Committee Reports > List of Committees > Dáil > 1977 > Committee of Public Accounts > Interim and Final Report - Appropriation Accounts 1975

MIONTUAIRISC NA FINNEACHTA

(Minutes of Evidence)

Déardaoin, 15 Nollaig, 1977.

Thursday, 15th December, 1977.

The Committee met at 11 a.m

DEPUTY O’TOOLE in the chair

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

GENERAL REPORT

Mr. T. F. Ó Cofaigh called and examined.

122. Chairman.—Mr. Ó Cofaigh, as this is your first appearance before the Committee, I welcome you on behalf of my colleagues. You are charged with a very important duty as overall Accounting Officer in the public service. The effective functioning of the Committee is dependent on your co-operation to a large degree and we are sure that this co-operation will be forthcoming. We will deal firstly with item No. 2 on the agenda, that is, the General Report of the Comptroller and Auditor General, paragraphs 1-9. We will refer to item No. 1 at a later stage. I should like to start with paragraph 1 of the General Report of the Comptroller and Auditor General which reads:

“Outturn of the Year

The audited accounts are summarised on page xli. The amount to be surrendered as shown in the summary is £24,729,439 arrived at as follows:—

This represents 1·9 per cent. of the supply grants, as compared with 2.6 per cent. in the previous financial period.”

Mr. Mac Gearailt.—Paragraph 1 gives the usual information regarding the overall outturn of the Appropriation Accounts for the year and it does not call for any further comment from me.

123. Chairman.—Would the Accounting Officer like to comment?

—I am honoured to appear before the Committee on this my first occasion. I assure the Committee that I will do everything in my power to provide the support which the Department of Finance and the Minister for Finance wish at all times to give to this very important Committee. In regard to paragraph 1, I have nothing to add to what the Comptroller and Auditor General has said except to point out that the surrender was 1·9 per cent of the total grant, which is one of the lowest amounts of surrender for some years past and shows, if anything, the rather close estimation over the accounts as a whole.

The estimation has been very accurate.

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

“Excess Vote

Expenditure amounting to £107,904 over and above the gross provision made by Dáil Éireann has been incurred on Vote 13— Superannuation and Retired Allowances, and will require an Excess Vote. There were surplus receipts of £104,318 under Appropriations in Aid. (See also paragraph 21 of this Report).”

The previous Committee brought in an Interim Report on this Excess Vote. The Excess Vote was agreed to by the Dáil on Tuesday last and we reserve our position to comment on it in our final report.

Mr. Mac Gearailt.—This matter has already been dealt with by the former Committee and a report has been submitted to the Dáil. It does not call for any further comment from me.

125. Deputy V. de Valera.—Are the orders law yet or not?

—They have been made, Deputy.

They have been made but they are not effective until the expiry of a certain number of days. Have these days expired?

—I cannot say because I did not go into details in regard to this.

I am aware of the fact that this is your first appearance before the Committee and I am sorry I was not here to welcome you. The point is, and I should like it on the record, that we agreed to the Excess Vote although at that time it had not been validated by legislation. That will cure itself in time. I was just curious to know whether the time had elapsed.

—We can tell you that.

I can find out for myself, thank you.

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

“Exchequer Extra Receipts

Extra receipts payable to the Exchequer as recorded in the Appropriation Accounts amounted to £8,454,924.”

Mr. Mac Gearailt.—Paragraph 3 is the total of the extra receipts cleared to the Exchequer and collected by Accounting Officers for the year. The breakdown of this total, Vote by Vote, is shown on page xli. These receipts are brought to the Exchequer under miscellaneous receipts.

Chairman.—Has the Accounting Officer any comment to make?

—It does not call for comment, Chairman.

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

“Surrender of Balances on Votes for the period 1 April 1974-31 December 1974

The balances due to be surrendered out of Votes for the public services for the period 1 April 1974-31 December 1974 amounted to £18,571,952. I hereby certify that these balances have been duly surrendered.”

Mr. Mac Gearailt.—As moneys voted by the Dáil are voted for the service of a particular year, it follows that any balances outstanding, remaining unspent at the end of the year, fall to be surrendered to the Exchequer and this paragraph certifies that the balances for the period April, 1974 to December, 1974 have in fact been so surrendered.

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

“Stock and Store Accounts

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

Mr. Mac Gearailt.—Stock and Store Accounts kept by Government Departments are required to be audited by me on behalf of Dáil Éireann under the provisions of the Exchequer and Audit Departments Act, 1921, and this paragraph informs the Dáil that the accounts were duly audited in the year under review.

