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)

Deardaoin, 30 Bealtaine, 1974

Thursday, 30th May, 1974

The Committee met at 11 a.m.

444. Deputy Griffin.—I move: “That Deputy H. Gibbons take the Chair.”

Deputy MacSharry.—I second that.

Question: “That Deputy H. Gibbons take the Chair”—put and agreed to.

DEPUTY H. GIBBONS took the chair

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

GENERAL REPORT.

Mr. C. H. Murray called and examined.

445. Chairman.—We will deal with the General Report first. Paragraph 1 of the Report of the Comptroller and Auditor General reads:

“Reference was made in paragraph 1 of my previous report to the delay in submission of Appropriation Accounts by Accounting Officers due to the failure of the Office of the Paymaster General to furnish to Departments statements of receipts and payments necessary for the preparation of these accounts. In April 1972 I observed that these statements were currently being furnished approximately nine months in arrear. In reply to my inquiry as to the cause of the delay the Accounting Officer of the Department of Finance informed me that the clearance of payable orders by the Paymaster General had fallen into arrear due to the unsatisfactory performance of machines supplied for the initiation of computerisation in 1968, that these machines had been replaced in January 1972 and that the new machines were operating satisfactorily. He added that arrangements had been made to have the arrears cleared with the help of an outside contractor, that it was hoped that all statements up to March 1972 would have been furnished by mid-July and that from September onwards the statements for each month would be furnished in the following month.

Appropriation Accounts of the Public Services are required by statute to be submitted to me by Accounting Officers not later than 30 November each year. To facilitate their earlier presentation to Dáil Éireann the Department of Finance approved administrative arrangements in 1957 which require the accounts to be submitted to me not later than 31 May. No accounts had been received by me at 31 May, and the following accounts* were outstanding at 30 November 1972—

Mr. Mac Gearailt.—This paragraph draws attention to the delay in the submission of the Appropriation Accounts for the year ended 31st March, 1972. A similar delay occurred in relation to the submission of the 1970-71 accounts and was referred to in the report for that year. The delay was due in the main to computer difficulties which were also experienced but to a somewhat lesser extent in 1972-73.

Deputy Griffin.—Is the position satisfactory now?

—I think it is much more satisfactory than it was. To give an indication of that, the monthly accounts for March, 1972, were not delivered by the Departments until August, 1972. The monthly accounts for March, 1973, the following year, were made available in June, 1973, and the monthly accounts for March, 1974, were made available in April, 1974. We are, therefore, up to date.

446. Deputy Tunney.—The machines in question, were they on hire or were they purchased?

—They were on hire.

447. Deputy Tunney.—There was no loss on replacing the machines?

—No.

448. Chairman.—Paragraph 2 of the Report of the Comptroller and Auditor General reads:

“*Outturn of the Year

The audited accounts are summarised on page xlvi. The amount to be surrendered as shown in the summary is £6,388,004, arrived at as follows:—

This represents 1.2 per cent. of the supply grants, as compared with 1.3 per cent. in the previous year.

Mr. Mac Gearailt.—This is the usual paragraph giving the overall outturn of the Appropriation Accounts for the year and is included for the information of the Committee.

449. Chairman.—Paragraph 3 of the Report of the Comptroller and Auditor General reads:

“Excess Vote

An excess vote will be required in the case of Vote 24—Land Registry and Registry of Deeds. Expenditure in excess of the provision made by the Oireachtas amounted to £7,664. (See also paragraph 34 of this report).”

Mr. Mac Gearailt.—This paragraph draws attention to the fact that the provision made by Dáil Éireann under the Vote for Land Registry was overspent. The circumstances in which this occurred are set forth in paragraph 34 and the matter was dealt with by the Committee when the Accounting Officer for the Department of Justice group of Votes was under examination.

Deputy Governey.—There is an amount in excess in relation to the Land Registry. This may not be the proper place to raise this matter. There seems to be some difficulty in the Land Registry in getting replies to queries about the transfer of deeds. I wonder is there understanding in the Land Registry Office? What is the position there?

Chairman.—There will be a report to the Dáil on this. It is the Department of Justice.

450. Paragraph 4 of the Report of the Comptroller and Auditor General reads:

“Exchequer Extra Receipts

Extra receipts payable to the Exchequer as recorded in the Appropriation Accounts amounted to £3,630,562.”

Paragraph 5 of the Report of the Comptroller and Auditor General reads:

“Surrender of Balances on 1970-71 Votes

The balances due to be surrendered out of votes for the public services for 1970-71 amounted to £5,872,822. I hereby certify that these balances have been duly surrendered.”

Paragraph 6 of the Report of the Comptroller and Auditor General reads:

“Stock and Store Accounts

The stock and store accounts of the Departments have been examined with satisfactory results.”

Mr. Mac Gearailt.—These are usual paragraphs included for the information of the Committee.

451. Paragraph 7 of the Report of the Comptroller and Auditor General reads:

“Breach of Accounting Principles

The breach of long-established principles of Government accounting, in some cases with the approval of the Department of Finance, is revealed in a number of paragraphs in this report. Paragraphs 52, 53, 58 and 67 draw attention to the issue of moneys for purposes other than those for which the moneys were voted by Dáil Éireann. Paragraphs 41 and 53 draw attention to disbursements which, while they did not represent matured liabilities in the year under review, were nevertheless charged in that year.

Moneys voted by Dáil Éireann for specific purposes as defined in the vote subheads may be properly spent on those purposes only, subject to the power of virement vested in the Minister for Finance. With the exception of grants-in-aid, moneys may be charged in a year only to the extent that they have in fact been properly expended before the end of that year; moneys issued in the form of grants to be spent later cannot be regarded as having been so expended. These principles are fundamental to parliamentary control over the expenditure of voted moneys and their breach cannot but undermine such control.”

