Committee Reports > List of Committees > Dáil > 1975 > Committee of Public Accounts > Interim and Final Report - Appropriation Accounts 1972 - 1973

MIONTUAIRISC NA FINNEACHTA

(Minutes of Evidence)

Déardaoin, 6 Márta, 1975

Thursday, 6th March, 1975.

The Committee met at 11 a.m.

DEPUTY DE VALERA in the chair.

Mr. M. Jacob (thar ceann an Ard-Reachtaire Cuntas agus Ciste) called and examined.

VOTE 4—CENTRAL STATISTICS OFFICE.

Mr. T. P. Linehan called and examined.

198. Chairman.—On subhead A—Salaries, Wages and Allowances—I do not think the volume of work to be carried out by the Central Statistics Office is decreasing in modern times?

—There has been substantial expansion, particularly since the advent of the EEC.

199. Regarding the note which explains the reason for the saving, have you any comment regarding the decrease in staff? Was that an economy measure or was it a temporary situation because of the postponement of the work that is indicated in the note?

—The suppression of posts may relate to some particular inquiry; for instance, a census of distribution which is not a continuing inquiry and in respect of which the work during the year was slightly more advanced than was anticipated when the Estimate was made. Consequently, a reduction that one knew would occur came into operation slightly earlier than had been planned for.

200. There is a certain amount of fluctuation in the office?

—Yes, particularly with an operation like the Census of Population which represents a tremendous increase.

And surveys, also?

—Yes. These would not be on a continuing permanent basis and, therefore, involve fluctuation. Well in advance of the year in respect of which the Estimate is being prepared we anticipate what are likely to be the changes.

201. Can you say approximately in regard to the personnel covered in subhead A in the year in question what is the percentage of permanent employees as distinct from casual employees?

—All the people included in subhead A are permanent civil servants. When we speak of suppression of posts we are referring to the release of clerical staff into the general reservoir. It is not a question of disemploying. The temporary personnel we employ are involved in the fieldwork. They are included in subhead D.

202. Is it the position, then, that you call on the Civil Service for personnel at times when you need them and release them at other times?

—Yes. The actual volume of the release is modified, however, to the extent that it is necessary to fill vacancies which occur because of marriage, retirement, promotion, etc.— there is a sizeable turnover at the Clerical Assistant and Clerical Officer level.

203. Therefore, because of the nature of your work, a certain elasticity is needed?

—Yes. I might add that we endeavour to plan the major surveys so that they fit in with each other. In this way we reduce the fluctuation to some extent so that there would not be a large number of surveys in one year and none for two years later. A Census of Population is a separate one which occurs at regular fixed intervals. There is no flexibility in that case.

Are these just what one might call management problems?

—Yes.

204. Deputy Bermingham.—Are there not some temporary staff involved in the collection of statistics?

—Yes. They are what I might call very temporary staff, people employed on a fee basis for the collection of statistics over a short time. They would not be permanent civil servants.

205. Chairman.—On subhead A.1—Losses— where did this armed robbery occur?

—It occurred along the east side of St. Stephen’s Green going from the corner of Merrion Row to Earlsfort Terrace, a short distance of less than a quarter of a mile. New building work was taking place on the far side of Hume Street. The two officers involved were walking along the special temporary pathway provided for pedestrians. A car pulled up and three people produced what appeared to be revolvers. They took the satchel and vanished. One of the people from the Office tried to hold on to the satchel for a short while. He was hit over the hand with what they thought was a revolver and his colleague told him it was better to let go, which he did. The car was found shortly afterwards near Portobello Bridge but none of the money was recovered. Between £5,000 and £6,000 was involved.

206. Deputy Bermingham.—Would you not be insured for that?

—We were not insured on that. Since that time we have in fact employed one of the security agencies to deliver this money weekly. The Office was not insured. I do not know at this stage if there are central arrangements which would involve the recoupment of the money.

Chairman.—When did it happen?

—It happened just over two years ago, in February 1973.

207. Deputy H. Gibbons.—On subhead B— Travelling and Incidental Expenses—I wonder about the correctness of the accounting in relation to the replacement of duplicating machines and ancillary equipment in the printing section. The installation of machinery may increase in the future. Should there not be a special subhead for this?

—That certainly would not create any difficulties for us. This is my first time involved in this capacity but my understanding is that these are traditional subheads that have been there for a long time.

208. Chairman.—The Deputy’s point is to some extent covered in the Estimates as incidental expenses of £4,800. The equipment is £18,000. When one has this under travelling and incidental expenses it seems there is a bit of lumping under that subhead. It all depends on what you regard as incidental. Would it not be tidier to account for the expenses under the details given, break up subhead B and put this under equipment or under the subheads indicated in the Book of Estimates? Would that not be a more informative method of presenting the account? If you take the Book of Estimates at page 9, subhead B is given as Travelling and Incidental Expenses. In support of Deputy Gibbons’s point travelling and subsistence allowances are given as £24,600 and there is £1,000 for the Garda, office equipment is £18,000 and computer rental is £22,500. If you add the last two you will get the greatest single sum making up something which appears as Travelling and Incidental Expenses. I should leave it to the Deputy to make his point but I support him in asking for a break up of this subhead. If it were broken up into B.1 and B.2 it might help us in dealing with something of this nature. Would you like to comment on that?

—If it were broken into B.1 and B.2? Is it a question of distinguishing the travelling expenses specifically and the rest together, or of distinguishing the item of equipment separately and the rest together?