129. Chairman.—Paragraph 6 of the Report of the Comptroller and Auditor General reads:

“Statement of Receipts into the Central Fund for the Year ended 31 December, 1975. Revenue:—

Statement of Issues from the Central Fund for the Year ended 31 December, 1975

Central Fund Services:—

Mr. Mac Gearailt.—Paragraph 6 shows the breakdown under various heads of moneys received into and paid out of the Central Fund in the year.

—It is purely a factual statement, Chairman.

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

“Repayment in respect of Issues under Fóir Teoranta Acts 1972 and 1973

The sum of £550,000, as shown in paragraph 6, represents the repayment by Fóir Teoranta of amounts issued to the company in 1974 from the Exchequer to enable it to provide a loan to the Alliance and Dublin Consumers’ Gas Company which was then experiencing financial difficulties. The Gas Company paid interest amounting to £106,356 during the period of the loan which it repaid in September 1975. As this interest was not paid to the Exchequer by Fóir Teoranta I sought the observations of the Accounting Officer.”

Mr. Mac Gearailt.—This paragraph deals with a loan made by Fóir Teoranta in 1974 to the Alliance and Dublin Consumers’ Gas Company. The loan of £550,000 was refunded by the company, repaid to the Exchequer, but interest of £106,000 paid by the Gas Company to Fóir was retained by Fóir. I asked the Accounting Officer for his observations. In his reply, he informed me that the repayment by Fóir Teoranta of the loan to the Exchequer was purely fortuitous as, at the time of receipt, it was surplus to Foir’s requirements for further lending. The interest, on the other hand, was received by Fóir in six instalments over a period of more than a year and was used in the first instance to cover normal administrative expenses. Any surplus on hands would be taken into account in drawing further advances from the Exchequer. I should point out for the information of the Committee that this matter was not raised by my office until my report was going to print and, therefore, the Accounting Officer had no opportunity of replying in time to get into the report. The matter was raised because the Minister for Finance had not decided the conditions under which advances made to Fóir are repayable. We came across this advance being repaid, which was unusual in the circumstances, and then we saw that interest was also received by Fóir and we wondered why they retained the interest when they did not retain the advance. You could say we looked at this more or less on the basis of Colmcille’s dictum, “To every cow its calf”.

—There are two sums involved here, capital and interest. The capital was a large amount for Fóir; there was £½ million out of, possibly, capital repayments of something like £1 million. When they received this sum and had no immediate use for it they came to the Department and asked what they should do. We commend them for doing this. If they had not come to us, we, and maybe the Comptroller and Auditor General, would have had something to say to them if they had put it in a bank account. They rightly came to us to know what they should do with it. We had no set regulations or directions made by the Minister and we told them to surrender it to the Exchequer. We used it then to reduce our own borrowing for that year and that would be a normal thing to do. As regards the interest, interest payments are used by Fóir towards their operating expenses. The distinction I made was, capital repayments can be used by them to finance further capital issues; interest is used to finance their operating expenses and this would be quite normal and is clearly shown in the accounts. As regards the point about not having given a direction, Fóir are a sui generis sort of body. They help many lame ducks and we thought it would be an esoteric operation to give them directions in regard to interest rates when they might not be earning this interest.

131. Chairman.—Would that create a precedent in this particular case now; was this something new?

—If it is a precedent, it is one we would hope to see arising from time to time. It is just a matter of good management on the part of the State body itself and we commend them for doing this or any others who may do it in the future. We have, in fact, animadverted on other State bodies who did not do this before.

This is the point I am coming to, that a general directive might be issued to all State bodies who might find themselves in the same position as Fóir, that they take similar action.

—Yes, but it does not happen so often like this. If the Committee felt we should consider this course I would be only too glad to do so.

132. Would any Member like to comment on what has been done by Fóir as a laudable objective?

Deputy Belton.—I only hope it will be an incentive to other State bodies to act in a similar fashion.

—Yes, it is a matter of generalising or being specific. We have been specific with State bodies where the occasion arose. If we were to issue a general instruction now through the Departments concerned because we do not deal directly with a lot of State-sponsored bodies—Fóir happens to be under the aegis of the Minister for Finance—it would mean issuing instructions through Departments to all State-sponsored bodies. I should like to consider that if the Committee would like me to do so and I could tell the Committee later what the result of that consideration was.

133. Deputy Morley.—Is it true to say that this would occur only on rare occasions?

—Precisely.

