MIONTUAIRISC NA FIANAISE
(Minutes of Evidence)
Déardaoin, 15 Iúil, 1971
Thursday, 15th July, 1971
The Committee met at 11 a.m.
DEPUTY P. HOGAN in the chair.
Mr. E. F. Suttle (An tArd-Reachtaire Cuntas agus Ciste) called and examined.
Mr. C. H. Murray called and examined.
1. Chairman.—Paragraph 1 of the Report of the Comptroller and Auditor General reads as follows:
Outturn of the Year
The audited accounts are summarised on page xxxiii. The amount to be surrendered as shown in the summary is £6,118,605 arrived at as follows:—
This represents 1.6 per cent. of the supply grants, as compared with 2.6 per cent. in the previous year.
In no case has the provision made by Dáil Éireann been exceeded and no excess vote is, therefore, necessary.”
2. Have you anything to add, Mr. Suttle.
Mr. Suttle.—I have no comment to make on that paragraph.
3. Chairman.—Paragraph 2 of the Report of the Comptroller and Auditor General reads as follows:
“Exchequer Extra Receipts
Extra receipts payable to the Exchequer as recorded in the Appropriation Accounts amounted to £2,444,493.”
Mr. Suttle.—Again I have no comment to make on that paragraph.
4. Chairman.—Paragraph 3 of the Report of the Comptroller and Auditor General reads as follows:
“Surrender of Balances on 1968-69 Votes
The balances due to be surrendered out of votes for the public services for 1968-69 amounted to £8,488,128. I hereby certify that these balances have been duly surrendered.”
Mr. Suttle.—No comment.
5. Chairman.—Paragraph 4 of the Report of the Comptroller and Auditor General reads as follows:
“Stock and Store Accounts
4. The stock and store accounts of the Departments have been examined with generally satisfactory results.”
Mr. Suttle.—Again, no comment.
6. Chairman.—Paragraph 5 of the Report of the Comptroller and Auditor General reads as follows:
“Statement of receipts into the central fund for the year ended 31 March, 1970.
Statement of issues from the central fund for the year ended 31 March, 1970:—
7. Have you anything to add, Mr. Suttle?
Mr. Suttle.—This is just a statement of the Exchequer receipts and payments.
8. Chairman.—Mr. Murray, there is an issue of £15,000,000 under the Air Companies Acts 1966 to 1969. Would you like to make a comment on that?
Mr. Murray.—This was finance required to increase the loan and share capital of the air companies in connection with the expansion of their air fleet, with specific reference to the purchase of the Jumbo jets. It represented part of the cost of that programme. The balance was made available by the company itself either from its internal cash flow or from non-Exchequer borrowings.
9. Deputy Tunney.—When this advance was being made were Aer Lingus/Aer Rianta able to satisfy you as to what would happen to the aeroplanes that would then become redundant?
—Yes. Part of the examination of the proposals put forward by the air company related to the future of redundant aircraft and expected receipts from the sales of these aircraft were part and parcel of the overall financial arrangement. They were taken specifically into account.
10. Would I be correct in saying that these hopes and anticipations in the matter of receipts have not been realised?
—Not fully, I gather.
11. Deputy Treacy.—To what extent, Mr. Murray, will this become a continuing liability—moneys of this kind being issued to the air companies? Or when can you see these companies becoming a profitable enterprise?
—Relating your question specifically to the payment shown on page vi, I can say that these payments, to the best of my knowledge, substantially completed the Exchequer’s part of the financing of a multi-annual programme of the air companies. As of now, we do not have any requests before us from the air companies for further financing but, of course, in this as in other areas life does not stand still. I cannot say that, in five years time, developments in the air business will not require further programmes by the air companies. All I can say is that, at the moment, we have completed our part of the financing of the air companies.
12. Has there been any understanding concerning recoupment?
—Of this amount? Well, a substantial part of it is share capital. Ten million pounds, I am told, of this £15,000,000 is share capital. The balance of five million pounds was provided by way of irredeemable loan, on which interest is at present paid at 7¼%.
13. Deputy Gibbons.—Could we have a few words in explanation of the Bretton Woods Agreement Acts? What exactly does this cover?
—This is a very long and complicated subject. Perhaps it would suffice if I say that these Acts relate, basically, to our membership of the International Monetary Fund and the World Bank. These Acts, inter alia, authorised the payment of our financial quota to these two organisations when we became members of them over 15 years ago.
14. Chairman.—Paragraph 6 of the Report of the Comptroller and Auditor General reads as follows:
“In addition to those shown in the previous paragraph, issues of £375,000 £35,000 were made from the Capital Fund to Gaeltarra Éireann and the National Building Agency, Ltd., respectively.”
15. Deputy Nolan.—Where grants are paid under this? Are they paid by the Department of Finance?
—These payments were made out of the Capital Fund under our authority.
16. Yes. But take the small industries grant, as administered by the IDA, do you have the same method of say a proposer who submits audited accounts and submits his proposals before he gets the grant?
—I think that point would not arise in quite the same way in relation to the payments made under this paragraph. As far as we were concerned it was merely a financial convenience to make these payments out of this fund. They formed a part of total payments that were made to the two agencies in question. It was just financially convenient to make part of the payment out of this Capital Fund. The Capital Fund was established in the mid-50s and was fed by the receipts from the special import levies that were imposed in the mid-50s. These special import levies were treated as capital and were invested in various State institutions. In some cases they were invested on an interest bearing basis so that all that is now available as free money in this Capital Fund is the interest on previous advances. This interest is, in effect, an Exchequer receipt and is available to finance various State bodies. The point I am making is that the total payments to Gaeltarra Éireann were greater than the payment made out of this fund. It happened to be financially convenient to make part of the payment from the moneys available in this fund. In so far as these two agencies are concerned the basic point is what were the terms of arrangements on which they got their total money as distinct from the terms and arrangement on which they get the element of their support which came from this fund.
17. Chairman.—Was there no other reason except the question of financial convenience——
18. From two funds?
—This money is available towards the relief of the Exchequer. It is purely a matter of convenience as to how it is actually disbursed. If it was not done in this way it would have been done in another way. The net effect, as far as the Exchequer was concerned, would have been the same.
19. Have you a further comment, Mr. Suttle?
Mr. Suttle.—Would it not be correct— this is a thing I have been thinking of for quite a considerable time—to wind up the Capital Fund and transfer the assets to the Exchequer. We could then have complete issues out of the Exchequer instead of having this mixed business of some of the money coming out of the Exchequer and some out of the Capital Fund. It is, in effect, all Exchequer moneys. This fund was set up in 1957, 1958 or somewhere around that period and the reason is now dead and gone as to why a separate fund was set up at that stage. It was to be used for capital purposes but that is now 15 years ago. I do not think there is any valid reason at the present time to keep a separate capital fund. Why not let the whole lot go into the Exchequer and wipe out the fund altogether?
Mr. Murray.—I think that raises a general issue as to the existence of a number of separate funds. It may well be that there is room for some financial rationalisation. It is not necessarily and solely confined to this fund.
Mr. Suttle.—I agree with you, yes.
Mr. Murray.—The second point is that I suspect that legislation would be required to do that. I am not sure about that. I would like to look into it. I am not saying that the necessity for legislation would, in itself, render invalid the point you are making. All I am saying is that it may well be that it is not simply a question of an administrative decision.