This matter has arisen on other Estimates also. Essentially it is an objection the Committee have to lumping sizeable expenditures. It is not a criticism of your office specifically. The Committee have a general objection that in dealing with Estimates substantial sums for certain purposes are conveniently tucked away under the heading of “Incidental Expenses”. We are not suggesting for a moment it has happened in this case because everything is set out here and there is nothing to cavil at in this Estimate. I think other members of the Committee will support Deputy Gibbons’s point. If the expenditure under subhead B is made up of the items listed in the Book of Estimates, it would be better to specify travelling expenses at £24,000 or whatever is the amount and list the other items as well. It is not really a question of whether it is to be travelling expenses or equipment expenses. The essential point is that the expenditure is itemised in sufficient detail to give the House the power of comment at least and ensure that this Committee can then compare the expenditure actually incurred with that estimated. I wish to emphasise that this is not directed specifically at your Estimate, of which there is no complaint. I am trying to give the raison d’être of the thinking here and, as you are concerned with the Central Statistics Office, I hope a message may get across of how we want statistics. If you have global headings such as “Incidental Expenses” it is too easy to do two things: first, to hide a discrepancy between an estimate and expenditure in any case and, secondly, it is conducive to the appropriation of a provision for one purpose to another purpose. This is something the Committee drew attention to in the not too distant past. I am talking in general terms and not with regard to this specific Estimate.

Deputy MacSharry.—I imagine this happens with every Department, that travelling expenses can be one heading and incidental expenses can be another.

Mr. Jacob.—Recently on a certain Vote this point arose and it was settled by creating a new subhead, giving a separate subhead—for instance, subhead E—for equipment and giving details in the Estimates. In other words, there was a separate subhead entitled “Equipment”.

209. Chairman.—Has this practice been introduced in all Departments?

Mr. Jacob.—It was introduced in the Garda Síochána Vote. If the subhead is made B.2 there is a suggestion that it is associated with travelling expenses which I take it is not the case.

Chairman.—This is a technical matter of accounting which I think we may leave to the Accounting Officers and the Comptroller and Auditor General.

Deputy MacSharry.—In the Finance Estimates this year there is an item of £130,000 for equipment as against £7,000 in the previous year. If one Department have already broken up the subheading that should be notified to all other Accounting Officers and the same procedure adopted.

Deputy H. Gibbons.—This is a wide ranging question. The Estimates indicate the amount it is intended to spend. The note to subhead B states that the excess was due entirely to the replacement of duplicating machines and ancillary equipment in the printing section. It strikes me there is something wrong in including office equipment with travelling expenses. There is no doubt that office equipment is becoming more expensive and I think it should get a separate heading.

Chairman.—I should like to emphasise to Mr. Linehan that this is something that applies to accounting generally and is not directed specifically to him. If we consider your Estimate of £18,000 for office expenses and £22,500 for computers and so on, there is an expenditure of £40,500. That £40,500 is included in the £71,000 granted in the Estimates. It is more than 50 per cent of the grant under the subhead. The note states that the excess shown in the account of £8,467 was due entirely to the replacement of duplicating machines and ancillary equipment in the printing section. That means that on a grant of £40,500 there is an excess of £8,000, which is a fairly substantial percentage. It is impossible to say from the note how much of that is to be appropriated to the heading “office equipment” or to the rental of the computer because printing of some sort is involved in both cases. I do not expect an answer to that but I am giving the example as an illustration of the point we have been making.

Deputy MacSharry.—I take it this Committee can make recommendations?

Chairman.—We want Mr. Linehan to understand this is not directed by way of complaint with regard to his Office. It applies to subheads in many cases.

Mr. Jacob.—In some cases.

210. Chairman.—As it arises in this case we should like you to take note of it and to consider the best way of dealing with the matter. On subhead C—Post Office Services— in every Estimate under the subhead for Post Office Services there appear substantial variations which to those not well informed raise the question of whether the system whereby the Post Office plays the role of a commercial agent selling a service involves a lot of duplication in accounting and unnecessary work while on the other hand, as one Accounting Officer has said, this has the advantage of keeping people on their toes in relation to the use and abuse of communications. Would you care to voice an opinion as to whether the revised system is a good one or whether there would be a saving in terms of administration and labour costs by reverting to the system of treating the Post Office as an organ providing a service for the State in the same way as a signal corps would provide a service for units of an army?

—This is not something on which I have dwelt at all because it is not a point that has given us any great problem. The amount of time spent on this aspect of the accounting is minimal so from that very low level point of view it makes little difference which way the accounting is done.

211. In other words, the way it is being done now causes no obstruction?

—No, but I would have sympathy with the point of view you quoted as having been made by another Accounting Officer—that it gives one a measure of the extent to which we avail of postage, telegrams and so on. We must be realistic in not allowing that to get out of hand. We also use computer services which are controlled by the Central Computing Agency. There was a proposal to charge for the use of those services by individual Departments. I do not know whether any decision has been reached. In general separate charges provide a measure of the extent to which each Department avails of the service.

212. Your point is that one of the merits of the system is that it is an automatic supply of what might be called management information?

—Yes, but I must be honest and say that that is not a tremendously important point since it is a minor item in our activities.

But overall for the Civil Service?

—This kind of information has been put together for all Departments in the preparation of the Post Office Commercial Accounts and is used in our national accounts where the Post Office is treated as a trading enterprise selling a service to public authorities. In that way we have an aggregate estimate of the services provided but we do not need individual Departmental Estimates for that purpose. For the CSO accounts we accept the Post Office Estimate but we do not have a detailed check or control with them.