134. Chairman.—Are we clear now on what we are suggesting here?

—I understand I am to consider advising State-sponsored bodies that where they have fortuitous significant repayments that they should consult with the Department of Finance, or the Department directly concerned with that body, as to whether that repayment should be surrendered to the Exchequer or whether it may be retained in some form or other under the control of the company itself.

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

“Savings Bank Fund Deposit Account

The Savings Bank Fund Deposit Account, which is managed by the Department of Finance, reflects transactions relating to the investment of Post Office Savings Bank moneys. In June 1966 a sum of £5,000,000, repayable over ten years with interest at the rate of 7 per cent., was borrowed for general Exchequer purposes from a foreign-based bank. The loan agreement required that the Minister for Finance would open a deposit account in the Dublin office of that Bank but did not specify the amount to be deposited. To meet this requirement the Department of Finance, in June 1966, deposited with the bank a sum of £5,000,000 as an investment of moneys of the Savings Bank Fund Deposit Account.

In the course of audit it was noted that the balance, including accrued interest, in the deposit account with the bank was £2,416,501 on 16 June 1975 when the outstanding balance of the original loan was £500,000. As the rate of interest on this deposit, 6¼ per cent., had remained unchanged whereas the interest rate allowed, for example, by the Central Bank on deposits placed with it on behalf of the Minister for Finance had varied between 6½ per cent. and 12⅜ per cent. since October 1972, I sought the observations of the Accounting Officer. He informed me that the size of the deposit had been kept under review and that, in the context of Exchequer borrowing strategy, certain factors besides the rate of interest earned on deposit have to be taken into account. The successful management of debt policy requires discretion and flexibility in regard to borrowing arrangements and this discretion must be exercised in the context of the primary necessity to finance the Exchequer’s borrowing requirement, a growing proportion of which has to be met from foreign loans. The raising of these loans is dependent on the continuing goodwill of foreign banking institutions and it had been possible to borrow a further £5 million in 1969 on satisfactory terms from the same bank which had also been one of the larger contributors to a $250 million credit facility granted by a banking consortium in September 1975. The Accounting Officer added that before the receipt of my query it had been decided to effect a reduction of the balance in the deposit account at such time as would not prejudice this bank’s participation in the 1975 Exchequer borrowing programme.

At the date of this report the balance in the deposit account is £1,565,640 and the loan received by the Exchequer in 1966 has been fully repaid.”

Mr. Mac Gearailt.—This paragraph draws attention to a relatively low interest rate earned by a sizeable balance on bank deposit. The observations of the Accounting Officer are contained in the paragraph. One comment I should like to make is that I would accept when this deposit was made originally that the interest rate was realistic but I would have thought that as interest rates generally increased the Department possibly might have gone back to the bank to negotiate a better rate.

—The interest rate may have appeared low with the passage of time but there is something more than straight interest rate considerations involved here. In negotiating with banks we establish rather complex intangible relationships with them and in the case of this bank we knew that they were having to service the money they had lent us at a rate considerably in excess of what they were charging us because of the movement of interest rates. We had got money from them—it was at 7 per cent.—and at one stage it was costing them nearly 14 per cent. to service the borrowings they had given us. That was their loss, as the Committee I am sure would point out, but the point as far as we were concerned was that if we were to get tough with the bank as regards either renegotiating the 6¼ per cent. deposit rate which they were giving us or reducing our deposits with them, because that was the choice, word would have got round and it could well have soured our relationships with banks from whom we were borrowing. This is something we would not wish to happen because of the importance of maintaining good relationships with banks and finance houses in the context of quite heavy Exchequer borrowing.

Chairman.—What the Accounting Officer is saying is that this is an intangible relationship. As individuals we are all aware of this kind of relationship that builds up between a friendly bank manager and a client. The Accounting Officer’s explanation is acceptable and, of course, the Government’s borrowing strategy is something which is outside our competence. However, the Committee are anxious to see that public funds are put on deposit at the most favourable rates possible. I appreciate that at some stage here the bank was at a loss also. This is the luck of the game, depending on rates applicable at any given time.

136. Deputy Woods.—On a point of information, do you have a management, somebody managing this situation constantly to get the best terms and so on?

—Yes, we have a section in the Department of Finance, under an officer called the Director of Finances, which constantly monitors our borrowing operations, day-to-day, because we are buying and selling an immense amount of Government stocks annually and even daily. Our turnover in Government stocks is now probably of the order of £8 billion annually and this section is daily “on the ball”, as it were, about these things.

So that in that sense you would have considerable competence in the market movements and values of the bonds, issues or borrowings in which you deal?