20. Deputy Collins.—Could we have a note on this matter?
—If the Committee wishes I can give them a note on that.*
21. Chairman.—Paragraph 7 of the Report of the Comptroller and Auditor General reads as follows:
“In paragraph 95 of my previous report I referred to the sale of the assets of the Industrial Engineering Company Ltd., Dundalk and to the receipt of £200,000 from the receivership funds. A further sum of £25,000 was received in the year under review and is accounted for in Sundry Receipts of the Central Fund. I understand that the sale of the company’s assets is not yet completed.”
22. Have you anything to add, Mr. Suttle?
Mr. Suttle.—This paragraph indicates the position at 31st March, 1970, regarding the disposal of the company’s assets in accordance with the Government direction of 1966—that was to wind up the company. I understand that the receiver is still engaged in the winding up.
23. Chairman.—Will there be a big loss here, Mr. Murray?
—Oh yes. The general magnitude of this has already been brought to the notice of the Dáil in, I think, 1968.
24. Could you give us an estimate of what you think it will be?
—This happened some years ago, before my time. I have not got the information readily available but it certainly was brought to the notice of the Dáil when an additional estimate for Dundalk was moved in the Dáil in July, 1968.
25. Deputy Tunney.—Last year the statement said that £600,000 was expected to be realised and that negotiations were near completion. Bearing in mind that a full year has passed to this year’s statement, I understand that the sale of the company’s assets is not yet completed. That does not seem to be any great progression from what was anticipated last year?
—Perhaps I could clarify that. Again this is somewhat complicated. There was the parent company, Industrial Engineering Company Limited, and its operating subsidiaries—the subsidiaries which held the assets, valuable or otherwise. Those subsidiaries have been sold and we know what we are going to get from them. We are getting our purchase price over a period of years. What is not settled is the final liquidation of the parent company. The amount of money involved here is going to be minimal and, in fact, the extent to which the State will get anything after all the legal expenses have been paid remains to be seen. There has been that much progress. The companies which hold the assets have been sold, a purchase price has been agreed and a basis of payment has been decided on.
26. In the matter of money, would it appear that whatever legal formalities are required in concluding whatever business is necessary, they are taking place but in the matter of recovery of any worthwhile moneys they are fading?
—No, I think the effective steps to realise or to sell the operating companies have been taken. What is open is the liquidation of the parent company, which is practically a shell company. This matter is in the hands of the liquidator. It is not a matter which is in the direct control of the Government but the amount we will get from that final transaction will be very small indeed.
Mr. Suttle.—I have some figures here. The total State assistance to the company —that is to the holding company—was £3,273,000 and the present estimate of gross receipts from realisation of assets is £582,000.
27. Chairman.—Two-and-a-half million pounds on the wrong side?
Mr. Suttle.—So far.
28. Chairman.—Paragraph 8 of the Report of the Comptroller and Auditor General reads as follows:
“Pending the enactment of the Shipping Investment Grants Act, 1969 (see paragraph 81) a sum of £339,000 was advanced from the Central Fund to the Industrial Credit Company Ltd. in 1968-69 to provide temporary finance towards the cost of a vessel being built for the B. and I. Steampacket Company Ltd. The amount advanced was repaid to the Central Fund in 1969-70.”
29. Have you anything to add, Mr. Suttle?
Mr. Suttle.—This paragraph refers to the arrangements made to provide bridging finance for a company which subsequently became entitled to a grant from the Department of Transport and Power. I will be referring to the grant scheme later in dealing with the Department of Transport and Power’s account.
30. Chairman.—Paragraph 9 of the Report of the Comptroller and Auditor General reads as follows:
“The Turf Development Act, 1968 enables the Minister for Finance, by Order, to defer the repayment of advances issued to Bord na Móna under Section 53 of the Turf Development Act, 1946 and to waive the interest due on such advances. The sum of £1,359,724 repaid to the Central Fund during the year includes £1,350,633, deferred repayments which fell due in the period April 1967 to October 1969. The interest waived for the same period amounted to £2,915,552. Repayments totalling £110,030 due to the Capital Fund which had been similarly deferred were also brought to account during the year and interest amounting to £744,062 was waived.”
31. Have you anything to add, Mr. Suttle?
Mr. Suttle.—This paragraph refers to a special concession made to Bord na Móna in regard to advances received from the Exchequer and the Capital Fund. Bord na Móna were in difficulties and it was agreed to waive interest and defer capital repayment due on annuities.
32. Chairman.—Does that position continue to the present?
Mr. Murray.—No, it was temporary. The company was going through a bad phase, mainly due, I think, to inclement weather but it has resumed payment of interest and the normal repayment of capital.
33. Deputy Gibbons.—Is the interest waived in perpetuity or does it become payable at some future date?
—It is, yes. In perpetuity.
Evidence taken in relation to paragraph 10 of the Report of the Comptroller and Auditor General is printed in Appendix 1 of the Interim Report.
34. Chairman.—Paragraph 11 of the Report of the Comptroller and Auditor General reads as follows:
“When Irish Steel Holdings Limited was established in 1947, it was agreed with the Minister for Finance at the time that the Comptroller and Auditor General should be auditor of the Company. This arrangement continued until the annual general meeting of November 1969 when a resolution was passed appointing, with the prior consent of the Minister for Finance, another auditor. As I was concerned with my responsibility under Article 33 of the Constitution, ‘to audit all accounts of moneys, administered by or under the authority of the Oireachtas,’ I sought independent legal opinion and I have been advised that the company acted within its rights and that I have no duty to audit its accounts.
I have also sought legal opinion regarding my constitutional position in relation to certain State-sponsored bodies that are not limited liability companies.”
35. Deputy Treacy.—I am concerned to ascertain why it was found necessary to appoint an auditor other than the Comptroller and Auditor General in this instance to a State body, Irish Steel Holdings Limited?
Mr. Suttle.—I have a statement which might help things:
I deem it advisable to bring this matter to the notice of the Committee because I considered the change a retrograde step. I am of the opinion that I am required under Article 33 of the Constitution to audit the accounts of Irish Steel Holdings Limited because the entire share capital of the company was provided from the Central Fund by Act of the Oireachtas; because these shares are held by the Minister for Finance on behalf of the State, because he appoints the Directors of the Company, making them in effect his agents; because rigid controls over the company’s actions are maintained, and that the Company’s accounts are in my view accounts of moneys administered under the authority of the Oireachtas. In my view the disbursement of moneys to the Company to pay for shares does not mean that the moneys cease to be administered under the authority of the Oireachtas. I do not claim that the Company is not entitled under the Companies Act, 1963, to appoint another auditor, but if it is my duty under Article 33 of the Constitution to audit the Company’s accounts at least a separate audit of a supervisory nature would be essential.
Counsel put forward the following opinion when I consulted him on this question and he agreed with the Minister for Finance that the company could dispense with my services and take on somebody else. But again it was only one man’s opinion. He was a senior man, a very eminent man, but I still do not agree with him. The way he could put it to me was that he regretted that his decision was against my view. He said that the Minister for Finance, when he acquired the shares of the company, becomes a mere shareholder, and the company does not in any way change its substantial legal nature even though its structure might be subject to interference and control by the Minister. This is the legal view of the position: that it is an established principle that a company is a corporate body distinct from the persons or shareholders comprising it. Even though the Minister acquires the entire shareholding, the separate legal entity of the company continues, and its business is carried on, not by the Minister as shareholder, but by the directors however great the control of the Minister may be. The capital acquired by the Company as a result of the acquisition of shares by the Minister ceases to be public moneys, in the view of counsel, when the shares are registered, and becomes the sole property of the company. As these moneys are administered and operated by the company through the directors they have not the character of moneys administered by or under the authority of the Oireachtas.
