Committee Reports > List of Committees > Dáil > 1974 > Committee of Public Accounts > Interim and Final Report - Appropriation Accounts 1971 - 1972

MIONTUAIRISC NA FINNEACHTA

(Minutes of Evidence)

Déardaoin, 4 Aibreán, 1974

Thursday, 4th April, 1974

The Committee met at 11.30 a.m.

Mr. S. Mac Gearailt (An tArd-Reachtaire Cuntas agus Ciste) called and examined.

VOTE 26—LOCAL GOVERNMENT.

Mr. M. B. Lawless called and examined.

65. Chairman.—Paragraph 35 of the Report of the Comptroller and Auditor General reads:

“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 for the years 1971-72 and 1970-71 were:—

£17,830,000 was paid into the Exchequer and £11,650 was refunded during the year leaving a balance of £454,701 compared with £326,609 at the end of the previous financial year.”

Mr. Mac Gearailt.—This paragraph is for information.

66. Deputy H. Gibbons.—On subhead E, there are two headings: E.1.—Housing Subsidy—and E.2.—Private Housing Grants. Is one local authorities?

—E.1. is the housing subsidies paid to local authorities for the provision of local authority housing, the loan subsidies. E.2. is private housing grants, grants paid to private persons.

67. Deputy Tunney.—On subhead J— Urban and Rural Employment Schemes— they seem to be very limited or confined schemes—a total of £8,000?

—They are the winding up of old schemes. Those schemes are being phased out and replaced by Local Improvement Schemes under subhead K.

68. Chairman.—On subhead K—Local Improvements Scheme—the supplementary estimate exceeded the original estimate. Was that because of a drastic change during the year?

—No. I think in that particular year the expenditure was running fairly high and we added this amount to keep the schemes going, to supplement the work that was going ahead.

69. They are round numbers?

—That is because these grants are notified to local authorities who have complete control. We do not approve of the individual schemes. This work is given out to local authorities.

Therefore those are round figures?

—Yes. A local authority may have exhausted their money about February and if we cannot get money from another local authority which have under-expended we sometimes provide for a supplementary estimate.

Deputy H. Gibbons.—That would not occur too often?

—No, not too often.

70. Deputy Tunney.—On subhead L— Technical Assistance—what was the exact nature of this technical assistance?

—Attendance by managerial, supervisory and technical personnel in the building industry at seminars and courses of training, also study visits abroad by representatives of the building industry and the engagement of consultants by building firms. We give grants towards these items of expenditure in order to modernise and bring up to date the building industry.

We give grants to the industry?

—We give grants to the firms.

71. I did not think they were in need of grants. Could we not get through An Foras Forbartha the same type of expertise?

—That is so. In fact, most of the seminars are run by An Foras Forbartha. They run, for example, seminars for foremen and personnel like that who are actually engaged on the building site, the idea being to try to ensure that building is carried on in the most economical way possible on the site. They run quite a number of courses. The Irish Management Institute also run courses. We give a limited number of grants as well for courses abroad.

72. I presume it would only be the bigger builder who would be interested in this, that we give assistance to firms like Mclnerney, Gallagher or Crampton?

—Yes.

73. Chairman.—Mr. Lawless, I think this is the last time you will come before the Committee?

—That is true.

We should like to thank you for your services to the Committee and to express our appreciation of the work you have done for us and to hope that that tradition will be followed in the future.

—Thank you.

The witness withdrew.

VOTE 36—ROINN NA GAELTACHTA.

Mr. L. Tóibin called and examined.

74. Chairman.—Paragraph 63 of the Report of the Comptroller and Auditor General reads:

“Subhead E.—Scéimeanna Feabhsúcháin sa Ghaeltacht

In paragraph 56 of my report for 1970-71 I referred to the issue of a short-term interest-bearing loan of £14,000 to a company which in 1969-70 had received a grant of £30,000 towards the approved construction cost of a hotel. The loan was for a period of one year and was to bear interest at a rate of 8½ per cent. In the year under review the company received an additional grant of £1,291, the repayment period of the loan was extended for one further year and the liability for interest was waived. Interest which had been paid amounting to £1,190 was refunded. The company has also received grants totalling £76,935 from Bord Fáilte Éireann and £35,000 of its issued share capital, £75,006, was held by Gaeltarra Éireann at 31 March 1972.”

Mr. Mac Gearailt.—I have nothing further to add to this paragraph except to say that I understand the repayment period of the loan was extended for a further year in February 1973.

75. Deputy H. Gibbons.—Is it the feeling that we shall be able to continue to meet the commitment?

—We dealt with this on the last occasion. This payment could have been made as a grant, and the only unusual thing about it is that, instead of giving the whole amount as a grant, we gave this part as a loan. We thought the amount was getting rather big due to the high cost of building and so on, so—rather than refuse further assistance— we attached strings to part of it and made a loan because of the difficulties into which hotels had run at the time; they are still in difficulties of course. At the moment the £14,000 is a loan free of interest.