213. But you would query any substantial variations?

—Yes. There is still an element of control but to my knowledge there has not been a situation of substantial variation.

214. Deputy Bermingham.—Do the Post Office present you with a bill in the same way as they would send me a telephone bill?

—There are quite good controls in so far as telephone bills and so on are concerned. These are reasonably well itemised. What goes into the Estimate in advance is their rough Estimate but the final one has a solid basis.

Mr. Jacob.—By way of being helpful, I have a note in connection with the Post Office accounting. A count of the mail inward and outward is made by the Post Office for one week, four times a year. This takes place in the Sorting Office and in very general terms constitutes a basis on which the Post Office build up their estimate charges for postal services.

Chairman.—I was seeking reaction from Accounting Officers in discussing this matter but the answer from Accounting Officers generally is quite clear.

215. Deputy Bermingham.—On subhead D— Collection of Statistics—what level of employment would be involved here?

—Most of the money involved under the heading D is spent by way of payment to people for services rendered.

Deputy MacSharrv.—So that most of the £141,000 was spent on paying staff?

—Does the Deputy wish me to elaborate on the items covered?

216. How are the fair and mart reports compiled?

—When the auction marts came into being we made arrangements with a large number of them whereby they made returns to us. These enabled us to compile average prices for animals sold at the various weights and so on. There is also a continuation of a longstanding arrangement with some fair and mart reporters who are paid a fee for making a monthly or a fortnightly return on the principal fairs. These are not permanent employees of the office.

217. Deputy H. Gibbons.—Are those the same figures that are announced on radio and television in the evenings?

—No.

218. Is there any co-operation between your office and Telefís Éireann in this matter?

—The very up-to-date type of intelligence information given on the radio and television is framed in ranges of prices at certain specific locations and is for the immediate use of the persons concerned, i.e., the individual dealers and farmers. The statistical compilation is rather a different matter. One has to combine detailed returns on the numbers involved and various prices paid in order to get overall average prices. We are fully aware of the RTE market reports but it is not possible to incorporate them directly into a statistical calculation or analysis.

219. Chairman.—Have you got what one might call a standing general directive—I am not asking for policy or anything like that—in your Office with regard to the approach to statistics, what your terms mean? I am talking about something you could give to a new person in the department. I am not after specific statistical information. Have you something like an instruction manual that would explain certain approaches or certain terms to a new person? If you had such a thing this Committee would be interested in it as it would help us to understand these statistics.

—I am afraid the answer to that is we do not have in black and white a handbook. It would certainly be a very useful thing to give to new statisticians coming into the office. Is that what you have in mind?

Yes.

—No—we do not have such a handbook. There is a basic philosophy concerning impartiality contained almost in this statement that the job of the office is to produce information which is accepted as valid by both Government and Opposition.

That is a rather subjective definition. Surely the purpose is to present information that is capable of numerical evaluation in regard to the economy in particular and in a consistent form that will constitute information for the Houses of the Oireachtas and the public as well as research workers.

—I tried to condense into a short sentence what several paragraphs would require.

It is also a question of having the information in a useful and understandable form. One of the difficulties about statistics is that the casual person coming along has not the initiative to go into details. Explanations are required. I wondered if you had such information available? Have you not a general directive that would give some indication of your overall approach?

—We do try in relation to a particular activity to put in the basic publications any qualifications or warnings about the validity of the information.

That would be your own and your immediate deputy’s leadership in carrying out your task. I do not think it is generally understood you are in the position that you are dealing with assignments where you must mobilise your resources and decide on the method of collection and presentation in a large number of individual cases. There is a lot of routine work in relation to individual matters.

220. Deputy H. Gibbons.—Can any person seek information from your office without charge?

—Yes—if it is information normally compiled by the CSO. He would have the right to seek it without charge but if what he was looking for was information which could not be given to him without involving a substantial amount of extra work we would ask for a fee. If it is a small incidental thing or something required by a student we would try to help that person to the greatest extent possible without charge. If it is a commercial firm looking, for example, for detailed trade statistics which are not confidential but are too detailed to publish, then we have a standing arrangement of charging a fee.

221. Can anybody get this information?

—Provided it is not individual information which is confidential. In this context we have a little joke that we spend half our time collecting information and the other half making sure that nobody ever gets it.

Chairman.—That is understandable. I am sure you appreciate that some of these questions, particularly those on Subhead B, were raised with you because you are an accounting department and also because this is something which is exercising us generally.

—I think it was an extremely reasonable approach.

The witness withdrew.

VOTE 15—LAW CHARGES

Mr. D. Quigley called and examined.

222. Chairman.—On subhead F—Defence of Public Servants—is that a provision in the case where public servants are sued in their personal capacity while in the discharge of their duty and are indemnified by the Government.

—Yes.

223. Deputy H. Gibbons.—On subhead G— Appropriations in Aid—when a judge awards expenses to the State, will the amount be set out in this item?

—It is from that that the Appropriations-in-Aid will come.

Chairman.—In other words, it is collected costs?

—Yes.

224. Deputy H. Gibbons.—I take it that £6,000 is the total of the costs collected by the State?

—The total of the costs and fees recovered was £4,961.

225. Chairman.—Of course, a proportion of the costs awarded are not collected. Is that so?

—Yes, some are not capable of being collected.

It is the proverbial “man of straw”. Is the amount a sizeable proportion?

—In the ordinary way it would amount to about half as much as is recovered.

The witness withdrew.

VOTE 42—POSTS AND TELEGRAPHS.

Mr. P. L. Ó Colmáin called and examined.

