Committee Reports > List of Committees > Dáil > 1976 > Committee of Public Accounts > Report - Appropriation Accounts 1973 - 1974

MIONTUAIRISC NA FINNEACHTA

(Minutes of Evidence)

Déardaoin, 5 Feabhra, 1976.

Thursday, 5th February, 1976.

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.

VOTE 45—FOREIGN AFFAIRS.

Mr. P. Keating called and examined.

419. Chairman.—Paragraph 58 of the Report of the Comptroller and Auditor General reads:

“Subhead J—Contributions to Bodies in Ireland for the furtherance of International Relations (Grants-in-Aid)

The charge to the subhead comprises:—

(1) A grant of £17,000 to the Irish Council of the European Movement and

(2) A grant of £500 to the Irish United Nations Association.

(1) The Irish Council of the European Movement, founded in 1955 as a branch of the International European Movement, was incorporated in January 1964 as a company limited by guarantee and not having a share capital. The general object of the Council is to spread the idea of the essential unity of Europe and of the desirability of greater unity among the nations of Europe and to encourage and promote studies and activities to this end.

(2) The Irish United Nations Association was formed in the late 1950s for the purpose of promoting a public interest in and support for the United Nations and its Agencies.”

Mr. Mac Gearailt.—This paragraph is for information only. Copies of the audited accounts of the two bodies mentioned have been received by me.

Chairman.—There is no comment from the Committee on this. Would you like to say anything, Mr. Keating?

—I do not think I have anything to add.

420. Then we can move on to the Vote itself. On subhead A—Salaries, Wages and Allowances—there is saving which was mainly due to unfilled posts. That does not mean it is causing you any particular difficulty in the Department?

—No. There were delays in final arrangements for provision of certain posts in connection with information activities abroad in the new programme. These were rectified in the year. We had made provision before we had made the final arrangements for the new posts. This was one of the main causes of this.

421. In subhead B—Travelling and Incidental Expenses—in these days when expenses are going up very much one does not expect to see a saving there?

—It was a saving on the supplementary grant.

422. On subhead D—Repatriation and Maintenance of Destitute Irish Persons Abroad—there is a note: “Accurate Estimation is difficult. The number of cases arising during the year proved higher than expected.” Is this influenced by such things as the Lebanon and places like that?

—This kind of incident can affect repatriation. Contingencies can arise due to civil disturbances in other countries which are unforeseen. I do not think there was any serious case in this year. It was a question, I think, of economic difficulties throughout the world which caused this.

423. Deputy Toal.—What percentage of these moneys is recouped?

—We write off about 5 per cent every year of the money spent every year. We recover, in other words, about 95 per cent.

424. Chairman.—On subhead F—Information Services—there was a saving here.

Deputy MacSharry.—What projects were not fully utilised during the year?

—This ties in to a certain extent with the question about the saving on staff I mentioned earlier. We had decided to implement a new programme of information services abroad. This involves increasing our staff. We did not find it possible to increase the staff in time to implement the programme we had devised. It was a new development in the Department.

VOTE 46—INTERNATIONAL CO-OPERATION.

Mr. P. Keating further examined.

425. Chairman.—Paragraph 59 of the Report of the Comptroller and Auditor General reads:

“Subhead C.10—Contribution towards the United Nations Emergency Force

Provision was made by supplementary estimate for the payment of a contribution to the United Nations towards the cost of the Emergency Force established in the Middle East in October 1973 by the United Nations Security Council.

Ireland’s share of the costs of operation of the Emergency Force for the period 25 October, 1973 to 24 April, 1974 was assessed by the General Assembly of the United Nations Organisation at 45,000 dollars, i.e. 0.15 per cent. of the 30,000,000 dollars appropriated for the purpose. The charge to the subhead, £18,805, is the sterling equivalent.”

Mr. Mac Gearailt.—This paragraph is for information only. Ireland has made further contributions towards the cost of this Emergency Force covering the period up to July, 1975.

426. Deputy H. Gibbons.—Is this not covered by the Department of Defence Estimate?

—No. The money paid by our Department has nothing to do with the actual Irish troops in the Middle East. There is a recoupment to Ireland of the expenditure involved in sending our troops to the Middle East and that is recouped to the Department of Defence. This is a contribution to the total force of all nationalities.

Whether we have anybody serving abroad?

—Whether we have anybody serving or not.

427. Deputy MacSharry.—It is specifically in relation to the Middle East?

—This was the decision taken about the Middle East crisis. The contribution was to pay for the specific UNEF force in the Middle East. The UNTSO and other forces are paid for out of the regular budget of the UN.

428. Chairman.—Paragraph 60 of the Report of the Comptroller and Auditor General reads:

“Subhead G.1—Contributions to Interim Agency for Personal Service in Developing Countries (Grant-in-Aid)

The Agency was incorporated under the Companies Act, 1963, on 28 March, 1974, as a company limited by guarantee and not having a share capital. Its primary object is the promotion of temporary service by Irish workers on economic and social development projects in developing countries. In the year under review a grant-in-aid of £30,000 out of the provision of £100,000 in the subhead was issued to the Agency whose accounts will be audited by me.”

Mr. Mac Gearailt.—This paragraph is for information only. The accounts of the Agency for the period ended 31st December, 1974, have been audited by me.

429. Chairman.—Paragraph 61 of the Report of the Comptroller and Auditor General reads:

“Subhead G.2.—Disaster Relief in Developing Countries

Provision was made by way of two supplementary estimates for contributions towards the relief of distress in developing countries caused by natural or man-made disasters.

The charge to the subhead comprises:—

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

430. Deputy H. Gibbons.—The Sahelian Desert appears under three headings. Does that mean there is not a unified approach?

—The Sahelian Desert is the southern edge of the Sahara. It spreads almost from West Africa across to East Africa. It is a very large area. Due to changes in climatic conditions there were about three years of drought which gave rise to great famine difficulties in a number of separate countries. A number of different organisations were involved in different areas. You will notice that the agencies involved were the FAO, which was a general food provision programme; UNICEF, which was for women and children in Ethiopia specifically; the Red Cross Society, again for Ethiopia where there was a certain Irish involvement because of teams from Concern who had gone there. The last one, No. 6, was the transport of dried milk to the western edge of this area.

431. Chairman.—Paragraph 62 of the Report of the Comptroller and Auditor General reads:—

“Subhead G.3—Bilateral and other Aid Contributions for Developing Countries

The charge to the subhead comprises:—

(1) a contribution of £80,000 towards the cost of two projects designed to improve the water supply and the condition of certain fisheries in Upper Volta in West Africa. The sum provided has been lodged to a trust account for which the United Nations will serve as trustee until the funds are paid over to a designated bank or executing agency.

(2) a contribution of £10,000 to the United Nations Special Sahelian Office towards its administration costs.

(3) a contribution of £150,000 towards the cost of establishing and equipping a regional centre for scientific research in the Indian Institute of Technology in Madras.”

Mr. Mac Gearailt.—Paragraph 62 is for information.

432. Deputy Toal.—That contribution to the Institute of Technology in India goes straight to India, not through the United Nations?

—No, that goes to the Institute through the Indian Government. We made an agreement with the Indian Government and a cheque was given to the Indian Ambassador, Mr. Patel, and the Indian authorities were thereafter responsible.

433. Deputy Moore.—Have we any means of checking on the allocation of that contribution or its use or abuse?

—Funds that go to international organisations as such are scrutinised by various courts of auditors which these bodies have set up, on which the member countries are represented, and we can put forward our candidature for these boards if we want to. With regard to money given to Governments as such, one has to depend on the good faith of the Government and its own accounting system.

434. Deputy H. Gibbons.—On subhead C.7—Contribution to the United Nations Trust Fund for South Africa—what is the difference between this and subhead C.8?