That is one legal man’s opinion. I did not go any further than that. I had a certain amount of difficulty in getting the authority of the Minister for Finance to employ counsel to get an opinion, because I cannot consult the Attorney General because he is the legal representative of the Government, and my position is that I am not responsible to the Government. So I could not employ the Attorney General and had to go to the Minister for Finance and tell him that I wanted to consult independent counsel. After some delay he agreed to let me have counsel. Having got the opinion of an independent counsel, which was against my view, I still could have gone further and taken the matter to the courts, but I said that I should leave it to the Committee to take a viewpoint on the matter.
36. Deputy Treacy.—Mr. Suttle has answered in great detail some of the questions which were actuating my mind in this important matter. I would like to ascertain whether Irish Steel Holdings Limited are the only State, or semi-State, body in which this has been done, that is to say, transferring the control and auditing to a private auditor. Is this not tantamount to turning a State body into a private company?
Mr. Murray.—Could I with respect to the Comptroller and Auditor General reply to a point which relates to action taken by my Minister? In fact, what happened in relation to Irish Steel was not a novel event, was not an innovation. Almost ten years ago a policy decision was taken that, in the case of well established commercial State bodies, the Ministers concerned would not oppose any request from them to have, what I might call in shorthand, private auditors. This was done over ten years ago and I note, for example, that as long ago as 1963 this point was brought to the notice of the Dáil, in reply to a Parliamentary Question. The reference is 28th February, 1963, a Parliamentary Question put down by the late Deputy Sweetman. In reply to that Question, my Minister told the late Deputy that the following four companies had been authorised in accordance with the policy decision I have just mentioned to appoint private auditors. The four companies were: the Irish Life Assurance Company, Limited, the air companies, Irish Shipping Limited, and Ceimicí Teoranta. Since that time other companies have been put in the same position.
37. Chairman.—You have a further comment, Mr. Suttle?
Mr. Suttle.—I think that this is the first occasion during my time of office as Auditor General that a change has been made. What was done in my predecessor’s time is quite another matter. The experience I have had of dealing with these companies and with State bodies generally is that they would all be delighted to have private auditors. Every single one of them. There is one exception and that is Shannon Catering Services. But the rest of them would be charmed to get in private auditors and some of them have attempted to do so over a number of years past. The control we exercise over these companies is more than is required by the normal company legislation of companies. While auditor of Irish Steel I was in the position to report to the Minister for Finance and to the Minister for Industry and Commerce matters that were not apparent on the face of the accounts, where there was bad work being carried out—this is some years ago when Irish Steel were expanding and developing their business—they made a few blunders and I reported these to the Minister for Finance and to the Minister for Industry and Commerce, and I know that the Directors of Irish Steel were not too pleased with that. That is particularly with regard to steel and a private auditor would not have questioned these matters because they were done with the complete authority of the Board of Directors, and that is as far as a private auditor is concerned. If he has the authority of a board of directors, he is satisfied, but that does not satisfy me. I consider that these are public moneys and that I should report further. I did not report publicly on this matter because I felt that I was doing sufficient in reporting to the Ministers.
38. Deputy Treacy.—Is it now the position that this State body and others I mentioned here are no longer accountable to you, to this Public Accounts Committee, or to Dáil Éireann?
Mr. Suttle.—They are required to present their accounts to Dáil Éireann. I think that is the limit of their responsibility at the present time.
39. Deputy Nolan.—You mentioned four companies. Have you the names of the four companies?
Mr. Murray.—Yes. I read them out: I shall read them out again. This only relates to the position in 1963. I was bringing out the point that as long as eight years ago this practice had been brought to the notice of the Dáil. The four companies were the Irish Life Assurance Company, the air companies, Irish Shipping Limited and Ceimicí Teoranta.
40. Deputy Nolan.—What other ones are there?
Mr. Murray.—I have not got the others to hand but I should imagine that that list has been added to since then, and if the Committee wish, I can bring that information up to date.* That is my only purpose in going back over this, because what happened in 1969-70 in regard to Irish Steel Holding Limited was not a departure. I wanted to bring this point to your notice that first of all, the change in the auditorship has not affected the accountability or non-accountability of these bodies to the Dáil, or to this Committee. That is a separate matter which, as you know, the Committee has raised and has been under consideration for a number of years now. The main point I wanted to make was this: in none of the cases where auditorship has changed has this come about as a result of any initiative or any pressure taken by the Minister or by my Department. It is left to the State body itself to decide whether it wants to make a change or not. Even then, it is a matter for the Minister to decide whether he will accede to that request. This leads up to the point that the appointment of an auditor to these State bodies is generally, almost invariably a matter subject to the approval of the Minister, and I put forward with some hesitation, and no disrespect at all, the question as to whether the exercise of that discretion by the Minister is a matter which is proper for consideration by this Committee. I am raising the point with hesitation and with no disrespect.
41. Chairman.—Mr. Suttle?
Mr. Suttle.—With regard to the question of policy decision in 1963, I can go back a bit further than that. Over 20 years ago I know that my office was approached to know would we take over the audit of the Electricity Supply Board, because the Department of Finance at that stage were dissatisfied with the audit carried out. It was a very big job at the time, and as our office was a comparatively small office, we decided we could not in the circumstances take over, so that the question of policy decisions with regard to the audit of State bodies and State companies is indeed one that has been changing from time to time. It could be decided in the morning that the whole lot of them were to be handed over to me. That question of policy is a matter from day to day. I agree with Mr. Murray that there was no pressure by the Minister for Finance on these companies to change their auditors. He did not have to. The companies were only too delighted to get the opportunity.
42. Deputy Nolan.—Who are the auditors at the moment?
Mr. Murray.—With respect, I do not think that that is relevant. I can give that information privately to the Committee.
43. Deputy Nolan.—Have you one or more?
Mr. Murray.—I would be surprised if any one private firm audited more than one State body. If so, it is purely coincidental, but in general no firm handles more than one.
44. Deputy Gibbons.—I just wonder how far we can go with regard to the question of policy. I shall make this point in another way. We have been told so frequently that the interference with the day-to-day running of those companies would be bad for the companies. I think that this is the basis for the policy. On the other hand, we are again faced with this problem in deciding which would be the better for the State and the use of State moneys, whether we should have a policy in which we decide on private auditors, or have the Auditor General. Another thing that strikes me about the Auditor General is that an accounting fee was paid to him for doing this work in the past. Again, when I am uncertain about this, having discussed it, where do we go from here? Do we reach a decision now or make any more definite comment on it?
45. Deputy Treacy.—While not wanting to get involved in policy change, accepting that the Minister did not take any initiative in this matter of changing auditors in respect of the State bodies referred to, I am wondering why any State body might wish to opt out of its recognised responsibility, by being answerable to the Auditor General and to this Committee, as heretofore, as to the reasons why we might wish to make a switch, so to speak.
Mr. Suttle.—I can only give a personal view on that. I do know that the type of audit carried out by commercial auditors is purely a mechanical legal audit, as required by the Companies Act. The audit I carry out is a critical audit. It is critical of the way the money is spent. The Companies Act only requires that any money spent shall be in accordance with the directions of the board of directors. I ignore the board of directors from that point of view and I criticise the question of whether the money was properly spent, that there was no waste. I carry out an audit on the same basis as if it was a Government Department. That is my view; I do not interfere with the day-to-day operations of a company in any way: we have never attempted to do that. We would be critical of the methods they have used or of the results they have obtained. They are matters which will not be reported by any commercial auditor. He is not required to do so. It is on that basis that these companies would prefer to have a private auditor than have my staff do it.