Mr. Mac Gearailt.—Breaches of government accounting principles have been brought to notice in recent reports on Appropriation Accounts and have been criticised by the Public Accounts Committee. In the year under review further breaches came to light and each case will fall to be considered as a separate issue when the Accounting Officer responsible is being examined by the Committee. In view of the responsibility of the Department of Finance as the central financial authority for the public service, attention is drawn in this paragraph to the overall position as revealed by these breaches. Three of the transactions involved had the prior approval of that Department.

Chairman.—Any comments?

—I should like to make a comment, if I may. Perhaps I should start off by making it clear, lest there be any doubt on this point, that the Department of Finance fully subscribe to the accounting principles laid down in the second part of this paragraph. The first part of the paragraph states that long established principles of Government accounting were breached in some cases with the approval of the Department of Finance. I take it that the paragraph references in the first part of paragraph 7 are intended to indicate the cases where such breaches arose. As far as my information goes, in only one of the cases cited, paragraph 67 relating to Gaeltarra’ Éireann, was the Department of Finance directly involved. I propose, with your permission, to comment on Gaeltarra Éireann when we come to consider paragraph 67. Leaving aside that paragraph, my information is that in all the other cases cited in the first part of paragraph 7 the matter at issue was primarily one for the Accounting Officer of the Department concerned. My information is that the Department of Finance were not involved directly or indirectly with the alleged breach of Government accounting. This does not mean, of course, that in so far as there was a breach—and this is primarily a matter for the Accounting Officers concerned—we would condone any such breach. My information is that the breach did not take place with the approval, or arise from any direction given by the Department of Finance, with the one exception of paragraph 67 to which I have already referred.

Mr. Mac Gearailt.—My information is that there were three paragraphs, two on the Department of Education. Paragraph 52 deals with the use of capitation funds for industrial schools for reconstruction purposes. In the case of paragraph 53 while Finance sanction did not specifically say out of what subhead the grant of £15,000 should be made, nevertheless it said that the moneys could be used for a course in child care provided there were savings on the Vote.

452. Chairman.—We asked for a report on the problem in the Department of the Gaeltacht. I also recall that on other occasions we debated the question of programme budgeting in relation to this problem. Again the Department of Education suggested that they were using this exercise in programme budgeting to some extent. Can you take us any further on this question?

—You are referring now to Gaeltarra Éireann and Roinn na Gaeltachta?

Yes, but I think the same thing arose in Education also.

Mr. Mac Gearailt.—Programme budgeting arose on Education but not on Roinn na Gaeltachta.

Chairman.—I think there was some confusion as to where the different Accounting Officers stood.

—I am not aware of any such confusion and I should prefer, with your permission, to defer commenting on Gaeltarra Éireann until we reach paragraph 67. I should like to repeat what I have already said, that whatever sanctions we may have issued in regard to expenditure relating to the Department of Education did not, in our view, give any authority to the Department of Education to charge a particular expenditure to what I might call in shorthand an improper subhead. We were not involved in any way, directly or indirectly, with the charging in 1971-72 of expenditure that, in the view of the Comptroller and Auditor General, had not fully matured in 1971-72. If the Comptroller and Auditor General thinks otherwise, I would be glad and willing to consider the grounds on which he bases these views and I would submit a report to this committee at a later date when I have considered the basis on which he considers we were in any way a party to a breach of accounting principles on the part of the Department of Education. It is quite clear that the paragraphs cited in the first part of paragraph 7 relate only to two Departments. One is the Department of Education and the other is Roinn na Gaeltachta. I shall deal with Roinn na Gaeltachta and Gaeltarra Éireann when we come to paragraph 67. Taking the other examples cited in paragraph 7, these relate entirely to the Department of Education. As I have said already, and it is important to emphasise it, we were not in any way involved, directly or indirectly, in the alleged breach of accounting practices on the part of the Department. I suggest that the prime responsibility in this matter rests with the Department of Education. I am not denying we have not got a parallel interest and concern, but in so far as there is a breach, the question of establishing that breach, or of commenting on it, is a matter for the Department of Education. If the Committee wish to pursue this matter with me, I suggest that the best procedure would be to take up the matter in the first place with the Department of Education, to hear what the Accounting Officer has to say on it and, if necessary, to ask me to come back before the Committee or to furnish a written note.

453. When we dealt with Roinn na Gaeltachta I cannot remember this matter arising or when we were dealing with Education. I suggest there might be a note from Finance covering the question of programme budgeting. I understand that, with the permission of the Department of Finance, you can change money from one subhead to another. Is this correct?

—Broadly speaking, yes.

But you cannot do so from one Vote to another? Is this so?

—You cannot transfer money from one Vote to another.

454. I made the point that the exercise of changing from one Vote to another would be acceptable to me under the heading of programme budgeting if the Department of Finance so approved. I also said I did not understand programme budgeting and I suggested we get a note from Finance. Programme budgeting can mean very little unless the Accounting Officer has some power to do this.

—With respect, I am not sure if the issue we are considering in paragraph 7 is directly affected by programme budgeting. The more satisfactory way to proceed would be to give the Committee a note on programme budgeting and on the extent, if any, to which it is likely to give rise to the kind of issues dealt with in paragraph 7. I will content myself by saying at the moment that I doubt very much that programme budgeting is likely to be relevant to the issues we are discussing in paragraph 7, except in very exceptional cases. If you will accept my suggestion, we could best consider this again when you have a note from us on programme budgeting.*

That would meet the situation.

Mr. Mac Gearailt.—I am sorry I must disagree with the Accounting Officer. I have here a copy of a letter from the Department of Finance to the Department of Education which refers to the payment of grants to Industrial Schools from Subhead B Vote 31 towards the cost of improvements to the premises undertaken by the authorities of the school. It states:

“In reply I am to say that the Minister for Finance agrees that within the limit of the provision available in the subhead, the Minister for Education should have discretion to make grants from Subhead B of Vote 31 towards expenditure incurred by the authorities of Industrial Schools for the purpose of work of adaptation and reconstruction of the premises.…”

Here we have money voted for capitation grants being used for reconstruction purposes. This letter conveyed the agreement of the Minister for Finance—it deals with paragraph 52.

