Committee Reports > List of Committees > Dáil > 1977 > Committee of Public Accounts > Report - Appropriation Accounts 1974

MIONTUAIRISC NA FINNEACHTA

(Minutes of Evidence)

Déardaoin, 3 Feabhra, 1977.

Thursday, 3rd February, 1977.

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 38—AGRICULTURE.

Mr. M. J. Barry called and examined.

589. Chairman.—Paragraph 43 of the Report of the Comptroller and Auditor General reads:

“Expenditure in excess of Authorised Issues

In paragraph 6 above I referred to payments made from seventeen Votes in excess of the amounts authorised by Section 2 of the Central Fund (Permanent Provisions) Act, 1965. Excess payments of some £3,958,000 were made from this Vote. I sought the observations of the Accounting Officer. He has informed me that the main reason was the changeover to a calendar year. This required an initial nine-month financial period which had practically run out before the Vote estimate was passed on 18 December 1974.”

Mr. Mac Gearailt.—This paragraph refers to another one of the seventeen cases of overexpenditure mentioned in paragraph 6. The circumstances in which the overexpenditure occurred have been explained by the Accounting Officer and are outlined in the paragraph.

Chairman.—Unless the Accounting Officer wishes to say anything about this, there is no need to delay. We have had this in many other cases.

—Our situation is similar to that of other Departments.

590. Paragraph 44 of the Report of the Comptroller and Auditor General reads:

“Collection of Monetary Compensatory Amounts

A test examination of the collection of Monetary Compensatory Amounts by the Department of Agriculture and Fisheries was carried out with generally satisfactory results.

In the course of audit it was noted that amounts of £134,688 due on exports to EEC Member States and £95,985 due on exports to non-member states had remained uncollected from a beef exporter at 31 December, 1974. I have invited the observations of the Accounting Officer on the delay in collection in this case.”

Mr. Mac Gearailt.—The Accounting Officer informed me in September, 1975 that the delay in collecting the amounts referred to in this paragraph arose mainly from the fact that certain operations of this exporter were being investigated by the Special Investigation Branch of the Revenue Commissioners. He has recently informed me that the moneys have been collected in full from the firm concerned.

591. Chairman.—Would the Accounting Officer like to make any comment on that?

—As the Comptroller and Auditor General has just said, this case has been settled, but we still have debts in this area which we are trying to collect. Last year I made reference to the fact that there was something like £5 million outstanding on cattle. We got that £5 million down to something in excess of £1 million and we are still working on it. The chapter has not been closed yet, by any means.

There was an unusual situation from 1974 onwards, and it is something to know that it is coming down. There was a reduction of £4 million in £5 million which shows progress.

592. Deputy C. Murphy.—Out of the money outstanding, what size figure would be outstanding from the EEC countries vis-à-vis that from non-EEC countries? Is that on a 50-50 basis?

—On cattle, the money outstanding is in respect of unpaid charges on cattle exported from this country. Mainly the debtors are resident either here or in the North of Ireland.

In this paragraph there is an amount broken down between money due on exports to EEC Member States and money due on exports to non-Member States.

—This is a reference to meat exported out of intervention. As to the destination of the exports, I do not have figures with me.

593. I felt that this also referred to money which had remained uncollected from a beef exporter at the 31st December, 1974. It was not an Irish beef exporter?

—The specific case to which the Comptroller and Auditor General drew attention was an Irish exporter.

The Accounting Officer is speaking in general terms?

—In wider terms of the general area.

594. Deputy H. Gibbons.—Was it settled for less than was due?

—No, we settled for the amount that we considered due.

595. Can we look forward to a time when this money will have to be paid before the animals are exported?

—This is the current situation. In this area problems arose in regard to cattle and in regard to beef at the beginning of the operation of this system of monetary compensatory amounts but it was getting us into a mess and after a short time we had to insist that cattle MCAs be paid on the date of export.

596. Chairman.—Paragraph 45 of the Report of the Comptroller and Auditor General reads:

“Subhead D.8.—Horticulture (including Glasshouses)

Provision was made by supplementary estimate for the payment of a subsidy of 5p per gallon towards the increased cost of heating oil used by horticultural producers in the period 1 July to 31 December, 1974 for the production of glasshouse crops and mushrooms. The charge to the subhead includes £64,147 in respect of this subsidy.”

Mr. Mac Gearailt.—This paragraph is for information and refers to a special subsidy payable to certain horticultural producers. The subsidy was paid at the reduced rate of 2p per gallon from 1st January, to 30th June, 1975 and was then discontinued.