76. Chairman.—Paragraph 64 of the Report of the Comptroller and Auditor General reads:

“Reference was made in previous reports to the payment of grants towards the construction of airstrips on Inis Mór and Inis Meáin in the Aran Islands. The grants, which were based on two-thirds of the construction costs, were paid to a company which intended to operate an air service between the mainland and the islands. The company was incorporated on 15 May 1969 and became operational in March 1970. In the year 1969-70 £15,400 was paid towards the cost of the airstrip on Inis Mór; in 1970-71 £10,000 was paid towards the cost (estimated at £26,000) of the airstrip on Inis Meáin and a further grant of £3,400 was made in the year under review.

In 1971 the company applied for an annual grant of £15,000 for five years to meet operational losses on the air services to the islands. Audited accounts for the period ended 10 September 1971, which were submitted by the company, disclosed that losses had been incurred on the air service to Inis Mór. The service to Inis Meáin had not yet commenced. The Department of Finance approved a proposal by Roinn na Gaeltachta that a payment be made towards this loss by increasing the rate of grant to ninety per cent. of the costs of construction of the airstrips but directed that Roinn na Gaeltachta in consultation with the company should seek to ensure that the services would operate on a profitable basis in future as losses on air services could not be accepted as a charge on the Exchequer. Accordingly a further grant of £12,600 was paid to the company in the year bringing the total amount paid at 31 March 1972 to £41,400. I inquired whether an evaluation had been made of the proposal to provide air services to the islands before the grants were sanctioned and, if so, with what results. The Accounting Officer has informed me that it was recognised that there was a need, from the social viewpoint, for air services to certain Gaeltacht islands and consequently that any expenditure on such services should not be judged on economic grounds alone. He added that when private individuals are prepared to provide airstrips or air services for such islands it is considered well worthwhile to give them grants in order to save State money because it would be difficult to avoid a heavy loss on such services were the State to provide them. He further added that the economic basis for any air service depends on the number of passengers carried and this cannot be accurately measured in advance.”

Mr. Mac Gearailt.—This paragraph refers to the payment of grants to a company which operates an air service to the Aran Islands, towards the cost of construction of airstrips on Inis Mór and Inis Meáin and towards losses incurred by the company in the first year of the service to Inis Mór. It would appear from recent reports that the operational area of the company is to be extended, that its share capital is to be increased and that Gaeltarra Éireann will take up part of the extra share capital.

77. Deputy Tunney.—Are we happy that the type of airstrip being provided is the most economic? I know it may be the cheapest.

—It is a rather unusual problem, on Inis Meáin, in particular. In making the airstrip blowing sand created great difficulty. It is operational at the moment on a restricted basis, but it is far from satisfactory as an airstrip. Various studies have been made of it and further improvements have still to be carried out there.

78. Chairman.—In fact, what you were doing was stimulating a private interest to provide a public service?

—We were grateful to find a private enterprise that was anxious to do that.

79. Is that private interest now likely to become a public interest?

—You might now say it is becoming semi-public, because Gaeltarra Éireann will have about one-third of the shares in it. Another commercial group, as well as the group who started this operation initially, will also be involved and the range of the services will be extended.

80. Is it too early to ask whether if the other procedure had been adopted against this procedure——

—I am recorded as having said that it would have been more expensive as a public project.

81. Deputy H. Gibbons.—Would extra sailings not have been more advantageous to the people on the island?

—Not quite. One of the big advantages of the air service is its flexibility in bad weather: it is claimed that the lives of a number of people who were ill on the islands have been saved. Aircraft can go in there when the Naomh Éanna or other boats could not.

Could helicopters not come in?

—That could possibly be arranged in an emergency.

82. From time to time one reads about people on the islands complaining about shortage of sailings at particular times of the year?

—The Naomh Éanna is the regular boat which serves the islands and during the summer period there is the Galway Bay. To my knowledge the islanders are particularly well served in this way.

83. Chairman.—Paragraph 65 of the report of the Comptroller and Auditor General reads as follows:

“I observed in the course of audit that a grant of £15,000 was paid in March 1972 to the company referred to in the previous paragraph to enable it to replace its aircraft. I asked the Accounting Officer whether the company had taken possession of the new aircraft and what evidence had been submitted regarding its cost and the valuation placed on the old aircraft. He informed me recently that the company had not taken possession of the new aircraft as the suppliers would not fulfil the contract and that legal proceedings had been instituted against them by the company. He also informed me that the price of the new aircraft was £45,408 and that the allowance on the old aircraft was £30,408, leaving a balance payable of £15,000.”

Mr. Mac Gearailt.—The point of this paragraph is that the company got £15,000 in March, 1972, towards the cost of a new aircraft; yet it had not taken possession of the aircraft by November, 1972. However, I understand that a grant of £50,000 was approved later to enable the company to pay off debts and to provide it with working capital. The original grant of £15,000 was regarded as part of this second grant and only the balance of £35,000 was paid.

—Up to the end of last month £100,000 was paid out. That is the full total up to date towards airstrips, aircraft and working capital.

84. Deputy Staunton.—I suppose it is the view of the Accounting Officer that in this type of activity it is more desirable that private enterprise be engaged?

—That is so.