—May I ask the date of the letter and file reference?

Mr. Mac Gearailt.—It is dated 18th January, 1972, reference S 18/19/67 and S 68/1/70.

—I am in a slight difficulty in that we were not consulted, nor am I saying we should have been consulted, in connection with the drafting of this particular paragraph and we were not in a position to give our views on it. The information I have is somewhat at variance with that given by the Comptroller and Auditor General. There is a further factor and perhaps I should make the point clear at the outset. The prime responsibility regarding the appropriateness of charging a particular item of expenditure to one subhead rather than to another rests with the Department in question and it is only in exceptional cases that this issue comes before the Department of Finance or that that Department are involved in giving a decision on the matter. Equally, the prime responsibility in relation to the charging of expenditure to any particular year, as distinct from another year, rests with the Department responsible for the expenditure. I suggest, if I may, that the proper course for this Committee is to hear the views of the Accounting Officer of the Department of Education on this matter and in the light of that to consider whether you wish me to come back to you again or submit a further note. I think that any other procedure which would involve me in comment in the matter at this stage might well be prejudicial to the position of the Accounting Officer of the Department of Education. I hope that what I have said in no way suggests that I do not want to be helpful to this committee or that I have any reservations about the correctness of the accounting principles and indeed their importance.

Chairman.—What do the members think about this?

455. Deputy Tunney.—It is difficult for the members to try to advance themselves to the point where they could comment on this at the same level as the Secretary of the Department of Finance or the Comptroller and Auditor General, just on a cursory viewing here. In relation to paragraph 7 I am trying to familiarise myself with the meaning of the words “matured liabilities”. The Comptroller talks about “matured expenditure”. Liabilities are of a different kind apparently.

Mr. Mac Gearailt.—Matured liabilities represent claims on hand in respect of goods received or services rendered. The claims are in order for payment but have not been paid at the close of the year of account. In other words, you are not paying in advance for something that has not been obtained.

456. In this case it would represent to you something that was paid for before it was delivered?

Mr. Mac Gearailt.—It was a payment in advance which, strictly speaking, should not have been made.

457. In respect of the actual work in question on the industrial school, there is a capitation grant per head of students and money that normally is voted to that subhead was used for reconstruction work. On a first viewing it would seem rather difficult to accept that both of those expenditures were related to the one thing. What is the danger the Comptroller and Auditor General sees in this particular exercise?

Mr. Mac Gearailt.—Our attitude is that if money is voted for a particular purpose it should be spent for that purpose, or something very close to it, but we would not regard capitation moneys as moneys which should be spent on reconstruction purposes.

458. Was it not said earlier that any Accounting Officer could with the permission of the Department of Finance, transfer moneys from one subhead to another?

Mr. Mac Gearailt.—I think what the Deputy has in mind is the accepted practice known as virement—of offsetting excess expenditure on Vote subheads by savings on other subheads of the same Vote. Virement is approved after the close of the year.

459. In this case that was not done?

Mr. Mac Gearailt.—What was done was that sanction was given by the Department of Finance during the year for the charging of construction expenditure to subhead B although that subhead provides for capitation grants only and notwithstanding that the Vote included a specific subhead (Subhead F) for construction expenditure. This type of sanction is irregular in my opinion and contravenes Dáil Éireann approval of the Estimate.

—My understanding is while the Accounting Officer of the Department of Education has been before you that his examination has not been concluded and his examination has not reached paragraph 52, to which Deputy Tunney is referring. These are matters which, as I said, are not alone his prime responsibility but where he has more expert knowledge on the subject than I have.

Deputy Griffin.—I suggest we refer this point back to the Accounting Officer of the Department of Education and ask him to give us an explanation as to the circumstances in which this money was given from one subhead to another. Would that be in order?

Deputy Tunney.—Earlier on the Comptroller and Auditor General said that this permission was given in advance. Surely that is when the permission should be given?

Mr. Mac Gearailt.—Our contention is that moneys voted for capitation grants should not be used for reconstruction purposes particularly as there was a capital subhead in the Vote.

460. Deputy Tunney.—Then you are, apart from taking issue with the Department of Education, taking issue with the Department of Finance on their right to give this permission.

Mr. Mac Gearailt.—Yes.

Deputy Tunney.—I did not know that.

Mr. Mac Gearailt.—There is merit in what the Accounting Officer says. We have not had an opportunity of discussing this with the Department of Education Accounting Officer. You will note in the particular paragraph we are talking about he makes a plea that the capitation grant contains an element for this adaptation work. In fairness to him he should be heard on that.

Chairman.—The Accounting Officer of the Department of Education should be heard?

Mr. Mac Gearailt.—Yes.

Chairman.—I understand we decided the Department of Education would come back on this. Is it suggested that the Accounting Officer of the Department of Finance come back to us subsequently?

Deputy Griffin.—If necessary.

Deputy Tunney.—It would be necessary. Obviously the Accounting Officer in the Department of Education was able to convince the Department of Finance that what he was doing was correct so we would have to get the two sides.

Mr. Mac Gearailt.—I think the Accounting Officer wanted to make a comment on the Roinn na Gaeltachta paragraph because the Accounting Officer in that case has already been heard.

461. Chairman.—Yes. We would like a comment on that.

—In regard to paragraph 67 my Department’s involvement was limited to sanctioning the issue of £275,000 in respect of the repayable advances for certain capital expenditure by Gaeltarra Éireann. This capital expenditure covered the erection of factories, the taking up of share capital in associated companies and the expenditure on Gaeltarra’s own capital activities. Unfortunately, and regrettably, my Department, in approving this issue, authorised the issue of £275,000 from subhead H.2, that is the Grant-in-Aid subhead, which is intended to finance the expenditure by Gaeltarra on industrial grants. The approval should not have issued in that form. What we should have approved was the issue of £275,000 as a non-voted repayable advance. The error was due to the fact that the officer dealing with this matter had only recently been assigned to the work. I understand, however, that despite this error, Grant-in-Aid moneys were not issued from the Vote for Roinn na Gaeltachta in the year in question for purposes other than those for which they were voted. In other words, the incorrect form of expenditure approval did not, in fact, affect the way in which the money was spent and did not result in any misuse of public moneys. I can, however, very readily understand that this matter has given rise to confusion and misunderstanding and, in so far as it arose from a mistake made in my Department, I should like to apologise not only to the Comptroller and Auditor General but also to the Public Accounts Committee.