46. Chairman.—You have something to add, Mr. Murray?
Mr. Murray.—Could I just make a brief statement. Before we ended the morning’s discussion we were talking about the issues raised in the change of auditorship in State companies. I just wanted to say, because I had not an opportunity of saying it previously, that my Minister and my Department would of course be concerned to ensure that any change of auditorship would not mean that the auditing services which would be available as a result of the change to the State bodies concerned would be less than those which would be commercially required, or required for commercial purposes.
47. Chairman.—In the view of the Comptroller and Auditor General, the commercial audit might not be sufficient.
—I do not wish to reopen the discussion on this, but I did not get an opportunity of saying that the adequacy of the auditing services available to the State companies is naturally a matter of concern to my Minister and my Department.
VOTE 1—PRESIDENT’S ESTABLISHMENT.
Mr. C. H. Murray called.
VOTE 2—HOUSES OF THE OIREACHTAS.
Mr. C. H. Murray called and examined.
48. Deputy Gibbons.—On subhead K.— Witnesses’ Expenses—what does this cover?
—Witnesses’ expenses has up to now been a token provision, to cater for the possibility that committees of either House might summon witnesses who might have to incur expenses. This of course has become far from a theoretical issue since these appropriation accounts were put in.
49. Deputy Gibbons.—You anticipate that they will be higher next year.
—They will be more than a token.
50. Deputy Gibbons.—On top of page 4, Fee in respect of appeal to Seanad, £20, what does this relate to?
—I am sorry, I have not got that information to hand. I could send it on.*
VOTE 3—DEPARTMENT OF THE TAOISEACH.
Mr. C. H. Murray called.
VOTE 4—CENTRAL STATISTICS OFFICE.
Mr. C. H. Murray called and examined.
51. Deputy Gibbons.—Does the Central Statistics Office supply information to anybody?
—Provided that the furnishing of the information would not breach rules of secrecy or confidentiality. Subject to that, information is supplied, for example, to commercial firms who seek more details of trade statistics than are available in the printed reports.
52. In the case of information referring to Departments do they supply those directly to the Cabinet? There was a suggestion that I cannot receive this information from the Departments on behalf——
—I do not know the full details here but I should imagine—just to continue with the example I gave—that the detailed information in question would not be available in, shall we say, the Department of Industry and Commerce. If the Department of Industry and Commerce were seeking a more detailed breakdown not available in the published trade statistics they, in turn, would have to go to the Central Statistics Office for it.
VOTE 6—OFFICE OF THE MINISTER FOR FINANCE.
Mr. C. H. Murray further examined.
53. Chairman.—Paragraph 12 of the Report of the Comptroller and Auditor General reads:
“Subhead M.—Payment to Special Regional Development Fund (Grant-in-Aid)
Reference was made in previous reports to payments into the above Fund from which grants or advances could be issued to assist economic projects in western counties. A further £100,000 was provided in the year and, as indicated in the account of the fund appended to the appropriation account, grants totalling £166,972 and repayable advances amounting to £150,150 were issued.
The terms and conditions of repayment are covered by agreements between the Minister and the borrowers but in one case in which an advance of £10,000 was made from the fund a receiver was appointed over the assets of the company before the agreement was executed. I have inquired as to the present position in this case.”
54 Have you anything to add, Mr. Suttle?
Mr. Suttle.—The accounts on pages 12 and 13 give details of all transactions of the Fund. With regard to the case mentioned in my Report, I have been informed by the Accounting Officer that while the debenture to secure the loan from the Fund had not been completed at the time the loan was issued, the Department’s position was safeguarded by the fact that there was a written agreement on behalf of the company to grant a debenture and that Counsel had advised that security for the loan could be obtained by procuring registration of the agreement. In view of the financial position of the Company, as disclosed by the receiver, it was decided not to incur the additional expenditure which this would involve. With regard to the operations of the Fund in general, I would like to point out that some industries obtained assistance from other State sources apart from the Fund. I feel that State assistance should be provided in toto from one source only. In this way the full extent of the assistance would be readily apparent. The Committee referred to this matter last year and the Minister for Finance, in his minute on the Report, has given some explanation. It reads:
The Special Regional Development Fund exists to cater for economic projects in the Western areas which cannot be assisted under other State schemes. The Industrial Development Authority would be precluded from assisting many of the projects aided from the Fund because the Industrial Development Act, 1969, does not envisage a role for the IDA outside the industrial field nor does it empower the Authority to make loans. There is full consultation with the IDA before industrial projects are assisted from the Fund.
Administration of the Fund by the Department of Finance facilitates co-ordination. A senior officer of the Department is chairman of a Central Development Committee on which various Government Departments, the IDA and the County Development Teams are represented. This Committee examines proposals for assistance from the Fund and acts as co-ordination of all State agencies dealing with the West.
The grants for small tourism projects were channelled through the Department of Transport and Power and Bord Fáilte and were reflected in Bord Fáilte’s accounts. These projects, which were regarded as likely to make a useful contribution to tourism development in the West, would have had to be deferred if the necessary finance had not been made available as an exceptional measure.
Nevertheless I feel that there is room for rationalisation and tidying-up of assistance to industry. I have some statistics here regarding some of the loans. One is a £40,000 loan to GWI in Sligo—the wood industry. They got £40,000 from the special regional development fund. They got £50,385 from Taiscí Stáit Teoranta. They got loans and various other facilities from the Industrial Credit Company of £253,000 so that the £40,000 in the case of GWI is only a minor matter out of the total assistance of £344,000. Again Potez Industries—that is the heater people in Galway—got an £18,000 loan from the Special Fund. They got a grant of £539,000 from An Foras Tionscail and they got £150,000 from the Industrial Credit Company. Filigrana Limited got £14,100 from the Special Regional Fund. They got a grant from An Foras Tionscail of £47,000 and a loan of £15,000 from the Industrial Credit Company. Irish Marble Limited got a grant and a loan from the Regional Fund and a further grant from An Foras Tionscail. My feeling in this matter is that it is very hard to know what an industry is getting or how much it is getting because it is spread over different sources. I feel that there could be a certain amount of tidying-up and rationalisation of the subsidies to industry.
55. Deputy Nolan.—In the minute of the Minister for Finance of 12th November it states: “There is full consultation with the IDA before industrial projects are assisted from the Fund.” If we read all that minute my interpretation of it is that there is no danger of moneys going to any project that would not be fully investigated by the Department of Finance before they are paid, or by the Committee.
Mr. Suttle.—On that I am not too sure because there is one group, Gael Linn— I got the Department’s papers dealing with that and I could not find a copy of the Gael Linn accounts on them. There was no copy on them and there never was a copy on them.