226. Chairman.—Paragraph 82 of the Report of the Comptroller and Auditor General reads:

“Stores

A test examination of the store accounts was carried out with satisfactory results.

In addition to the engineering stores shown in Appendix II as valued at £3,774,639 at 31 March 1973 engineering stores to the value of £21,141 were held on behalf of other government departments. Stores other than engineering stores were valued at £733,472 including £234,727 in respect of stores held for other government departments.

Including works in progress at 31 March 1973 the expenditure on manufacturing jobs in the factory during the year amounted to £81,928, expenditure on repair work (other than repairs to mechanical transport) to £216,471 and e penditure on mechanical transport repairs to £27,508”

Have you anything to add, Mr. Jacob?

Mr. Jacob.—This paragraph reports to Dáil Éireann that the Store Accounts kept by the Department of Posts and Telegraphs were duly audited in 1972-73 as required by statute and that adequate regulations for control are being enforced. The paragraph also gives the value of engineering and other stores on hands at 31st March, 1973, including stores held on behalf of other Departments.

Chairman.—The important point here is that you are satisfied?

Mr. Jacob.—Yes.

Chairman.—The Accounting Officer is to be complimented. Anyone who has to handle these matters nowadays can appreciate the difficulties.

—Thank you.

227. Paragraph 83 of the Report of the Comptroller and Auditor General reads:

“Revenue

A test examination of the accounts of postal, telegraph and telephone services was carried out with satisfactory results. The estimates of Revenue for 1972-73 and the net yield for the years 1972-73 and 1971-72 are shown in the following statement:—

£40,800,000 was paid into the Exchequer during the year leaving a balance of £1,942,889 at 31 March 1973. Sums amounting to £42,587, due for telephone services provided in previous years, were written off during the year as irrecoverable.”

Mr. Jacob.—This paragraph reports to Dail Éireann that a test examination of the accounts of the revenue from post office services has been carried out with satisfactory results. This paragraph also gives the net yield of revenue from each of the three services in the year under review, together with comparative figures for 1971-72.

228. Chairman.—Paragraph 84 of the Report of the Comptroller and Auditor General reads:

“Post Office Savings Bank

The accounts of the Post Office Savings Bank for the year ended 31 December 1972 were submitted to a test examination with satisfactory results. The balance due to depositors, inclusive of interest, amounted to £199,086,627 (including £52,228,388 in respect of liability to Trustee Savings Banks) at 31 December 1972 as compared with £183,703,645 at the close of the previous year. Interest accrued during the year on securities standing to the credit of the Post Office Savings Bank Fund amounted to £13,195,473. Of this sum £8,484,768 was applied as interest paid and credited to depositors, management expenses absorbed £1,274,032 and the balance £3,436,673 remained as a provision against depreciation in the value of securities.”

Mr. Jacob.—This paragraph gives information on the operations of the Post Office Savings Bank in the year under review. It will be noticed that the balance, including interest due to depositors, shows an increase of £15,383,000 approximately on the previous year.

229. Chairman.—On subhead B—Travelling and Incidental Expenses—we have already raised with other Accounting Officers the question of what is included under the heading “Incidental Expenses”. They are set out in the Estimates; but the point is whether that subhead in the Appropriation Accounts should not be broken down further so that a number of items of a substantial nature will not be lumped together under the heading of “Incidental Expenses”. This is a point the Committee will be making generally. Do you wish to comment on this?

—No, beyond saying that we will be happy to give whatever details the Committee wish.

230. Deputy MacSharry.—In the Estimates Volume a sum of £361,800 is described as “Miscellaneous”. What is involved in that?

—I am afraid I cannot give any details offhand. If the Committee wish I will furnish them with a breakdown of the figure.

The reason I asked the question is because you have itemised the Travelling and Incidental Expenses. There are certain items as low as £10,000 but a sizeable figure, £361,800, is given as “Miscellaneous”.

Chairman.—If you would give the Committee a note on this matter it would be helpful.

—I shall send a note.*

231. On subhead C—Accommodation and Building Charges—I take it that what is involved is development of the telephone service?

—Yes.

232. On subhead D—Conveyance of Mails —I take it that the increase is the result of the inflationary trends?

—It is mainly due to inflation.

233. Deputy MacSharry.—On subhead F— Engineering Stores and Equipment—how is our contribution to satellite and other international systems assessed?

—We own a share in the international consortium called Intilsat which conducts all the satellite operations for the international telecommunications services. Also, we own a share in the earth station at Goonhilly in Britain and by virtue of our interest in these installations we are entitled to circuits at certain rates of payment. The investment in the satellite communication is estimated to yield about 14 per cent per annum. Satellite systems have been very successful and we have rather more circuits to the United States and Canada through the satellites than through cables.

So we are making money?

—Yes.

234. Chairman.—On subhead I—Losses—I note that, peculiarly, there is no note although there is substantial provision for losses. What types of losses are involved?

—These are set out in considerable detail in the Schedule.

235. Regarding Appropriations-in-Aid, I take it that the statement here is an account of revenue received?

—Yes.

236. Deputy H. Gibbons.—Is all the money that comes into the Post Office lodged with the Exchequer?

—Yes, every penny of it.

And the Exchequer pay the running expenses?

—Yes. Payments are not lodged on the day they are received. There is a running balance but they are paid over to the Exchequer by arrangement with the Department of Finance.

Chairman.—The Department of Finance pay you the money you need for your disbursements?

—Yes.

In a sense, therefore, the State is your banker?

—Substantially, that is the position. For instance, all the money we invest in the telecommunications and telephone service is advanced by the Exchequer. They borrow it from the Post Office Savings Fund, but so far as we are concerned they are the suppliers of the money.