Chairman.—The Accounting Officer for Roinn na Gaeltachta gave a somewhat similar explanation. This explanation is pretty full and I thank you for it.

462. Deputy Tunney.—Did this take place after Gaeltarra Éireann had got permission to raise the upper limit from £2 million to £6 million under the Gaeltacht Industries (Amendment) Act, 1971 or was it before it?

—I could not answer that at the moment but, if I might say so, I do not think the answer to the question would affect what I have said because the repayable advances sought, and in effect made, were within the ceiling for authorised repayable advances under the legislation.

463. The money was issued from the Grant-in-Aid subhead?

—In fact, yes, but as I have said, it was intended to be used as a repayable advance and we authorised the expenditure of £275,000 in error as an issue from the Grant-in-Aid subhead.

464. Chairman.—It was not, in fact, spent?

—This is what Roinn na Gaeltachta say and I have no reason to doubt it.

Mr. Mac Gearailt.—Our problem was that we had to depend on the papers available in Roinn na Gaeltachta and, as I said already, Gaeltarra Éireann on this occasion asked for advances specifically for advance purposes. There was no indication in the files we saw that this was Grant-in-Aid money. At the end of the financial year, at the end of March, they had overspent the advance money and underspent the grant money. While the Accounting Officer suggested that they might have met the overspending of advances from bank borrowing, in fact they did not borrow from the bank. This was our difficulty. We had no indication on the file that this was Grant-in-Aid money and only to be used as Grant-in-Aid money.

—Could I just make my Department’s position clear again? The reason I attach importance to this is that it is linked with paragraph 7 where they talk about breaches of accounting principles. Our function was the approval of expenditure and, in fact, the form in which we approved this did breach accounting principles. This was a mistake and, as I said, I apologise to the Committee for it. The rest of the matter is between the Committee and the Department of the Gaeltacht.

465. Chairman.—It is a bit clearer now. The explanation is clear. Paragraphs 8 and 9 of the Report of the Comptroller and Auditor General read:

“Statement of Receipts into the Central Fund for the Year ended 31 March, 1972

Statement of Issues from the Central Fund for the Year ended 31 March 1972

In addition to those shown in the previous paragraph, issues were made from the Capital Fund as follows:—

Mr. Mac Gearailt.—These paragraphs are included for the information of the Committee. They do not call for any further comment by me.

466. Chairman.—Paragraph 10 of the Report of the Comptroller and Auditor General reads:

“Issues under the Taiscí Stáit Teoranta Act, 1963

As shown in the Central Fund Statement in paragraph 8, issues under the Taiscí Stáit Teoranta Act, 1963, amounted to £1,604,200 in the year 1971-72. In the course of my audit of the company’s accounts for that year I noted that the total amount of advances made from the Central Fund and not repaid amounted at 28 September, 1971 to £7,487,976. The statutory limit laid down by section 14 of the Act for such advances was £7.5 million. To enable Taiscí Stáit Teoranta to meet its commitments from October, 1971 onwards it was arranged, with the agreement of the Minister for Finance, that the Industrial Credit Company Ltd. would provide bridging moneys. £962,326 was provided on this basis up to 31 March, 1972, bringing the total borrowings which had not been repaid at that date to £8,450,302. Section 13 of the Act per-permitted Taiscí Stáit to borrow other than from the Central Fund, but within a limit of £7.5 million on aggregate borrowings which had not been repaid. This statutory limit was therefore exceeded by £950,302. I referred to this matter in my report on the company’s accounts which have been presented to the Oireachtas and I communicated with the Accounting Officer of the Department of Finance. He has informed me that the arrangement for the provision of moneys by the Industrial Credit Company Ltd. became necessary because of the delay in the enactment of legislation for the establishment of Fóir Teoranta. This company, incorporated on 28 March, 1972, has since taken over the assets, liabilities and other commitments of Taiscí Stáit Teoranta which has been dissolved, and the moneys borrowed from the Industrial Credit Company Ltd. have been repaid in 1972-73 by the new company. As a breach of the 1963 Act occurred because of an arrangement by the Department of Finance in relation to the financing of a State-sponsored company I have deemed it desirable to bring the matter to attention.”

Mr. Mac Gearailt.—Paragraph 10 draws attention to the fact that Taiscí Stáit Teoranta was in breach of the Taiscí Stáit Teoranta Act, 1963, in the year under review as the company had exceeded the limit on its borrowings laid down by the Act.