The background is that there has been a demand for this type of service which tends to be subsidised in most maritime countries. We are following the example of Norway and of Scotland. In the latter country there is an enormously heavy subsidy paid by British Airways. What is involved here seems substantial in a relative sense. It is thought desirable that such a service should exist. In fact, it is relatively small. If it were run as a public enterprise the extent of public funds needed would be enormous. The reference to sailing is not entirely relevant because you run into weather problems and time factors. The air service has been successful. Apart altogether from hospitalisation and the health of the people on the islands it has developed substantially the tourist industry on the islands. Many people holidaying in Galway go out on trips by air. My only regret is that under policy to date it has not been possible to expand this type of activity to areas which are equally underprivileged but which unfortunately are not within Gaeltacht areas but this is not the business of this meeting.

85. Deputy Tunney.—I think we all agree with that. We cannot look upon this as a matter of economics. There are social factors. However the airstrip as yet is not reliable. I wonder whether initially it would not have been better to have provided a tarmac airstrip rather than hoping that ultimately the grass one would be satisfactory? Personally I do not think it will ever be satisfactory.

—But even with tarmac the problem of blowing sand would remain. It is not so much that grass will not grow on the sand but that more sand blows over it. That would apply even to tarmac and there would have to be some method of shifting the sand. It is quite a technical problem but we hope it will be solved. It might eventually be solved by putting a different type of wheels on the aircraft so that they could land on loose sand.

86. Deputy Griffin.—I agree with what Deputy Tunney has said, but are we getting the best value for the money spent?

—I think so. Having regard to the social need for this type of service I think we are getting excellent value.

87. Chairman.—Paragraph 66 of the Report of the Comptroller and Auditor General reads:

“I referred in paragraph 58 of my previous report to the special arrangements approved by the Government under which the capital cost of installing electricity generating plants and network on certain Gaeltacht islands, where the normal supply by the Electricity Supply Board will not be available, is being met from voted moneys. Work on Oileán Chléire, Co. Cork, which was carried out by the Electricity Supply Board, was completed in 1971-72 and the charge to the subhead includes £26,949, which together with £9,495 charged in the previous year brought the total cost of this project to £36,444. The original estimate, £28,500, was based on service to fifty-five consumers, but at 31 March 1972, seventy-seven consumers had been connected; the additional connections were mainly responsible for the increase in cost. Installation work commenced in 1971-72 on Oileán Thoraí, Co. Donegal and the estimated capital cost of this scheme is £26,500; £15,680 was paid in the year under review.”

Mr. Mac Gearailt.—This paragraph is for information. On the basis of the figures given here for the completed scheme in Oileán Chléire the average cost per house was £470 as compared with the estimated £520 approximately.

88. Chairman.—Paragraph 67 of the Report of the Comptroller and Auditor General reads:

“Subhead H.2.—Gaeltarra Éireann—Caiteachas Caipitil (Deontas-i-gCabhair)

In February 1972 Gaeltarra Éireann sought a repayable advance of £275,000 from the Exchequer to meet capital expenditure on the erection of factories, on the taking up of share capital in associate companies and on its own activities. As Gaeltarra Éireann had already received its full allocation of repayable advances for the year, Roinn na Gaeltachta, with the sanction of the Department of Finance, issued £275,000 from this grant-in-aid subhead. The moneys in subhead H.2. were not voted for the purposes specified and accordingly I asked for an explanation. The Accounting Officer has informed me that the Department was aware that Gaeltarra Éireann would not have spent the full grant-in-aid by the end of the financial year and would spend the balance in 1972-73. At the same time it was known that Gaeltarra Éireann would have spent more than its allocation of repayable advances in 1971-72 and that the deficiency would be made good with the first issue in 1972-73. The Accounting Officer maintains that the grant-in-aid moneys, £275,000, were not issued for purposes other than those for which they were voted. As I am still not satisfied that the £275,000 should have been issued from this subhead I have deemed it desirable to draw attention to the matter.”

Mr. Mac Gearailt.—Oireachtas Éireann has provided that Gaeltarra Éireann should get Exchequer moneys for capital purposes by two routes:— (1) repayable advances from the Exchequer, and (2) moneys voted annually by Dáil Éireann under subhead H.2. of the Vote for Roinn na Gaeltachta. The latter moneys are specifically voted to meet capital expenditure on grants to associate companies and to small industries while repayable advances from the Exchequer are earmarked for (a) capital expenditure on factories, (b) purchase of shares in associate companies, and (c) the ordinary activities of Gaeltarra, for example, knitwear, industry, toys, etc. In brief the point of the paragraph is that moneys voted by Dáil Éireann under subhead H.2. for grants to associate companies and small industries were diverted to meet expenditure proper to be met from Central Fund advances. The Committee will have noted from the paragraph that the Accounting Officer does not agree that voted moneys were so diverted.

—I do not at all accept the implication that the moneys were diverted. The moneys were issued precisely for the purpose for which they were voted. The only venial sin that may have been involved is that they were issued in the knowledge that they would not be spent within a few weeks; that is all. They were eventually spent for precisely the purpose for which they were voted.