In the sense that the Post Office is a commercial concern, the State is your banker.

—Broadly speaking, that is correct.

237. What is amazing in relation to the losses is the closeness of the estimate to the expenditure under that subhead. In relation to such variables as burglaries and armed robberies there is a remarkable degree of accuracy.

—There might appear to be a sinister implication in that statement!

My suspicious mind is not turning in that direction but there is a remarkable coincidence.

—We could not have made it all up.

Deputy MacSharry.—Is there a similar degree of accuracy annually?

—No. Some years we might get a less favourable result.

238. Deputy Bermingham.—I wish to ask about the method of estimating the cost of post office services for the public service departments in general.

Chairman.—This is the one I intended asking about, too. These accounts impress even in respect of the notes. Because of the detail of your reports, anybody examining them can at least do complete sums. The notes are characterised by a definiteness as regards sums of money, whereas all too often in respect of other Departments we find notes that require questioning. To that extent you are to be complimented. However, my question is this: Is the system working well whereby you are proceeding on the basis of a firm or a company selling a service or should there be a change in regard to the public service? The question arises from the fact that in every Estimate there is a sum— it is almost always in subhead C—a charge to the Department in respect of post office services but various Accounting Officers have not had very much to say on this entry. To the uninitiated this raises the question whether there was an exercise in unnecessary accounting and whether economy and efficiency would be promoted by your Department just laying it on, like the signal corps of an army. That is the question. We have asked this question and got an opinion from a number of Accounting Officers. I would like to ask you what is your opinion? There was an older system and you are operating a different system now. Is the present system the best?

—We think that it is. At all times, so far as I know, since the State was established, the system you described applied in the case of telegrams and telephone charges but not in regard to postal charges. In regard to postal charges the change over from what was a service rendered basis, with which you would be familiar, where the credit was always shown in the Post Office accounts but there was no physical money transfer, was effected about 1964 at a time when we were trying to bring more realism into the post office accounts. We felt that the introduction of a system of cash payments would be more real and more likely to generate a commercial attitude among our staff. As regards the position in relation to other Departments, if I may offer the comment, we feel the fact that they have to put a provision in their Vote, have to justify that provision to the Department of Finance at the Estimate stage and subsequently have to justify any excess payment may have a certain beneficial effect in causing them to be a little more economically minded and to raise questions if they find their bill is going up by more than the ncreases in charges that we are making.

The majority of Accounting Officers, for your information—there was only one who was definitely of another view—hold exactly the same views you have expressed here. If we needed any further evidence I think the comments of the Comptroller and Auditor General and the details of your accounts are sufficient answer for us.

239. Deputy MacSharry.—Are the charges for Government Departments similar to those for me?

—They are exactly the same.

240. Deputy Bermingham.—Can it be taken that the charges collected from Government Departments are accurately assessed? Are the letters which go out from here and from Government Departments franked in the same way as those of an ordinary firm?

—We could not guarantee complete accuracy as regards the postal figure. It is an estimated figure. It is the best estimate we can make. It is got by a combination of tests, for one of which we depend on the Stationery Office supply of envelopes, which is a fairly good guide. The other is by periodic sample testing which we apply ourselves. As regards letters going out from the Dail, the House, through the Clerk of the Dáil, exercises control.

Chairman.—That is correct.

241. Deputy Bermingham.—Private firms can have stamping machines for which they pay the exact amount due. Is that not the case in the Civil Service?

—No, that is not the case.

Chairman.—The mechanics of franking are not resorted to in certain cases. For instance the Revenue Commissioners send you envelopes to send back with the address of the collector printed on them. I wonder would the Committee agree with me, having considered the whole matter and particularly in the light of the report before us today, that we are satisfied with the system and we will dispose of the matter.

Deputy Bermingham.—I think so.

242. Deputy H. Gibbons.—It is stated on page 22 of the Post Office Commercial Accounts* that capital repayment is £1,703,289 and interest is £5,320,846, giving a total of £7,024,115. Does the interest not seem very high?

—I am happy to say the Post Office do not fix the interest. That is settled by the Minister for Finance. We are required to pay annuities under the telephone capital repayments subhead of the Vote.

243. The grant and expenditure are shown in this Vote. The expenditure seems to be the repayment of capital and interest. Is it purely a book-keeping account or the actual transfer of money?

—It is purely an accounting entry. It is inserted by the direction of the Department of Finance to meet the repayment of capital annuities.

244. Chairman.—Capital in your case is always likely to be very closely tied up with both policy and grants from Finance.

—Yes, and the availability of Exchequer funds.

We would like to say that if we got all the Departments on the same basis with details such as in the presentation of these accounts, our work would be much easier and faster.

—You are more than kind. Thank you.

The witness withdrew.

VOTE 43—DEFENCE.

Mr. S. Ó Cearnaigh called and examined.

245. Chairman.—Paragraph 85 of the Report of the Comptroller and Auditor General reads:

“Subhead H.—Defensive Equipment

In April 1972 the Department of Defence, with the sanction of the Minister for Finance, entered into negotiations with an Irish company for the production of three prototype armoured personnel carriers, subject to a maximum expenditure of £90,000. The Minister for Finance subsequently sanctioned the making of an agreement with the company for the production of the three prototype vehicles within the expenditure limit approved. Payments amounting to £25,024 were made on a time and material basis in the year under review; the initial vehicle was completed in July 1973 and is now under test. I understand that at the date of my report the formal agreement with the company has not been signed.”