—Yes. The section works very successfully. Recently we renegotiated a large borrowing which we had made last year for $300 million but which we did not have to take up there and then. We renegotiated the terms of that borrowing with a very significant beneficial result to the Exchequer only in the last couple of weeks. I say that to illustrate that we keep this area under constant review.

137. Deputy Belton.—Would I be right in thinking, from the explanation given, that the Accounting Officer might think that the most profitable rate might not be the most advantageous rate?

—Yes, the optimum rate is not necessarily the highest rate.

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

“Clearance of cashed Payable Orders by the Paymaster-General’s Office

The Paymaster-General’s Office is a participant in the Central Exchange which provides for the clearance of cheques, payable orders, etc. between the participants. The rules require that payable orders drawn on the Paymaster-General’s account be presented at the Exchange in the same manner as cheques and that the accounts of the presenting banks be credited immediately with the value of the orders presented. The rules also require that orders subsequently rejected by the Paymaster-General be returned directly to the presenting branch within three days of their first presentation at the Exchange. The necessary adjustments in respect of rejected orders are also effected through the Central Exchange.

On 19 October 1973 sums totalling £3,983 were credited to two banks in respect of 31 documents purporting to be payable orders which, on subsequent checking, were identified as forgeries. The checking of these in the Office of the Paymaster-General, by computer processing, was not completed until 13 November 1973 and the banks then disputed the right to effect recovery on the grounds that the rejected orders had not been returned within the period provided for in the rules of the Exchange. Recovery has not yet been effected and I sought information from the Accounting Officer as to the present position.

As it appears that several weeks can elapse between the presentation of payable orders at the Exchange and the checking of these orders in the Paymaster-General’s Office and as orders rejected cannot, therefore, be returned to the banks within the time allowed I also inquired regarding the steps being taken to enable the Paymaster-General’s Office to comply with the clearance requirement of the Exchange.

The Accounting Officer informed me that the Central Data Processing Services of the Department of the Public Service, which process orders drawn on the Paymaster-General’s account, had been asked to revise the existing computer system so as to permit of compliance with the clearance requirement. He stated that, while non-compliance involves loss of right to pass a debit through the Central Exchange, the Paymaster-General—apart from the case mentioned— has continued to pass such debits successfully through the Exchange. He also stated that the claim for recovery of the amounts involved in this case was still being actively pursued notwithstanding the objections raised by the banks and on the basis that, in any event, the Paymaster-General can pursue the claim outside the Central Exchange by reference to banking law. He added that the law officers had been asked for advice in the matter from this point of view.”

Mr. Mac Gearailt.—This paragraph draws attention to the inability of the Paymaster-General to meet the three-day clearance requirement of the Central Exchange in relation to payable orders drawn on his account and, in particular, in relation to sums totalling £3,983 in respect of 31 documents purporting to be payable orders which were in fact forgeries. The observations of the Accounting Officer are contained in the paragraph. I understand that the matter has not yet reached finality.

—We have written to the Attorney General seeking advice on this. We do not intend to let the matter rest with the bank’s say so and we are awaiting his advice. Even if this repayment cannot be claimed by strict reference to the Exchange rules, as we call them, we feel we have a case under normal banking procedures and law to obtain a recoupment of this money. Part of the money, in fact, has been recouped from two banks. Unfortunately, it is not significant in the context of the whole amount but we have recovered from two banks.

139. Chairman.—There is a principle, of course, involved here. You say that the normal banking law would possibly strengthen your hand in recovering this money and that some of the banks have made a refund or recoupment? I presume the same law would apply to the outstanding banks or institutions?

—The banks who have not refunded, and also the banks who have, would claim that their action generally was without prejudice. I do not know that it would prove anything satisfactorily.

Was it a gratuitous gesture on the part of the banks?

—“Gratuitous”, I suppose, is not too strong a word. Again, it was in the interest of good banker-client relationships that the two banks paid us. It was only a matter of something less than £1,000, whereas what is involved here is more than £3,000.

Does this arise very often?

—No, I am pleased to say that we have very few cases of this sort arising.

That disposes of the General Report of the Comptroller and Auditor General.

MINUTE OF THE MINISTER FOR FINANCE ON COMMITTEE’S REPORT ON THE APPROPRIATION ACCOUNTS 1974.

Mr T. F. Ó Cofaigh further examined.

140. Chairman.—We will now consider the Minute of the Minister for Finance from the Committee’s point of view. It is regarded as generally satisfactory. One of the most significant sections of it is section 12, which concerns payments requiring validation by specific legislation. We are pleased to note that the Minister endorses the Committee’s view. Before I invite my colleagues to consider the Minute I should like to say I am pleased to note that the Minister is urging Accounting Officers to deal promptly with requests for information by the Comptroller and Auditor General whose contribution to our investigative process cannot be over-emphasised.