—Mr. Chairman, could I make a statement? At the end of paragraph 10 it is stated that a breach of the 1963 Act occurred because of an arrangement by the Department of Finance in relation to the financing of a State-sponsored company. I think it is desirable to mention a few factors which are not fully brought out in paragraphs 10 and 11. This problem arose from a delay in the enactment of the Fóir Teoranta legislation which was intended to establish Fóir Teoranta as a new body with new borrowing limits to replace Taiscí Stáit. The Bill to establish Fóir Teoranta was introduced and circulated in October, 1970, that is, 12 months before the breach referred to by the Comptroller and Auditor General which took place in October, 1971. On a number of occasions well before October, 1971, I drew attention to the desirability and, indeed, the urgency of having the legislation enacted in good time. I checked my records on this and I found that, apart from oral representations on this point, I made a written submission about it on 13th May, 1971, at a time when the unissued borrowing powers of Taiscí Stáit amounted to £1.6 million. I made a further written submission on 15th July, 1971, when the unissued borrowing power of Taiscí was £1 million and when there was very little prospect of having the legislation enacted before the Summer Recess. The date of that representation was 15th July, 1971. On that occasion the then Minister decided that we would have no option but to make the best ad hoc arrangements possible with the Industrial Credit Company if payment to Taiscí Stáit exceeded the statutory limit of £7½ million. On that occasion the Minister also accepted that the legislation would have to be given top priority in the autumn of 1971. In the event, the Fóir Teoranta Bill was not enacted until January, 1972, and in October, 1971, as stated in these paragraphs, it was found necessary, with the approval of the then Minister, to make the ad hoc financial arrangements with the Industrial Credit Company for the financing of Taiscí Stáit. If the amending legislation had been passed within even 12 months of its introduction, there would have been no need to have had temporary recourse to the Industrial Credit Company. I would submit, Mr. Chairman, that my Department had taken the necessary steps to ensure that the Bill was ready in good time. My Department, of course had no function regarding the timing of the enactment of the legislation. If no funds had been issued to Taiscí Stáit between October, 1971 when its statutory borrowing limit was reached and early in 1972, the company would have been unable to deal with a number of urgent applications for financial assistance. It is as well to bear in mind the functions of Taiscí Stáit. Almost by definition it was only companies which were in acute financial difficulty which sought its assistance. No other source of finance was available. There was a grave danger that in the absence of Taiscí assistance the concerns in question would have run into substantial financial difficulties and employment might well have been imperilled. It was in these circumstances that the then Minister decided that the risk of cutting off Taiscí’s supply of funds could not be taken and that temporary ad hoc measures would have to be taken until the legislation was enacted. As the Comptroller and Auditor General brings out in paragraphs 10 and 11 the matter was brought specifically to the notice of the Oireachtas during the passage of the amending legislation. It was also, of course, mentioned in the report and accounts of Taiscí Stáit for the year in question, both by the directors and the Comptroller and Auditor General who audited the accounts. I hope that statement will have placed this matter in context.

Chairman.—It is full and clear.

467. Deputy Tunney.—The Comptroller and Auditor General talks about undermining the control exercised by Dáil Éireann. Could the Accounting Officer tell me, apart from the fact that the Minister mentioned this in the Dáil, if there was any other manner in which he could have made known his financial plight to the Dáil and looked for ad hoc permission from the Dáil in respect of his predicament?

—There was only one theoretical way in which that could be done and that was to have introduced a Bill amending the Taiscí Stáit legislation by increasing the upper limit on its borrowing powers. But the Minister took the view that if there was a problem in getting through the Dáil legislation which had been introduced 12 months before, which was drafted and circulated, then the problem of drafting legislation to amend the Taiscí Act, to introduce it and have it enacted, was an even greater problem.

468. Chairman.—Paragraph 11 of the Report of the Comptroller and Auditor General reads:

“The arrangement for the provision of the bridging moneys referred to in the previous paragraph provided, inter alia. that:

‘Industrial Credit will initially finance the transactions from its own resources. When it becomes necessary for Industrial Credit to draw down Exchequer advances—other than advances for Shipping Finance Corporation—these advances will be earmarked in the first instance to finance the bridging facilities. Exchequer advances provided to finance the bridging facilities will be regarded as outside the Capital Budget provision for Industrial Credit.’

While there was a statutory limit to the amount of advances from the Central Fund which might have been made to Taiscí Stáit Teoranta there is no statutory limit to the amount of such advances which may be made to the Industrial Credit Company Ltd. The arrangement therefore enabled a company, which had exhausted its Central Fund borrowing powers, to receive further moneys indirectly from the Fund. As such an arrangement undermines the control exercised by Dáil Éireann over advances from the Central Fund, I sought an explanation from the Accounting Officer. He informed me that the arrangement under which the Industrial Credit Company Ltd. provided temporary finance to enable Taiscí Stáit Teoranta to continue its operations was entered into in October 1971 when it became clear that Fóir Teoranta could not be established in sufficient time to meet urgent Taiscí Stáit commitments which Taiscí of itself could not honour as it had no funds and had virtually reached the statutory limit of £7.5 million on its aggregate borrowings. He also informed me that the facilities provided by the Industrial Credit Company Ltd. under the arrangement were at the express request of and in respect of propositions approved by Taiscí Stáit and were in the form of bridging finance pending the establishment of Fóir Teoranta, and that legislation to extend the limit on aggregate borrowing by Taiscí Stáit was not introduced because the Fóir Teoranta Bill was already before Dáil Eireann. He further informed me that, in the course of the discussion in both Houses of the Oireachtas on the Fóir Teoranta legislation, the Minister for Finance referred to the fact that Taiscí Stáit had entered into commitments in excess of its statutory borrowing limit and made it clear that the financial provision for Fóir Teoranta included an element to fund commitments undertaken by Taiscí Stáit.

As the reply of the Accounting Officer made no reference to the fact that the arrangement referred to above undermined the control exercised by Dáil Éireann over advances from the Central Fund I have sought his further observations.”

Mr. Mac Gearailt.—The breach of the 1963 Act referred to in paragraph 10 was facilitated by an arrangement made with the Industrial Credit Company Limited whereby Taiscí Stáit, which had virtually reached the statutory limit on its borrowings and could not therefore borrow further moneys directly from the Central Fund, could be put in funds indirectly from that fund by borrowing from the Credit Company.

469. Chairman.—Paragraph 12 of the Report of the Comptroller and Auditor General reads:

“Issues under the Industrial Credit Acts, 1933-1971

At 31 March 1971 repayable advances from the Central Fund to the Industrial Credit Company Ltd. for the general purposes of the Company totalled £7.4 million. No terms as to the repayment of these advances had been fixed but interest on them was paid by the Company. The Minister for Finance made arrangements for the repayment by the Company of £6.7 million of these advances to the Central Fund on the 30 April 1971. On the same day an advance of a like amount was made from the Fund to the Company subject to repayment by way of an annuity over a period of 15 years commencing on 1 May 1976. All other advances made to the Company will fall to be repaid by way of annuity over a period of not more than 13 years commencing with effect from a date not earlier than two years after the date of making the advance in each case.