Have you anything to add, Mr. Jacob?

Mr. Jacob.—This paragraph is for information. I understand that the payments to the company who produced the prototype carriers amounted to £147,000 at 30th September, 1974, and that further payments, excluding VAT on a number of imported and other items, could bring the total cost to £166,000 approximately. The observations of the Accounting Officer were sought on the considerable increase in the cost of the carriers. The following is the reply received from him:

The causes of the increase in cost were as follows:—

1. The original estimate of £90,000 was based on a time scale of 12-14 months for the manufacture and testing of the three prototypes. This proved to be entirely inadequate because the development programme became more complex than at first envisaged due to the various changes that were indicated in the early development running. These arose mainly from engine overheating, shearing of wheel mechanism gears and seizure of wheel hub bearing in the first vehicle. Other modifications were also necessary to overcome problems encountered during the proving tests on the first vehicle and, to a lesser extent, on the second.

2. The energy crisis at the end of 1973 and rising prices generally resulted in very great increases in the costs of materials and in delivery delays.

3. Labour rates were increased with effect from 1 October, 1973, in the case of the two engineers employed on the project by 28-5 per cent and 33⅓ per cent respectively and, by 20 per cent to 25 per cent for others.

As regards Article 2 of the draft agreement, the Company in September, 1973 adverted to the very high increases that had occurred in costs of labour and materials since the original estimate was drawn-up and suggested that a figure of £105,000 might be necessary to complete the project. In January, 1974, the Company indicated a figure of £120,000 and in September, 1974 a figure of £166,000.

An agreement has not been signed. The Department is advised that there is a contractual relationship with the Company on the basis of the correspondence which has taken place and on part performance. At this stage, therefore, it is envisaged that completion of that part of the arrangements which relates to the production of the three prototypes will be governed by the relationship indicated: and if thereafter further dealings with the Company arose e.g. in the matter of bulk production, should such be decided on, the matter would be covered de novo by an agreement to be negotiated and perfected before any work or service within the comprehension of such agreement would be undertaken by the Company.

S. Ó Cearnaigh

Oifigeach Cuntasaiochta.

28 Feabhra 1975.

246. Chairman.—This is really the implementation of a policy decision?

—Yes, it is to establish whether a suitable armoured personnel carrier can be manufactured and assembled in this country. It was a tentative project in that sense and the company have got to the point where they have produced three of these vehicles. The first was what might be regarded as a test piece; the second was more advanced; No. 3 is the completed vehicle, fully operational. It is still under test with regard to mileage and running-in generally. It will be a few months before that is completed but it is a going concern as of now. However, its final military evaluation will not take place until the tests are completed.

247. Here we are on the borderline with regard to policy matters. Are the considerations with regard to embarking on this project prompted by military necessity? In this connection military necessity can mean the development of local resources to produce items of this nature. Is there an important defence consideration when one considers a situation where defence may be more than keeping order or local security? There is also the question of availability. However, there is something else we must consider, whether it is prompted by desire to promote an Irish industry or to use the Department of Defence as an agency in providing industrial activity of this nature. If you consider this is a policy question I should not ask, I will accept that; but if it is a question that can be answered it might be helpful to the Committee.

—It is a combination of the two—to evolve an armoured personnel carrier suitable to Irish conditions and also to create a business or an industry here capable of doing this kind of work. I would point out that much of the parts, such as engines, the transmissions and the gears have to be imported. The main work done in Ireland is putting the parts together, plus the fabrication of the armoured plate which is imported in sheet form. The testing of the assembled work is part of the project.

248. Paragraph 86 of the Report of the Comptroller and Auditor General reads:

“Subhead P.—Naval Stores

Reference was made in previous reports to expenditure incurred on the construction of a fishery protection vessel expected to cost in the region of £1 million. The vessel was completed in May 1972 and payments to the builders during the year under review amounted to £112,175 bringing the cost at 31 March 1973 to £987,875. In addition, consultants’ fees at that date totalled £45,055, including £8,891 paid during the year.”

Mr. Jacob.—This paragraph gives information on the construction costs, including consultants’ fees, of L. É. Deirdre. These fees were paid to Irish Shipping Ltd. who acted as consultants.

249. Chairman.—I take it that the principal use of this vessel is for fishery protection purposes?

—It is for coastal patrol, including fishery protection work.

250. Deputy H. Gibbons.—How far out can such vessels go?

—Such a fishery protection vessel would have a considerable range.

If we extend our fishing rights to 200 miles, would such vessels be able to deal with the problem?

—This vessel has a range of over 3,000 miles on one fuelling. It is quite capable of covering that kind of assignment, as far as its type goes. It is not a warship as such.

251. If we extend our fishing limits to 200 miles, will it be necessary to declare this vessel obsolete and to get another kind of vessel?

—I think not. It would be a question of numbers rather than type.

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

“Subhead S.—Buildings

To supplement the efforts of local authorities to provide houses for members of the Defence Forces, the Department of Defence, with the sanction of the Minister for Finance, decided to meet from voted moneys the cost of building 50 houses for non-commissioned officers and men at the Curragh Camp. Responsibility for the preparation of plans, the selection of the contractor, the supervision of the work and for contract payments was entrusted to the National Building Agency Ltd. The net cost of the houses, including the fee for the Agency, was estimated at £198,000 and the sum of £147,495, certified as having been expended on the work during the year, was paid from the subhead.

A payment of £5,000 was also made to the Agency from this subhead in respect of preliminary work in relation to the provision of a further 20 houses at Athlone.”