—They are for slightly different purposes. Subhead C.7 refers to the people from the Republic of South Africa. Subhead C.8 includes the Republic of South Africa but also takes in places such as Southern Rhodesia, Namibia and the Portuguese territories. The United Nations Trust Fund for South Africa is made up of voluntary contributions from States to be used for grants to voluntary organisations, Governments of host countries of refugees from South Africa and other appropriate bodies for the following purposes: legal assistance to persons charged under discriminatory repressive legislation in South Africa; secondly, relief of dependants of persons persecuted by the Government of South Africa, from acts arising from opposition to the policies of apartheid; thirdly, the education of prisoners, their children and other dependants; and, fourthly, the relief of refugees from South Africa. The second fund, the United Nations Educational and Training Programme for Southern Africa, maintains an integrated educational and training programme for Namibians, South Africans, Southern Rhodesians and for, up to now, persons from territories under Portuguese administration.

435. Deputy Toal.—Under that entire group for the United Nations, some of the amounts are very small. What percentage do we contribute in comparison with other countries?

—I am not aware that I have that information with me at the moment. Our contributions have been rising over the years but they are, I think, small compared to many contributions.

436. Deputy MacSharry.—What proportion of our contribution is a commitment that we have to honour each year and what proportion is voluntary?

—All the South African funds are voluntary.

437. Deputy Toal.—On subhead D.2— Travelling and Incidental Expenses, Intergovernmental Legal Bodies—did anybody take part in or travel abroad for legal conferences? I see an expenditure of £3?

—These particular legal bodies, which are the Hague Conference on Private International Law and the International Institute for the Unification of Private Law in Rome, are very technical and we had lawyers in our Embassies who are able to act on our behalf at the Conferences. We did have people travel abroad for other legal purposes during that year but that would be covered under the general subhead for travel.

Deputy MacSharry.—Where did the fellow go for £3?

—This is not for travel; it is a bank charge for payment of the contributions.

The witness withdrew.

VOTE 7—OFFICE OF THE REVENUE COMMISSIONERS.

Mr. J. C. Duignan called and examined.

438. Chairman.—Paragraph 10 of the Report of the Controller and Auditor General reads:

“Revenue Account

A test examination of the Revenue Account has been carried out with generally satisfactory results.”

Paragraph 11 of the Report reads:

“The net yield of Revenue for the years 1973-74 and 1972-73 under its main heads is shown in the following statement:—

£664,540,000 was paid into the Exchequer during the year leaving a balance of £1,610,209 as compared with £1,188,151 at the end of the previous financial year.”

Paragraph 12 of the Report reads:

“I have been furnished with the following analysis of amounts of income tax, sur-tax and corporation profits tax outstanding:—

Comparative totals for the previous year are Income tax, £24,039,812; Sur-tax, £4,174,015; Corporation Profits tax, £5,420,507.”

Paragraph 13 of the Report reads:

“Extra-Statutory Repayments of Customs and other Duties

Extra-statutory repayments of Customs duties, £37,814, Excise duties, £26,052, Turnover and Wholesale taxes, £19, Value-Added tax, £1,013 and Stamp duties, £3,681, was made during the year.”

Paragraph 14 of the Report reads:

“Remissions and Amounts Irrecoverable

I have been furnished with schedules of the cases involving a loss of £100 or upwards in which claims for duty under the Revenue Acts were remitted without statutory authority or passed as irrecoverable during the year ended 31st March 1974. The total amount of the items included in the schedules, £122,278, is made up as follows:—

The distribution according to the grounds of remission or write-off is:—

I have made a test examination of the items included in the schedules with satisfactory results.”

Mr. Mac Gearailt.—Paragraphs 10 to 14, inclusive, are the usual paragraphs concerning the collection of revenue and the various remissions and repayments. They are for information and I have no further comment on them.

439. Chairman.—On paragraph 11, might I ask, in very general terms, is the standard of the yield in 1973-74 as good as 1972-73? What I am referring to is the situation where a business puts up its prices so that it should be able to collect more money but the volume of business goes down and it actually collects less. From year to year there are variations in the Finance Bill and it has repercussions, usually in recent times, towards getting more revenue. I do not want specific answers, just an indication. Do you feel that your yield is keeping up to expectation on the standard of the previous year?

—Yes. We had not at this stage, of course, been hit by the recession.

So that the yield of revenue in 1973-74 is comparable, without any perturbation, with 1972-73.

—Yes. I could compare the different heads, the net receipts, with the budget estimate if you wished me to do that.

No, I do not think we need put you to that trouble. It is your opinion that matters here and your experience. You had not a particular problem in this year.

—No. As I say, the recession had not hit us yet.

440. The answer may be different for the next Committee. On paragraph 12, last year we had a communication from you on collection problems. Have these problems eased or have they become more difficult?

—They certainly have not been fully resolved. With the substantial increase in the charge and the difficulties the taxpayers are facing through a recession, collection is becoming very difficult. With our machinery we can go a certain distance. It becomes then a question of enforcement. We have two courses, going through the Sheriff (or county registrar) or through the Revenue solicitor. The volume of work going to both of those sectors has increased enormously.

441. You were concerned about the efficiency of the machinery of the Sheriffs and county registrars last year.

—In order to try and ease the burden on the county registrars, we have, in a number of districts, appointed an assistant to the Collector General who calls on defaulters and urges them to pay their tax. He leaves notices with them warning them that the arrears are about to go to the county registrar for enforcement. That has perhaps reduced by about 35 per cent to 40 per cent the number of cases going to the county registrars.

That is a very substantial——

—Yes. We have not done that in all districts. We have done it in less than half the districts.

442. Does this involve substantial expense?

—It is just one man of very junior rank in each district.

One man only?

—Yes, in each district. One man of paper-keeper rank, because his function is purely to call and deliver a notice and see the people if he can. We find this a useful service. But I should explain that, while it has cut down by as much as 35 to 40 per cent, the number of cases going to the Sheriffs, it is not the number compared with last year’s figures; it is compared with the number that would have gone to the county registrars otherwise.

443. You would have had very many more going?

—Yes. You will appreciate that with inflation and even with the thresholds for everything moving upwards—personal allowances and so on—there are more people coming within the tax net. Of course the farming community are also being brought into the tax net so that there are quite a lot of new problems in relation to tax collection. The sheriffs and county registrars are performing a tremendously important role in revenue collection. We cannot overstate their importance in the function of recovering tax. We are pressing to have their requirements fully met.

444. The net picture you have given me —please correct me if I am wrong—is that the number of cases you would have to put into the hands of the sheriffs and county registrars and even your solicitors, has increased but that, by virtue of your arrangement, you have succeeded in preventing 40 per cent of the cases going to them. Is that a net improvement? Does this mean that you have in the nett collected more revenue than you would have otherwise?

—We have collected far more. Our percentage is still quite satisfactory but it is the future that gives cause for concern. Six or seven years ago the number of cases going to the county registrars might have been of the order of 3,000 or so. Now it is of the order of 20,000, or more.

You mentioned that to us last year and you were concerned about it?

—We think we will be able to keep it at around the 20,000 mark for the time being.

If you can keep it down it is a reasonable administrative cost. As you say, there is only one man per district?

—Yes, one man per district.

445. I will not ask for the figure now, but it might be interesting to see it. Naturally you balance these things up yourself. We have had notice that you are going to set up a special section. Will that project be a serious demand on revenue?

—That is in the field of tax evasion. I am speaking about tax collection. The new division will have to be manned by taking inspectors from tax districts. Our recruitment of inspectors has been quite satisfactory. We have been able in recent years to meet virtually all our needs by recruitment.

446. Would it be a valid sum to take, for instance, the costs of your Department as shown on these estimates and to subtract them, so to speak, from the revenue you put into the Exchequer and to nett that and say: “This is really what we are getting”? Would that be a fair yardstick?