597. Chairman.—Paragraph 46 of the Report of the Comptroller and Auditor General reads:

“Subhead E.1.—Promotion of Sales of Dairy Produce Abroad

The charge to the subhead represents a payment of £56,000 made to An Bord Bainne Co-operative Ltd. in the period under review to finance the promotion of sales of dairy produce abroad. A payment of £75,000 was also made to the society for the same purpose in the previous financial year. As vouchers supporting the expenditure of these moneys were not available to me for audit I have invited the observations of the Accounting Officer.”

Mr. Mac Gearailt.—This paragraph draws attention to the absence, at the time of our audit, of satisfactory vouching for payments totalling £131,000 made in 1973-74 and 1974 to An Bord Bainne Co-operative Ltd. towards the cost of its promotion of export sales of dairy produce. The Accounting Officer informed me that the certified accounts of the former statutory board indicated each year the amount it had expended on such promotion work. As the certified accounts submitted by the Co-operative for 1973-74 and 1974 did not give this information it was asked for particulars, certified by its auditors. The auditors’ certificates submitted have been inspected by my officers and this disposes of the matter satisfactorily.

598. Chairman.—As Bord Bainne is no longer in your ambit, nothing further arises.

—No. In fact, the situation is that the Department of Agriculture were giving a contribution to Bord Bainne for a specific purpose, to help finance the promotion of sales of dairy produce. The sum of money which the Department of Agriculture gave was small, a very small part of the total sum which Bord Bainne used for this promotional effort and it was a matter of identifying and being satisfied that this money was used for the purposes for which it was given. The situation is satisfactory in that respect.

599. Paragraph 47 of the Report of the Comptroller and Auditor General reads:

“Subhead F.1.—Agricultural Credit Corporation

Under agreements signed in 1952 and 1953 loans amounting to £115,000 were made by the Agricultural Credit Corporation to the Co-operative Fruit Growers Society Ltd., Dungarvan. Repayment of the loans was guaranteed by the Minister for Agriculture and Fisheries. As the Society was unable to meet its commitments the loan agreements were terminated on 3 December, 1974 and the total amount outstanding, £32,711, including interest, was demanded by the Corporation. Of this amount £17,711 was repaid by the Society and the balance, £15,000, was paid from the above subhead on foot of the Minister’s guarantee.”

Mr. Mac Gearailt.—This paragraph is for information. Including the £15,000 paid in the period under review, the net charge to voted moneys in respect of loans made to the Co-operative Fruit Growers Society by the Agricultural Credit Corporation amounted to £71,055.

600. Chairman.—Paragraph 48 of the Report of the Comptroller and Auditor General reads:

“Subhead M.2.—Dairy Herds Conversion Scheme

This scheme, which is in operation from 20 December, 1973, is aimed at encouraging the owners of dairy herds to switch to meat production. Premiums, based on the gallonage of milk sold in the year to 30 June, 1973, are paid in three instalments to herd owners who give up for four years the commercial production of milk and milk products. Participants are not eligible for grants under the Beef Cattle Incentive Scheme (Subhead D.4). The cost of the Conversion Scheme is shared equally by the European Agricultural, Guidance and Guarantee Fund (FEOGA) and the Vote.”

Mr. Mac Gearailt.—This is also for information. In 1975 £150,864 was received from FEOGA in respect of its contribution to the cost of the scheme in 1974.

601. Chairman.—Paragraph 49 of the Report of the Comptroller and Auditor General reads:

“Subhead M.4.—Incidental Expenses arising out of Market Intervention

Subhead N.-Appropriations in Aid

The charge to Subhead M.4. is made up as follows:—

In order to maintain fixed minimum prices for some agricultural products the Common Agricultural Policy of the EEC provides for a system of market intervention to be operated in the Member States. Community regulations require the setting up in each Member State of a central agency to operate this system. The Minister for Agriculture and Fisheries is the official Intervention Agency of the EEC in Ireland and is responsible for the purchase, storage and resale of the products involved. In the period under review intervention operations in this country were confined to beef and skimmed milk powder, the capital cost being met from interest-bearing repayable advances provided to the Agency from the Central Fund. Losses on the disposal of products sold by the Agency are met from FEOGA. Subject to certain limits fixed by Community regulations, interest, storage and handling charges etc, are also met from FEOGA, Prior to 1 April, 1974 expediture under these heads was not charged to the Vote but was debited directly to a FEOGA account. As from that date this expenditure is charged to Subhead M.4. and moneys recovered from FEOGA are credited as appropriations in aid. The total amount received in the period under review and credited to Subhead N. is made up as follows;—

While the charge to Subhead M.4. consists of actual payments made, recoveries are effected with the approval of the E.E.C. Commission on the basis of projected expenditure.”

