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, 20 Feabhra, 1975

Thursday, 20th February, 1975

The Committee met at 11 a.m.

DEPUTY de VALERA in the chair

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

GENERAL REPORT.

Mr. C. H. Murray called and examined.

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

“Reference was made in previous reports 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. Appropriation Accounts are required by statute to be submitted to me 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 for the year under review had been received by me at 31 May 1973 but all the accounts had been furnished by 30 November. I understand that the delay on this occasion was caused mainly by difficulties arising from the transfer to a new computer of the work of processing of payable orders for the Office of the Paymaster General.”

Have you anything to add, Mr. Mac Gearailt?

Mr. Mac Gearailt.—This paragraph draws attention to the fact that no Appropriation Accounts for 1972-73 were received by 31 May 1973, as required under the administrative arrangements made in 1957 by the Department of Finance. All accounts were, however, received by the statutory date 30 November, 1973. Similar delays occurred in relation to the submission of the 1970-71 and 1971-72 accounts and were referred to in the reports for these years. The delay on this occasion was due in the main to difficulties experienced by the Paymaster General’s Office in the changeover of operations to a new computer in Kilmainham.

53. Chairman.—I am sure this delay makes it very difficult for you as well as for the Comptroller and Auditor General. We would like to know if there is an explanation, Mr. Murray.

—Basically the explanation is as given in the Report of the Comptroller and Auditor General. There were what are generally referred to as “teething problems” in the new computer. We think these have been ironed out now and the monthly accounts on which the Appropriation Accounts are based are being made available relatively promptly. Some figures may illustrate this. For example, in regard to 1971-72 the accounts for March 1972, were not available until August 1972, because of problems with regard to the computer. There was some improvement in 1972-73 when the March accounts were available by the end of June 1973. In 1973-74 the March accounts were available by 23rd April 1974 and in regard to the broken financial year from April to December 1974, the December accounts were available by 29th January 1975. We think we are now in control of the situation.

Chairman.—I think everyone will understand there are teething problems with computers.

54. Deputy Griffin.—Are there new dates involved in view of the new financial year?

—We have indicated the new dates for submission of accounts and we did this in consultation with the Comptroller and Auditor General. The accounts must now be furnished to the Comptroller and Auditor General on or before the end of April in the year following the year to which the accounts relate.

55. Chairman.—You referred to the computer at Kilmainham. Is that computer under the control of the Revenue Commissioners?

—No. It is under the control of the Central Data Processing Section of the Department of the Public Service.

It is in no way associated with the Revenue Commissioners’ computer?

—Not now. Part of the problem was that we changed over from one computer to another.

56. The reason for my question is that considerable extra loading, possibly overloading, has been placed on the Revenue Commissioners’ computer by the health and social services requirements. So I am informed, and naturally that will come before us when the Revenue Commissioners come before us. I was anxious to know whether some similar loading had come on the computer you have to handle. Are there any statutorily required computations other than those in relation to payments for the public service?

—I am not directly involved now in the administration of this computer, but I can give you a general assurance that we are satisfied with what I might call the public accounting requirements. Our public accounting requirements receive proper priority in the processing by computer.

57. You have the capacity?

—Yes.

And you are not embarrassed by extraneous loads resulting from legislation for other purposes? That question is meant to be helpful.

—I understand that.

We understand your problem.

—I would merely point to the fact that we are now able to deliver monthly accounts to Departments before the end of the following month. That fact probably speaks for itself.

“The proof of the pudding is in the eating?” In this particular year anyway you were not embarrassed by any such problem?

—No.

58. Paragraph 2 of the Report of the Comptroller and Auditor General reads:

“Outturn of the Year

The audited accounts are summarised on page xli. The amount to be surrendered as shown in the summary is £12,903,853 arrived at as follows:—

This represents 2 per cent of the supply grants as compared with 1-2 per cent in the previous year.”

Have you anything further to add, Mr. Mac Gearailt?

Mr. Mac Gearailt.—This paragraph gives the usual information regarding the overall out-turn for the year 1972-1973. I have nothing further to add.

59. Chairman.—We have already dealt with the excess. A motion was moved in the Dáil yesterday dealing with it. The amount to be surrendered represents 2 per cent of the supply grants as compared with 1.2 per cent in the previous year. One can understand that with inflation the absolute value of these surrenders will naturally increase, but the percentage relationship seems significant in the sense of percentages of increase. Would you like to comment on that?

—Yes. We were naturally concerned with this ourselves and we were able to identify the Departments in which the main increase took place. In fact, of the total of £12 million, somewhat over one half is attributable to four Departments and there were special circumstances in these four Departments. If I might just illustrate by taking one example: this was the Department of Industry and Commerce. The main factors responsible for their surplus arose under the headings of the Industrial Development Authority and the Shannon Free Airport Development Company; the problem was in estimating the amount of grants that would actually be paid out in the year.

60. As far as you are concerned with these Departments, you are merely concerned that the grants statutorily authorised are made and the balance surrendered?

—That is so. We would, of course, have a general interest in the estimating efficiency of the Departments, because budgetary policy has to be based on what Departments ask for and receive and we would be very much concerned if surpluses occurred in what I might call controllable situations. In other words, if the surpluses were due to estimating errors which might have been corrected. On the other hand, we frankly recognise the problem of Departments operating grants and other facilities where the basis of expenditure and the timing of payments are largely governed by factors outside the immediate control of the Department concerned.

61. Might I summarise by saying that the Committee would be concerned that the relation of the total of the Supply Grants to the grants to be surrendered would be maintained as far as possible at customary level and, in particular, that the increase in percentage—percentage now; naturally the absolute will be governed by other factors— of the amount surrendered should be maintained at the customary levels as far as possible?