It was agreed between the Minister for Finance and the Industrial Credit Company Ltd. that the conditions as to interest on advances would stipulate that the amount of interest payable by the Company to the Exchequer could be adjusted up or down according as the Company experienced gain or loss, arising from any change in currency parity rates, in making repayments of capital or payments of interest on any loan in foreign currency obtained from the International Bank for Reconstruction and Development. This implies that the Company is being indemnified by the Central Fund in respect of any losses which may be incurred on the repayment of these foreign currency loans and that the Central Fund will benefit from any gains which may arise from such repayment.”

Mr. Mac Gearailt.—This paragraph draws attention to special terms arranged in the case of the Industrial Credit Company Limited in relation to interest payments to be made by the company on advances borrowed by it from the Central Fund.

470. Chairman.—Paragraph 13 of the Report of the Comptroller and Auditor General reads:

“Issues under the British and Irish Steam Packet Company Limited (Acquisition) Acts, 1965 and 1971

In July 1971, in pursuance of an arrangement with the Department of Finance, the British and Irish Steam Packet Company Ltd. paid into the Exchequer by way of loan, a sum of £2,893,699, being the net sterling equivalent of a loan of DM.26,000,000 raised by the Company from a German bank. The arrangement also provided that the money would be used to enable the Minister for Finance to take up shares in the Company to help finance its capital investment programme. The Company’s loan from the bank is repayable in ten annual instalments commencing in 1977 and interest was fixed at 8.5 per cent per annum. The Minister’s loan from the Company is repayable over the same period but the interest rate has been fixed at 9.67 per cent to reimburse the Company the cost of raising its loan.

The British and Irish Steam Packet Company Limited (Acquisition) (Amendment) Act, 1971, enabled the Minister for Finance to purchase, in addition to the shares in the Company already held by him, not more than three million ordinary £1 shares. As indicated in the Statement of Issues from the Central Fund £1,320,000 was paid to the Company to meet a call of 44p per share on the three million additional shares purchased by the Minister. Further calls amounting to £1,500,000 had been met by the Minister by October 1972.”

Mr. Mac Gearailt.—The amount of the loan paid in to the Exchequer, £2,893,699, was the gross amount of the loan raised by the B and I Company less costs, transfer fees and legal expenses and it is being used by the Minister for Finance to take up further shares in the company. As indicated in the statement of issues from the Central Fund (paragraph 8) £1,320,000 was so used in the year under review.

471. Chairman.—Paragraph 14 of the Report of the Comptroller and Auditor General reads:

“Loan Agreement with the International Bank for Reconstruction and Development

Under the terms of an agreement concluded in August 1971, a loan of U.S. $13 million was made available to Ireland by the International Bank for Reconstruction and Development to finance an educational development project to be supervised by the Department of Education. The loan from the Bank is intended to finance the foreign content, estimated at 40 per cent., of the works and services in the project. These comprise mainly the construction, furnishing and equipping of six State and eighteen Community Comprehensive Secondary Schools, one Secondary-Technical School, one Regional Technical College, one College of Commerce and thirty Agriculture Education Centres. Repayment of the loan will commence in 1977, interest being charged at the rate of 7¼ per cent. per annum on principal withdrawn and outstanding. A commitment charge at the rate of three-fourths of 1 per cent. per annum is made on the amount of the loan not used from time to time. The loan facility was not used in the year under review and a sum of £10,296 was paid from the Exchequer in respect of the commitment charge on the full loan for the period 8 October 1971 to 15 January 1972. (See also paragraphs 48 and 51). An amount of £172,792 on account of the loan was received in the period 1 April 1972 to 30 November 1972 and included as Other Borrowings in the Exchequer account.”

Mr. Mac Gearailt.—This paragraph is for the information of the Committee. I have no comment to make.

VOTE 1—PRESIDENT’S ESTABLISHMENT.

Mr. C. H. Murray called.

No question.

VOTE 2—HOUSES OF THE OIREACHTAS.

Mr. C. H. Murray further examined.

472. Deputy Tunney.—On the first four subheads I note that the amount claimed was less than granted.

—Yes.

473. On subhead I.—Allowances for Former Members of the Houses of the Oireachtas—is this where we show compassion and sympathy to former Members?

—These are ex-gratia payments to former Members who do not qualify for pensions under the Ciste Pinsin.

474. Are there any discretions allowed in respect of those ex-gratia payments?

—Yes. They come within a framework set out in the Superannuations and Pensions Act, 1963. Certain conditions have to be satisfied. Of course, as I emphasised, the people involved do not qualify for payments under the Ciste Pinsin.

475. I heard of a former Member of this House who at the present time is barely surviving. I thought that if such information were brought to the notice of the responsible officer here he might carry out his duties with maximum sympathy. After all, there would not be many people involved.

—I am advised that these pensions are awarded after examination of applications by a Committee of the Houses of the Oireachtas. I am sure that either my Department or the officers of the Dáil would be glad to inform the Deputy of the position.

476. Chairman.—On subhead K—Witnesses’ Expenses—what does this cover?

—In principle this is intended to cover cases where during the operation of Dáil Committees, such as this Committee for example, it is found necessary to call witnesses and to pay their expenses. As you can see, the provision is a token one.

VOTE 3—DEPARTMENT OF THE TAOISEACH.

Mr. C. H. Murray further examined.

477. Chairman.—Paragraph 15 of the Report of the Comptroller and Auditor General reads:

“Subhead D.—Information and Public Relations Services

In November 1971 an agreement was concluded between the Department of the Taoiseach and an international agency on the provision of public relations services to the Government. Sums totalling £19,282 in respect of fees and expenses paid to the agency were charged to the subhead in the year under review.”

Mr. Mac Gearailt.—This paragraph is for information. I have no further comment to make.

478. Chairman.—On subhead D—Information and Public Relations Services—does this heading cover something different from the Government Information Bureau?