Mr. Mac Gearailt.—This paragraph gives details under the main heads of the expenditure, in the period under review, of voted moneys by the Minister for Agriculture and Fisheries as Intervention Agency as well as details of sums received from FEOGA in respect of such expenditure. This expenditure only covers what may be termed the overhead costs of intervention. The capital cost of the products purchased was, in the period, met from repayable advances issued from the Central Fund.

Chairman.—Could you give us a little more detail?

Mr. Mac Gearailt.—Provision is made in the subhead for what might be called overhead charges, storage, transport, interest and so on. At the same time we recovered a good deal more than we paid out in that year.

602. Chairman.—Would the Accounting Officer like to elaborate?

—I think I should do so because this is probably the biggest issue in this whole area of accounts and is likely to be there for some years to come. Perhaps it would be useful if I made a few general comments on what it is all about. Everybody will remember that the international beef market became chaotic at the end of 1973 and the early part of 1974. Under the EEC intervention system beef is taken off the market, put into store and later re-sold at tender or fixed prices. This collapse of the international market was sudden and it threw the beef market here into chaos. We were obliged to bring the EEC intervention system into operation immediately. In 1974, 1975 and 1976 we bought nearly 330,000 tons of beef off the Irish market, for which we paid £265 million. We stored the beef here and abroad in various cold stores. At one point we were using up to 80 cold stores. What the Comptroller and Auditor General is drawing attention to is part of the complexity of the financing operation for this exercise. We had to pay for the meat as we bought it from the processors. We then had to find cold stores for it, pay transport charges and see that everything was reasonably well done. At the same time we were making demands on Brussels for interim payments because the cost of this operation is ultimately to be borne on Brussels funds. They were paying us on account for these charges because these massive arrangements involved a tremendous amount of accounting and documentation. The position was further complicated by the fact that from the autumn of 1974 onwards even though we were buying in beef steadily, we were also selling beef steadily and so we had double documentation. This is why I have said this system is likely to be with us for a number of years because we are still buying and selling intervention beef. The quantities we have been handling in recent months are quite limited on the intake side so that the total stocks we have at the moment would be about 35,000 tons. The accounting job is now computerised to a great extent and is much more orderly than it was when we started. This will be a very big problem in accounting terms for the next couple of years.

603. In other words, to get to that stage the balance will take quite a lot of adjustment. Is that really what you are saying?

—Yes. The whole accounting operation for purchases, stores, sales, transport and all the other items that go into these commercial transactions taken together add up to a tremendous amount of detailed documentation and accounts.

To strike a balance is not a simple matter.

—The stock position is changing daily and this makes accounting all the more difficult.

604. Have you decided on any policy for stock valuation?

—Yes. Working in co-operation with the authorities in Brussels we have gradually sorted things out and got a system which is working satisfactorily. In all the control methods which we have employed up to now we have not turned up anything that would leave us terribly worried about losses or pilfering. There will be some problems but at present we have no evidence that anything has gone wrong.

You are getting everything under control?

—Yes. We would say it is now under control.

605. Deputy C. Murphy.—Does the trend of having a credit balance at the end of each accounting period continue or is it a see-saw situation?

—It is an up and down situation because, in effect, we borrow money domestically to pay the meat processors, because they have to be paid if they are to remain in business. Later we make claims on Brussels. Brussels take responsibility for paying ultimately unless something has gone radically wrong; say, for example that 100 tons has disappeared, then Brussels would say that was our responsibility. But that situation has not arisen.

606. Then it is the responsibility of Brussels to dispose of what was in stock in intervention?

—No. What happens is that management committees meet in Brussels and agree on tender and fixed prices for next month. Then we as the Intervention Agency invite people to purchase; but it is our responsibility to look after these sales, sell the beef at the tender or fixed price and then do all the necessary accounting thereafter.

607. Deputy H. Gibbons.—Did the Accounting Officer say there were purchases of £265 million?

—Yes. I said that since we went into this business of buying intervention beef we have spent £265 million in purchases of beef.

608. It is not necessary to show this in the accounts?

—There are separate FEOGA accounts under which this can be done; but as the Comptroller and Auditor General said in his explanation to this paragraph, where the National Exchequer could be ultimately involved would be if at the end of the day we have not balanced our books and satisfied Brussels as to our disposals and everything else—then there could be a charge ultimately on the Irish Exchequer, because if we made serious mistakes in this whole operation Brussels would not pay the bills.

Mr. Mac Gearailt.—But the capital cost this year, as I have said, was met from repayable advances from the Exchequer, so they would not appear in the Appropriation Accounts. They would not be met from voted moneys.