—It varies from one duty to another. If you take tobacco and spirits duties, you collect them very simply because they are large sums. If you take value-added tax as an example, it costs us roughly less than 1 per cent.

Because commercial firms do the work?

—They do.

The same with PAYE?

—The cost of collection figures would be higher perhaps there. With the new capital taxation the cost might be nearer to 2 per cent. Still the overall cost is low.

447. I know I am going a little bit beyond the year we are talking about. I do not ask for any answers that are not relevant. The new capital taxation will mean a considerable increase in the expense of operating the Estate Duty Office, will it?

—So far we have been able to carry on with very little extra staff.

For a while you were seriously in arrears. Then you caught up on that.

—I would not like to say that we have caught up on everything. We are faced at present with an overlap because as well as the new taxes we are still operating the old estate duty. There is a tremendous volume of that still coming in. It will take a little while to phase it out. At the same time, we are faced with the operation of these new taxes. We are trying to handle the overlap as best we can. A new branch has been set up to deal with the wealth tax and the capital acquisitions tax as a separate unit distinct from the Estate Duty Office. We have tried to divide the staff between the two. According as the work on estate duty diminishes we will transfer the staff to the new division. There has been comparatively little diminution in that work so that we are faced with a bulge in both places at the same time.

448. I take it that new taxation and changes like this impose a strain on you because they must be met within a very short time?

—Yes. Of course we try to look at the situation as something which must be dealt with without extra staff in so far as that is possible. We do not want to get staff until we can assess precisely what we want. When the capital taxation programme was announced first the thresholds were much lower than they eventually turned out to be. The original figures were £30,000 and £40,000 rather than £70,000 and £90,000. We expected originally to have many more taxpayers as a result of the wealth tax than we will now have because of the increase in the thresholds. If there were a very big number of wealth taxpayers, it would probably be more economic to operate the tax through the various tax offices in the country, that is, in conjunction with income tax. When the number of wealth tax payers was reduced to the order of 6,000 or 7,000, as it is now, we felt that was something that could be handled in the Estate Duty Branch. Therefore, we have just a very small number of extra people in the tax districts for monitoring the cases, and so on, and linking up the work between the two sectors. On the question you asked about staff, our approach is to try to contain the work within the existing organisation until we can see clearly what extra work is involved. The wealth tax is coming in quite well. We have already exceeded the estimated yield quite substantially. Taxpayers are required to put in their own estimates of wealth and pay tax on that basis. There is a very high rate of interest, 1½per cent per month, if they under-estimate the figures of wealth. The office takes a certain proportion each year—the larger ones first— and checks up on the figures.

With that number and with those thresholds it will not be a major administrative problems?

—We think we will be able to manage without a great deal of extra staff.

449. Coming to income tax and sur-tax, the amount not collected, at paragraph 12, related to the sum of over £221 million. That is a pretty tight figure? It is about 3 per cent.

—That is right. Comparing the figure with last year, and taking all the years involved, the amount outstanding now is about 0.2 per cent up on last year.

In current times, that is pretty good?

—Yes. It is not a source of worry to us.

450. I was going to ask about PAYE. Last year you were concerned about the tendency rather than the practice for employer-collectors, normally firms, to hold on to PAYE taken from employees and use it as a kind of temporary working capital. Have you been able to control that problem?

—What happens is that we follow up with estimated assessments much more quickly than we did in the past. In the larger cases we do it within a matter of a month or so. In smaller cases it might be two months. We are faced with this type of situation. New businesses are continuously being established. They make returns for a year or so. Then they fail to put in returns and we make estimated assessments, based on the best information we have, looking at the figures they paid in the past. We make some additions to these figures. Where a concern is expanding rapidly it may, in fact, pay the tax on the estimated assessment, or may not pay it at all. It is building up arrears because the estimated assessments are very much less than the true liability. We find in some cases at the end of the year when we get the return in that both in relation to VAT and PAYE, because they failed to make returns and did not respond to our pressure but, perhaps, paid some tax on the basis of our estimated assessments, there is a substantial undercharge. Our approach now is to try to prosecute the cases which do not send in returns. These things take time. There have been one or two cases where we lost a substantial amount of money by employers giving the impression that their business was much smaller than it was, and we did not recover the full amount properly payable.

451. Your net Vote is practically £13 million and you collect £665 million in that year. The return is good.

—Yes, compared with other countries and bearing in mind our size. Normally, the smaller the size the higher the percentage cost because there are certain overheads which cannot be reduced.

452. On the question of company taxation—it does not concern this year—do you anticipate that, when the new Bill goes through, it will cause you any problems?

—The problem we will have will not arise from the changeover in the system of taxation. The numbers of new companies which are being incorporated have grown enormously in recent years and we need more staff to cope with that situation. There is no change in the economic incidence of the tax under the new Bill: we are having one instead of two taxes, and we are closing a few loopholes here and there.

It is a kind of consolidation and modernisation of the tax system. It is a very big Bill.

—Yes.

I think you will ask us to get it through rather quickly. If we get the same service as we got on the Income Tax Act staffwise, I do not think we will have much of a problem?

—We will have two very good men on that work.

453. In regard to value-added tax, the Comptroller and Auditor-General told us at the beginning that the paragraphs were for information. He had nothing to add to them.

—On the value-added tax, the point is that we have always linked up our figures for sales taxation with the figures for income tax. When we brought in value-added tax, there was a broken period for turnover tax and a broken period for value-added tax and, because the coverage of these taxes was not precisely the same, we felt it would not be worthwhile trying to establish a precise correlation between the figures for the sales taxes and the income taxes in that broken year. We did not follow that up too closely because we felt it would not be worth the effort. When we got the first full year for value-added tax, we again established our procedures of linking up and checking the figures for sales tax purposes with the figures for income tax. In this field, we have a stronger check than most countries because we have the advantage that both the value-added tax and the income tax are dealt with by the one authority. In many countries the sales taxes and income taxes are dealt with by separate authorities: sometimes by the Customs and Excise, sometimes by a separate Sales Tax Department, which do not have the same cohesion as we have in an organisation like ours where both are dealt with in the same office. The figures for VAT are collected by the computer. For each concern figures are shown for the six two-monthly periods comprised in the specific accounting period of that particular concern and they are carefully checked against the income tax figures.

454. Paragraph 15 of the Report of the Comptroller and Auditor-General reads:

“Value-Added Tax

Reference was made in paragraph 18 of my previous report to the introduction of value-added tax from 1 November, 1972. Gross receipts from the new tax amounted to £161,468,063 in the year under review partly offset by repayments amounting to £26,608,969 in the same period leaving a net yield of £134,859,094 as shown in paragraph 11. A limited test check of the procedures in operation for the collection and verification of value-added tax seemed to indicate that no reconciliation is made between the taxpayer’s declared turnover for value-added tax and the turnover revealed in audited accounts submitted for income tax purposes. As it would appear that such a reconciliation was envisaged as one of the controls on the accuracy of the declarations submitted in connection with the payment of value-added tax I have communicated with the Accounting Officer.”

Mr. Mac Gearailt.—The figures quoted in the paragraph indicate the gross and nett yield of the new tax in its first full year of operation. With regard to the comparison of the figures in VAT returns with the figures in the taxpayers’ accounts submitted for income tax purposes, the Accounting Officer has pointed out that such a comparison, which is regarded as a vital check, can be fully effective only if VAT figures are available for the full 12 months of the accounting year. Most income tax assessments are based on the preceding year’s profits, so practically all assessments for 1973-74 and many for 1974-75 would be based on years which would not include 12 months’ VAT. It is expected that the check will be fully effective for 1975-76 assessments.