—This relates to the matter dealt with in paragraph 15 of the Report of the Comptroller and Auditor General.

479. Deputy Griffin.—Is this agency still in operation?

—No, that contract has been terminated.

VOTE 4—CENTRAL STATISTICS OFFICE.

Mr. C. H. Murray called.

No question.

VOTE 6—OFFICE OF THE MINISTER FOR FINANCE.

Mr. C. H. Murray further examined.

480. Chairman.—Paragraph 16 of the Report of the Comptroller and Auditor General reads:

“Subhead L.—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 are issued to assist economic projects in western counties. A further £350,000 was provided in the year. The account of the Fund, which is normally appended to the appropriation account, had not been received at the date of my report.*

Mr. Mac Gearailt.—The account of the Development Fund for the year is appended to the Appropriation Account, pages 13-15.

481. Chairman.—On subhead D—Management of Government Stocks—what does this subhead cover?

—This covers all payments made by my Department in connection with Government stocks. This term covers investments and borrowings ranging from national loans to prize bonds and savings certificates.

482. Is it confined to the Bank of Ireland?

—No, it is not. For example the payments in respect of saving certificates would be made to the Department of Posts and Telegraphs. In the last few years in regard to other forms of borrowing there has been a deliberate trend to transfer the management of the registers of Government securities from the Bank of Ireland to the Central Bank. This process will be completed in full very shortly.

483. Will there still be a subhead D?

—Yes, there will be a payment for this service.

484. On subhead K—Grants for County Development Work—what does this cover?

—This is mainly certain administrative expenses arising out of the operation of the county development team system. The secretaries of county development teams are officers of my Department and their salaries are covered by subhead A. However, there are expenses attached to the operation of the system, such as travelling, subsistence and other expenses of the members and officials of the teams, and they are covered under this subhead. There are other types of expenditure, but broadly it is the non-remuneration costs of running the county development team system.

485. Deputy Tunney.—In the note referring to subhead N—Science and Technology (Grant-in-Aid)—there is mention of the difficulty of recruiting liaison officers for the promotion of university/industry cooperation in science and technology. Does that mean that establishments such as Kevin Street were not consulted?

—I am not quite sure of all the details. I know the broad outline of the scheme; what was intended here was to establish a bridgehead between research in universities and third level education on the one hand and industry on the other to ensure that the needs of industry were known and that the results of research in third level centres could be applied to better effect.

I would be happy if I thought consultations had taken place with Kevin Street. I should not like to think they were excluded because they were always the leaders in this field as against the universities.

—Perhaps I might be permitted to submit a note on this matter. I am not too sure of all the facts.*

486. Chairman.—On the Special Regional Development Fund Account, is this fund still under the Department of Finance?

—Yes.

487. Has the position improved in relation to the outstanding repayable advances? Has this matter been concluded yet?

—The first note relates to a particular point of time, which is now over two years ago. There have been changes since then. For example, in regard to note No. 2 in a number of cases the security arrangements have been completed. As regards note No. 1 it is now clear we will get no money in some cases and in a number of other cases we have got some money from the receiver. I suggest, since this position changes from time to time, from year to year, that it might be more satisfactory to get a report on the position as it was 12 months later, in other words, when you come to deal with the 1972-73 Appropriation Accounts.

488. In regard to repayable advances for which security arrangements had not been completed does this imply that the money was advanced before they were completed?

—Yes. I would like to explain the circumstances in which this is done. By and large, these are what I call rescue type operations and, very often, if the rescue is to be effective it is necessary that the assistance be given before legal formalities are completed. We try to reduce this type of case to a minimum but it is not completely avoidable.

489. Deputy Tunney.—On Repayable Advances Outstanding—there is a sum of £87,500 against Gael Linn?

—I think when you come to look at the Appropriation Accounts 1972-73 you will find that we have a note on that. That has since been converted into a grant.

490. Deputy Governey.—Does it mean that these repayable advances outstanding were overdue?

—No.

491. Deputy Griffin.—Approximately what percentage of repayable advances were recouped eventually?

—I would prefer to give you a note on that because in fact a single figure could be misleading. There might either be no precise terms for repayment or there might be a schedule of repayments. I think you are primarily interested in what extent any of these repayable advances are not likely to be repaid. We will try to give you a note on that.*

VOTE 9—STATE LABORATORY.

Mr. C. H. Murray further examined.

492. Chairman.—On the Explanation of the Causes of Variations between Expenditure and Grant—it is stated that the saving in subhead A was mainly due to unfilled posts. I suppose there are always unfilled posts in these places?

—Yes. I think this is an office which has suffered from an outward movement of staff. There has been a flux.

493. Deputy Griffin.—Has that outward flux in any way lessened the effectiveness of the State Laboratory?

—I am not aware of any complaints from the users.

494. Chairman.—Are those the people who deal with the breathalyser?

—I could not say. I know they do a lot of work for the Revenue Commissioners and the Department of Agriculture and Fisheries. I do not think they are involved in the breathalyser.

VOTE 10—CIVIL SERVICE COMMISSION.

Mr. C. H. Murray further examined.

495. Chairman.—On the Appropriations-in-Aid, Receipts from the Department of Posts and Telegraphs—is this for conducting interviews and examinations?

—Yes, by and large, the Department of Posts and Telegraphs, in their relations with other Departments, operate on a commercial basis. They charge other Departments for services rendered by them and you will notice in virtually every Vote a subhead for post office services. The other side of that coin is that the Department are charged by other Departments and offices for services rendered to them. In this case the Civil Service Commission get payment in respect of examinations conducted by them in respect of post office personnel.

496. Do the Civil Service Commission not get payment from any other Department?

—No.

497. Deputy Griffin.—Why do they not get it from other Departments?

—If I might explain this. The procedure in regard to Posts and Telegraphs is an attempt to show what is the result of operating the postal-telegraph service on a commercial basis. It pays for services given to it and it gets payment for services it renders within the public service. The nearest we go to indicating a somewhat similar position in regard to other Departments is where we indicate in respect of these Estimates the cost of what we call allied services. In other words, in respect of each Department there is attached at the back of the Estimate an indication of the cost incurred by the public service on functions relating to that particular Department.