—Yes. Would the Chairman permit me a comment on that? Lest there be any confusion let me say straight away that we share the Committee’s concern for the reasons just mentioned. It is as well to point out that if one goes back four or five years one finds that the surrender, as a percentage of the net grant, was considerably greater than it has been in recent years. I am not saying this is an excuse for going back to a higher figure now. Our wish would be that this should be kept at in or about 1 per cent of the net amount. It will be appreciated that there can be factors which are completely outside the limits of prudent financial administration.

62. Some Members who have served a long time in the House will recollect that there was a long period where there was a lot of complaint with the control of the Department of Finance in the expenditure of the other Departments. Great pressure was put on your Department to relax the rigidity. Frankly, I think the pendulum has swung the other way now. In the interests of public accounting and of your own control the emphasis has to be put back a little on maintaining the overall control of your Department on public expenditure. That roughly summarises the position.

—I would accept that.

63. Paragraph 3 of the Report of the Comptroller and Auditor General reads:

“Excess Vote

Expenditure amounting to £27,818 over and above the gross provision made by Dáil Éireann has been incurred on Vote 21—Garda Síochána, and will require an excess vote. There were surplus receipts of £69,539 under appropriations in aid. (See also paragraph 29 of this report).”

Have you anything to add, Mr. Mac Gearailt?

Mr. Mac Gearailt.—This paragraph draws attention to the fact that the provision made by Dáil Éireann under Vote 21—Garda Síochána, was overspent. The circumstances in which this occurred are set forth in paragraph 29 of this report and the matter was dealt with by the Committee last week when the Accounting Officer for the Department of Justice Group of Votes was under examination.

64. Chairman.—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 £4,045,045.”

Mr. Mac Gearailt.—This paragraph gives the total of the Extra Receipts payable to the Exchequer collected by Accounting Officers in the year under review. The breakdown of this total, Vote by Vote, is shown on Page xli. These receipts are brought to credit of the Exchequer under the head— Non-Tax Revenue, Miscellaneous Receipts.

65. Chairman.—Paragraph 5 of the Report of the Comptroller and Auditor General reads:

“Surrender of Balances on 1971-72 Votes

The balances due to be surrendered out of votes for the public services for 1971-72 amounted to £6,388,004. I hereby certify that these balances have been duly surrendered.”

Mr. Mac Gearailt.—As moneys are voted by Dáil Éireann for the service of a particular year it follows that any balances remaining unspent at the 31 March fall to be surrendered to the Exchequer. This paragraph certifies that the moneys due to be surrendered in respect of 1971-72 balances have, in fact, been so surrendered.

66. Deputy Governey.—Is there a limit on the time within which they must be surrendered?

—There is no statutory limit. It is done very quickly.

Chairman.—It is an essential operation to enable you to budget at all.

—That is so.

67. 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.—Stocks and Stores Accounts kept by Government Departments are required to be audited by me on behalf of Dáil Éireann under the provisions of the Exchequer and Audit Departments Act, 1921. This paragraph informs the Dáil that the accounts have been duly audited.

68. Chairman.—Paragraph 7 of the Report of the Comptroller and Auditor General reads:

“Statement of Receipts into the Central Fund for the Year ended 31 March, 1973

Statement of Issues from the Central Fund for the Year ended 31 March, 1973

Mr. Mac Gearailt.—This paragraph shows the breakdown under various heads of moneys received into and paid out of the Central Fund in the year under review.

Chairman.—Many of these would come under the appropriate accounting officers before us. This money is all properly authorised. The context of it is a policy matter rather than an accounting matter. There is no particular accounting comment to make.

—Very well, Chairman.

69. Paragraph 8 of the Report of the Comptroller and Auditor General reads:

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

The Capital Fund, which was established in 1956 to receive the equivalent of the proceeds of a special import levy, was wound up in October 1972 under section 41 of the Finance Act, 1972. The assets of the Fund at the date of winding-up, comprising a cash balance of £203,369, shares in state-sponsored companies, £2,202,422, and repayable advances outstanding, £11,876,723, were transferred to the Exchequer.”

Mr. Mac Gearailt.—This paragraph is for information. It lists the issues from the Capital Fund during the year and draws attention to the winding up of the Fund in October 1972. I have no further comment to make on it.

70. Chairman.—Paragraph 9 of the Report of the Comptroller and Auditor reads:

“Contribution to E.E.C. Budget

The European Communities Act, 1972 provides that from 1 January 1973 the treaties governing the European Communities and the existing and future Acts adopted by the Institutions of those Communities shall be binding on the State and shall be part of the domestic law thereof under the conditions laid down in those treaties. It also provides for the making of regulations by a Minister of State to enable this provision to have full effect. The European Communities (State Financial Transactions) Regulations, 1972 were made by the Minister for Finance under the Act and enable Ireland’s contribution to the E.E.C. budget to be made from the Central Fund. This contribution in respect of 1973 is calculated under the treaty of accession and E.E.C. legislation as 0.2772 per cent. of the Communities’ budget. The issue of £1,172,084 from the Central Fund shown in paragraph 7 represents payments during the three months to 31 March 1973 towards the financing of the Communities’ budget.”

Mr. Mac Gearailt.—This paragraph refers to the Act of 1972 which provides that the treaties governing the European Communities and the Acts of the Communities’ institutions shall be part of our domestic law. It also refers to the making of Regulations enabling our contributions to the EEC budget to be made from the Central Fund. This Contribution forms part of the Central Fund Services and does not require an annual vote by Dáil Éireann. The issue of £1,172,084 mentioned in the paragraph represents our first payments to the EEC budget.

71. Chairman.—With regard to the contribution to the EEC, it does not require an annual Vote?

—No.

72. Nevertheless, your Department must be involved considerably in the administration of the Fund?

—I would hesitate to form a view on whether the Department’s involvement was considerable or not. I am not quibbling over words. I agree that there is a lot of responsibility, particularly in establishing the procedures. This caused us a good deal of work.

What additional work has fallen on your Department?