609. Deputy Crotty.—Do you receive interest on the expenditure?

—We pay interest on what we borrow. We are allowed interest by Brussels but there is a disparity to our disadvantage between the two interest rates. Brussels work on an average interest rate over the Member States but our national interest rate is higher than the European average. For example, we may be borrowing money at 11 per cent and being allowed only 8 per cent by Brussels, and there is a loss of 3 per cent

610. This would be a very large amount of money on the sum of £265 million referred to.

—Yes, this is a loss in our Vote in recent years. We are provided with this as an incidental to intervention expenses.

611. Where does this money come from?

—From the Exchequer. What I am referring to is the difference in interest rates. This comes from the Exchequer.

612. Have any representations been made to the EEC on this front?

—Yes, we argue about this, but their attitude is: “There is a variation in the interest rates among the different member States. We cannot give interest rates at the very top; we must give them at the average and have it the same for everybody.”

613. Deputy H. Gibbons.—What would be the largest sum that would be owed to you at any particular time by Brussels?

—I suppose the easiest way to answer it is to say whatever sum is represented by what beef is left in store. If you ask me to put a money value on that I cannot do so off the cuff, but as we sell this intervention beef we are recouping expenses. However, the amount actually left in store today—I think I put the figure at about 35.000 tons, which is relatively small in relation to the quantities we were dealing with in 1975 and early 1976—is back to manageable proportions. It was at the height of its trouble in 1974 and 1975, when it was a very sizeable commercial operation.

614. You mentioned 20 storage places. Where would these be?

—At one point we had 80 storage places. We had every cold store we could use in this country and we were using cold stores in England, France, Belgium and Holland.

615. Deputy C. Murphy.—We have been paying substantial charges for the use of these cold stores. Would we have sufficient cold storage facilities of our own to carry the 35,000 tons in stock or are we still in the position of having to hire cold storage and pay for it.

—Wherever we have cold storage we have to pay. Again, Brussels pay the cost of this provided it is within the agreed limits. We would not wish to tie up all the cold storage available in this country because there are other commodities to be stored. Meat moving into commercial trade must be stored, too. We are using about 20 cold stores at present, mainly here and in the UK, but we have reduced our dependence greatly in respect of the foreign stores.

616. Deputy Crotty.—Has it cost us money to keep meat in cold storage? In other words, have we hired cold storage space at rates higher than the EEC recoupment rates?

—No. This balances out. It might be that in a single instance we would pay marginally more than an agreed figure but in other instances we pay marginally less. I am speaking to some extent now from memory but I do not think there is much of a balance on storage. The biggest loss is represented by the difference in interest rates.

Could you quantify that for any particular year?

—The Estimates for 1977 show the provision we are making in that regard.

617. Deputy C. Murphy.—Is it likely that this problem will be solved with the move towards a common unit of currency?

—I doubt if it would but that is only a guess. I cannot give the figures requested because in the summary version of the Estimate that I have here the subhead gives only a total. The sum of £21 million for incidental expenses arising out of market intervention includes beef and milk powder but what the Deputy seeks is the figure for the Exchequer loss on the differential. It is about £3,500,000.

618. Deputy H. Gibbons.—On the question of tendering, is it the position that the tender price is decided in Brussels?

—There is a system known as the management committee system. This committee meet regularly and decide on the quantity of intervention beef they would market for, say, the following month and also at what price it should be put on offer. At times all the beef on offer may be taken up but at other times demand may be slack.

619. Is there any obligation on you to seek a price higher than the price agreed in Brussels?

—If we could get a higher price, of course we would; but that would not be likely when the beef would be available at the tender price,

620. Is there any financial imposition in the event of failure to dispose of the quantity concerned?

—No. The meat is on offer. Let us say that 5,000 tons are on offer for the month of February—anybody who wished to purchase, say, a minimum of ten tons would be free to purchase or not to purchase as he wished.

621. Who would be likely to be tendering at that stage?

—Perhaps somebody who would want processing beef for manufacturing purposes, for example, for hamburgers or such products. Equally, people who cater for institutions buy beef in sizeable quantities. Another type of person is the one who would wish to be selective in his buying, for instance, somebody buying for a hotel or for a supermarket chain and who wishes to buy a particular cut, I should have explained earlier that most of this beef is not in quarters—it is boxed boneless beef, sold by description, for example, “carton of fillets”. That is the kind of cut that would be sought by a buyer for a hotel. This kind of cut would be the most expensive to buy.

622. Therefore, people within the State would be buying intervention beef?

—They are free to buy. In the case of cuts, the minimum purchase is five tons but five tons in the case of fillets could represent a very expensive purchase for the average butcher or wholesaler here because this is frozen beef which must be managed very carefully. The buyer, therefore, would need to be sure of his turnover and that he can keep the beef under the correct conditions in relation to temperature until it is sold for consumption.

623. How much of the intervention beef would be bought (a) within the state and (b) outside the State?

—The vast bulk of it is bought by purchasers outside the State.

By government agencies?