498. Chairman.—As I understand it, payment by the Departments to the Department of Posts and Telegraphs is based on an estimate. Is this an exact figure—payment the other way?

—I would say that the actual payment would be as exact as any such payment could be. Of course, the grant would be an estimate, but the expenditure would be intended to be a very close approximation to the actual cost.

499. On Appropriations-in-Aid 2.—Receipts from County and County Borough Councils and Harbour Authorities—how does this arise?

—This relates to the recruitment of staff for local authorities.

And the health boards will eventually find their way into that list?

—I presume so.

No question.

VOTE 11—AN CHOMHAIRLE EALAÍON.

Mr. C. H. Murray called.

No question.

VOTE 12—SUPERANNUATION AND RETIRED ALLOWANCES.

Mr. C. H. Murray further examined.

500. Chairman.—Paragraph 30 of the Report of the Comptroller and Auditor General reads:

“Subhead B.—Payments under the Civil Servants’ Widows’ and Children’s Contributory Pensions scheme

Subhead C.—Ex-gratia pensions for Widows and Children of certain former Officers

As mentioned in previous reports a contributory scheme was introduced in the year 1968-69 to provide pensions for widows and children of certain public servants who died on or after 23 July 1968. Ex-gratia pensions were granted to widows and children of public servants who died or retired prior to that date. Pensions for dependants of members of the Garda Síochána and for dependants of National Teachers, Post Office officials and Army officers are provided from Votes 21, 28, 42 and 44 respectively. I understand that while some progress has been made in the preparation of the necessary legislation it has not been possible to finalise it owing to pressure of work.”

Mr. Mac Gearailt.—This paragraph is for information. I understand that the drafting of the legislation mentioned here has not yet been completed.

501. Deputy Griffin.—On subhead E.— Compensation Allowances under Article 10 of the Treaty of 6 December, 1921—could we have some explanation of that, very briefly?

—By and large Article 10 of the 1921 Treaty enabled people to retire before the normal date if they could claim that their conditions of service were worsened or prejudicially affected by the operation of the Treaty. The payments arising are involved in subhead E. If you look at the Appropriations-in-Aid there is an offsetting payment from the British Government.

502. It is 53 years later and very few people would be left?

—That is right. We hope it will be a diminishing item.

Have we any indication as to how many are involved?

—No. I could get that information.*

I was a little amazed that 53 years later people are still receiving it.

503. Chairman.—On subhead G—Injury Grants and Medical Fees—payments for personal injuries to whom?

—Broadly speaking this would arise in respect of civil servants and other public servants who are injured in the course of their duties.

VOTE 13—SECRET SERVICE.

Mr. C. H. Murray called.

No question.

VOTE 14—AGRICULTURAL GRANTS.

Mr. C. H. Murray called.

No question.

VOTE 15—LAW CHARGES.

Mr. C. H. Murray further examined.

504. Deputy Griffin.—On subhead D.— Fees to Counsel—there is a big increase. The original was £75,000 and the supplementary was £50,000. The supplementary is two-thirds of the original. Was there any particular reason?

—I do not know offhand beyond saying that you can understand that this is necessarily a very conjectural estimate. If half a dozen big unexpected cases were to arise they could easily account for this supplementary.

505. Chairman.—On subhead F.—Defence of Public Servants—how does this arise?

—Broadly speaking this enables payment to be made where legal action is taken against public servants in respect of something they did in the course of their duties and where they incurred costs in defending themselves in circumstances where it is considered that their action complained of was in fact reasonably undertaken in discharge of their public duties.

506. Does this cover all civil servants?

—All public servants. Typically, the people most covered by this are members of the Garda Síochána.

Deputy Griffin.—And teachers?

—They would not be excluded. In principle, all public servants are covered.

Chairman.—The amount is not very large.

VOTE 16—MISCELLANEOUS EXPENSES.

Mr. C. H. Murray further examined.

507. Chairman.—Paragraph 31 of the Report of the Comptroller and Auditor General reads:

“Subhead F.—The Racing Board—Grant-in-Aid for Capital Purposes

In previous reports I referred to the decision that funds would be made available over a number of years to the Racing Board to assist it in carrying out improvements at racecourses. A further grant of £100,000 was made to the Board in the year under review bringing the total paid to 31 March 1972 to £300,000.”

Mr. Mac Gearailt.—This paragraph is for information. I have no further comment to make.

508. Chairman.—Paragraph 32 of the Report of the Comptroller and Auditor General reads:

“Subhead G.—British Special Import Deposit Scheme

In paragraph 34 of my previous report I referred to the termination in December 1970 of the above scheme and to some claims in respect of interest which would fall to be met in the year 1971-72. In the year under review sums totalling £84,711 were paid to banks in respect of outstanding claims for interest bringing the total amount paid to 31 March 1972 to £2,708,198.”

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

VOTE 50—PENSION INCREASES AND ALLOWANCES.

Mr. C. H. Murray called.

No question.

VOTE 51—REMUNERATION.

Mr. C. H. Murray further examined.

509. Chairman.—Why is the President’s Establishment not included in Vote 1?

—This Vote relates to payments during the course of 1971 under the appropriate national round. It deals with expenditure which could not have been forecast at the time of the Estimate. In some cases, it was possible to make the particular payments out of the appropriate Vote because there were savings or because a supplementary estimate was necessary for reasons other than pay increases. This Vote related to cases where savings were not adequate to meet the pay increases and a supplementary estimate was not being taken for other reasons.

510. Do they have to get permission from the Department of Finance to use those savings?

—Yes.

The witness withdrew.

The Committee adjourned.

*These accounts have since been received and are included in this volume.”

*Accounts outstanding at 30 November 1972 are included.”

*See Appendix 11.

*The account has since been received.”

*See Appendix 12

*See Appendix 13.

*See Appendix 14.