Mr. Murray.—I do not know whether the Comptroller and Auditor General checked with my Department as to whether accounts were available to it. They may not have been on the particular papers that went to him but that does not necessarily mean, in considering this matter, that my Department had not got whatever accounts were available. I intervened at this point because I happened, personally, to have dealt with that particular matter and I happen to have some knowledge of it. While it is not for me to say whether the investigations we made were good, bad or indifferent I can only say that they were as detailed and as thorough as we could make them. I am not quite sure exactly what is the point at issue here. One could raise a general point at large in regard to the unification of all aids to industry or all aids to tourism and so forth—all State aid no matter what form it takes. That is one issue. Another more limited issue, and the one that arises by reference to the Vote that is at present before us, is the extent to which the special regional development fund as such gives support which is parallel or duplicated or close to that given by other agencies. My point is that these two aspects are not necessarily the same. Just to illustrate what I have in mind; State aid can take the form of a grant or it can take the form of a commercial loan. It happens that the agencies giving these different forms of support are different agencies. One is normally the Industrial Credit Company and the other is normally the IDA or it may happen, if it is a small enough case, it may be the special regional development fund. But the IDA is not statutorily competent or authorised to give commercial loans. In fact, whatever about statutory competence, the administrative experience and techniques required to evaluate the terms on which loans should be made and many related matters, including advice on mergers, for example, are not necessarily those which are relevant in deciding to give or not to give a grant. It has been a matter of policy that the different aspects of State assistance shall be handled by different agencies competent to deal with them. It is on that basis that the legislation has been prepared. We have a series of Acts relating to the Industrial Credit Company. We have a series of Acts relating to the Industrial Development Authority. These statutes have been passed by the Oireachtas, and have been debated by them, and I would suggest that the issue of whether or not one should have one big multi-purpose agency to deal with all aspects of State support for firms has been decided by default by the Oireachtas. Having said that, we then turn to this particular issue of the special regional development fund. I just wanted to say one thing to supplement what is in my minute recently circulated. In order to ensure maximum co-ordination with the Industrial Development Authority in the administration of this Fund in so far as it relates to industrial projects, we have arranged that the IDA regional managers will be members of the county development teams. This is a further step in co-ordination and liaison in addition to those which I have mentioned on previous occasions to the Committee and set out in the Minister’s minute which was recently circulated.
56. Chairman.—Is each body giving financial facilities acquainted with the fact that the other body have or have not given any money to the particular person or body seeking it?
Mr. Murray.—As a general rule I would say yes. For example, to take another body not related to this Vote, Taiscí Stáit. Apart from the fact that the Industrial Credit Company act as managers for Taiscí Stáit we would be aware, from the statement of its financial condition, its requirements and the source of funds available to it, whether it had got facilities or was looking for facilities from the Industrial Credit Company, from the IDA or from any other source. The same, by and large, would apply to the IDA. It would apply to the ICC itself in regard to cases that were being dealt with by it as distinct from acting as managers for Taiscí Stáit.
57. Before they are given any funds are they asked to sign any declaration to the effect that they have not had funds from any other bodies?
—I am in some difficulty in answering that question because I am not responsible, for example, for the IDA. I think that that aspect of it might possibly be appropriate to the accounting officer for the Department of Industry and Commerce.
Mr. Suttle.—On the question of liaison, I agree that there is liaison. My view of this is that there could be a certain amount of rationalisation. The question of legislation preventing IDA from issuing loans is a matter which could be easily overcome. It is a question of control. I agree that there is a certain amount of liaison but we had a case last year where a company got a grant from IDA and got a loan from ICC. The company sold its premises and disposed of everything within a very short time of getting the grant from IDA and they never knew anything about it. ICC had dealt with the whole matter and had ignored IDA. If it was a question of one, or even two, bodies dealing with the matter, you could understand. But where you have four, or possibly five—you have Gaeltarra Eireann doing the same thing, issuing loans and grants.
58. Deputy Gibbons.—While I think that every care should be taken to ensure that companies would not abuse the system of grants and loans, I feel that this special regional fund should be administered by a separate body. The administration of the IDA would not be a help to the fund and its objects. I would not like to see it administered by the IDA, because they have very strict criteria. Going through the list of those activities benefiting, certainly they are very wide. The area that I represent is a very depressed area industrially, and I feel that one of the most important things in it is to develop some tradition or interest in industry. A fund, such as this special regional fund, must be available. The criteria for awarding it should not be as tight as that for the IDA. I am prepared to accept that in this manner some of this money may not create the development which you would anticipate, and as such I suggest that it would be a loss to the State and to the community. I have not time at my disposal to develop this further to show that the opposite would not be the effect of it.
59. Chairman.—Would Mr. Murray have another look at it and see if there is any possibility of improving whatever liaison measures may be necessary so as to make it more watertight.
Mr. Murray.—In this problem, the issue can be approached at large and in general or it can be considered from the much narrower aspect of the special regional development fund. On the larger aspects of this I maintain that the existence of separate institutions to deal with separate aspects of State assistance has already been considered and decided, and insofar as it involved legislation must be taken as to have the approval of the Oireachtas. As far as the special regional development fund itself is concerned, we are very much alive to the need to ensure co-ordination with other State bodies, because apart from the question of specific grants or loan assistance from the fund, the whole raison d’etre of the local development or county teams and of the central development committee is to ensure that at local level the facilities available through different State agencies are effectively used to the benefit of county development. We are constantly on the watch out for this, and as an example of how we are keeping an open mind on this, I mention once again the fact that once the IDA had a regional organisation we ensured that their regional managers would be involved in the county development team work. The IDA are already involved, of course, as members of the central development committee, which oversees the work of the county development teams. I mention this to illustrate my point that we are always on the look out for ways of improving co-ordination and of avoiding duplication. You can rest assured that this is a matter to which we will continually give attention. At the moment there is nothing further I can add to what I said in the Minute that was circulated recently from my Department.
60. Deputy Gibbons.—On subhead L— Grants for County Development Work— what does the £25,000 involve, is it for the payment of officers?
—In general this relates to the administrative costs of the county development teams. In other words, it is the administrative costs at local level involved inter alia in the administration of the grants and loans that are issued from the Special Regional Development Fund.
VOTE 9—STATE LABORATORY.
Mr. C. H. Murray further examined.
61. Deputy Gibbons.—Does the State Laboratory overlap the Institute of Standards? I see in the Appropriations in Aid, No. 2—Recovery from Road Fund in respect of analysis of road-making materials. It struck me that this might be a job for the Institute for Research and and Standards.
—I cannot say much about the specific examples you mention, as to whether that would most effectively be done by the Institute of Industrial Research and Standards. Perhaps it would be better if I looked into that and gave you a note on it.*
VOTE 10—CIVIL SERVICE COMMISSION.
Mr. C. H. Murray further examined.
62. Deputy Gibbons.—On Explanation B.
—The excess is mainly due to the payment of travelling expenses of overseas candidates and to an increase in the number of interview boards—is this a usual thing?
—It is not unusual in the sense that travelling expenses are paid to overseas candidates, but not to candidates within the country. This reflects the extent to which we have to go outside this country to attract candidates, and the extent to which we have to pay their costs, if we want to bring them before the interview boards.
VOTE 11—AN CHOMHAIRLE EALAÍON.
Mr. C. H. Murray called.
VOTE 12—SUPERANNUATION AND RETIRED ALLOWANCES.
Mr. C. H. Murray further examined.
63. Chairman.—Paragraph 26 of the Report of the Comptroller and Auditor General reads as follows:
“In paragraph 26 of my previous report I referred to the scheme for the payment of pensions to widows and eligible children of civil servants who died on or after 23 July 1968 including those who retired after that date, and to the arrangements for deducting contributions from pay and lump sums. It is intended to seek legislative authority for the scheme. Payment of pensions commenced in the year under review and the charge to this vote to 31 March 1970 amounted to £31,744. Contributions to that date amounted to £414,822.