89. Chairman.—Some of us do not understand this. Could you explain it to us?

—There is an annual capital allocation for Gaeltarra Éireann from State sources and, as far as the Government—and indeed as far as the Department of Finance—are concerned initially, it does not matter how it is divided. What is settled by the Government each year is a certain overall figure. At a stage before the Estimates are printed we have to split this into two and call some of it a repayable advance and the remainder a grant from a subhead in the Vote. It is not easy to do that division satisfactorily. Sometimes we are fairly accurate and sometimes we are not. As things turned out in that year the division was not very accurate; it was estimated by Gaeltarra that more of one type of capital was needed and could be spent before 31st March while some of the other type of capital available would not be spent before 31st March. Some of the voted capital was issued—for the purpose for which it was voted—in the knowledge that it would not be spent until after 31st March. That occurred towards the end of the financial year. If it had happened at an earlier stage during the year it would be regarded as normal because we have to issue funds so that Gaeltarra can incur expenditure.

90. Gaeltarra get moneys through two routes?

—Two types of capital, yes.

Do you agree that the first type is repayable advances?

—That is right.

Do you agree that the second route is the moneys voted annually under subhead H.2?

—That is right.

Are we agreed on that?

—There is no doubt about that.

91. What is the statutory authority for route 1?

—The Gaeltacht Industries Act, 1957.

What section?

—Section 26. It reads:

For the purpose of enabling the Board to exercise or perform its functions, the Minister for Finance may, on the recommendation of the Minister, advance from time to time to the Board, out of the Central Fund …

92. What is the relevance of section 25?

—Section 25 relates to grants. Section 26 is for repayable advances. Repayable advances have always been regarded as for capital purposes, so much so that I was inclined to assume that “capital” would appear in the section but it does not.

Is there any other enabling section?

—Section 25 is an enabling section for grants. Again it does not specify capital because we issue two types of grant, non-capital grants and capital grants.

There is a note in your estimate. What does that say?

—It relates to grants under section 25.

For the record would you translate that accurately?

—Subhead H.2. provides for a grant under section 25 of the Gaeltacht Industries Act, 1957 (No. 29 of 1957) in connection with capital expenditure on grants under section 4 (4) (bi) and (bii) of that Act (as inserted in 1965 and as amended in 1968 and in 1971).

93. On H.2.—Gaeltarra Éireann— Caiteachas Caipitil (Deontas-i-gCabhair)— am I correct in reading that as a grant-in-aid under section 25 limited by section 4 (4) of the 1957 Act as amended? Is the application of the moneys voted under H.2. limited to section 4 (4) of the 1957 Act, as later amended?

—There is no doubt about that. That is so.

I do not want to put my interpretation on this but to ask you a question. Is it correct to say that the grants under H.2. are limited by section 4 (4) of the 1957 Act?

—Yes, as amended.

That section 4 was subsequently amended?

—Yes, substantially in 1965 and in detail but not in principle later.

94. Is it the point that the purposes for which this money was paid out from this subhead do not come in within section 4? Can you bring in the purposes within section 4?

—There is no doubt in my mind whatsoever.

95. We are interested in statutory authority. Can you now point to section 4 (4) and show us the justification for spending the money?

—Section 4 (4) (bi) and (bii) enable grants to be paid out by Gaeltarra to various bodies for industries. The 1965 Act was the first occasion when grant-giving powers were conferred on Gaeltarra for industrial promotion purposes.

96. Yes, but is section 3 of the 1965 Act not an amendment?

—The main amendment is quoted in section 3 of the 1965 Act.

Is that section of the 1965 Act essentially an amendment of the 1957 Act?

—Yes.

97. There are two things in this. Section 4 (4) says:

Without prejudice to the generality of the foregoing subsections and in addition to the powers conferred on the Board by any other provision of this Act, the Board shall have power——

Do you read the Comptroller and Auditor General’s objection that you do not come within the amended section 4, that is the terms of the 1965 Act?

—I am very familiar with these Acts. I know them almost off by heart.

98. Can I put it to you this way? Are you relying on the general powers given to you by section 4 (3) of the 1957 Act which states:

The Board shall have all such powers as are necessary for the purposes specified in subsections (1) and (2) of this section.

Are you relying on that or can you rely on the specific powers given to you by section 3 of the 1965 Act?

—The 1965 Act for the first time conferred industrial promotion powers on Gaeltarra and gave them power to give grants for industries. These are the grants we are now considering. In the Vote subhead H.2 was introduced shortly after: there was only one subhead H for grants to Gaeltarra up to then. Subhead H.2 was introduced for these capital grants for industrial promotion purposes. On this particular occasion a sum of money was issued to Gaeltarra Éireann from Roinn na Gaeltachta for grants for industrial promotion purposes. It was spent precisely for those purposes and for no other purpose whatsoever. We can go back and show exactly how it was spent. Side by side with that, towards the end of the financial year, Gaeltarra went into the red on the repayable advance side and spent more money than they had. That is the issue. This money from the Vote was not issued for spending as a repayable advance. It was issued for spending later for the precise purpose laid down in the Acts and in the Vote.

Mr. Mac Gearailt.—Would the Accounting Officer agree that what Gaeltarra looked for was repayable advances for the purposes for which repayable advances are given?

—That is true but they did not get them.