—To the latter part of the Chairman’s remarks I should like to add immediately that the Minister for Finance, and the Department of Finance, see an identity of interests in this area. It is because we are impelled by the desire to co-operate fully with the Committee that we impress, and continue to impress, on Accounting Officers the need to reply promptly to your queries. With regard to the first part of your remarks about the paragraph 12 items we have, as you will note the Minister has said, endorsed the Committee’s views. Legislation has been, or is being introduced, in all but one of these cases.

Mr. Mac Gearailt.—We are quite happy with the Minute as a whole.

141. Deputy V. deValera.—I realise this is the Accounting Officer’s first time here. I generally share the view expressed by the Chairman and the Comptroller and Auditor General but it might not be any harm if we tied up a few loose ends.

Mr. Ó Cofaigh has indicated something that is absolutely essential. The control of public expenditure by the Dáil depends on three organs working together, the Comptroller and Auditor General, the Department of Finance and this Committee. The Department of Finance has a certain over-lordship and is the only executive arm for this control machinery, just as the Comptroller and Auditor General is the only intelligence and true watchdog for the Dáil and for the public. This Committee, so to speak, co-ordinates the two.

Accepting that, and accepting that we are all together in this, there are one or two points about the history of this that I should like to ask a few questions about. You are aware of the letter from the Department of Finance dated 14th September, 1976, that is in the Appendix to the 1974 report. This Committee has already, in the Report, replied but there are some points in regard to the present minute that I think if we got them clear we would avoid misunderstandings in the future. That letter deals specifically with Transport and Power and the Committee has made the point that other grants were not taken into account, but that is amended in the Minister’s Minute. Under section 6 of the 1964 Act there was power for a grant and power every five years for the Minister to review the grant. Is that not correct? Is it not also correct that this was exercised at the first five-year period in 1969 but in subsection (5) there was a very stringent provision to the effect that where an order was proposed to be made under this section, a draft of the order shall be laid before each of the Houses of the Oireachtas and the order shall not be made until a resolution approving of the draft has been passed by each House? Would you agree with us in taking the view that in that Act alone there was a very clear intention shown by the Dáil to keep a tight control of expenditure on this semi-State body? Would you agree with that interpretation of that section?

—I would agree that it was the intention of the Dáil to keep control of expenditure.

142. Yes. Then the next thing is that it was necessary to give additional moneys in the Estimates for 1970-1971 and the additional grant was £642,460 shown in the Book of Estimates. That is provided for specifically by the Transport Act, No. 31 of 1969. Does that not also show the continuing intention of the Dáil and the acceptance by your Department of the relation of legislation to the Estimate?

—It does.

143. There was a further additional grant which is referred to in paragraph 4 of the Department’s letter, the £2.98 million voted contingent on the enactment of legislation. Do you see that in paragraph 4? That was validated and given effect by the Transport Act, No. 24 of 1970. Does that not also indicate the close control the Dáil wishes to have and also the consciousness of your Department of the necessity for legislative control? The question I would like to ask—I do not say this in a controversial way but in order to know where we are on interpretation—is why, very shortly afterwards, we have in paragraph 5 of the Department’s letter:

This Department indicated—

that is your Department—

that special legislation was unnecessary and consequently the footnote “contingent on the enactment of legislation” was not inserted on the face of the Estimate.

The question I want to ask is why the sudden reversal of approach to this? Meticulous care was taken up to that point to see that everything was rite esse acta. I know you were not involved personally but why, at that point should this attitude be adopted? What happened? Was it that legislation could not be got through the Dáil? Was it a policy matter or was it a purely administrative matter?

—I can assure the Deputy that there was nothing considered about this matter. The people to whom the question was posed at that time went over the course again and queried the necessity for having legislation enacted. I am not quite clear at the moment what the time scale was, whether there was an awareness about that or not. I would assume that legislation could have been enacted, if necessary, within the time but I do not know offhand. The view was taken then that the necessity of putting the Dáil to the point of clearing legislation hardly arose. This is the view that was adopted. I realise that the Minister has in his Minute adopted a different stance now, but I am trying to go back in time. The officials concerned reasoned then that if a Supplementary Estimate were moved the Dáil would be apprised of the amount being given and would be aware that it was in excess of the statutory limit. They could say that if the Dáil passes the Estimate and the passage of the Estimate were confirmed in the Appropriation Act it would give adequate legislative authority for the action taken. It was, perhaps, a rather detached view or maybe an unacceptable view.