Chairman.—It is obviously an accounting matter?

Mr. Mac Gearailt.—It is control. We audit these cases and check them.

Chairman.—It takes time?

—It is a useful by-product of VAT that it affords a check with the income tax figures.

455. Paragraph 16 of the Report of the Comptroller and Auditor-General reads:

“Interest on overdue Income Tax and Sur-Tax

It was noted in the course of audit that in a number of cases of late payment of income tax and sur-tax recovery of interest on overdue tax as required by the Income Tax Act, 1967, as amended by the Finance Act, 1971, was not pursued. In reply to my inquiry the Accounting Officer informed me that the introduction of the interest provisions in these Acts inevitably gave rise to initial difficulties in implementation. He stated that the main objective, earlier payment of taxes, was achieved relatively quickly, but that the secondary objective, the pursuit of interest in individual cases of late payment, had in the first instance to be tempered by the necessity for streamlining administrative procedures and other factors. These were, for example, the establishment of procedures to clarify legal aspects as regards revised due dates and dates of issues of demands, the maintenance of good will and good relations with taxpayers and accountancy firms with whom the new interest provisions caused initial difficulties and misunderstandings, and the lack of a computer programme for the automatic calculation and demanding of interest. He added that in 1971 it became possible to allocate resources to the development of such a programme for the purpose, and that interest on overdue tax is now automatically calculated and collection vigorously pursued by computer processing.”

Mr. Mac Gearailt.—The Accounting Officer has set out fully the Revenue position in regard to the non-pursuit of interest in these cases and the changed position since the allocation of computer resources in 1971 for the calculation and demanding of interest. In the circumstances I have no further comment to make.

—It is working very effectively now and for people who allow their tax to get into arrear, the interest charged is quite a substantial addition. We believe that it must deter people from allowing their tax to get into arrears—at least anybody who is really keeping a proper control of his business.

456. Chairman.—If there is any hardship, does it fall on the taxpayer?

—We have no statutory power to wipe out the interest. We must collect it.

457. This is one of the interesting points. Neither myself nor some other Deputies seem to be able to understand this. In the Dáil we have made efforts to see that you and your officers had discretion in certain areas, but I must confess that many times I felt that the attitude behind the scenes was that to leave you too much discretion here might not be as acceptable as one might think, that you would prefer not to have this discretion.

—I think that is so, because where there is discretion it is very difficult to administer it. Under the care and management provisions, the Revenue have certain rights and so on in cases of great hardship and tax so foregone would, of course, come before your Committee here. You will see some cases like that. There is also the fact that the Revenue always check, for example, that the tax was legally due. If it is under appeal, at present the tax must still be paid but up to a certain time, a few years ago, once the tax was under appeal the taxpayer did not become liable for interest until the appeal was determined. The result of that was that many taxpayers appealed automatically so the law was changed. The date from which the interest becomes payable is sometimes difficult to arrive at, because there may be adjustments to the assessment and so on. But the Revenue have established very clear rules on it now.

458. What discretion does an inspector have on this?

—An inspector does not have any discretion about interest but if the taxpayer had appealed there is discretion in regard to the admission of an appeal. He has no discretion of remission of interest which is, of course, charged by the Collector General; the local inspector is not involved with the interest at all. So far as interest is concerned, the Revenue are very slow not to collect it.

459. Take the question of non-audited accounts. Again I am thinking of individuals who are paying income tax, of which there would be a large number. One of two things could happen with perfect bona fides on both sides, either after a couple of years it seems that a back adjustment is needed, even though it has been agreed, it may have been too high or too low—in the case of it being too high there is no interest to be got for the taxpayer; that does not enter into it—but in the case of an under-assessment, that has been bona fide arrived at and agreed between the inspector and the client, there then may be some money to be paid by the taxpayer. How does that rank for interest or does the interest provision automatically apply there?

—No, unless an assessment has been made there would not be any interest on the amount undercharged.

If there was an assessment found to be adjustable, I assume that can happen?

—What happens is this. If the person makes a payment which the inspector accepts as being reasonable because the assessment is under appeal, the Revenue would not charge interest.

460. For instance, suppose somebody has been trying to declare everything absolutely bona fide and there is some mistake and he comes back and says: “Look, in those years I had so much more taxable income than I was taxed for,” and there are some people who would like to do that rather than have the chance hanging over their heads that somebody else would find it out, then there is an adjustment and he is quite cheerfully prepared to pay. Is there any discretion there to forgive him the interest, so to speak?

—That is somewhat different. The interest is taken into account in the overall settlement.

This would be a reassessment.

—It is a case where a person has made a return and omitted something through an error or mistake on his part, and in such a case the inspector would just assess a person. If he was satisfied that it was a bona fide mistake, there would be no charge for interest.

It was a question of how far discretion went here?

—He would not have power to charge the interest there, because the interest is charged on the assessment but he would have power to look at it and satisfy himself that the omission was due to an error or whether a penalty position would exist.

461. Yes. That is an important discretion. On subhead A—Salaries, Wages and Allowances—saving was due mainly to delay in filling vacancies and to staff changes involving appointments at lower points in salary scales. It is commonly thought that you suffer casualties through people buying expert staff, in other words, the gamekeeper turning poacher. Is this a problem? We all have to live, and if the State is paying an expert for a particular job at a certain rate and a commercial concern comes along and decides that it is going to make him a very attractive and substantial offer, one can hardly blame the individual. We meet this in business in all sorts of ways, but if it is a significant matter it raises a very serious problem for the State in an office like yours.

—I think it is a feature of every tax administration that they lose highly skilled staffs to outside firms and it is something that the administration cannot try to compete with. If large multi-national firms or large firms of accountants want to get experts it is a question of the price they have to pay. The State cannot try to entice people like that to stay on. If it is a question of whether the salaries people have are adequate. The State offers very many attractions; there is security, pension and so on and conditions that very often are not matched in outside firms.

Still, there can be a serious problem here and it is not simply a matter of taking your Department in isolation and adjusting the rate.

—It is something Government Departments have to live with and it is a question of having one’s resources planned that one can make up for that sort of thing.

462. I am leading up to something here on which I hope I will not have to rule myself out of order on policy, but it is very relevant to administration because of what we have been talking about, particularly where inspectors are concerned, has this meant people doing work of a higher rank than is appropriate to their grade.

—No, that would not happen because there would be promotion along the line.

463. I know there are grades and responsibilities. I understand that an inspector’s job is very particular. Can you maintain an inspector’s post in face of the problem you have?

—It takes about three years at least before a new officer is able to carry out an inspector’s work effectively. He must pass examinations and he is also handling case work and being trained on the job. There is no question of people being asked to do work that is not appropriate to their grade.

If they were doing inspector’s work without having passed their examination——

—They are not. When people come in first the work is allotted in such a way that they are put on very simple work; they are also given a substantial period to study.

464. Actually, I did not intend to probe in that direction. If you had in your Department some mechanism of local control and then had more discretion and were less tied by the law, would you not kill two birds with one stone? First of all, you could make your own task and that of the people administering it easier. Secondly, the law could be greatly simplified because the legalistic stunts for tax evasion are knocked on the head straightaway by that approach. Thirdly, the poaching would stop because no matter how expert a person is when he is up against the answer, he can say: “Well, this is the way I am going to do it”. That would be the final answer.

—I think the answer is that it would not be a good thing that people at local level should have discretion—

No, I said that there would be discretion and control—

—Even with that——

Could you devise a scheme?

—I doubt it very much. There must be very clear lines of definition as to what is taxable and what is not; there should not be discretion except to an appeal body which could review the position. When you speak of tax avoidance schemes and so on, I think they are a by-product of high rates of personal taxation. In countries where there are high rates of personal taxation it is just something one must live with. The solution is not in giving greater discretion to local officers.