Mr. Mac Gearailt.—There was nothing on the file to show that they did not. You told Gaeltarra in November that they could spend “timpeall £275,000 níos mó ná mar atá i gceist a chaitheamh mar airleacan ar an tuiscint go mbeidh sábháil dá réir ar an Deontas-i-gCabhair”. You told them in fact they could overspend to the extent of £275,000 in advances. The only implication that I could take out of that was that they would use the grant moneys, otherwise where would they get it?

—They would get it in the bank. We now receive an account every week: we keep a very close check on the balances. One week they may be in the red and the next one they may have balances in hands. It is normal procedure.

Mr. Mac Gearailt.—As I say, we can only go on papers we examine. Our interpretation was that Gaeltarra looked for advances. They specified what they wanted to do with the money; the purposes were related to advance money. They got money out of the Vote. I think we were justified in our interpretation.

99. Deputy Tunney.—It was apparently necessary in the matter of proper accounting procedures to introduce subheads H.1 and H.2?

—That is right. It was done on the recommendation of this Committee.

Is it necessary to retain those two separate subheads?

—I would see no objection to them. I certainly would not ask the Committee to review a decision taken some years ago.

It is only for the purpose of respecting that decision. In the matter of accountancy you would not see, having regard to the legislation, a need for the retention of two separate subheads.

—Even if they were reconstituted it would not solve the present problem. Some of the money we are talking about here does not appear in the Vote. It is money which comes through the Department of Finance from the Exchequer. That would be my answer to the Comptroller and Auditor General. I can issue money out of subhead H.2. I cannot and do not issue repayable advances. The Department of Finance do it.

Mr. Mac Gearailt.—Yes, but if it was a question of issuing repayable advances the Department of Finance would only issue them, I should imagine, on the recommendation of the Accounting Officer.

—Absolutely.

Mr. Mac Gearailt.—If Gaeltarra Éireann wanted repayable advances and Roinn na Gaeltachta were prepared to recommend them the recommendation would come forward. The problem was that there was a limit of £475,000 placed on the repayable advances by the Department of Finance. They had already got that much. They could not get any more repayable advances although they looked for them. We saw money going out of the Vote and we assumed this was money going out to meet the purposes for which the advances were sought.

—That was not a correct assumption. It went out and was spent for the purpose for which it was voted.

Mr. Mac Gearailt.—Would the Accounting Officer agree there was no indication on the file we saw?

—I could not agree with that. First of all the capital Roinn na Gaeltachta can issue to Gaeltarra is solely confined to grants from subhead H.2. I could not issue repayable advances: the Department of Finance do it. The advances do not come out of our Vote at all. We make recommendations to Finance, and they issue the money.

100. Chairman.—You issue this money from H.2?

—That is right.

For what purpose do you issue it?

—For the purpose of paying grants for industrial promotion in due course.

And what was your authority for paying it for this purpose?

—H.2. itself.

No, the statutory authority?

—The statutes mentioned in H.2.

101. Deputy H. Gibbons.—As I understand it, you gave money which was intended as a loan?

—No. That is what the Comptroller and Auditor General is suggesting.

To people who sought a loan. I understand it is a loan you gave from H.2, which, in fact, is not loan money. In giving that, did you assume it would be paid back as all loans should be paid back?

—No. There is nothing really sacrosanct about the 31st March in this context: expenditure of capital is an on-going activity. Capital is provided in the Vote for industrial promotion grants. At a given point in time this particular payment went out to Gaeltarra in the knowledge that they would spend it on industrial promotion grants.

In the coming financial year?

—Yes, which they did. In the meantime they went into the red on the other type of capital expenditure, which was recouped to them after 1st April when the next issue of repayable advances came through from the Department of Finance.

102. Chairman.—Would you give the Committee a written statement rebutting what has been suggested today?

—I will do that, but perhaps I could summarise it in a sentence or so by saying that, looking back on this with hindsight, what we might have done is to have gone to Finance and said: “The repayable advance allocation of so much is insufficient. Will you please issue £x more than that and we will effect a corresponding saving of £x on our capital grant provision in the Vote?” If that had happened and if Finance had agreed we would not be spending any time on the matter now.

103. Deputy Griffin.—If it were possible for that grant money to have been spent before 31st March, this would not have arisen?

—No, it could not have arisen.

It so happened it was financially impossible for this money to be spent between the time it was issued and 31st March?

—Yes.

In the knowledge that it was voted for a particular purpose, you continued to use that money for that purpose?

—We had issued it and Gaeltarra continued to use it for that purpose.

104. Chairman.—Will you submit a written statement about the matter, and we shall see it more clearly then.

—Certainly, I will do that.*

105. Deputy Griffin.—On subhead D— Tithe Gaeltachta—there is a sizeable amount of expenditure more than granted. Could that have been avoided?

—No. The note says that more work was completed on Gaeltacht housing than had been expected. If I may say so, I am glad to see the note that way; more often than not, it has been the other way round.

106. Deputy Staunton.—On subhead G Eagrais Áirithe Ghaeilge—in the note there is a summary of the organisations assisted. I am looking at the position of Gael-Linn. To what extent is their activity funded by the State?