—Under this specific heading?

Yes.

—I would not say there has been an identifiable additional workload on the Department. The main problem was in establishing the procedures involved. Within limits this has been absorbed into our ongoing routine—although I hesitate to say “routine”—of established administrative controls.

73. In other words, the payments are not made from this State in bulk?

—No.

They are made under a controlled procedure?

—That is so. There is very specific procedure involving, in general, monthly payments.

Is the Comptroller and Auditor General satisfied completely and informed of this situation?

Mr. Mac Gearailt.—Yes.

74. Chairman.—You are satisfied that you have the necessary facilities and resources to do this job efficiently?

—The answer to that is “yes”. The procedures involved were discussed in advance with the Comptroller and Auditor General.

75. Deputy H. Gibbons.—Are they paid in a routine way or on demand? Are they paid each month, is it just an average over the 12 months or are demands made?

—There is an involved procedure whereby, at the end of the year or shortly after the year in question, there is a final setttlement. However, during the year the payments made relate to the amounts required for particular months by the Community.

76. Deputy Griffin.—With the Community budget increasing annually, will our contribution increase accordingly?

—Yes. We can take comfort from the fact that the budget will be increasing mainly because payments by the Community to member states under the Common Agricultural Policy will be increasing. We benefit from the increase in the Community’s budget.

77. Deputy Toal.—Will our percentage remain the same?

—There are involved procedures in the Treaty of Accession under which our proportion of the total Community budget has been fixed at about 0.6 per cent but that figure is only applicable at the end of the transitional period. We phase ourselves into the full contribution over a period of years.

78. Deputy H. Gibbons.—I understand this money is not voted. At what stage will it come before the Dáil for debate? Will it be on the budget debate?

—I would hesitate to give an official answer to that but my experience has been that discussions on the budget are rarely confined and I am sure this might be considered an appropriate matter to be referred to and discussed during the budget debate. However, I must emphasise this is a personal view.

Chairman.—This is a very important question. I am informed there are two reports on developments in connection with the EEC that come before the Dáil each year for debate.

—That is so.

79. Paragraph 10 of the Report of the Comptroller and Auditor General reads:

“Issues under the European Communities Act, 1972

These issues, amounting to £695,626, were also made under the European Communities (State Financial Transactions) Regulations, 1972 referred to in the previous paragraph and comprise:—

(i) £306,000—this amount was advanced to the Minister for Agriculture and Fisheries, in March 1973, to enable him to discharge his function as the Communities’ official Intervention Agency in relation to milk powder offered for intervention. Under EEC price support arrangements an Intervention Agency is responsible for the purchase, storage and resale of agricultural products offered to it. As the milk powder offered in this case did not meet the standards laid down by the EEC it was not accepted by the Agency. The money advanced was therefore not required and was refunded to the Central Fund in April 1973.

(ii) £250,000—this represents the first instalment of Ireland’s subscription to the capital of the European Investment Bank.

(iii) £139,626—this represents the first instalment of Ireland’s contribution to the European Investment Bank’s statutory reserve and to such of its provisions as are equivalent to reserves.

On its accession to the European Communities, Ireland automatically became a member of the European Investment Bank. Its subscription to the Bank’s capital has been fixed at 15 million units of account (equivalent to £6.25 million at the present applicable exchange rate of 2.40 units of account to the Irish pound) of which 20 per cent is payable in five equal instalments over the first two and one-half years after accession, the remainder being payable on call. The contribution towards the reserves of the Bank has been fixed at 1 per cent of the reserves at 31 December 1972 and is payable in five equal instalments over the first two and one-half years after accession.”

Have you anything to add, Mr. Mac Gearailt?

Mr. Mac Gearailt.—This paragraph gives the breakdown of the issues “below the line” during the year from the Central Fund under the European Communities Act, 1972. They comprise advances to the Minister for Agriculture and Fisheries to meet expenditure in relation to milk powder offered for intervention as well as the first instalment of Ireland’s subscription to the capital of the European Investment Bank and the first instalment of our contribution towards the Bank’s reserves.

80. Chairman.—I take it there has been no administrative problem either for you or for the Comptroller and Auditor General?

—I think not. This would apply particularly with regard to items (ii) and (iii) mentioned here. The prime responsibility, or the location of the main work involved in (i), is in the Department of Agriculture and Fisheries. However, insofar as our function is to provide the money and to ensure that what we provide is the correct amount, this is not a major matter although the amounts involved now under item (i) are very large indeed.

81. Deputy H. Gibbons.—Arising out of the statement of the Accounting Officer, from what source is the money, which is a large amount, made available? Obviously interest will have to be paid. Can we recover the interest from the EEC intervention fund or what is the procedure?

—With regard to the first part of the question regarding the source from which the money is provided, so far as we are concerned this is one of a number of demands on the Exchequer. I do not think there would be any great point in saying that we raise a certain amount of money from a certain quarter in a certain way and that it is used for a particular aspect of expenditure. The financing of these payments is part and parcel of the overall financing of the Exchequer. On the second point, there are provisions in Brussels for the recovery of some of the interest payments involved. In principle, the cost to member states of providing the finance for intervention purchases is recouped to member states by a rather involved procedure that I need not go into now. I stress “in principle”, because the Community have taken a view that the interest rate they must take into account, and on which they must base their repayments, is what I might call in shorthand the average appropriate rate of interest in the Community. It so happens that at the moment the rate we are paying exceeds that rate. So far as this particular year was concerned, this was not a relevant issue because the payment in question was a provisional payment, the first we made. In the event it was found no payment was required and the amount was refunded to the Central Fund, so that in 1972-73 the sort of issue we are talking about did not arise.

82. I take it the payment referred to in paragraph 9 cannot be written off against the payment mentioned in paragraph 10?

—No. They are completely separate transactions.