The Department of Posts and Telegraphs provides for the pensions relating to its own officers. In 1969-70, £8,038 was charged to Vote 42 in respect of widows’ and orphans’ pensions and total contributions received to 31 March 1970 amounted to £159,757.”
64. Have you anything to add, Mr. Suttle?
Mr. Suttle.—This paragraph sets out the position regarding pensions paid and contributions deducted under the widows’ and children pensions scheme introduced three years ago. I have no further comment to make on it.
65. Chairman.—Legislation has to be introduced in respect of this?
Mr. Murray.—That is so. It is hoped that it will be introduced in the next session. The work involved at official level has been practically completed.
66. Deputy Gibbons.—With reference to subhead H—Pensions to Resigned and Dismissed Royal Irish Constabulary, including Widows—would there be many people concerned?
—It is a diminishing number, as you can understand. There are about 240. In 1969-70 there were 201 men and 31 widows.
VOTE 13—SECRET SERVICE.
Mr. C. H. Murray called.
VOTE 14—AGRICULTURAL GRANTS.
Mr. C. H. Murray called.
VOTE 15—LAW CHARGES.
Mr. C. H. Murray called.
VOTE 16—MISCELLANEOUS EXPENSES.
Mr. C. H. Murray further examined.
67. Chairman.—Paragraphs 27, 28 and 29 of the Report of the Comptroller and Auditor General read as follows:
“Subhead F.—The Racing Board—Grant-in-Aid for Capital Purposes
To assist the Racing Board is carrying out improvements at racecourses it was decided that funds would be made available to it over a number of years. The grant of £100,000 represents a first contribution to the Board towards the cost of improving amenities at Leopards-town Racecourse.
Subhead G.—British Special Import Deposit Scheme
In paragraph 27 of my previous report I referred to the arrangements made to assist exporters following the introduction of the British Special Import Deposit Scheme. These arrangements continued in the year under review and the charge to the subhead in respect of interest paid to banks amounted to £1,435,101.
Subhead J.—Northern Ireland Relief Expenditure (Grant-in-Aid)
During the year under review sums amounting to £89,733 were issued to the Irish Red Cross Society and sums amounting to £10.267 were issued to other persons. These payments were charged to a suspense account. In March 1970 the account was cleared when a supplementary estimate for a grant-in-aid of £100,000 was passed by Dáil Éireann.
Grants-in-aid are generally voted to specified grantees but in this instance the grantees were not named. As indicated in the Book of Estimates for the Public Service expenditure of sums issued out of this grant-in-aid was not liable to be accounted for in detail to me.”
68. Have you anything to add, Mr. Suttle?
Mr. Suttle.—Paragraph 27 is for the information of the Committee. Paragraph 28 is, again, for information. The schemes terminated in November, 1970—that is the special import levy scheme. I do not think I need comment on paragraph 29.
69. Deputy Gibbons.—Would it be in order to ask has any new thinking been done about the management of grants-in-aid?
Mr. Murray.—We are looking at this and have been looking at it for some time past. Our investigation is not yet concluded. Any proposal to change the present system would of course be brought before the Committee before any final action was taken.
70. Chairman.—Could Mr. Murray tell us if he has any knowledge as to how the percentage of grants-in-aid, vis-à-vis our total revenue expenditure, lies in this country as compared with the United Kingdom?
—No. I have not that information offhand. The percentage here would be quite high because, for example, the £23 million which has been provided this year for the Industrial Development Authority will take the form of grants-in-aid. In other words, there are some very large sums indeed that are spent by way of grants-in-aid and I should imagine—but this is only a personal view—it will continue to be so spent because of the flexibility this gives in enabling unspent balances to be carried forward and to deal with cases which cannot be finally decided as of a particular 31st March. There are very many large sums such as the payments to Bord Fáilte, the payments to Córas Tráchtála and very many other large cases which form grants-in-aid. Offhand I would say that in Irish circumstances the percentage would be relatively high. We will cover this matter in our investigation. What I have in mind is that, at some stage or another, we would let the Committee know what our thinking has been and we will try to include the information that you seek now, Chairman.*
VOTE 50—INCREASES IN PENSIONS AND EX-GRATIA PENSIONS FOR WIDOWS AND CHILDREN.
Mr. C. H. Murray further examined.
71. Chairman.—Paragraph 96 of the Report of the Comptroller and Auditor General reads as follows:
“In paragraph 26 of this report reference is made to a contributory pension scheme for widows and children of certain public servants who died on or after 23 July 1968. As from 1 October 1969 ex-gratia pensions became payable to the widows and orphans of public servants who died or retired prior to 23 July 1968. Ex-gratia payments in the year under review from this Vote amounted to £80,619, and further sums amounting to £25,437 were paid from Vote 42—Posts and Telegraphs. It is intended to seek legislative authority for these pensions.”
72. Have you anything to add, Mr. Suttle?
Mr. Suttle.—This paragraph concerns payment of pensions which were introduced as an adjunct to the main widows and children pension scheme dealt with in paragraph 26. Again the legislation has not yet been enacted.
Mr. C. H. Murray further examined.
73. Deputy Gibbons.—Mr. Murray, last year you dealt at some length with the staffing difficulties and recruitment for the civil service. What is the position this year? Has it improved?
Mr. Murray.—On the general aspects of this I would refer you to what we say in the Minute of 25th June. There has been, in important areas, a substantial improvement. For example, if I recall correctly, this issue arose last year on the Central Statistics Office where the Committee’s attention was drawn to it by the substantial payments for overtime. I am told that as of now, while there are some vacancies in the Central Statistics Office these are not in any way unusual or of long standing. Among other things the fact that we are holding more frequent and more flexible examinations for clerical assistants has meant that that particular grade, which was responsible for the greatest number of unfilled vacancies, is now much closer to being filled than previously. There is still a problem in general but numerically, I am told, it is not as important as it used to be.
74. You had some extra trouble on the Revenue side last year?
—On Revenue, perhaps I might be excused and the accounting officer for the Revenue Commissioners might deal with it.
Chairman.—Thank you very much Mr. Murray.
The witness withdrew.
VOTE 42—POSTS AND TELEGRAPHS.
Mr. P. L. Ó Colmáin called and examined.
75. Chairman.—Paragraph 82 of the Report of the Comptroller and Auditor General reads as follows:
“Subhead L.—Commissions and Special Inquiries
The charge to the subhead (£3,715) is for expenses incurred in the year arising out of the judicial tribunal set up to inquire into the R.T.E. programme on moneylending.”
76. Have you anything to add, Mr. Suttle?
Mr. Suttle.—This paragraph is for information. The bulk of the expenditure on this inquiry was incurred in the following year, 1970-71.
77. Chairman.—This refers to just the first part of the inquiry?
78. Chairman.—Paragraph 83 of the Report of the Comptroller and Auditor General reads as follows:
A test examination of the store accounts was carried out with satisfactory results.
In addition to the engineering stores shown in Appendix II as valued at £3,057,907 on 31 March 1970 engineering stores to the value of £47,884 were held on behalf of other government departments. Stores other than engineering stores were valued at £425,446 including £78,265 in respect of stores held for other government departments.
Including works in progress on 31 March 1970, the expenditure on manufacturing jobs in the factory during the year amounted to £60,693, expenditure on repair work (other than repairs to mechanical transport) to £146,178 and expenditure on mechanical transport repairs to £24,415.”
