year students in the faculty of agriculture. The Committee appreciates the need for such experience, but in its opinion the most practical part of training is to have to function in a situation where costs will not be so different from what the ordinary practising farmer has to face.

26. The Committee in its reports of recent years has stressed the importance of careful planning and realistic estimates in relation to projects financed directly from public funds. This principle should in the Committee’s opinion also apply where bodies such as the universities rely to a very large extent on public finance for capital projects. In the case under review the Accounting Officer promised a reappraisal of the financial commitments and a full report to the Committee.

Public Works and Buildings

27. The Committee noted that 450 houses had been built by the National Building Agency Ltd. for the accomodation of married members of the Garda Síochána. It was envisaged when this scheme started that approximately 1,000 houses would be provided but the project has been in abeyance for some time pending the settlement of future policy. The committee assumes that the houses erected are State property and are all vested in the Commissioners of Public Works. It wonders whether they are regularly inspected and maintained, and what action is taken when houses become vacant and are no longer required by the Gardai. It shall await a full report on this project.

Education

Qns. 1743-1785 Appendix 47.

28. The Committee took evidence on the operation of the school transport services undertaken by C.I.E. and on the question of cost and accounting. It was given details of the charges included in the claims and of the agreement with the company based on an exchange of letters. The claims are audited and certified by a firm of auditors acceptable to the Minister and may be subjected to further examination by the Comptroller and Auditor General. The Committee assumes that precise information is available relating to the Department’s commitments and wishes to be assured that the charges made are fair and reasonable having regard to the monopoly enjoyed by C.I.E. the capital employed in the school transport project and particularly the cost of administration of the scheme. In this connection, the Committee asked for information about the amount of the additional cost to C.I.E. of general administration to cope with these services. The amount charged by C.I.E. under this head was £300,000.

29. The Comptroller and Auditor General drew attention to a payment of £2,500 to the Royal Irish Academy which was included in the subhead for travelling and incidental expenses because the provision in the Grant-in-Aid to that body had been exhausted. In the opinion of the Committee this transaction should have been noted in the Appropriation Account.

Secondary Education

Comprehensive Schools

30. Current expenditure in the year relating to comprehensive schools amounted to £127,748. The full cost of conducting these schools is borne by the Department but no detailed accounts for each school were available to the Committee. As this is a new service the Committee feels that it should receive accounts for its information.

PATRICK HOGAN

12th November, 1970.