83. Chairman.—May I take it that these matters of financing are issues under the European Communities Act, 1972?

—Yes.

84. I take it that what you mean by the general revenue of the State are the funds provided from the items listed in paragraph 7, namely, revenue, repayments under various Acts and money raised by debts generally paid out of taxation, loans and whatever you recoup from grants to semi-State bodies in particular?

—Perhaps I was too general in my remarks. We regard payments under paragraph 10 (i) as capital repayments and, therefore, it would be quite exceptional for us to finance it by taxation. In fact, we have not financed it by taxation. We finance it as an element in the total capital payments we have to make. We finance it, therefore, in various ways, generally by various forms of borrowing. I am really talking now about the existing basis because we are at the moment actively considering new arrangements for the financing of these payments since they have now got so large that their size introduces a new dimension. We are far advanced in our consideration of alternative ways of financing these. We are also considering the point raised by Deputy Dr. Gibbons as to what happens when there is a large gap between the price of the money to us and the rate at which we get recoupment from the Community. These are policy areas we are at the moment considering.

Will these require legislation?

—No. Certainly the first will not because it is merely a question of changing the type of borrowing we do.

This is a question of accounting administration then?

—Yes, that is one way of putting it.

85. In those circumstances, may the Committee ask you to furnish us before the change with a note on existing procedures?

—Certainly.

If you will send us a short note setting out the details to avoid questions in future—a note to answer Deputy Dr. Gibbon’s point.

—Certainly. We will do that.*

86. Paragraph 11 of the Report of the Comptroller and Auditor General reads:

“Issues under the National Building Agency Limited Acts, 1963 and 1969

As shown in paragraph 7 issues from the Central Fund in the year 1972-73 to the National Building Agency under the above Acts amounted to £680,000. In the course of the audit of the accounts of the Agency for the year ended 31 March 1973 I noted that in February 1973, shortly after it had received £280,000 from the Central Fund, the Agency had placed £400,000 on deposit with its bankers. This amount remained on deposit at 31 March 1973. Issues from the Central Fund to the Agency are made on the recommendation of the Minister for Local Government and I sought information from the Accounting Officer for the Vote for Local Government regarding the controls exercised by his Department over such issues. He has informed me that the Minister does not operate any detailed controls over the day-to-day management of the Agency’s accounts. When the Minister is satisfied, in the light of the Agency’s expenditure on its on-going programme, its contractual liabilities at the time, the period of the year, and the overall allocation of the Agency under the Capital Budget, that an issue of moneys is justified he forwards the requisite recommendation to the Minister for Finance. The Accounting Officer also informed me that the £280,000 paid in February was recommended for issue as the final instalment of the Agency’s capital allocation for 1972-73 which was required to meet estimated expenditure on works carried out on behalf of the Agency within the financial year and contractual liabilities at that time. As it appears to me that public moneys in excess of the Agency’s immediate cash requirements may have been issued in the year under review I have deemed it desirable to draw attention to this matter.

The control of the issue of public moneys to semi-state bodies is also referred to in paragraphs 57 and 76. In addition to communicating with the Accounting Officers immediately responsible for this control I have brought the matter to the attention of the Accounting Officer of the Department of Finance.”

Mr. Mac Gearailt.—This paragraph draws attention to the issue of moneys to the National Building Agency in excess of its immediate cash requirements. The paragraph also contains details of the Accounting Officer’s reply to our query. Our concern in such cases is to ensure that public money is not issued from the Exchequer before it is required or in larger sums than the service for which it is issued requires. This is especially important having regard to the high cost of borrowing for Exchequer purposes. As indicated in the paragraph, I drew the attention of the Accounting Officer of the Department of Finance as the central financial authority to this case and to two somewhat similar cases which are reported in paragraphs 57 and 76. He has informed me that the Departments concerned have introduced or have been instructed to introduce arrangements which will ensure that amounts issued to semi-State bodies are sufficient only to meet immediate requirements and that in no circumstances must large balances be allowed to accumulate in their hands.

87. Chairman.—Would the Accounting Officer care to comment?

—It is as the Comptroller and Auditor General has said: we did receive this notification from him and, having examined it, we told him what changes were envisaged or had, in fact, been introduced. We did this after the date of this report before you and he has now carefully recorded the terms of our reply. We ourselves are examining how the bodies mentioned by the Comptroller and Auditor General are operating this new procedure and we think it is a little early yet to come to any final views because, in fact, it was only in the middle of last year that we gave instructions as to what the change would be. The Committee can rest assured we will keep this under close review.

88. This problem appears to arise in the case mainly of what amounts to a grant-in-aid from the point of view of your control. Is that correct?

—In the event, this is what will happen.

This is where the problem arises. The moneys are voted, but in such a way— whether by grants or otherwise—that the direct normal control you would have over public expenditure does not operate?

—I would hesitate to generalise quite on those lines because one of the cases involved was the National Building Agency and, even in the case of the Shannon Free Airport Development Company, while it is true it is a grant-giving body, it is also a body that incurs large expenditure under its own control in the development of the estate and related matters, so I would hesitate to generalise.

89. I will accept that but, if you put in that caveat, then I would like to ask you would you consider the areas to which you have restricted this to be areas for which the Minister would be answerable in the Dáil by way of Parliamentary Question or are they outside that?

—I was going to come back to that aspect independently, apart from the way you, Mr. Chairman, have put it because the position is that the prime responsibility in this matter rests with the Departments concerned. We can lay down the general ground rules on this, tell them the precautions they should take and the general conditions they should lay down. But the extent to which, in the event, State bodies or other agencies under their control conform with these ground rules or conditions is a matter primarily for the Department concerned.

90. But you have not the same direct control over these funds that the Department operates over, say, direct public service expenditure?

—No, I would not make that distinction.

Have you control then?

—I would not distinguish in the type of control we have as between, shall we say, voted moneys and non-voted moneys. I would not make a distinction.