465. On subhead C—Post Office Services

—I should say you would have plenty of work for the Post Office when it is functioning.

—Yes. It is largely the increase in the Post Office rates rather than in extra work.

It is an internal accounting business for the State.

466. Deputy Tunney.—On subhead D— Machinery and Equipment for Security Printing and Stamping—in regard to the work which was envisaged, was it necessary to make the purchases which were provided for here at a later date?

—Yes. It was a delay in delivery.

Would there have been an extra cost due to an increase in the items or the delay?

—No.

467. On subhead E.—Motor Vehicles—in regard to the delay in the purchase of new cars, suppose at that stage you had decided to buy a car which you did not, in fact, buy, are you then able to buy it at the price you originally provided for; the price of the car might have increased in the meantime?

—I would not like to answer about the cars because we are in a different situation there from where we ourselves have a contract for machinery. I am not quite sure if we were buying a car whether——

468. In present times, would it be true to say, however paradoxical, that you saved money by spending it?

—I think the answer would be that we probably did not because there was a direct contract to supply the cars. I do not have any information as to whether they were supplied at the original contract price. We placed the contracts through the Post Office. It is a different situation in regard to machinery which the Revenue order themselves. If the Deputy wishes to have a note——

No.

—Motor cars and vans are in a different position to machinery.

469. Chairman.—On subhead H.—Expenses in connection with International Organisations—your involvement with international organisations must have become much greater?

—Yes, very much so, not merely because of membership of the EEC but also because international taxation and the avoidance of international taxation is something which every country is pursuing.

470. Deputy C. Murphy.—On subhead I.— Office Machinery and other Office Supplies— does the delay in installing machines impair your efficiency?

—These are usually in replacement of old machines and we are able to carry on with the old machines until we get the new ones. The difference would be marginal.

It is mainly replacement?

—Yes.

471. Deputy Tunney.—On Appropriations-in-Aid—there is a note: “1. Payments received for printing relating to Social Insurance.” Was it possible to estimate to the £ in that case?

—Yes. I suppose it is a question of a charge per unit.

It does not always occur that the amount realised corresponds to the £1 with the amount estimated?

—I assume it is a question of doing so many books at so much per book. That does not apply always in relation to services for other Departments.

472. It seems peculiar to printing because I notice you have it in relation to the printing of motor vehicle licences?

—It is a question of an order in advance for a certain number. We quote a figure and that is what we get.

473. Deputy C. Murphy.—On “Miscellaneous,” you estimated £4,280 and you realised £38,866?

Chairman.—The figures are broken down at the end.

Deputy C. Murphy.—They are. If you estimated £4,280, it would seem to me that they would have been covered by the three small sums, possibly, of £1,400, £1,300 and £1,000?

—This would have been about the time work on the EEC was building up and we had no idea as to how much it would be. This is the recovery of the travelling expenses in connection with it.

474. Deputy Griffin.—It may not be appropriate to this Vote, but does the theft of social insurance stamps affect your Department?

—If I recall that particular case, it was some defective stamps that were being sent for destruction.

Theft in general of social welfare stamps

—does it affect this Vote or have you any policy on it?

—We have very strict security on printing. I do not think we have had any cases where there was any fraud or theft. We had one case of interest in connection with road tax. Some motor licences were not printed correctly and they were sent for destruction. They were kept in a place for confidential waste in a locked room. Unfortunately, there was such a quantity of them that the overflow was put in another room which was also locked but, when the question of taking these for destruction arose—they should be burned under the supervision of a person who certifies that each sack was destroyed—the overflow got mixed up with confidential waste for destruction by an outside firm and, when they were being taken away in a lorry, somebody outside took a supply of them and started selling them. It was detected at a very early stage. The local authorities had to recall all those particular type of car licence forms and the Revenue had to prepare a new set.

Deputy Moore.—It happened again since?

—I do not think so.

Chairman.—What the Deputy may have in mind is that the stamps on sale are stolen. That comes under the Health Vote.

—That is the only one I can recall.

475. Deputy H. Gibbons.—What is covered by the general lighthouse fund?

—This is what we recover for the cost of Revenue staff involved in the collection of light dues from ships. This is recovery of expenditure by Revenue.

The Port and Docks do not do that?

—No, the Revenue Commissioners.

476. Chairman.—The question of “Miscellaneous” was brought up. It is typical of this Department that while it is a sizeable sum we have a breakdown of what “Miscellaneous” is. The Committee have complained with other Departments that sizeable sums are put down as “Miscellaneous” and we do not know what they are. We have found cases where they should have been under subheads. Here, as usual, you are setting the proper example. I want to ask a general question. If you have dutiable goods brought into the port and the tax payments, and so on, are completed but, because of a labour dispute or something of that nature, delivery is not made, and, say, a budget or change in taxation intervenes, does the importer have to pay at the higher rate even though it was outside his control and the actual documents were cleared before he got the goods?

—You say the duty has been paid?

Yes.

—If the duty has been paid, anything that happens after that is not a matter for the Customs.

477. Suppose the documents are agreed, and the duty to be paid is agreed, and the goods are held up for a period, is the law such that, if the duty had not been paid— it could happen that the documents were not cleared through no fault of the importer, through a labour dispute—it compels you to pay the higher rate?

—The position is that duty is charged on acceptance of the documents by the Customs. You can take the goods as soon as you pay the duty. A different situation would arise where goods were brought in which were put into a bonded warehouse.

That is different. They are still in bond and they are subject to a fluctuation in tax.

—The date of delivery from warehouse determines the rate of duty.

For instance, the price of wine was increased in the budget. Ships were held up in the ports. If, say, a wine importer had presented his documents when the ship arrived and he paid the duty and it did not go into bond but merely stayed on the ship, and he took it straight out to his own place, would he be under any disability?

—I am not quite sure as to how far a person can clear the ship until formalities which would be outside Revenue control would be complied with—as regards the landing of the goods and so on—whether you——

I suppose ail sorts of complications arise when we go into the details.

—I do not think the customs officers would come into it until——

These are the things that can happen with budgets like the last budget and are outside your control.

The witness withdrew.

VOTE 34—LANDS.

Mr. T. O’Brien called and examined.

478. Chairman.—Paragraph 37 of the Report of the Comptroller and Auditor General reads:

“Subhead G.1.—Payment to Grant-in-Aid Fund for the Purchase of Interests for Cash (Grant-in-Aid)

This Fund, which is accounted for by the Accounting Officer of the Vote for Lands, is used to finance purchases for cash of suitable properties for land reform purposes. In previous years such purchases were a direct charge on the Vote. The account of the Fund is appended to the appropriation account.

In the course of audit I observed that in four cases, in which agreements to purchase for cash under Section 27 of the Land Act, 1950, had been entered into by the Land Commission and deposits paid on dates between November 1968 and March 1970, possession of the lands had not yet been obtained. The Accounting Officer informed me that difficulties in clearing title had arisen in each of these cases but that they were being pursued with the vendors’ solicitors.”

Mr. Mac Gearailt.—This paragraph notes the setting-up of a grant-in-aid fund to finance cash purchases of land which in previous years were a direct charge on the Vote and also deals with failure to obtain possession in four cases in which agreements to purchase for cash had been entered into and deposits paid by the Land Commission. I understand that the difficulties in clearing title mentioned by the Accounting Officer have not been resolved in any of the four cases.

—The only comment I can make on that is that once title difficulties arise at all and turn sour, it is hard to get back on a straight track, and as the value of land has increased in the meantime, owners are very reluctant to complete sale at the earlier price agreed. That is particularly so when the original vendors die before completion of sale. As to the four cases, I could give a brief comment on each. For the property in County Roscommon, title difficulty is the reason for delay. The legal complications that arose with regard to registration of ownership were unforeseen at the time of the signing of the contract in 1968, and on top of that there were also some household and family disputes which added greatly to the trouble. However, the case was progressing at all times, even if very slowly, and we had to await developments in it. But the fact is that registration is now in progress and we expect that that case should be completed very shortly.