144. From the Committee’s point of view it was unacceptable. Those of us who are managers and administrators will want to cut the red tape, so was it fundamentally a question of administrative convenience in going straight ahead or was it a claim to override statute in this way? This is the fundamental question.

—I want to assure the Deputy that nobody in the Department of Finance would consider or even contemplate in any way overriding statute. In the Department of Finance we are very conscious, as I said at the start of these proceedings, of the need for identity of attitude between the Department of Finance and the Dáil in this matter of expenditure control.

145. I will indicate in a moment why I pursued this matter because it is a sequence. Accepting that, on page 204, paragraph 35 of his Minute on the Report of the Committee of Public Accounts on the 1971-72 Appropriation Accounts, Supplementary Grants to Córas Iompair Éireann, the Minister has stated his opinion that:

… while the Appropriation Act in itself represents necessary and sufficient statutory authority for the issue of supply, it is desirable that special legislation should be enacted…

That is one step further; it is an assertion of what is admittedly a controversial area. The Committee Report on the 1973-74 Appropriation Accounts summarises the position noting:

… that the Minister for Finance is legally advised that the Appropriation Act constitutes the further legislation which it considers should be enacted to validate the issue out of voted moneys of grants in excess of the limits laid down in existing legislation…

My point is that there has been a gradual slide in the official view to the point where it was virtually said—it is now corrected in this Minute—that the Department were holding the view that if an item was within the ambit of an Estimate and voted by the Appropriation Act, that that was necessary and sufficient.

—In fairness to ourselves, there are items in the Estimates which are not the subject of prior legislation by the Dáil. In that case I think the Deputy would agree—

I do.

—I agree with the drift of the Deputy’s argument that if a corpus of legislation exists that that corpus must be observed as well as passing an Estimate and validating a grant.

146. Would it be reasonable to suggest—I am not asking you to say “yes” or “no” to a question that is difficult to frame—that traditionally and in the history of the thing, the voting of supply by the method of Estimate and Appropriation Act was essential as a mechanism for controlling the issue of public funds for the purposes of the official administration, the Civil Service and other services, to run the State. Was that not the basic idea?

—That is correct.

147. Would you agree that this has been complicated in our time by two aspects that grew up after the tradition of this was founded. One aspect was Parliament starting to legislate to give public moneys to non-State bodies. This question would never arise if this was a Vote to a Department or a Vote being administered by a Department. But here are grants to an outside body. Even though it is a semi-State body it is not directly under your control; it is not even under the overall control of the Department of Finance. Would you not agree that in those cases—and CIE is a typical one— the distinction to be made is this: where you have any body outside the service, semi-State or otherwise, to whom grants or moneys are payable out of public funds, that that should be specifically adverted to the Dáil and that the mechanism of the Estimate and Appropriation Act is per se not sufficient? Would you think that point was reasonable? That is the furthest I would ask you to commit yourself.

—We are getting into deep water.

I know we are but it is very important for our mutual understanding of the Committee’s point of view and the administrative point of view.

—It is something I would like to consider. It is such an important principle that, for me to react precipitately might be inferred—

148. I accept that completely and I have even warned you. This is not a cross-examination in court. It is a question of trying to get at principles. It is generally admitted, I think you will agree, that it is desirable where there is a corpus of legislation to show to amend the legislation. It is also desirable that, if there is such a matter of that nature, it should be shown on the face of the Estimate in a way in which it can be separately recognised. We are agreed on that. I am pushing the point a little further in saying that where it is anything outside the direct administration of the State, that is, a Department of State, where it is in relation to grants to any body or thing that is governed by specific enabling legislation for that body or thing to function, that this is a case, generally, without going into any of the distinctions you went into in the Minute now before us, where two things should happen. If you have to anticipate—and anticipate you will often have to, as we have all admitted—it should be clear on the face of the Estimate or Supplementary Estimate that is brought. That is necessary anyway to bring it within the ambit of the Appropriation Act. Is that not so? You cannot exercise virement to that extent.

—It must be covered by the ambit.