91. This is a very important question now for this Committee because, in effect, what we are asking you is what you and the other Accounting Officers are responsible for and the Committee would take the view that we are entitled to all information in that area and, going a little further, that the Dáil would be entitled to be informed. We have constantly got the answer in the case of State bodies that these have passed beyond the orbit, as it were. I am not asking this as a trap question or a difficult question. I just want to clarify the position. Have you or have you not got direct control over these moneys after they pass to these bodies?

—May I say, with the greatest respect, that you are raising a matter that does not arise directly on this particular paragraph? I am not saying the question is not a proper one to raise but what is raised in this paragraph is whether there are proper accounting procedures which ensure that at any given point of time the agency receives only the amount of money required for its purposes.

92. I know we are discussing this paragraph. I am in the Chair and decide what is a relevant question. It has a bearing on this paragraph. I quite accept it is not something directly concerned with the paragraph. You will agree it has relevance because we refer to excesses and the amount to be surrendered. Here is one case where moneys were paid from the State and, as we see it, unless you explain otherwise, should have been surrendered back. Instead they have been put on deposit for the purposes of this. That creates budgeting problems for your Department. A similar question arises in other paragraphs. I am trying to determine where your area of responsibility in such matters is. Naturally, we accept what you say. There is no question of not accepting your answer. It is a question of trying to determine whether you have control or whether you have to accept a fact arising from the legislation.

Deputy H. Gibbons—Is there an obligation on a State body to surrender whatever moneys they have at the end of the financial year?

—If I may answer the Chairman first, my earlier remark to the Chairman was not intended to suggest that I queried whether the question was relevant or not. I thought he was raising a much broader question of control of State bodies.

Chairman.—In that sense, yes.

—The broader aspect of control and responsibility to Parliament goes far beyond what is raised in this paragraph. I was trying to relate my remarks to this paragraph. This is as good an example as you will find of the relative responsibility of Accounting Officers and of the Department of Finance and other Departments. I fully share the concern of the Comptroller and Auditor General and this Committee’s concern about moneys paid out of the Exchequer over and above the amounts required to meet the current and immediate requirements of the business in question. This is something that must be checked. Our initial concern and responsibility is to ensure that Accounting Officers are made fully aware that this is a practice that is not to be condoned. We must also lay down the broad rules. This can only be done in very general terms. We have said that arrangements must be adequate to ensure that amounts issued to these bodies are sufficient to meet only immediate requirements and that in no circumstances must large balances be allowed to accumulate in their hands. Two terms are used—“immediate requirements” and “large balances”. Each Department must decide what is “immediate” and what is “large” in relation to their specific requirements. If we were to go beyond that general description and indicate more precise arrangements in the case of each body we would have to revise these arrangements as time went on. What is appropriate for a particular body at a given point in time might not be appropriate later. The prime responsibility for policing these arrangements rests with Departments.

93. This is completely accepted. You must supervise matters. If you do the work in detail you might lose sight of the wood for the trees. We want to get as clear a view as possible of your responsibility and potential for exercising it in this general area. The Committee accept what you have said in your attitude towards the Accounting Officers. My concern was prompted by my wish to make sure that you have overall supervisory control. We can understand the immediate problem caused to you by budgeting, apart from the fact that it would be highly undesirable, if a loophole of this nature was discovered, to permit of evasion of surrendering funds to the Exchequer when they should be surrendered. If that state of affairs became more complex our problems and those of the Accounting Officers would also become more complex. All these procedures should be defined and observed. We want to be helpful.

—I fully accept that. We realise the seriousness of this issue. Our position in this matter in regard to other Departments is not in dispute. They accept the principle involved and that we have a responsiblity and a concern. It is a question of how one applies this in practice. In all cases concerned, we are looking at how this operates. In one case we are not yet happy about it on the basis of the information given to us by the Department concerned. We are in touch with the Department concerned about this.

94. Deputy H. Gibbons.—If the directives are read and followed reasonably there should be no great surplus at the end of the financial year?

—Yes, or during the course of the financial year. We will not be satisfied with window-dressing or a system under which for eleven months payments are excessive and then in the final month everything is put in order. It is a question of reasonable administration. We have laid down the general rules.

95. Is there an obligation on these bodies to pay back some of their balances at the end of the year?

—There is no statutory obligation. Excess amounts may be issued from time to time. The control should be such that, when the payment for the following month is being determined, any excess is taken into account in regard to the current month.

96. Deputy Governey.—Is this the first occasion anything like this has happened, or at least has come to light? If it is not the first occasion, is this sum the largest amount that was involved?

—I think generally it is the first time. at least for some time, this has been brought to notice. The Comptroller and Auditor General might like to comment?

Mr. Mac Gearailt.—I think that fairly recently we had one other case—I am speaking subject to correction—but I do not think there was anything as large as this involved.

97. Deputy Toal.—Who determines the capital allocations each year?

—This is part of the general process of determining the total level of expenditure. A view regarding its requirements is formed by the body itself, it discusses it with the parent Department, it is discussed with the Department of Finance and the final decision is taken in the light of views about the overall total expenditure. The matter is very much a question of central control. There is no question of the body concerned or the Department in question having the final say. It is one element in the total overall expenditure.

98. Deputy Governey.—In this case where money was put on deposit—I know it was only for one month—would the Comptroller and Auditor General say who got the interest?

Mr. Mac Gearailt.—Is the Deputy referring to the Agency?

Deputy Governey.—Yes.

Mr. Mac Gearailt.—They would retain the interest. In fairness to the Agency, may I say they would be liable for interest to the Exchequer on their advances. That does not apply to at least one of the other bodies who made a profit. I have deliberately not gone into specific cases here because you may wish to raise them with the Accounting Officers concerned.

Chairman.—Yes. Is the Comptroller and Auditor General satisfied?

Mr. Mac Gearailt.—Yes.