—In that year they got £47,500, as you see in the note.

107. Is that a continuing thing?

—Yes. We have been giving grants to all the organisations named there since 1965.

108. In regard to Gael-Linn in particular, on what basis do you decide the extent of the allocation?

—We get accounts from these bodies. They make a case for expenditure on various activities. In some cases in recent years we have been giving so much per £1 of an organisation’s income from other sources.

On a £1 for £1 basis?

—Not necessarily £1 for £1; maybe more than that, maybe less. We have a look at their income from other sources and base our grants on that.

109. Deputy H. Gibbons.—I take it they are not a profit-making organisation?

—They are spending a lot of money on various schemes but there is no question of making a profit out of our grant.

110. Deputy Tunney.—Again on this assistance could you not be more generous towards Taibhdhearc na Gaillimhe?

—We have been more generous since then. In fact we have increased the grant fairly substantially, but perhaps you would elaborate on that and suggest how——

111. I am thinking of the increased grants which have been given to the Abbey Theatre here and the fact that we have recently set up a second national theatre. In that light, the figure for Taibhdhearc na Gaillimhe seems inadequate for what they should be doing.

—That is a debatable question.

Of course if they have not looked for it be it on their own heads.

—Most organisations do not get what they look for. We have to have regard to the number of performances they put on and to the size of the crowds they attract.

Deputy Tunney.—They cannot put them on without money?

—If they put them on without audiences they are not being attractive from our point of view.

112. Deputy Griffin.—On subhead G, is there any grant-in-aid given to Comhaltas Ceoltóirí Éireann?

—It comes out of subhead F(6). Subhead G is for purely Irish language organisations and Comhaltas Ceoltóirí Éireann are not exclusively an Irish language movement.

113. Deputy Staunton.—Gael-Linn have a broad range of objectives and activities. When the Department gave them a grant-in-aid were there stipulations in regard to the areas in which that fund would be spent or have Gael-Linn got latitude?

—They get the grant-in-aid in relation to their language promotion efforts.

114. Is there any check in so far as that organisation is concerned to see that the money is used not in those outside activities but on language promotional efforts strictly? Gael-Linn engage in activities such as bingo sessions and so on. Broadly speaking, can they use that fund for purposes outside language promotional activities?

—The bingo and other activities are engaged in in order to make profits which they can use for their language promotional efforts.

115. Some such outside activities might not be successful. Under the system now obtaining, are they in a position to utilise some of the State subsidy to subsidise loss-making activities in other areas?

—There might be occasional loss-making projects in the Gaeltacht.

116. If they had a loss would it not limit the amount of the grant available for their main activity? Can that happen because of looseness in our arrangements?

—I do not think so. They always make a certain amount of money.

But if they have a loss-making activity in some areas does that not mean they have much less money for their main activity? It seems to me the system should be capable of making this sort of thing watertight.

—I think it is.

117. I think a check should be made to ensure the funds go precisely where the Department believe such funds should go.

—The system is quite clear. We give them the grants for their language promotion activities and in any particular year it has been invariable that more money has been spent on these activities than we have given them in grants.

118. If that organisation are engaged in commercial activities, even in Gaeltacht areas, it would seem the system is such that they could incur losses in certain areas, not in Gaeltacht areas, which would have to be subsidised?

—I do not accept that. They invariably have a surplus income and loss-making activities would only go to reduce that surplus. It does not follow, therefore, that our grant would subsidise loss-making activities.

It seems to me that controls are not tight enough.

—I suggest they are as tight as we can make them. The Comptroller and Auditor-General can see the audited accounts.

Mr. Mac Gearailt.—The accounts are audited by other auditors and they show the outturn of a number of Gael-Linn activities and they then show the Government grant coming in. They are not very informative. I have been speaking to my officers about it.

119. Deputy Tunney.—Do they get any other assistance by way of subsidy in connection with the summer courses?

—For example, one of the main courses they run is for pupils spending a school-term in the Gaeltacht. There was a stage when they got assistance from us as an ordinary recognised committee for that purpose. Now they do not; nor does any other committee. Another scheme under which they qualify would be Gearrscannáin Ghaeilge—Irish films. They have been assisted in the production of Irish language films and, in fact, the main expenditure under that head in the year under review was on their film Mótar Mo Chroí.

120. Might it not be possible at some stage to get a global figure for all these activities?

—It would. The only other figure I can think of in that line would be for the films. They could also qualify for grants from Gaeltarra Éireann for industrial promotional purposes.

121. Deputy Staunton.—I believe it is desirable that we should have full details from organisations such as this about the areas in which they have used the State grants given to them. This is particularly necessary where there is an organisation with a wide range of activities ranging from the commercial arena to the purist area of language development. We are entitled to fairly precise accounting.

—We do not have details of their commercial activities but we have a certified figure for the surplus available each year for the purposes in which we are interested. If their surplus is smaller from their other activities it means that the amount they have available for Irish language development is correspondingly smaller but there is no question of any part of our grant going to subsidise their commercial activities.

Mr. Mac Gearailt.—As I understand it this grant-in-aid is to aid certain language activities. I think it should be possible for them to produce separate accounts—in other words, where you give a grant directed at a special area you could get separate accounts in relation to that specific area.