Mr. Jacob.—This paragraph is for information. Further payments in respect of the houses at the Curragh Camp and at Athlone were made from the Vote in 1973-74 and in the nine-month period ended December, 1974. Both schemes have now been completed. I understand that the final cost of the Curragh scheme of 50 houses was £196,000 approximately, after allowing for State housing grants and that the net cost of the Athlone scheme of 20 houses will be £96,000 approximately.

253. Deputy Bermingham.—Do you intend to continue this activity?

—Yes, as far as possible. The official view regarding housing for soldiers is that primarily it is the responsibility of the local authority to provide them with housing, on an equal footing with other members of the community. However, where there are special needs, the Department provides a limited number of houses, as in the case of the Curragh and Athlone. There will be further building in the Curragh.

254. Would some of these houses be a replacement for unfit quarters?

—In the case of the Curragh the intention is to phase out some of the older quarters. We closed down some old quarters in Athlone that were regarded as insanitary. It is a combination of replacement and the provision of new houses.

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

“Subhead Z.—Appropriations in Aid

The balance due to the Department of Defence in respect of the expenses of Irish contingents with United Nations peacekeeping forces amounted to £605,505 at 31 March 1972. Of this sum, £331,187 was received from the United Nations during the year under review and brought to credit as appropriations in aid. A further claim for £106,325 was submitted to the United Nations during the year bringing the balance outstanding at 31 March 1973 to £380,643.”

Mr. Jacob.—This paragraph is for information. Of the balance outstanding at 31st March, 1973—£380,643—£273,447 was received from the United Nations in 1973-74. Further claims amounting to £235,473 have been made on the organisation leaving a balance, £342,669, due. These figures do not include the costs of our participation in the Middle East operation. The Department of Defence have received advance payments amounting to £160,565 towards these costs but no formal claim has yet been submitted by the Department.

256. Chairman.—How much money is owed to us in respect of such operations?

—There is the sum of £342,669 mentioned and that is in respect of the Defence Vote as distinct from the Army Pensions Vote. There is also money owing under the Army Pensions Vote and this comes to £235,000. The total outstanding at the moment is approximately £578,000.

It is more than £500,000 at any rate?

—Yes but quite considerable sums of money have been recovered from the United Nations. More than £3 million has been paid to us by the United Nations in connection with the sending of troops overseas.

257. Deputy H. Gibbons.—Do I take it that the United Nations make a contribution to pensions?

—Yes, in respect of soldiers who were injured in the course of service or who contracted disease attributable to service; there is a contribution too towards pensions in respect of those who die while serving overseas.

258. Chairman.—On subhead D—Reserve Defence Force: Pay, et cetera—is the proportion of the reserve force to the permanent force smaller than it was in the past?

—That is so, because the strength of the Permanent Defence Force has increased substantially in the past two or three years. It is probably now at the highest point it has been since the war years.

259. Has the reserve force decreased?

—Yes. The First Line Reserve has decreased. For the past few years it has been static but the figure is down considerably on what it was up to then.

What do you mean by First Line Reserve?

—The First Line Reserve consists of soldiers who have served their term in the Permanent Defence Force, say three years, and who have a reserve engagement of a further nine years. The Second Line Reserve consists mainly of the FCA.

260. I can understand the decrease in the First Line Reserve in one of two ways: either there is a temporary decrease now due to a small establishment in certain years in the past or is it that soldiers have the option of continuing after their first three years?

—Yes.

In effect that reserve is being called up?

—Yes, that affects the strength of the First Line Reserve. There are considerable attractions to encourage soldiers to extend their service.

261. On subhead F—Civilians attached to Units: Pay, et cetera—I take it these are not civil servants?

—No. They are persons employed under the Defence Act, 1954, and consist of a wide range of skilled and unskilled personnel such as builders’ labourers, craftsmen, attendants at messes and so on. The total number concerned is about 2,000.

262. In relation to G—Civil Defence—is it your opinion that the community is not taking seriously enough the idea of civil defence; is it that civil defence does not appear to be a matter of any urgency?

—It is probably a combination of both but we are reasonably pleased with the Civil Defence organisation. The strength is about 20,000. It is not a highly centralised organisation. It depends to a large extent on local effort and each local authority is responsible for civil defence in its own region. The local authorities are the controllers of civil defence and the County Manager is usually the County Controller.

263. Regarding H—Defensive Equipment— I take it that by and large moneys voted are spent for that purpose?

—Yes. In the year concerned here we did fairly well.

264. On M—Clothing and Equipment— there is a very substantial discrepancy between the two and the note says that the saving is due to the non-delivery of certain items and delays in receipt of accounts. This is reminiscent of something we heard in respect of the Garda Síochána. What happened here?

—Deliveries did not come in at the expected rate. The goods were ordered but were not delivered in time to enable payment to be effected in that year.

265. Having regard to all reasonable circumstances, is it your opinion that the orders were placed so as to allow for delivery at the expected time?

—It is very difficult to say that because they were placed as soon as we could possibly place them. We are very conscious of the need for substantial stocks of clothing at all times but questions of pattern and of cloth and problems of manufacture arise which can cause considerable delays at times. Certainly, the material was ordered but the delivery was not made in time.

266. Deputy H. Gibbons.—Is your contract on a year-to-year basis or longer?

—Each year provides for certain quantities of clothing but it is a continuing process, taking one year with the next and depending on the short-term and on the long-term needs and on the extent to which the reserve stocks are to be held.

267. The contract does not change from one company to another?

—Not to any great degree because certain companies specialise in this type of work.