—By commercial outlets in the main.

How many countries would be involved?

—Many of the EEC countries. Also, there have been big sales to Russia and the Middle East and various other places.

624. Deputy C. Murphy.—In endeavouring to encourage tenders for this beef, are we at a disadvantage because of our geographical location, in terms of cost of transportation and so on? Possibly, also, would we be at a disadvantage by reason of other countries inviting tenders in areas of huge populations?

—I do not think so in so far as intervention beef is concerned but the question of transport costs and of our geographical location affects adversely the whole marketing of beef and cattle from this country. That will always be the position.

625. Would it be likely, therefore, that purchasers would be more likely to buy from these other countries who are at an advantage geographically?

—No; because a potential purchaser in, say, Britain, would be aware that the beef for which he was offering was in intervention already in London, Bristol or elsewhere in England. Consequently, his costs would not be affected, It suits us to have it in store in fairly strategic places where it is accessible to potential buyers.

626. Deputy H. Gibbons.—How many countries are putting beef or milk into intervention?

—At the moment, out of the Nine there are very few member States putting beef into intervention, possibly the Germans and the French may be putting small quantities in but most of the beef currently produced is being marketed commercially.

627. What about the milk situation?

—At this time of the year I doubt if anybody would be putting milk products into intervention, In relation to milk we are only talking of two commodities, milk powder and butter. I am not sure that anybody is putting milk powder or butter into intervention at the present time.

628. Chairman.—Paragraph 50 of the Report of the Comptroller and Auditor General reads:

“In the course of audit of expenditure in respect of the handling, storage and transport of beef I noted that a procedure was adopted which provided for payment of the full amount due pending a later check of the relevant invoices. In most cases these invoices remained unchecked at the time of my audit, I have recently been informed by the Accounting Officer that payments are made in full one month in arrear to Irish cold stores and six weeks in arrear to United Kingdom cold stores at which time a substantial balance is accrued due in each case. The Department could not be taken to be satisfied indefinitely to continue with such payments on account which are an undesirable but still, unfortunately, a necessary feature of payments in some areas of beef intervention and are caused by the unprecedented scale of the operations. He further informed me that special assignments of staff have been working on a reconciliation of the documentation in arrears and on current work. It is, therefore, hoped to cease payments on account altogether but it will be some months yet before this can be achieved.”

Mr. Mac Gearailt.—This paragraph refers to the arrangements made by the Department, in administering the intervention system, to deal with claims for payment of transport, storage and other handling charges on beef purchased. Even though the total amount paid to a claimant at any particular stage was less than the total value of the invoices submitted by him I considered it undesirable that a situation should have developed in which invoices which had been met in full remained unchecked for a considerable length of time. The Accounting Officer has explained the circumstances which gave rise to this position and his explanation is included in the paragraph.

629. Chairman.—Is there still some delay in rectifying this position?

—We are practically correct on it now. We have been able to bring much more order into it. This year we have got it on computer. Because our intake over recent months was so much lower than it used to be, we have practically brought ourselves up to date in the sense that we have got out of the chaotic situation we had at the start. Everybody is now better geared to handle the situation, not only our staff in the Department of Agriculture, but meat processors and transport people. I am very optimistic that before the end of this calendar year we will have this whole situation cleared.

630. Paragraph 51 of the Report of the Comptroller and Auditor General reads:

“Arising from my audit of Ireland’s section of the FEOGA account I found it necessary to communicate with the Accounting Officer on a number of matters relating to the purchase and storage of intervention beef, e.g. stock control, weight discrepancies, payments on accounts and overpayments. These matters will be dealt with in my report on the FEOGA accounts for 1973 and 1974 when they are submitted to me for certification. Any resulting losses may give rise to a charge to Voted moneys and I have, therefore, deemed it desirable to include a reference to these matters in this report.”

Mr. Mac Gearailt.—This paragraph draws the attention of Dáil Éireann to the possibility of a charge falling on the Exchequer should losses occur on our intervention operations because of shortcomings in stock control, weight discrepancies, overpayments, and so on and should the EEC Commission refuse to meet such losses.

631. Deputy H. Gibbons.—Are there any losses now due to the fact that some meat may be rejected?

—Yes. What might be called incidental losses are always liable to occur. For example, we had one cold store in England where there was evidently a failure of power at some stage because, when we came to take the beef out, it was clear that it was not right. Some losses occurred there. We must settle this sort of thing in negotiation with the cold store people and losses may result. Another example is that a purchaser may get a consignment of beef out of intervention and he may complain that there has been some mislabelling and what were sent to him as expensive cuts turned out to be cheaper cuts. We have to sort it out between him and the processor here who originally put up this beef and again losses might occur. We regard these as losses incidental to this kind of transaction. Brussels lose as well. There is a one per cent tolerance for incidental losses arising in this whole business.