—The figures we get are pretty close to that.

122. Deputy Staunton.—I appreciate that none of the grant goes into a commercial area but a loss may be incurred in a commercial field and in such circumstances is it not possible that less of the State grant would be available for the purposes for which it was intended?

—I would not accept that. They invariably have a surplus from their commercial and fund-raising activities. On the other hand if they had a deficit we would have to take another look at the procedure.

123. Deputy Griffin.—Is there a certain amount of duplication between Comhdháil Náisiúnta na Gaeilge and Conradh na Gaeilge? Could you define briefly for us the difference between those two organisations?

—It would not be easy to do it briefly but I shall try. Comhdháil Náisiúnta na Gaeilge are expected to co-ordinate the activities of the other organisations and they are almost exclusively dependent on the grant they get from us; their income from other sources is insignificant. Conradh na Gaeilge is a very long-standing organisation; they collect funds of their own in various ways—subscriptions, receipts from certain GAA games and so on—for language promotion activities which we also assist. An Chomhdháil is a body here in Dublin made up mainly of representatives of the other organisations. An Conradh has branches throughout the country.

124. Chairman.—That is all, Mr. Tóibín, except for the payments to Gaeltarra.

—I will give you a note and if you feel like asking more questions at that stage, I shall be glad to come back again.

Our main concern is accounting procedures which as you will appreciate have to be very strictly adhered to.

The witness withdrew.

VOTE 43—DEFENCE.

Mr. S. Ó Cearnaigh called and examined.

125. Chairman.—Paragraph 103 of the Report of the Comptroller and Auditor General reads:

“Subhead P.—Naval Stores

Work continued on the construction of the fishery protection vessel which was commenced in September, 1970 and to which reference was made in my previous report. Payments to the builders during the year under review totalled £681,100 bringing the cost at 31 March, 1972 to £875,700. In addition, consultants’ fees at that date totalled £36,164, including £20,577 paid during the year.”

Mr. Mac Gearailt.—This paragraph is for information. The fishery protection vessel has been in commission for some time.

126. Paragraph 104 of the Report of the Comptroller and Auditor General reads:

“Subhead Z.—Appropriations in Aid

I referred in paragraph 102 of my previous report to the disposal of two corvettes in the Naval Service, which were regarded as unserviceable, and to the acceptance with the agreement of the Government of a tender other than the highest on condition that the vessels should be broken up in Ireland.

In the year under review a third corvette, also unserviceable, was offered for sale. The invitations to tender, returnable in June, 1971, did not include a condition that the vessels should be broken up in the State. The letter of acceptance of the highest tender, £10,140, included this condition but it was subsequently modified. The tenderer later declared his inability to buy at the price offered. Fresh tenders, returnable in March, 1972, and incorporating a provision that the vessel should be broken up within the State, were invited. The successful tender, £6,250, was received from a firm which had offered £8,050 in June, 1971. I have asked for the Accounting Officer’s observations on the transaction.”

Mr. Mac Gearailt.—I have made copies of the reply of the Accounting Officer available to the Committee. It is as follows:

“The letter of acceptance of the offer for L.E. Maev issued in July 1971 was superseded by a letter issued in September 1971 accepting an offer in the same sum but substituting for the condition that the ship be completely broken up in this country a proviso that only the hulk of the vessel be exported. This was done following an informal decision taken by the Government in the matter on 30th July, 1971.

The Government’s decision regarding the disposal of L.E. Macha and L.E. Clíona in 1970 related to that particular transaction and was not a policy decision of any wider application (as is borne out by their decision of July 1971 concerning the disposal of L.E. Maev). There was no authority to include a domestic break-up clause when tenders for L.E. Maev were invited in May 1971. In both cases tenders were invited on the basis of free and unrestrained competition so that all the options open in regard to disposal of the vessels would be in evidence. These options might conceivably have included sale for purposes other than scrapping at a price far in excess of the scrap value of the corvettes.

It was only as a result of the specific decision in the matter eventually taken by the Government in January, 1972, that the stipulation that L.E. Maev was being offered for sale on condition that it would be broken up completely in the country was included in the invitation of tenders that month.”

127. Chairman.—Would the Accounting Officer like to make any comment?

—The Government were fully informed of the progress of the negotiations, and the action taken towards the disposal of the vessel. I think they were motivated by the wish to give local employment and the ultimate decision was largely influenced by that consideration. It was eventually specified that the ship was to be broken up in Ireland.

And that is the only point there is in it?

—That is so.

And that is a policy matter in the last analysis?

—Yes.

Mr. Mac Gearailt.—Our reading of it was quite simple. There were three vessels. Two of them were put up for sale and the conditions laid down by the Government were that they would be broken up. We assumed that the same condition would apply to the first two. Factually he was right.

—I am quite satisfied that the Government did not make any restriction at all as in the case of the first two ships and that they allowed it to be an open tender, not confined to breaking up in Ireland. We were not bound to accept the highest or any tender in this case. The Government themselves would ultimately decide whether to accept a local tender or a foreign tender.