149. It has to be within the ambit. Secondly, two further things are necessary. It should be shown on the face of the Estimate what it is and, afterwards, the legislative code should be amended within the year preferably so that everything will be regularly done. I am making that point to you for consideration in the first instance. There is the first thing that perturbed the situation. The next thing is the whole vexed question of the grants-in-aid, and indeed, this Committee is largely in arrears over misunderstandings about grants-in-aid. I will leave it at that. The point I am therefore making is that the voting of supply by way of Estimate and given statutory effect by virtue of the Appropriation Act is essentially a method for controlling the issue and spending of public moneys by public Departments, that is, by the State itself and its organs; that that mechanism per se is not appropriate to the cases where grants are made, whether in aid or otherwise, to any other body, corporation or person. If that distinction were considered it might help us to understand the Committee’s point of view because the Committee adheres, I think—but it is not for me to say, Mr. Chairman—to the attitudes it has adopted. I should like to suggest, Mr. Ó Cofaigh, that this would be considered by you. Naturally, I do not ask for immediate answer, because there are too many ramifications to say something simple.

—There is just one off-the-cuff reaction. When we speak about moneys payable out of the Votes, they are voted by the Dáil for the service of different Departments. These Departments—and the Department of Finance is in a rather peculiar situation in that we are insulated from the cut and thrust of everyday life—must make issues directly to people and bodies, and probably, deal with very many small, even vexatious, items. There are hosts of people looking for grants of one sort or another. I take it that you would not envisage Departments in all such cases having to legislate for those?

Now we are getting into the minutiae. I am talking about a general principle. I would hesitate very much—

—I wanted to carry this thought through.

150. This is case law. We cannot carry it through to ultimate and final logical definition at any stage of the debate. That is for the Dáil to do by legislation. I am trying to suggest the general ambit, if you like, of the operation of this mechanism of Estimate and Appropriation Act simpliciter with the backing of other legislation.

—Perhaps what we are talking about is when Departments or Ministers are considering assisting or channelling public moneys to bodies or other, they must consider whether the nature and purpose of the grant is such that it should be legislated for; that is whether it is important enough to bring to the notice of the Dáil by way of specific legislation. This would not occur in every case but only in significant cases, or where there might be a matter of public policy involved. We have talked about CIE, but we would not be talking about, say, some small charity down the country.

You may have grants-in-aid appear in the Estimate. These are things done by the Department, remember. They are directly done by the State in this way to a large extent. I suppose we could go into minutiae and we would not come to a finality.

—Another course of action would be when an Estimate was before the Dáil. While part 3 of the Estimate is not part of the legislation, as you know, there is a certain amount of information in it and Deputies would have an opportunity of raising this question. They might ask themselves: why not have legislation to deal with this specifically?

And then there is the question of grants-in-aid and all that.

—Yes.

151. I want to come to a further point. The Department moves from an accepted position to a position where it positively stands up and says: “It is in the Estimate, it is within the ambit, the appropriation was made law and that is the end of it.”

There was the logic. I invite you to look at the comment in May, Parliamentary Practice, 19th Edition, pages 747-8, which poses the question. We want to find the answer to that question. Before I go on to the specific matter dealt with in the Minute from the Minister, which I mentioned, I should like to refer to something else. Having taken that step the next thing I find is a statement in this letter to the effect that the provision in section 6 (1) of the Transport Act, 1964, was in the nature of a guarantee to CIE that, subject to ratification through the Vote system and the Appropriation Act, a fixed annual grant of at least £2 million would be made. It states that given that provisions regarding voted moneys in legislation other than the Appropriation Act cannot be regarded as more than an expression of intention, and so on. It appears from the Department’s letter that we have moved to the point where statutes in this connection are merely regarded as “expressions of intention”. Would you go that far?

—Oh no. A statute is a statute. It is an enactment by Parliament.

Yes, but about this letter—this is the reason we are having this talk—I want to see that the erroneous things said in this letter are dispelled. If you take section 6 (1), to which it specifically refers, that is a most stringent statutory provision. I read subsection (5) which was one of these positive things, it required a resolution approving. With that in the background, and also the fact of the enactments contained in the other Acts I cited, the 1969 and 1970 Acts, I for one would like to put it to you that it is going very far indeed and utterly unacceptable to this Committee, that a statute of the Dáil should be regarded as nothing more than an expression of intention. Would you agree that it is going too far to say that?

—There is a matter of spirit and words here.

Litera scripta manet.

—In this case it is not quod scripsi as much as quod non-scripsi. I cannot interpret it very well.

152. That is what I am afraid of, that at a later stage quod scripsi scripsi would be pleaded.

—If I may assist here. The use of the words “cannot be regarded as more than an expression of intention” was not in a pejorative sense so much as an indication, or a desire to indicate, that the Dáil envisaged a freedom of action. That, I would think, is all the words were intended to mean there. They were not intended even to purport to circumscribe what the Dáil had decided. It was an interpretation of what the Dáil might have had in mind, whether they were free to act otherwise if they wanted to.