632. Chairman.—Paragraph 52 of the Report of the Comptroller and Auditor General reads:

“Subhead M.5.—Cattle Slaughter Premiums

Under a regulation made by the EEC Member States are authorised to pay a premium on cattle, other than cows, slaughtered on or after 1 August, 1974. The object of the scheme is to encourage producers to maintain cattle intended for slaughter for a period of additional fattening. The amount of the premium varied between £9.24 per head in August, 1974 and £26.18 in December. The cost of the scheme is shared between FEOGA and voted moneys and the charge to the subhead represents the amount met from voted moneys up to 31 December 1974. The scheme continued in operation in 1975.”

Mr. Mac Gearailt.—This paragraph is for information. The sharing of expenditure was initially on a 50/50 basis but the proportion payable by FEOGA was gradually increased and from 16 March 1975 the full cost of the scheme was borne by FEOGA. The scheme terminated with effect from 28 February 1976.

633. Chairman.—On subhead A.1.— Salaries, Wages and Allowances—is there any general reason for the discrepancy there?

—This kind of discrepancy almost always arises from delays in filling vacancies.

634. Deputy C. Murphy.—On subhead B.4.—Private Agricultural Schools, etc.— are there many private agricultural schools?

—I will list them for you. There are privately-owned colleges to which we give grants. They are Gurteen, St. Patrick’s in Monaghan, Mount Bellew, Multyfarnham, Pallaskenry, Warrenstown and Rockwell. In addition, there are about six girls’ schools.

Domestic economy schools?

—Yes.

635. Chairman.—On subhead B.9— Scholarships and Training—I note that there were both withdrawals and examination failures in regard to scholarships.

—This is a normal pattern.

636. Deputy C. Murphy.—On subhead B.10.—Farm Apprenticeship Board—Grant-in-Aid for General Expenses—is this just a grant-in-aid towards the operations of the board itself? It is not a subsidy to apprentices?

—It is a grant-in-aid to enable the board to do certain things but it is not a grant-in-aid direct to each individual working on a master farmer’s land.

637. Do the master farmers have to pay for the training of these apprentices from their own funds? There was a recent dispute as to whether AnCO should be involved in this training. Have you any general information on that point?

—Yes. There is a good deal of uneasiness and dissatisfaction. From the point of view of the Department of Agriculture and Fisheries this Apprenticeship Board was originally set up with the intention that the farm organisations—including Macra na Feirme—would put up a sizeable part of the funds and that the State would provide the balance. However, very little money comes from any source other than the Department of Agriculture and Fisheries and we would like to think that the farm organisations would place a little more value on this scheme and put some funds into it. On the whole the scheme works successfully and each year the Department provides cash awards for the best apprentices in a training period. At any time there could be a total of between 140 and 170 apprentices with farmers. It is a three-year course with an intake of about 60. It is a good system but we should like to see farmers put more funds into it. They in turn would like to see something like an AnCO system, but whether they would contribute is another matter.

638. Chairman.—On subhead B.11— Technical Assistance—the note draws attention to claims not received. This seems to be a constantly recurring thing in these notes.

—Yes. This is a fair example of the kind of subhead which gives rise to this situation. Here we have a sum of money set aside for technical assistance to firms who might want to do a consultancy job or send somebody abroad for specialised training. The onus is left on the firms to come forward if they have a project they would like us to support. It happens sometimes that there can be sizeable savings if the firms or institutions do not use this service.

639. That is quite true. If I understand it correctly, claims were not received towards the cost of a number of approved projects. That seems to suggest that there are claims for which the Department are liable which have not been furnished before the end of the accounting period?

—That is correct. What happens is that some of the firms may be slow in sending in their claims.

You cannot pay till you have got them. That is perfectly understandable. The only question I am raising here in general terms is: is there any adjustment of accounting other than what we have here that would avoid these surpluses being shown in the accounts over the year? Of course, they are claims for the future.

Mr. Mac Gearailt.—They would have to be met subsequently, but in so far as the money was not expended it would have to be surrendered.

640. Chairman.—The net accounting problem is the balancing of an outstanding claim against the surrender of the balance to which the claim is attached?

—Yes. It can be embarrassing sometimes because it puts an undue strain on the provisions we make for the following year.

In other words you have to re-introduce the liability into your estimates for the following year?

—That is right.

In any year then you show in the accounts the estimated complete liability to be incurred in the year in question as well as the unpaid claims of the previous year?

—That is correct. We get this, I should say, in a bigger way when we are dealing, for example, with building contracts or schemes of modernisation where the claims are not coming in as regularly as we would like.