479. Chairman.—It used to be a direct charge on the Vote?

—Yes.

And it is now a grant-in-aid which gives flexibility in estimates. In these few cases, because of legal machinery, you could not get possession. Is that it?

—That is right.

But you are pursuing it?

—Yes, we are pursuing all four cases.

480. Deputy Griffin.—It often happens that a family may, through financial circumstances, offer lands to the Land Commission and then their financial situation improves somewhat and they regret having offered the lands. In these four cases is there any such position?

—That is so in two of the cases and the comment you made happens to be quite appropriate. I believe that in two instances they may not go through at all and we will probably have to settle for a refund of the deposits.

Chairman.—I think that, in justice, that is the best solution.

481. Deputy Toal.—This all comes under another subject when we get to it, but on the problem of these lands, in what percentage of cases had you to pay cash to acquire lands?

—Very small.

482. Deputy C. Murphy.—Could I inquire, where the Land Commission have obtained land either under a compulsory order or on a voluntary basis and then proceed to let the land and title does not come clear for probably two or three years, what happens to the money that is obtained from the letting? Does this go to the person who is selling or does it go to the funds of the Land Commission?

—It goes to the funds of the Land Commission for the reason that, once the purchase or acquisition is completed, the purchase money of the property with accruing interest is placed to the credit of the estate on the day they get possession. From that day on it is open to the owner and his solicitor to lodge title and claim that money. If they are slow in claiming it, if they are slow in lodging the necessary title, that is their own fault. While we are in possession of the properties we have to meet outgoings in the form of rates; in addition we ourselves have to service the bonds and pay the interest on them at the rate current when the price was placed to credit.

483. What I would like to see is some form of apportionment made that, after taking into consideration the facts which the Accounting Officer mentioned, nevertheless if there was a reserve it should go back to the person who is selling. Suppose the delay might be within the office of the Land Commission itself, does it not still work financially to the benefit of the Land Commission and not to the person who was selling and often selling rather reluctantly?

—The point is that the money payable for the property, the price agreed or fixed, is available to the owner as from the date of possession.

What does possession entail?

—Once possession is handed over to the Land Commission, the money is there for him to claim. We have to meet our own outgoings in the form of the servicing of the bonds representing that price, of the interest on that price, plus rates, and we have to let the land to get in some revenue. That is our side of it. Interest is accumulating on the purchase money.

For whom?

—For the owner from the date he gives possession.

484. Deputy H. Gibbons.—Had you ever to surrender land because you could not get full title for it?

—No; that has not happened. The situation in relation to land acquired like that is that, regardless of who owns it, the property comes to and vests in the Land Commission freed and discharged from all other encumbrances and those charges or mortgages and whatever financial blisters may be on it are all made a charge on the purchase money. The land is actually converted into cash. We get the land regardless, and the owner gets the appropriate money whenever he is able to show title to it.

This is the point I want to make. The Commissioners have never surrendered land because they have not got title. Am I correct in thinking that some of the Land Acts give you power to get over difficulties of title in some circumstances and in particular places?

—The situation is roughly what I said. Regardless of the title, we get the land. The land itself is converted into cash or cash equivalent and then the owner gets that when he is able to establish his title. Otherwise the situation would be quite impossible. The Land Commission could be held up for years and years and never get possession of a property.

485. This brings up the point I wanted to reach. Then why hold up the money to the person awaiting the title when you know, in fact, that eventually the title will come to you? There is no reason why you should not pay the full money?

—Who will we pay it to? They must prove the title.

486. Deputy C. Murphy.—It seems to me that quite often land is transferred by the Department of Lands to the Forestry Section and this seems to be an operation that occurs within the Department. We make representations, as Deputies, on behalf of applicants. We believe the Land Commission have taken over, for example, 100 acres of an estate, and we are told that 30 or 40 of those acres have been passed over to forestry. Is not this an internal arrangement?

—Yes. It would be an internal arrangement. If we had property of 100 acres with 60 acres of good land which would be suitable for agricultural purposes, the Land Commission would hold on to that and distribute it to nearby smallholders. If the remaining 40 acres was rather marginal land, less than agricultural quality, and maybe rather inferior quality but suitable for forestry, then the Land Commission as a separate transaction would sell or allot that to Forestry.

487. Who actually would determine that 40 acres as being marginal?

—That would be done jointly. A joint inspection would first be carried out by both Land Commission inspectors and the Forestry inspectors on the ground.

This is precisely the point. In no way then is the Department of Agriculture and Fisheries or some other agency involved on behalf of applicants?

—That is right.

I suppose I am into the area of policy. Am I?

Chairman.—I do not like to hold you up too much.

488. Deputy C. Murphy.—It is a hot point in Wicklow. Land is often termed as unsuitable for agricultural purposes, marginal land, by the Land Commission and the Forestry section. They agree because it is to their mutual advantage to agree. Speaking on behalf of many of my constituents, I find the system in vogue is completely disadvantageous to them.

Chairman.—Deputy Murphy’s protest would be that it is managed internally within the four walls of the Department.

Deputy C. Murphy.—I asked if this was just an internal arrangement.

Chairman.—Would your answer not be that it is to prevent two Departments from manoeuvring against each other?

Deputy Toal.—It is all one-way traffic. It is all from agricultural land to forestry.

Deputy C. Murphy.—Especially in regard to land which, by County Meath standards might be termed marginal, but which might be grade B land by County Wicklow standards because, by virtue of our tradition in Wicklow, our people could make a good living out of it. They find that land which by their standards is very good goes to Forestry.

—I should say we are very scrupulous about that and in no way would we wish to plant or devote to timber production land we feel should go to food production in the hands of working farmers.

I could accept that, but too often it happens.

Chairman.—We are going into the area of policy.

489. Deputy C. Murphy.—I come to the actual money you pay for this 100 acres. Then you decide that 60 acres of this, by your own standards, is good. How do you actually break down the cost figure? Do you regard each acre as being of the same value when you go to allot, what I would regard as——

—We would assess a value on it. This would be done in the first instance by qualified people, inspectors, who are accustomed to valuing land, nearly all of whom are university graduates and probably with an agricultural science degree in general agriculture. On the Forestry side they would be dealing with it under the forestry discipline. Each field would be valued——

I see.

—according to its agricultural worth. The marginal land would rate much lower in price than the quality agricultural land.

490. So whatever overall figure was paid for it, when the land is being allotted to successful applicants, their rental or repayment will be at the highest figure and not spread over an even balance of what you paid for the full estate?

—The land transferred to Forestry would be paid for by them at the valuation assessed. It would be an apportioned relative amount.

It seems to be transferred to Forestry before a lot of people can get their say in. It is a fait accompli?

—That would be an argument on the merits as to whether the land is suitable for forestry or agriculture.

491. Another general point is that the Land Commission seem to hold on to land for one reason or another for quite a long time. It might often be said that in the income from the rental of this land per annum you might have practically cleared your original cost price for the land and then when you are going to set it out to the successful applicants you are on a total profit basis. Would that be accurate?

—No, but in this particular year we will find, later on in the account, that management income exceeded outgoings. That was largely because there was a big demand for land being let and high letting rents prevailed.

492. Deputy Griffin.—On subhead A— Salaries Wages and Allowances—have you your full complement of staff?

—No. Our full staff complement is 959 but we had about 78 vacancies running throughout the year. These were mainly in the junior clerical grades.

493. Deputy Toal.—It is amazing to see a figure of £31,000 for the Solicitors Branch in the Land Commission. If we break down subhead A, is Solicitors Branch a figure of £31,000 for the entire year?