Chairman.—All we can say is that we agree with the point of view of the Comptroller and Auditor General. Full cooperation is the only way to deal with the problem. That disposes of paragraphs 1 to 11.

99. Deputy H. Gibbons.—Am I in order if I ask the Accounting Officer to outline how the budget is prepared each year or is this the appropriate occasion to do so? For example, he said they consult people and that the Secretaries of the Departments confer together. The process of preparation of the budget is a complete mystery to me. Am I in order in raising it here?

Chairman.—It would be out of order on a policy basis but I think that to discuss the mechanics is in order. On one occasion I had some slight experience of the public service and I think that first the Departments prepare their Estimates or demands for submission to the Department of Finance. Is that correct?

—Yes.

They come to the Department of Finance and a process of consultation and pruning takes place on a purely accounting and administrative level. At some stage policy matters, which are not our concern, arise as to whether certain expenditure is to be made and either a Minister or the Government decides on that. We are precluded from asking questions about such matters. After scrutiny by the Department of Finance, the Estimates are approved first from the administrative point of view and then they are approved from the political viewpoint. In theory they should come before the Dáil for passing but in fact the actual voting on the Estimate may be pretty much ex post facto. This is one of the matters we have been raising recently. In fact, you have to act on those Estimates virtually from the time they are published?

—We have, of course, statutory cover for doing this.

Of course. I am not questioning that for a moment.

—There is a sensible procedure under the Central Fund (Permanent Provisions) Act, 1965, whereby payments can be made out of central funds of up to 80 per cent of the preceding year’s voted provisions.

100. This brings up the old question of the manager and the shareholders. The manager wants to get the work done but the supervision and control of expenditure can often be in conflict with efficiency and the carrying out of duties. I quite realise the Act you referred to is not for discussion here and that you are operating under that, but have I roughly outlined the procedure followed?

—If I may say so, you have outlined very briefly a procedure that takes a long time.

Of course it does. Before we proceed, is there anything you would like to say to us from the point of view of expressing any difficulty that might exist for you where the Committee might be able to help? I sometimes ask Accounting Officers this question. If there is not, we can pass on to deal with Vote No. 1.

—No. I appreciate the concern behind the question but at this stage I will say no, thank you.

VOTE 1—PRESIDENT’S ESTABLISHMENT.

Mr. C. H. Murray further examined.

101. Chairman.—Might I ask one question which is relevant to all Estimates? You may not feel it is a matter for you to answer or you may feel you are not in a position to answer, in which case no answer is required. We notice in practically all Estimates there are now very substantial sums for Post Office services within Departments, which seems to suggest a considerable amount of internal accounting. Having regard to the fact that the telephone service in the Department of Posts and Telegraphs is a State service, may I make a suggestion rather than ask a question, even though I phrase it in the form of a question? Would any economy be achieved by simply having free telephone communication and postage within the State service itself? Would that eliminate accounting and make for greater efficiency and economy? I do not expect an answer. I make the suggestion for consideration. The old idea was that the Post Office was a commercial operation, but the situation has changed. The question is a surprise question because you could not have anticipated it and you could very properly say we should raise it with the proper Accounting Officer first. I merely throw this out as a suggestion because it might be something to be considered at the top.

—May I give you a quick, general reaction to this?

Not unless you wish?

—I will give it without prejudice. The reason for this change was an attempt, as I think you know, to indicate on a quasi-commercial basis what the total expenditure of the Post Office is and what the total receipts would be if they were deemed to be at arm’s length, and this involves an entry for Post Office services in the Estimates for individual Departments. I hesitated for a moment in answering and the reason I did was because I am not personally familiar with the amount of work this involves for individual Departments. I am assured that the work in administering these arrangements is not substantial and my provisional judgment is that, having regard to the arguments in favour of this new approach from the viewpoint of the Department of Posts and Telegraphs, it is unlikely the administration work involved in individual Departments is sufficient to outweigh the arguments in favour. Having said that, perhaps I could look at the matter again and, if I find that general statement needs to be clarified in any way, I can let you have a note.

I repeat what I said was intended more in the nature of a suggestion rather than a question. Where there might be an area of answer it is, as you say, absolutely without prejudice.

—I shall certainly follow that up.

We do not want to impose any burden of that kind on you. It is just a suggestion.

VOTE 6—OFFICE OF THE MINISTER FOR FINANCE.

Mr. C. H. Murray further examined.

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

“Subhead K.—Payment to Special Regional Development Fund (Grant-in-Aid)

Reference was made in previous reports to payments into the above Fund from which grants and advances are made to assist economic projects in western counties. A further £350,000 was provided in the year and, as shown in the account of the Fund appended to the appropriation account, grants totalling £184,940 and repayable advances amounting to £71,509 were issued. Repayments of principal and interest totalled £27,514 and refunds of unexpended grants amounted to £572.

Notes to the account of the Fund indicate that, having regard to changes in certain activities of Gael-Linn Teoranta, repayable advances of £87,500, issued to the Company prior to 1 April 1972, were converted into a grant. This conversion was effected in March 1973 and interest amounting to some £26,000, then due on these advances, was waived. (See also paragraphs 20, 55 and 56).”

Mr. Mac Gearailt.—The Account of the Fund for the year is appended to the Appropriation Account and appears on page 12 of the Volume. Also appended are schedules giving details of the grants, and repayable advances made in the year and the advances outstanding at 31 March, 1973.

103. Chairman.—Do you wish to make any comment, Mr. Murray?

—Merely to say, on a general aspect, that the Committee has been interested in the past in the general administrative arrangements relating to this Special Regional Development Fund and related matters. The Committee was aware, I think, that this matter has been examined over some years. Specific proposals for changes in the present set-up have been submitted to the Government in the very recent past.

Deputy H. Gibbons.—You say proposals have been made to the Government and we have, I suppose, to await the Government’s decision.