Mr. Suttle.—Again this paragraph is for the information of the Committee.
79. Chairman.—Paragraph 84 of the Report of the Comptroller and Auditor General reads as follows:
A test examination of the accounts of postal, telegraph and telephone services was carried out with generally satisfactory results.
The net yield of revenue for the years 1969-70 and 1968-69 is shown in the following statement:—
£27,350,000 was paid into the Exchequer during the year leaving a balance of £814,710 at 31 March 1970 as compared with £582,593 at the end of the previous financial year.
Sums amounting to £6,552 due for telephone services provided in previous years were written off during the years as irrecoverable.
The increase in telephone service revenue is due to increased charges (£2 million) which were introduced on 1 January 1969, the receipt of a shortfall (£1.1 million) from the year 1968-69 due to delay in issuing accounts in the last quarter of that year consequent on the increases, and the buoyancy of business (1.6 million).”
80. Have you anything to add, Mr. Suttle?
Mr. Suttle.—I have no comment to make on this. Again this paragraph is for the information of the Committee and deals with postal revenue.
81. Chairman.—Paragraph 85 of the Report of the Comptroller and Auditor General reads as follows:
“Post Office Savings Bank
The accounts of the Post Office Savings Bank for the year ended 31 December 1969 were submitted to a test examination with satisfactory results. The balance due to depositors, inclusive of interest, amounted to £147,761,301 (including £26,933,766 in respect of liability to Trustee Savings Banks) on 31 December 1969 as compared with £140,802,036 at the close of the previous year. Interest accrued during the year on securities standing to the credit of the Post Office Savings Bank Fund amounted to £10,515,621. Of this sum £5,865,280 was applied as interest paid and credited to depositors, management expenses absorbed £482,867 and the balance, £4,167,474 remained as a provision against depreciation in the value of securities.”
Mr. Suttle.—For the information of the Committee.
82. Chairman.—Paragraph 86 of the Report of the Comptroller and Auditor General reads as follows:
Suspense Accounts are normally used for recording payments or receipts which will later be recovered or paid out and will not become charges or credits to an appropriation account. It is also the practice to put temporarily to a suspense account items which need further investigation before a final allocation can be made. Departmental instructions provide for frequent review of these accounts to ensure prompt clearance.
In the course of audit it was noted that the clearance of certain suspense accounts was unsatisfactory. I have been furnished with explanations in relation to some accounts and the Accounting Officer states that a recent staff reorganisation should improve the position.”
83. Have you any further comment, Mr. Suttle?
Mr. Suttle.—Some improvement has been made in regard to the clearance of the suspense accounts. The position at 31st March, 1970, was less than satisfactory. I am keeping the matter under review.
84. Chairman.—Would you like to make any comment on that, Mr. Ó Colmáin?
Mr. Ó Colmáin.—We are as anxious as the Comptroller and Auditor General to get these suspense accounts into the best shape as quickly as possible. We had made a good deal of progress but progress was impeded by the extra work arising out of the bank strike last year. This took a lot of staff time but it is pretty well in hand now and I am hopeful of an early clearance.
85. Deputy Gibbons.—On Appropriations in Aid, No. 1—Recovery in respect of Telephone Capital expenditure—the figure is £7,500,000 and on Vote 42, in the accounts for Post Office Telegraphs (Telephonic System) on page 138 the figure of £7,500,000 again appears as a receipt. Is this the same figure?
—It is the same figure.
86. Chairman.—You have a comment, Mr. Suttle?
Mr. Suttle.—The telephone capital is financed by the Exchequer and the Exchequer supplies the money to the Post Office and they account for it purely as capital expenditure. The actual cost of work done is charged to the Vote and a recovery then is brought in as Appropriations-in-Aid, capital expenditure on telephones. The ordinary running expenditure remains as a charge on the Vote and the revenue arising from telephones is brought in direct to the Exchequer as Post Office receipts.
87. Deputy Gibbons.—I wonder would the accounting officer say something about the motorisation of postal delivery. Has the Department been justified in this policy and how is it working out financially?
Mr. Ó Colmáin.—The position is that motorisation of postal delivery is introduced only where it is established that it will be economical to introduce it. We are satisfied that in all cases where it has been introduced economies have been effected.
88. Chairman.—I wish to read you here the report on the Commercial Accounts (Prl. 1795) by the Comptroller and Auditor General on your accounting procedure and records. It reads:
The accounting system of the Department of Posts and Telegraphs is on a receipts and payment basis which is designed primarily to serve the purposes of parliamentary control of expenditure. This system does not facilitate the production of an income and expenditure account and a balance sheet. Some progress has been made to bring the Post Office commercial accounts into line with the best commercial standards. I have been urging on the Department the need for the introduction of accounting procedures and records designed to facilitate the production of improved commercial accounts and I have recently been informed that the Department proposes to employ consultants to review and advise on the accounting system in general.
Is that proposal now in operation?
—I did not quite follow——
Mr. Suttle.—This is the paragraph of my Report on the commercial accounts regarding the improvement in the commercial accounting procedures—the Chairman wants to know have you any comments regarding the employment of the consultants?
Mr. Ó Colmáin.—As the Comptroller and Auditor General’s Report accurately says we propose to employ consultants to review the whole system of accounting within the Department and to advise on the system in general. The terms of reference have not been settled but we are getting ahead with the arrangements for interviewing a number of these consultants and deciding which one we should employ to undertake the task. We would hope to get something going fairly quickly.
The normal practice is to get a number of firms to make a preliminary survey of the problem and later to submit an estimate of what they would charge for a full examination and report. We are now at the stage of being about to invite some firms to make such a preliminary survey.
89. Chairman.—Your present system then and its deficiencies would explain why you are writing a supplementary provision of the same amount every year for depreciation?
—In respect of depreciation we are satisfied that the straight line system on prime cost would not yield sufficient for our purposes and I think we are now depreciating on a very conservative replacement basis.
90. In view of inflationary costs?
—We have not finally settled the permanent basis of depreciation. We will do that when we get the advice of these consultants. Meanwhile, I think we are satisfied—and I hope the Comptroller and Auditor General is satisfied—that we are putting by enough to keep the firm going.
91. Members have also received the Factory Balancing Statement for 1969-70.*
The witness withdrew.
VOTE 26—LOCAL GOVERNMENT.
Mr. M. Lawless called and examined.
92. Paragraph 31 of the Report of the Comptroller and Auditor General reads as follows:
“The Nelson Pillar Act, 1969 imposed a liability on the Dublin Corporation to pay to the trustees of the Pillar compensation for damage caused to the Pillar and for its subsequent removal, and also for losses and other expenses incurred. Provision was made under this subhead for recoupment to the Corporation of its outlay under the Act which amounted to £26,939.
Expenditure of £10,321 was incurred in previous years on the demolition of the Pillar and on meeting consequential claims for compensation for damage to property in the vicinity.”
93. Have you anything to add, Mr. Suttle?
Mr. Suttle.—The Act provided that compensation for the damage to the Pillar should be paid by the Corporation in the first instance. It was the Government’s intention that the expenditure should be borne by the State. The expenditure of £10,321 was incurred by the Department of Finance in 1966-67 and 1967-68.
94. Chairman.—The Government will pay the entire cost?
95. Paragraph 32 of the Report of the Comptroller and Auditor General reads as follows:
“The 1969 Congress of the International Federation for Housing and Planning was held in Dublin in May 1969. The local arrangements were made by An Foras Forbartha which was recouped expenditure of £14,806 from this subhead.”