268. Chairman.—On subhead X—Travelling and Incidental Expenses—would that include the travelling expenses of Army personnel?

—No, only the civilian staff of the Department.

269. How much is incidental and how much is travelling? We will not delay now but we have suggested to other Accounting Officers that there is too much grouped under incidental expenses and that other subheads are indicated.

—It is set out in detail in the Estimates.

The point is that incidental expenses should not be large sums. They should be either trivial or incidental.

270. Deputy H. Gibbons.—On subhead AA. —Military Educational Courses and Visits— on what basis are they organised? Do you seek the courses or are they by invitation?

—Both. This subhead also covers courses at home, e.g. in the Institute of Public Administration, but it is mainly for overseas courses.

Would those cover cadets going to the university?

—That is a different type of thing.

VOTE 44—ARMY PENSIONS

Mr. S. Ó Cearnaigh further examined.

271. Deputy H. Gibbons.—On subhead D— Military Service Pensions—there seems to be something contradictory here. A Supplementary Estimate usually indicates an increase. Here it is a reduction. The same applies in subhead E. What is the reason for this?

Chairman.—Is that a matter of accounting? Does this mean you had a surplus somewhere?

—When a Supplementary Estimate is brought in account is taken of savings in particular subheads.

Was there a saving on this subhead here to be offset against the amount of the supplementary?

—Yes.

272. How does the military pension scheme compare with the civilian pension scheme in the same Department? Is there a scheme for both?

—There is a separate scheme for military pensions, the Defence Forces Pensions Scheme. It is provided for in subhead E.

273. Under what scheme are the civilian staff of the Department provided for? Is it a Civil Service scheme? Do the Department cover the civilian side?

—The Civil Service element of the Department is covered by the Civil Service Superannuation Acts.

274. Is there any particular scheme under these Acts?

—The one scheme covers the whole Civil Service and is administered by the Department of the Public Service. The basic legislation is an old British Act. Military personnel are covered by a separate scheme; the basic Act there is the Defence Forces (Pensions) Act, 1932, as amended from time to time. The third element is the civilian employees who are employed under the Defence Act, 1954 and were not covered for pensions until a scheme was introduced in the past couple of years; they are now eligible for pensions on much the same style as the Civil Service.

275. Deputy H. Gibbons.—About 35 years ago there was a charge of one penny a week for the wear and tear of the barracks. Is there any such charge now?

—No; I imagine that charge was what was known as “barrack damages”—perhaps somebody broke delph at some time. There is no charge now but barrack damages might be levied, for instance, if breakages occur where it is necessary to allocate responsibility and where no particular soldier can be identified as having been responsible. The charge might be levied on the unit or on a group of soldiers.

276. Can you tell us how many IRA medals were awarded during the year?

—We have not the exact figure but I think a couple of hundred were awarded during the year. Such medals are still being awarded.

277. Do you still have to get documentation and evidence?

—We have certain material in the Department from the administration of the Military Service Pensions Acts. For other material we have to go to the surviving officers and, unfortunately, they are becoming fewer and fewer. It is very difficult to get adequate verification of membership now.

Are there still new applications?

—Yes.

278. Chairman.—Deputy Gibbons has raised a very important point regarding the future record. Even the accounting under this Vote is an historic exercise from another point of view. I should like to ask the Accounting Officer a question regarding the Registry in the Department of Defence. How long are files kept? Even 30 years ago there was a fair accumulation of files and there must have been a very considerable increase in the documentation since then. What is your policy with regard to keeping records? I presume there must be some segregation of files when they become merely of historical value. Can you tell the Committee what is the administrative policy with regard to filing records?

—We have not what might be called a specific policy on that matter. We have not destroyed any files and that is true also of pension documents.

This must raise a problem for the Department?

—We have a problem with regard to storage accommodation and we have been asked to do some culling of the files.

279. It is fortunate that Deputy Gibbons raised this matter because it has some basic national importance. In the Department of Defence there is a large amount of material that is important from the historical point of view. From the time the Department was established in the early 1920s to the outbreak of war in 1939 is a phase that was well documented and information relating to that period is of great historical interest. In addition, the records covering the war period will be of interest to future historians. There may have been a more routine period afterwards where the records, though not unimportant, dealt mainly with administrative matters. Now there is another phase where I imagine the records of the Department will have considerable historical value. Has any thought been given to how these files will be preserved? If I may mention a personal experience, when we were closing down operations in 1945 the Army staff decided that an accurate resumé of the administrative history of the Permanent Defence Forces should be prepared and I was asked to do the job. The documents were in an appendix to a general report furnished to the Government and they dealt with all aspects of defence. The point I wish to make is that I was able to do the job because the facilities were available in the Department. It was possible to index every sentence and that is a tribute to the efficiency of the record-keeping in the Department. The material was used to comment on the handicaps the military were under in preparing for the war. It was due to the efficiency and the orderly state of the Registry at the time that the job of preparing the resumé could be done. I am a little frightened when you said you were asked to do some culling because this can be a dangerous operation, although I appreciate the problem with regard to storage accommodation. This is not a question for the Committee of Public Accounts but I will take the opportunity to suggest that great care should be taken to preserve all records for the future. Even the record of a man’s pension may be of vital information for future historians.

—I will take careful note of what you have said.

I do not mean this as a lecture but it would be a tragedy if historical material were not preserved.

—I appreciate that and I can tell the Committee nothing has been lost yet.

I hope that in 100 years time your successor may be able to say that nothing has been lost.

The witness withdrew.

The Committee adjourned.

* See Appendix 9.

* Prl. 3886.