—That is right.

104. Chairman.—Under subhead C— Post Office Services—without adverting to the earlier question, there is a big increase. Was that due to increased costs?

—Basically, it was. If you look at the explanatory note you will see that the main part of the increase arose in relation to increased costs of management of savings certificates and related matters, as distinct from postal services.

The savings certificates would have been in the same category then as salaries and wages?

—Yes. Increased costs would be the main factor.

105. Under subhead D—Management of Government Stocks—what exactly is involved there?

—This covers specific payments for the management of national loans, prize bonds, land bonds and external loans. This is oversimplifying it but, taking one aspect, it would be a payment, for example, to the Central Bank for keeping the registers of the national loans.

106. Deputy H. Gibbons.—The Central Bank does all this work now?

—I hesitated over the words “Central Bank” because there has been a process of change. The present position is that the registers for all the national loans are now managed by the Central Bank.

107. Chairman.—On subhead F—Economic and Social Research Institute—these are simply grants-in-aid?

—Yes.

Do these institutions directly help you in the administration? Are they grants-in-aid for social policy reasons?

—These are autonomous institutions.

Does the State make use of them?

—Yes, indeed.

It gets certain service from them?

—Yes. It may pay for the service it gets in some cases. The grant-in-aid is not made on any condition that the institutions provide a certain service for the State.

108. Deputy H. Gibbons.—On subhead G —Beartas i leith na Gaeilge—what is covered?

—This subhead covers Comhairle na Gaeilge which was recently disbanded and is now replaced by Bord na Gaeilge. It also covers expenditure in regard to the Language Attitudes Research Survey.

109. Chairman.—There is a note on subhead H—National Savings Committee. Would you expand on it? Was the excess due to five quarterly accounts being recouped to the Department of Posts and Telegraphs and partly to increases in salaries not provided for?

—The position in regard to this committee is that its accounts are paid by the Post Office directly. We recoup the Post Office quarterly in arrear. In the preceding year there was a delay by the Post Office in seeking recoupment for one quarter and we had to pay five quarters in this year. In the preceding year we made only three quarterly payments.

110. Deputy H. Gibbons.—On subhead J —Grants for County Development Work— does this cover the payment of regional development officers?

—No. It covers only expenditure related to county development teams. In one case there is not a county development team in operation but there is a county development officer. The proper description of the work is regional development work. The county development officers service the county development teams.

Chairman.—The excess is substantial but it was an experimental period.

—That is so. There are over 12 organisations involved throughout the country and it is not always easy to get the accounts from them in time.

111. Deputy H. Gibbons.—On subhead M —Science and Technology—there is a note. There is some duplication or triplication here. The Departments of Education and of Industry and Commerce make some grants. Who has control over technology and science as a whole?

—One of the indirect functions of the National Science Council which is mainly concerned with the administration of the amounts provided under this subhead is to help with the co-ordination at a departmental level. There is representation on the council from the Departments of Industry and Commerce, Education and Finance.

112. On extra Remuneration—would it not be more appropriate if the £500 paid to a director of Nítrigin Éireann Teoranta and the £200 to a director of the National Stud should be charged to their accounts?

—They are not charged to our accounts. The State body in question pays them. This merely indicates the extent to which officers are paid other than from the Department

Chairman.—It is intended to be information about officers in the civil service?

—Yes.

113. Deputy H. Gibbons.—On the Special Regional Development Fund account, there are seven companies in receivership.

—The present position varies from company to company. I have a note stating that the final report from the receiver is expected in respect of the first of these companies. A second company was liquidated. A certain amount was recoverable and the balance is not recoverable. A simple statement cannot cover them all. Following my last appearance before this Committee I gave information indicating the extent to which the amounts advanced from the State were irrecoverable or were written off and our estimates of the extent to which the remaining amounts were likely to be recovered. That broader statement might be more informative than looking at individual cases which can change from year to year.

114. Deputy Governey.—In the third note it is stated that repayable advances of £87,500 issued prior to 1st April, 1972, were converted into a grant in the year under review. Is this the usual procedure?

—It is not an unusual procedure. The amounts involved were unusually large but what happened in this case was that assistance which was sought was given in the form of a loan because it was considered that the concern in question would be able to repay it. In the event when that assumption was proved false it was given as a grant.

115. Deputy H. Gibbons.—At 31st March 1973 the total repayable advances outstanding were £416,517. Has the situation improved?

—I think the best I can do is to give you a note on that. This is a position that changes from year to year and from case to case. You will see this when you have the Appropriation Accounts for 1973-74 before you, but if you wish I can anticipate that by giving you a note.*

Chairman.—That would be very helpful.

VOTE 9—STATE LABORATORY.

Mr. C. H. Murray called.

No question.

VOTE 13—SECRET SERVICE.

Mr. C. H. Murray called.

No question.

VOTE 14—AGRICULTURAL GRANTS.

Mr. C. H. Murray further examined.

116. Deputy Griffin.—On subhead B— Supplementary Allowance—where does the EEC fund fit into this context?

—It is not relevant in this context.

Where is it accounted for?

—So far as it involves payments which come into the Exchequer, they would be largely reflected in the Appropriation Accounts of the Department of Agriculture and Fisheries.

117. Chairman.—On the overall estimate —having regard to the fact that the total is in the region of £30 million—the expenditure under the heading “Less than granted” is slightly over 1 per cent of the estimation. I do not think you can do much better than that.

—We have a problem here because this really turns on estimating the level of rates to be struck. The actual sum under the heading “Less than granted” is a relatively small percentage of the total involved.

VOTE 16—MISCELLANEOUS EXPENSES.

Mr. C. H. Murray further examined.

118. Deputy Toal.—On subhead A—The National Theatre Society Limited—may I ask how many theatres avail of this?

—This formal title, The National Theatre Society Limited, is a formal way of referring to the Abbey Theatre. It is the Abbey that is covered by this and not other theatres. However, you will notice in subhead B. there is additional aid provided for other theatres.