96. Have you anything to add, Mr. Suttle?
Mr. Suttle.—Again, this paragraph is for information. In addition to the amount mentioned there was incidental expenditure of about £2,000 incurred by the Department of Finance.
97. Paragraph 33 of the Report of the Comptroller and Auditor General reads as follows:
“Motor Vehicle Duties
A test examination of the revenue from motor vehicle duties, etc., was carried out with satisfactory results. The reports of the Local Government auditors who examine the motor tax transactions of local authorities are made available to me.
The gross proceeds in 1969-70 amounted to £13,768,029 compared with £12,754,362 in the previous year. They include fines amounting to £323,556 collected by the Department of Justice; £9,205 in respect of fees received under the Road Traffic Act, 1961, Road Traffic (Public Service Vehicles) Regulations, 1963; £11,736 fees collected by planning authorities in respect of appliances and structures for servicing vehicles; £63,420 fees received by the Department of Local Government pursuant to the Road Traffic (Licensing of Drivers) Regulations, 1964, and £122,088 received from government departments in respect of State owned vehicles.
£13,416,121 was paid into the Exchequer and £19,506 was refunded leaving a balance of £483,398 compared with £150,996 at the end of the previous financial year.”
98. Have you any further information, Mr. Suttle?
Mr. Suttle.—Early this year I asked the accounting officer to comment on the report prepared by a survey group appointed by the Minister for Local Government, in which it was stated that motor tax evasion may be costing as much as £350,000 a year. He informed me that the figure was somewhat of a guess estimate by the group based on a sample survey carried out by the Dublin Motor Registration office, and that while a certain amount of deliberate evasion takes place, the Department has no definite facts or figures as to the extent of such evasions.
Mr. Lawless.—I might mention that the traffic wardens employed by Dublin Corporation are now putting notices on cars where the car does not exhibit a current Road Fund licence. We are hoping that that will result in a reduction of the losses. In addition, we have been able to carry out more inspections than previously of motor taxation offices.
99. Chairman.—Is the Department still considering the question of centralisation of motor taxation?
—Yes, that is correct. We are considering very seriously the question of computerising the collection of motor taxation and we have inspected systems in England and in other countries. We are in close consultation with Aer Lingus who have a computer, and they are at the moment acting as consultants or advisors to us on the question. I might point out that normally a transfer from manual operation of motor licences to a computer system takes quite a long time. Estimates prepared of the time it takes to make the change in other countries have on occasions proved to be much too low. We are pursuing the matter very seriously.
100. Chairman.—Why not put a few pence on the petrol and drop motor taxation?
101. Paragraph 34 of the Report of the Comptroller and Auditor General reads as follows:
“In the course of audit I noticed that for the year 1967-68 the average cost of collection per transaction, varied between local authorities from £0.13 in Mayo to £0.27 in Carlow, and that the average cost in Dublin, which accounts for 35 per cent of duty and 29 per cent of transactions was £0.24 compared with a national average of £0.20. At my suggestion the Accounting Officer carried out an examination of the costs of collection with a view of assessing the efficiency of local taxation offices. He has recently informed me that this examination has shown that the cost relationship between counties does not vary very much from year to year but that special circumstances exist in the counties in which the cost appears to be consistently high. He has also informed me that more frequent inspections of local offices should help to improve efficiency but he does not anticipate that significant reductions in cost can be achieved. He feels however that the centralisation and computerisation of motor taxation work which has been recommended as a result of a recent study would offer the best prospect of a long term solution of this problem.”
Mr. Suttle.—I have nothing further to add to the information in the paragraph at this stage.
102. Deputy Gibbons.—On subhead K— Rural Employment Schemes—why is it recorded here now? I understood that all the administration had been done by the county councils.
Mr. Lawless.—The administration of the local improvements schemes is done by the county councils. Subhead K refers to the rural improvements schemes, which are no longer in existence but the amount provided here was to cover outstanding grants and to wind up the schemes.
103. Chairman.—In respect of the Road Fund Accounts* you have issued £12 million from the central fund motor taxation. Is that the amount that was received exactly from motor taxation?
—No. That is less than the amount that was paid into the Exchequer. I have here the figures of the total amount paid into the Exchequer from the central motor taxation account, which came to £13,400,000 approximately.
Mr. Suttle.—That is 25 per cent tax?
Mr. Lawless.—Yes. The difference is the amount collected as a result of the 25 per cent increase on cars and cycles in 1966 and retained in the Exchequer.
Mr. Suttle.—That never goes into the Road Fund? It goes straight into——
Mr. Lawless.—It goes into the Exchequer. The figure £13,400,000 includes fines for motor traffic offences.
104. Chairman.—How is the figure £12 million arrived at?
—Approximately £1,400,000 is retained by the Exchequer.
Mr. Suttle.—It arises from the practice of keeping a running balance and paying over in even sums; £12 million is not the exact figure that was due.
Mr. Lawless.—That is correct.
105. Chairman.—That was not always the practice?
Mr. Suttle.—Yes, it was; they handed over in even sums.
106. Chairman.—Did they not hand over all——
Mr. Lawless.—It comes over eventually, instead of calculating it at a particular day, how much is due, we just hand over even sums of money and they know exactly the amount that is coming in day by day, and instead of calculating on 31st March exactly how much is due to be handed over, we hand over an even sum and keep a running balance on it.
107. Deputy Gibbons.—I wonder is this question relevant for the accounting officer. It is a question of administration. On whom lies the duty of the improvement of roads, particularly the main or arterial roads?
—The local authorities—the road authorities. It is their primary duty. I think as has been announced the Minister intends to introduce legislation for the taking over of the national primary roads. That legislation has not been introduced and pending that the responsibility lies on the local county councils and county borough councils.
108. Where it is obvious on a main road —I am thinking now of the road to the West, through Dublin, Maynooth and Kilcock—that some improvements should be done and nobody seems to be taking the initiative, is there not some obligation on the Department to move in a situation like this and direct the attention of the county councils to this fact?
—Yes. The Department, in so far as funds are available, makes these funds available for the more important stretches of road. I am not suggesting that the road to Maynooth is not an important road but the Department tries to do what it can with the amount of money that is available for road improvements.
109. Chairman.—But is it not a fact that the work done on main arterial roads is largely by arrangement between the local county engineer and the departmental inspector.
—That is correct. This work is done by improvement grants which are allocated by the Department which has to take into account all the other demands on the fund for improvements and maintenance.
110. Deputy Gibbons.—The thing that strikes me about the road to which I referred is that it does not seem to be a proper approach to widen the road beyond Kilcock and not to widen it on this side of Kilcock which, in fact, is carrying much more traffic. There is a bottleneck on this road out to Kilcock every day—and at practically all hours of the day—and if the widening had been done on this side of Kilcock I think the traffic would filter out faster. It seems to me that this must be a priority. I have sought information on a few occasions as to why it is not treated as a priority and nobody seemed to have the answer to this problem. Some people blame the Dublin County Council, the Kildare County Council and if information is sought at this level the Department is blamed.
111. Chairman.—This is hardly a matter for the Department of Local Government. Perhaps it could be raised in the House.
Deputy Gibbons.—I have done so.
Chairman.—Thank you very much, Mr. Lawless.
The witness withdrew.
The Committee deliberated.
The Committee adjourned.
* See Final Report of Committee (Order of Dáil of 1 December 1970): Appendix 9.