641. Is there any way you could estimate, on experience, that a certain percentage of claims will not fall for payment within the year and therefore when you are making your estimate you could provide for the total expected claims for the year in question, plus the claims outstanding less an estimated percentage of your first figure, on the basis that that would be transferred to the following year? Is there any consistency there to warrant such an approach?

—It could be tried experimentally for a few years; but I should think, speaking without prior consideration, that the one part of the equation would balance out the other. You do an addition and a subtraction—

They should roughly balance?

—But then you finish almost where you started.

Yes, you still have the bigger amount there?

—That is right.

Mr. Mac Gearailt.—If the Accounting Officer felt that a claim was not going to come in, I doubt if he would make provision for it or would be allowed by Finance to make provision for it.

Chairman.—Anyway our job is to deal with accounts. We are not an estimates committee and we will leave that thorny question to the Accounting Officer.

642. Deputy C. Murphy.—On subhead B.16.—Connemara Pony Breeders’ Society— Grant-in-Aid for General Expenses—has that remained static at £500?

—Yes, I think it has been at that level for a number of years. We have transferred much of this Vote to Bord na gCapall since last year.

I was wondering, in view of the fact that this society are now more active and generate more interest today——

—The Connemara Society do excellent work.

They do. They seem to be going from strength to strength, but I take it the money now comes from Bord na gCapall?

—From here on it all comes through Bord na gCapall.

643. On subhead B.18.—Prizes at Shows, etc.—do I understand that a member of the Army team will not be allowed to retain a cash prize won at an equestrian event? Does that money go to the Department of Defence? Is there a transfer from Agriculture to Defence?

—I cannot answer that. If we give money to the RDS to sponsor a competition we are finished with it at that point. If an Army officer wins it I am not sure to whom he accounts for it, presumably the Secretary of the Department of Defence.

The money actually leaves your Department and goes to the RDS?

—Yes.

644. Deputy H. Gibbons.—On subhead C.4.—General Disease Control and Eradication—is there any case for making the warble fly dressing compulsory?

—It was compulsory for a number of years and then the incidence became so low that there seemed to be general acceptance of the idea that it was rather wasteful to treat millions of cattle to pick up the relatively few that had warble infestation. Then it was put on a voluntary basis. People are encouraged to dress their cattle if there is any evidence of warbles but there is no demand, so far as I am aware, for a return to compulsory annual dressing.

645. Deputy C. Murphy.—On subhead D.5.—Sheep Headage Grants—is the saving here the result of a reduction in numbers?

—Since the headage payment was fixed it must be accounted for by a reduction in numbers.

646. Chairman.—Regarding the totals, I note there is surrender of about 10 per cent. In terms of the amount involved—more than £50 million, the estimating is very good, indeed. The only question that arises is in relation to surrenders which, presumably, are caused by people not making claims within certain periods?

—That is one reason. The other is that in cases of new schemes it is almost impossible to determine how much money will be paid by the end of the first year. Examples of this here are the market intervention and the farm modernisation schemes.

The point is that within the present framework of accounting and having regard to the fact that this was a year of change the accounting in this Department is extremely good. That reflects efficiency in the Department. It is a very complicated Department?

—It is.

647. Estimations in relation to receipts from sales of cattle slaughtered where schemes have been established seem to be quite good. This was before the difficulty with the veterinary profession?

—We have got over those difficulties and the testing is now going ahead.

648. Deputy C. Murphy.—Has the beef classification scheme got off the ground yet?

—I am sorry to say it has not got anywhere. The meat processing industry have no enthusiasm for it. They say they might operate it if the Department of Agriculture finance it and start it. Much the same situation obtains in England where butchers do not want this sort of classification system. They say that the best judge of the quality of a carcase is the man who buys it for his own trade and they will not rely on other judgments in relation to this. It is an open field for different opinions and arguments. Officially, we say that a classification system is very important for an exporting country. The meat processors who actually sell the beef do not think so.

649. Are there any regulations to insist that there be some form of classification scheme for processed meat?

—I do not think so.

650. Chairman.—Thank you, Mr. Barry. This is probably one of the most complicated Departments now, and one of the most important Departments from the national point of view. These accounts are generally in order. Is any real deterioration anticipated in subsequent years?

—The point of greatest difficulty, and I could not describe it as deterioration in the next couple of years, will be clearing up this whole area of intervention beef and MCAs.

That is a current problem?

—Yes. We are reasonably confident at this stage that there will be no real skeletons in the cupboard as we clean it out.

VOTE 39—FISHERIES.

Mr. M. J. Barry further examined.

651. Chairman.—Paragraph 53 of the Report of the Comptroller and Auditor General reads:

“Subhead C.3.—Main Fishery Harbour Works, including Payments to the Fishery Harbour Centres Fund

The cost of main fishery harbour works, carried out by the Office of Public Works on a repayment basis, is met from this subhead.