Mr. Mac Gearailt.—We possibly would not have adverted to this were it not for the fact that the Accounting Officer tried to introduce this condition subsequent to receiving tenders.

—Specifically on the direction of the Government.

128. Chairman.—Paragraph 105 of the Report of the Comptroller and Auditor General reads:

“In paragraph 103 of my previous report I referred to the increase over the three years to 31 March 1971 in the balance due to the Department of Defence in respect of the expenses of Irish contingents with United Nations peace-keeping forces. The balance at that date was £468,598 and of this a sum of £232,817 was received in the year under review and brought to credit as appropriations in aid. Two further claims totalling £369,724 were submitted to the United Nations during the year bringing the balance outstanding at 31 March 1972 to £605,505.”

Mr. Mac Gearailt.—This paragraph is for information. I understand that, except for a small sum, the amount due from the United Nations at March, 1972, has since been received. Other claims on the United Nations have of course been made in the meantime.

—There is a constant flow of accounts and remittances from the United Nations. The current sum outstanding is £390,000.

129. Chairman.—On subhead H—Defensive Equipment—there is a note which says that the saving is due to unanticipated delays in the delivery of stores. Were the orders actually placed and finalised?

—Yes.

130. Subhead J—Mechanical Transport— has a similar note. I presume the answer is the same?

—Yes, deliveries which we expected before the end of the financial year did not materialise. Various factors entered into it such as the British coal strike.

131. Deputy Griffin.—On subhead S— Buildings—the amount spent is less than that voted. Would it be carried forward?

—Yes. One of the big things there was the construction of the cadet accommodation in Renmore Barracks, Galway. Progress was not up to anticipation but the work was continued in the following year.

132. Deputy Tunney.—I would like to make a general comment here. A feature of this seems to be the unusual number of cases where there is an explanation for a saving. Would that indicate that you could have estimated more precisely what the amount should be? Invariably it happens in one or two subheads but it seems to have happened in this particular year with unusual frequency.

—It is very difficult to give any simple explanation of what happens but, generally, the best possible estimation is made both at the beginning of the financial year, when the Estimate is prepared, and also at any point where a Supplementary Estimate is taken, as in this case. We are faced with the situation that coming to the very end of the financial year one cannot be sure if material and important stores will be delivered in the last week of March or if they will be delayed for some reason and be delivered in April, which is the sort of thing that happened in a number of these subheads. The reason for the delay could be something like a strike here or in England, a slowing down in production or the energy crisis. Any of these things can have serious consequences on the situation.

133. You could take that as applying to every Department. In these particular cases it would appear your Department had more savings than any other Department?

—The particular type of purchases we make lend themselves to that possibility because a lot of them are not produced in the country and there are many factors that enter into the delay in the delivery of orders.

If that is so should we not estimate more cautiously?

—I suppose we tend to be optimistic. Possibly we are too optimistic.

134. Chairman.—Deputy Tunney raised a point I was going to raise on the total payment in the Vote. There is a saving of over 1 per cent on the Estimate. The total Estimate is about £23 million?

—Yes.

135. Deputy Staunton.—It seems to me, looking at your original Estimates and the Supplementary Estimates that the Supplementary Estimates are very substantial in certain areas. For example, subhead D— Reserve Defence Force—original Estimate £691,000, Supplementary Estimates £324,000; subhead H—Defence Equipment—original Estimate £267,000, Supplementary Estimate £984,000; subhead I—Medicines and Instruments—original Estimate £32,000, Supplementary Estimate, £28,000; subhead J— Mechanical Transport—original Estimate, £255,000, Supplementary Estimate, £307,000; subhead M—Clothing and Equipment— original Estimate £440,000, Supplementary Estimate £177,000; and subhead O.1— General Stores—original Estimate £165,000, Supplementary Estimate, £344,000. How would you explain the fact that the Supplementary Estimates are at such a high level?

—It was a time of major expansion in military equipment, in view of the security situation, under the direction of the Government.

136. Why was provision for this not made in the original Estimate?

—It was an entirely new programme of purchases that was decided on in the course of the year.

Was it in this particular year that the expenditure was incurred?

—Yes, a major part of it was incurred in that year.

Chairman.—The Comptroller and Auditor General informs me that the variations in your Estimates are not very much out of line with those of other Departments having regard to the nature of them.

VOTE 44—ARMY PENSIONS.

Mr. S. Ó Cearnaigh further examined.

137. Deputy Griffin.—On subhead I— MacSwiney (Pension) Acts, 1950 to 1964— could I inquire what that is?

—A pension to the widow of Terence MacSwiney.

138. Deputy H. Gibbons.—On Appropriations-Aid—are you still awarding medals?

—Yes.

How many during the year?

—They are running at the rate of 500 a year.

139. Deputy Griffin.—These are new applicants?

—Yes.

140. Chairman.—How are they substantiated?

—It is becoming more difficult all the time, because very many of the officers of units have died. There are certain records which are a help and we do our best with whatever evidence is available.

141. Deputy H. Gibbons.—It is mostly for electricity and travel rather than for the special allowance?

—Yes.

The witness withdrew.

The Committee adjourned.

* See Appendix 5.