119. Chairman.—Subhead B has a note to the effect that as the legal and other formalities relating to the establishment of the second theatre company, the touring company, were not completed before the end of the year, the money provided could not be spent.

Deputy Toal.—Are there no grants to other theatres?

—Yes, under subhead B. That subhead covers a grant to the Gate Theatre and was intended to cover grants to the new Irish Theatre Company. There were delays as indicated but the new company has been established and grants will be payable this year.

120. Deputy Governey.—Under subhead H—Commemoration of the Anglo-Irish Truce 1921—there was a delay by the contractor supplying medals. Have they been supplied?

—Yes. The payment was made in 1973-74.

121. Deputy Toal.—On subhead I—Contribution to Fund established by the Assembly of the Northern Irish People (Grant-in-Aid)—what exactly is this fund?

—Perhaps I could refer the Committee to the statement made by the Minister for Finance in introducing the Supplementary Estimate for this amount. The Supplementary Estimate was introduced on 28th March 1973 and, in introducing it, the Minister said:

“Members of the House will be aware that the previous Government, subject to the approval of Dáil Éireann, undertook in the aftermath of the Derry shootings in January 1972, to provide moneys through suitable channels to help the minority in Northern Ireland to achieve through peaceful action a just form of administration.”

The Minister went on to say that the previous Government had decided that assistance in this way would be given by a grant-in-aid to the Assembly of the Northern Irish People which certain people up North had decided to establish following the Derry shootings in January, 1972, and it was decided that the relief would be restricted to defraying the cost of administration and publicity—in other words, to cover the initial expenses of an appeal for funds launched by the Assembly of the Northern Ireland People. The amounts paid out were of the order of £9.500. These were paid to the trustees of the Northern Ireland Assembly. The amounts were paid into an account in an Irish bank in the name of the trustees of the Assembly. It was provided that the account was to be used solely for the purposes specified in the grant-in-aid and there was a prohibition on using any of the moneys in that special account for the purpose of making payments into any other accounts operated by the Northern Ireland Assembly: in other words, this particular account could only be used either to receive payments from the grant-in-aid for the purposes appropriate to the grant-in-aid or, indeed, to receive payments from other sources, but it could not be used for making payments on behalf of the Assembly for purposes other than those authorised by the grant-in-aid. Might I summarise by saying that while this was, in fact, provided as a grant-in-aid, it was really operated as a grant because the amounts were only paid on foot of vouched detailed expenses submitted by the appropriate people up North.

122. Deputy Griffin.—Is the fund still in existence?

—No. It has been cleared out. I am speaking now insofar as the Exchequer is involved. We have no knowledge of what, if anything, was done with other moneys.

Is there a current fund?

—There may be for all we know, but there are no current commitments on behalf of the State to any such fund. There was only one payment by the Exchequer.

VOTE 49—INCREASES IN PENSIONS AND ALLOWANCES.

Mr. C. H. Murray further examined.

123. Chairman.—Would the Accounting Officer state very generally the main reason for these increases?

—Speaking very generally, this particular Estimate was necessary because, after the Estimates had been prepared initially, various national pay agreements were entered into and these had to be provided for and there were consequential changes then in pensions.

124. State pensions are geared to some extent to existing salaries?

—That is so.

And also to national pay agreements?

—They affect pensions as well.

125. You have details of expenditure listed here under various heads—Civil Service, National and Secondary School Teachers, Garda Síochána, RIC, Defence Forces and Local Authorities. I take it in each case there are statutory schemes in operation and the pensions are paid under these statutory schemes. Is that correct?

—For some time now the administration of this has passed over to the Department of the Public Service and I am just a little uncertain as to whether they are statutory in all cases.

I am talking about this particular year?

—I would like to check up on that. Perhaps I could let you have a note on it.

For the Committee’s information would you let us have a note on the pension provisions applicable under this Vote?

—Provided you will be indulgent and be satisfied with a very broad statement because, for any one of these, a detailed and complete statement could be quite long.

If there are objections to furnishing the information at this stage we will not press you?

—It is not a case of objection. All I am saying is that I know in regard to the Civil Service that a comprehensive statement on the regulations and conditions determining Civil Service pensions could run into a number of pages.

When you speak of regulations, I agree. It is all on statutory authority?

—Quite so. Yes.

I misunderstood you the first time. It is all covered by certain regulations.

—You wish to have an assurance on that? Very well.

It would be helpful to have in each case an indication of the statutory authority.* The difficulty for us is not the principal authority. That is easily traced. We must make sure to have all the orders and consequential directions under them. Perhaps you could supply the secretary of the Committee with that information should the Committee need it. It might not be a matter for investigation. We have no reason to understand that we should investigate it, if nobody has any comment to make, adverse or otherwise. I just wished to make it quite clear that these increases are automatically largely geared to increases in the public sector.

—Yes.

That is really the only point arising. If there is anything we should specifically question our watchdog will not allow us to slack.

126. Deputy H. Gibbons.—Perhaps in future years a table might be included covering all payments to and receipts from the EEC. Would that be in order? Could there be a table showing them in next year’s Appropriation Accounts?

—Certainly, if you allow us to consider how best that might be done. Generally, explanatory notes are related to specific Votes. What Deputy H. Gibbons has in mind would relate to a number of Votes. Some receipts go to the private sector. The Deputy has in mind receipts and payments involving the Exchequer and the Central Fund. We will be glad to see how we can give that information to the Committee.

What I have in mind would be a table showing outgoings and income.

—We will consider how best we might do that.*

Chairman.—That is all, Mr. Murray. Thank you very much.

The witness withdrew.

The Committee adjourned.

* See Appendix 5 .

*See Appendix 6.

* See Appendix 7.

*See Appendix 8.