I observed in the course of audit that expenditure on development of the harbours at Dunmore East and Castletownbere exceeded the amounts approved by the Minister for Finance in 1971 and 1972, respectively. Expenditure to 31 December, 1974 amounted to £650,424 at Dunmore East and £1,128,123 at Castletownbere while the amounts sanctioned were £559,854 and £913,000. In reply to my inquiry the Accounting Officer has informed me that the question of revised estimates of costs for both harbours was taken up with the Office of Public Works in 1973. That office estimated that the total costs for Dunmore East would be of the order of £825,000 while Castletownbere would be in the region of £1,500,000. The Office of Public Works is being pressed as a matter of urgency for the necessary detailed information so that the covering sanction of the Minister for Finance for the increased expenditure on both harbours may be obtained.”

Mr. Mac Gearailt.—This paragraph deals with two cases in which expenditure was incurred in excess of the amounts authorised by the Minister for Finance. I understand that the necessary sanctions have now been received from the Department of Finance.

652. Chairman.—There is a great delay in getting the sanction here. It was the subject of comment before this. One could have imagined that the sanction would have been obtained at the latest in the subsequent year. I presume the Comptroller and Auditor General drew attention to the matter.

Mr. Mac Gearailt.—We looked for the sanction.

Chairman.—Is there any explanation for that?

—The criticism is very fair. These delays should not occur. In any case where three Departments are concerned, in this case the Departments of Agriculture, Finance and the Office of Public Works, it takes some time to get things sorted out. The Office of Public Works have had great difficulties in getting their systems, procedures and staffing right for this kind of work. Here we are dealing with an unknown quantity in the sense that a major fishery harbour is a job that continues for maybe four or five years and the original estimates which the Board of Works offered are at best only tentative because of the nature of the job to be done. We get Finance sanction on this original tentative estimate and we in turn authorise the Office of Public Works to get on with the job of building the harbour. They then either employ contractors or look for direct labour. The years pass and the cost goes up and up. In this case the original sanction may have been given in 1970 or 1969. In Dunmore East this job finished in December, 1974; but between January, 1971, and January, 1975, building costs in this country went up by over 80 per cent so that in this kind of situation the sanction becames less and less realistic as the years go on. It is a real problem and we are meeting it again in other areas where buildings take a long time to plan and get completed. We have this problem with some of the university colleges in the faculties which we are funding.

653. Put that way it is acceptable, but it goes back to the accounting method here. Since the Department of Finance are supposed to have control, is there any way by which they can give a provisional sanction or intervene to try to keep the thing on-going from year to year? This can be a very real irregularity in a certain type of case. One has to insist on Finance sanction to keep regularity and uniformity throughout the Service and control expenditure, although a case like this is a very real difficulty. The Accounting Officer’s explanation has been complete and the difficulty with the Board of Works is completely understood, but taking it in general is there any way in which this type of case can be met? Undoubtedly in an inflationary situation such as we have had after even a year an estimate on that basis of current costs of that year will be insufficient for the following year. Is there any way in which this matter can be handled so as to avoid the necessity of comment of this nature from the Comptroller and Auditor General? This technicality seems to be taking up our attention when we might be more concerned as to the justification for any increase in expenditure. We may become confused between technicalities and the real question of whether there was extravagance. Clearly, the explanation is acceptable in this case.

—I accept the validity of this point. It does seem that the control is less than it might be where work goes on over a number of years. I am not sure how we could improve the situation. It is possible that we could talk with the Department of Finance and with the Board of Works about having an annual certificate for the value of the work accomplished to date. We could then base our annual provision on this. That would improve the degree of control exercised on this issue.

654. Of course, this is just one case in which you happen to be involved. We should really ask the Department of Finance to note the point and examine the possibilities. It is understandable that this should come up on this Vote. Possibly we will refer to it in the report. It is not a reflection on the Department of Agriculture and Fisheries but it would give the Department of Finance the opportunity of replying by minute. This is really a question for consideration by the Department of Finance. These problems are not simple.

—The problem is acute where a third party is involved, that is, a university or the Board of Works. We have to coordinate the interests of all concerned.

Thank you for that explanation.

655. Deputy H. Gibbons.—On subhead A.—Salaries, Wages and Allowances— there seems to be some difficulty in filling vacancies.

—It is not that there is a shortage of people but there is a time lapse between the announcement of vacancies and putting people at desks, so these savings occur.

Chairman.—Having regard to the extraordinary complications of the two Departments for which you are responsible, your administration seems to the Committee to be very satisfactory and I should like to compliment you on it.

—Thank you.

The witness withdrew.

The Committee adjourned.