—Yes, it would be as of 1973-74.

How many staff are there?

—We have one senior solicitor, one first assistant solicitor and one assistant solicitor. Then we have a number of legal clerks and law clerks.

Is it not grossly understaffed?

—I doubt if it is.

494. Chairman.—On subhead D.—Statutory Contribution to Land Bond Funds, etc.—there is a note that the issue of fewer bonds than had been anticipated gave rise to consequential saving.

—The estimate for that year was based on an issue of £2 million land bonds but the actual issue was £1.7 million and that was in 9¾ per cent bonds.

495. On subhead F.—Deficiency of Income from Untenanted Land—there is a note: “Grant not required as revenue exceeded expectations due to the general rise in the letting value of land.”

Deputy C. Murphy.—I think the Accounting Officer might have some further comments on that?

—Yes. £50,000 was voted and none of it was spent. Receipts to the account for untenanted land that year were £857,451. They would be mainly for lettings through auctioneers and stock managers. The outgoings were £624,202, mainly on rates, herds’ wages and the servicing of bonds. That left a surplus of £233,249. We paid over £184,000 to the Vote and that can be seen as part of item 3 of the Appropriations-in-Aid—Surplus Income of Rent and Interest Accounts—which estimated at £30,000 and realised £216,126. That surplus of £184,000 was paid over and we have a balance of about £49,000 which is carried forward. On the Deputy’s general point, I would say that apart from rough grazing we had about 65,000 acres of what would be called arable or good pasture land on hands that year. There was a very keen demand for lettings following our entry to the EEC that year and revenue actually increased by 20 per cent.

496. Deputy Tunney.—Could it appear from this that you could be accused of being dilatory about the allocation of land because of the advantages accruing to you by holding it and letting it?

—No, we try to allocate land as fast as we can, but it is a slow process and cannot be done overnight. First of all, all the local applicants have to be interviewed and it is well recognised that we get quite an amount of representations. We have to arrange fencing. Sometimes we have to build houses for new incoming tenants or migrants. We find difficulty in getting contractors. We may have to drill for a water supply. All these things take time. It is our ambition to allot land as fast as possible; in fact we have a standing instruction to have it allotted within two years, but we are unable to carry that out in all cases.

497. In respect of moneys which you say are from the lettings, certain of these moneys were devoted to servicing bonds and for the payment of expenses within the Department. You indicated that.

—No. The other expenses would be rates and herds’ wages.

498. You referred to servicing bonds as well.

—Yes.

Suppose the position were—this would be too much to hope for—that you could dispense with land immediately you got it, where normally would the money for the servicing of the bonds come from?

—It would come from the tenants to whom we allotted it.

499. When you subsequently allocate the land to a tenant is there any relation between what you have been getting for that land while you rented it and the annuities you decide he should pay?

—The standing practice would be as far as possible to recover what we paid for the land.

Where you have made a profit on the land——

—Making a profit on the land is rare. It has become common enough in the past few years with the letting price of land going so high, but before that for many years, in the 1930s, 1940s and 1950s, there was a substantial loss in management.

500. Past costs have no relation. You talk about the EEC year, would you say that this year is going to be another EEC year for you?

—It is; this year is going to be a good year also because if the price of cattle goes up and there is a demand for land with keen competition for it, the prices will go up, but we would not allow the high price we would get for the letting of land in any particular year to influence us in fixing the final price of the land, for the simple reason that we let land only for short periods, 11 months, one year or two years. A person would be prepared to pay a fairly high price for it for a short period like that but when we finally dispose of it to a named allottee who is going to have it for all time then he would be unlikely to be prepared to pay for a period of 30 or 40 years a price that another man would be willing to pay for it for just a season or for a very short term.

That is why I am hoping that the moneys you would be getting in respect of that shorter period would not be in any way prejudicial to the person who was going to get the strip of land subsequently.

—Exactly. I accept that. It is true.

501. Deputy C. Murphy.—Surely the Land Commission are there to improve the lot of the smallholders. If land comes up on the open market, these people do not seem to have a chance of getting it.

—We have to let the land for the best price we can get to meet the outgoings and to get in revenue. This is in the short-term. If we were making a continual loss by letting under its value to the locals or at less than the going rate, I imagine this Committee of Public Accounts, spurred on by the Comptroller and Auditor General, would find serious fault with the Department. Where possible we would let in small lots to cater for local smallholders.

Chairman.—To some extent this is a matter of policy. We are going beyond the accounts. This debate is developing into a matter of whether the policy of the Department should be to make their operations economical or whether the policy should be a social service. I will have to stop the discussion at that and go on. I am ruling that this is a policy matter. It can be taken up in the House.

502. Deputy Toal.—In conacre lettings it is the policy of the Land Commission to sell houses on lands they have acquired. Am I correct in saying that?

—Yes, if they are surplus. If we do not need them for another tenant we will sell them, generally by public auction.

Is the revenue from the sale of properties listed here?

—It is, yes. It appears as excess annuities in item 4 of the Appropriations-in-Aid and not separately. It is included in that figure. The total amount realised for the whole of that item is £345,000.

503. Chairman.—I notice the word “etc.” in subhead K. This Committee have objected before to global words like “etc.” Is it not possible here to break down Item 4, as Deputy Toal asks, in more informative detail?

—It would be, if necessary. There is a category of items labelled “Excess Annuities”.

I wonder could you give the Committee the details.

—I could give it now. These excess annuities come under about six heads. In that particular year the receipt from the land bond fund section was £219,033, purchase annuities fund, £45,333, migrants’ registered holdings, £22,245, “cash” estates sold, £43,869, redemption of excess annuities, £10,890 and by way of redeemed improvement advances, £4,096. That is a total receipt of £345,466. The underlying idea in relation to the first two items mentioned is that all the money voted for the improvement of estates is not paid out as free grants. Some of it is expended by way of advances repayable by annuities. The amount recovered by way of such annuities is treated as an excess annuity. It was passed in the Vote as a grant but not all of it is paid out as a grant; some of it is recovered. Where we buy an estate for cash and find a house on that estate surplus to our requirements, and sell it by public auction, the sum realised on the sale of that house is also brought in here.

504. Deputy Griffin.—As a matter of interest, what are the terms on which land is let by the Land Commission? Could you average the present price per acre? I know it varies somewhat, but could you give me an approximate figure on how long land is let to a tenant or what is the term of years?

—Do you mean the short-term?

The repayment term.

—The repayment term of the annuity depends on the interest rate of the bonds for which the estate is purchased. For example, at the moment there is a 16 per cent bond and the annuity from that is 16¼ per cent. There would be 16 per cent interest and ¼ per cent sinking fund. The repayment period for that is 27 years.

505. Deputy C. Murphy.—What approximately would you have to pay by way of expense towards putting of land into prime order before actually allotting it? That would be towards the seeding and liming of land?

—Where we engage in rehabilitation, it would depend on the condition of the land. We do not do it in all cases. For example, we would not do it in the case of local allotments where a person within a quarter of a mile with 30 acres was getting another 20 acres. We would not do it in that case; he would be able to look after it himself and would be expected to finance it himself. In the case of an incoming migrant from, say, Mayo to Westmeath, we would rehabilitate the land. We would do a good rehabilitation job, acting on the advice of the local agricultural officer.

Deputy H. Gibbons.—Would that be covered by excess annuity on the tenant?

—Very little. Most of that is by the way of free grant.

506. Deputy Griffin.—You mentioned it is the wish of the Land Commission to allot land approximately within two years of acquiring it?

—We do not always succeed in doing that.

I said it was the wish of the Land Commission to do so. Are you quite satisfied that that is not just a pious wish? If you had an increased inspectorate what would the position be towards the realisation of that ambition?

—If we had more staff we could do more. The number of inspectors has increased in the last few years by up to 20.

507. Could you not seek a further increase in the number of inspectors if you have 65,000 acres on hands and you wish to allocate it within two years?

—As regards the 65,000 acres on hands, if the Chairman will allow me, I would like to make a brief comment on that because there seems to be a good deal of misunderstanding about it. A body like the Land Commission who are engaged for so long in the business of purchasing and acquiring land will inevitably find themselves with a lot of territory, bottoms or tails of land, that is not really land at all in the strictly classified sense: I mean mountain, moor, water and lakes. We would have about 18,000 acres of that kind. We have about 90,000 acres of lettable land. Even some of that would be inferior or rough grazing. In terms of good arable or pasture land, we have about 65,000 acres. Our dealings with that are on an on-going basis. For example, last year we allotted 35,000 acres but we took in another 30,000 acres. What I would like to emphasise is that it is not the same land all the time; the pool is being regularly subtracted from and added to—there is an annual turn-over of it.

VOTE 35—FORESTRY.

Mr. T. O’Brien further examined.

508. Chairman.—Paragraph 38 of the Report of the Comptroller and Auditor General reads:

“Subhead H.—Conservation (Grant-in-Aid)

In the course of audit it was observed that a contract for £5,566 was placed in April 1971 for a documentary film with a proposed screening time of thirty-five to forty minutes and due for completion by 1 March 1972. Payments on foot of the contract amounting to £3,500 were made in advance of delivery which did not take place until June 1973. As the film was found unsatisfactory in some respects it was re-edited and shortened by another firm to a screening time of fourteen and a half minutes at a cost of £960.

As a further payment of £1,000 was made to the original contractor in July 1973, when it was already known that the film was not satisfactory, I sought the observations of the Accounting Officer. He informed me that this payment was made under an agreement terminating the contract and that it was fully justified having regard to the amount of work involved and the quantity of material surrendered to the Department which, in fact, made it possible to complete a satisfactory film within the budget. As the end product was satisfactory and met all the objectives the Department had in mind the Accounting Officer considered that the payment could not be regarded as nugatory.”

Mr. Mac Gearailt.—This paragraph deals with payments to a contractor for the production of a film which proved unsatisfactory and which had to be re-edited and shortened by another firm in order to provide an acceptable product.

Deputy Tunney.—Was this the film we saw recently on television?

—No. It was not the same one. The film referred to in the paragraph is entitled “The World of the White Fronted Goose”.

Chairman.—Has the Comptroller and Auditor General anything to say about the further payment of £1,000 referred to in his note?

Mr. Mac Gearailt.—This was what gave rise to our query. When it was discovered that the original film as submitted was unsatisfactory why was there a further payment made. We give the Accounting Officer’s explanation there.

509. Chairman.—Has the Accounting Officer any observations to make.

—I made the point, in reply to the Comptroller and Auditor General, that the substance of the material left to us was adequate, and more than adequate, to produce a good film. We had no difficulty about paying for it. It was considerably shortened to 14½ minutes, but a satisfactory film was completed within the budget, in fact for £106 less than the budget.

510. Deputy Griffin.—On subhead C.1— Payment to Grant-in-Aid Fund for the Acquisition of Land—roughly how many acres have been acquired by the Land Commission for forestry?

—By the whole Department?

Yes, under this Vote for Forestry.

—The Department owns 850,000 acres of land altogether—that is the Forestry Service. Of that, 740,000 acres are plantable and of that, 650,000 acres have, in fact, been planted at 232 different forest centres throughout the country.

511. Deputy C. Murphy.—On subhead C.2—Forest Development and Management —do you find there is an increase in the number of claims for damage done to property arising from forest development this year?

—No. There is always some little damage done in the ordinary course of managing 232 properties, but it is rather slight. There is a note there, under C.2 item 2—£377 for damage to property of others arising from operations of the Forest and Wildlife Service. It is a very small amount.

512. Deputy Griffin.—On subhead C.3— Sawmilling—coming from Tipperary I have a particular interest in Dundrum. Are our sawmills a paying proposition?

Chairman.—There is a trading account.

—Will I deal with it now?

Yes, but there is a trading account here.

—The trading accounts are on pages 99 and 100. There are two sawmills. There was a profit of £6,424 at Cong in Mayo and a loss of £2,866 at Dundrum which left an overall profit of £3,558.

So, Cong is profitable. It is paying for the Tipperary concern?

—Yes. I would point out, however, that Dundrum has since come back into profit.

513. Deputy C. Murphy.—Where exactly would the cost to develop forest walks and trails be charged?

—In subhead C.2—Forest Development and Management—sub-item 4, amenity development is provided for.

There is no income or revenue by way of charge to people making use of these?

—No, these nature trails are free. There is literature at the entrance point, and people are asked to pay 4p or 5p for the leaflet. We are not quite indifferent as to whether they are paid for or not, we would like them to be paid for. There is a little box there for the purpose.

514. I noticed them. I may now be on policy. Do you intend to develop the forest trails more and to establish, shall we say, adventure trails such as they have on the Continent, by way of activities rather than, say, leisurely strolls pointing out things of interest and, if you do, have you budgeted for the hollowing and re-arranging of trees so that people can do little acts for themselves to get involved?

—Our courage has not extended that far yet.

Chairman.—We will all be playing cowboys and Indians. From experience I would say Wicklow is a great place to do it.

Deputy C. Murphy.—This has become very popular in places like Switzerland. I was told about it and it does not seem to be extremely costly. Instead of just having strolls, they make it a little more active.

515. Chairman.—On the Appropriations-in-Aid, it would be helpful to the Committee if a heading like “Miscellaneous” could be broken down into some detail. The Vote of the Revenue Commissioners has a section on “Miscellaneous” and you can see the way it is broken down. I commend that to the Accounting Officer in this case and to all other Accounting Officers.

—“Miscellaneous” is always rather a ragbag of things.

Yes, but the sum is sizeable. We do not mind the ragbag but, if it is a big sum of money, we want to see what rags are in the bag.

—The main reason for the additional receipt that particular year was that, something which we did not expect to be doing, we sold some of the houses occupied by foresters direct to the foresters as sitting tenants.

516. Do you think that is something that should come out separately?

—We had no subhead for it at the time. I agree that perhaps it should.

It could be detailed there.

—The other big item there was that we sold some plants to the nursery trade, some surplus plants.

517. Deputy C. Murphy.—For losses resulting from forest fires there is a fierce sum of £59,048?

—Yes. There were 470 fires that year of which 70 caused damage to 730 acres.

Where do the fires originate? Is it within the forest or on adjoining lands?

—Generally on adjoining lands.

518. Have you a clearance area and is much money spent?

—We have, and we do our best. We utilise press, radio and television publicity. We have fire patrols at dangerous weekends. We do not expect to get away 100 per cent clear; no country does in relation to forest fires but there is constant propaganda and persuasion. I could illustrate one instance of a fire in Cork which spread into a plantation. A local was engaged in burning vegetation on his lands at the time. The fire got out of control, spread into the plantation, and burned 40 acres of State forest property, resulting in damage of £1,634. The local was reported to have a history of mental illness. He was also in poor financial circumstances. No legal action was taken by the Department but we asked the gardaí to talk to him.

They are supposed to give notice to the forestry people?

—They are, that is of intention to burn within one mile of a plantation.

At times an undesirable growth comes right up to the perimeter of the forest?

—In such cases we would carry out ground clearance there ourselves with the permission of the adjoining owner.

This clearance should be in your own property?

—We do it within our own boundaries also.

The witness withdrew.

*Includes £703,183 Duty deferred under EEC Regulations (1972-73 £262,305).

†Includes £8,151 Levies deferred under EEC Regulations.