153. The letter from the Attorney General’s office says the theory that a provision in a statute for the payment of an annual sum is only an undertaking and that the money must still be voted is, in his view, correct. The money must still be voted but you could have a very interesting case if the Dáil refused to vote it. The point I want to draw to your attention is that if it was put to the Dáil, the Dáil would not accept the contention that any of its enactments are merely expressions of intention.

—Again, we are dealing with words here. The principle is unassailable. The Dáil decides something and that is the end of it. Lawyers daily try to judge the intent behind legislation without in any way questioning the Dáil’s decision in passing the legislation. That is the absolute. One can parse and analyse but that is what was involved here. However, we have reconsidered the basic question here and acknowledged to the Committee that things might have gone otherwise.

154. It is only to clear the air of possible trouble arising from that letter in the future, especially from the way the Attorney General’s office replied. That is the reason I have asked so many questions about it. It was merely to make sure that this letter has no authoritative precedental content for the future. It is the minutes that have. I would be tempted to ask the question: “Do you claim that this is a letter of precedent or do you simply regard it as merely an administrative communication that was given to the Committee when the Committee asked for it”?

—I would unhesitatingly say that it is an internal administrative document which has no significance as a precedent at all or an interpretation that should be regarded as a precedent.

Chairman.—We are tending to get embroiled in a legal argument here. Perhaps we could make some progress with the other items on the agenda?

Deputy V. de Valera.—Will the Chairman bear with me for one moment? What the Accounting Officer has said is important, that it was merely an administrative document that was given to the Committee on the Committee’s request.

—Quite.

And does not rank with the Minute.

—Absolutely not.

155. I regret having to delay the Committee but this whole body is a body of case law that has grown up. Another question arises also. Section 3 of the 1974 Act changed things and recently I asked some Questions as to what they were. For that reason I will not repeat them again. Undoubtedly, EEC Regulations are part of our domestic law, is that not so?

—Yes.

156. By act of the Dáil. These Regulations that are in question are Regulations circumscribing what can be done, not mandating what shall be done, in regard to grants, generally speaking. Is that so? In other words, if the Department were to refuse, or even if financial sanction was withheld, the refusal of payments that were within the Regulation would be perfectly in order? What you cannot do is exceed the Regulation or breach the Regulation?

—The Regulation is the law by Act of the Dáil.

Exactly. It struck me in the way the matter had been put that there was a danger of construing the limitation, the ambit defined by these Regulations in cases of this sort, as authority for actually spending what would be lawful within the Regulations. Do you get the point I am trying to make here?

—Yes.

I am asking what mechanism should be adopted here?

—Of course, in the Estimate itself these Regulations are quoted specifically. In fact, if I remember rightly, under CIE there are three different references.

The power is there, undoubtedly, but what I am saying is that there is nothing in these Regulations that says the Dáil must give CIE such and such. Is there?

—No.

It says what you can do but it does not say you must?

—I do not think they could say that.

157. No, because there is a whole question of sovereignty here. Therefore, if it is within the Regulation is it not desirable that the Dáil should be specifically aware of these grants and payments of money in some way analogous to the situation as it was before the EEC Regulation?

—Maybe, if the Deputy looked at it this way, we frequently have in the Estimates references to Orders, and Grants payable under Orders or calculated in accordance with domestic Orders made by Ministers here. These other grants are calculated under Regulations that are made in Brussels to which we accede but if the Dáil tomorrow felt that these grants were wrong what would happen administratively would be that the Minister concerned would have to go to Brussels and seek to have the Regulations changed, if it came to that.

158. Take CIE, as a specific case, the Regulations we mentioned say what you can pay to CIE but there is nothing to stop the Dáil in the morning saying we will only give CIE £10 this week, let them go and do the rest themselves. Is there anything in the Regulations to prevent us doing that?

—No, that could be done tomorrow.

159. That could be done tomorrow by the Dáil. That being so, I am suggesting that the Regulations per se are not sufficient to simply spend money as a grant without bringing it to the attention of the Dáil. Does that fact not bring in these grants still within the constraints that the Committee of Public Accounts have laid down and defended for so many years? Do you get my point? Could I put it to you this way, the danger of interpreting circumscribing and permissive EEC legislation as authorising, and worse still as mandatory, is a hidden trap leading towards the sacrifice of a certain amount of local fiscal autonomy?

—We are in an area of policy here that is not for me to intrude on; it is for Ministers and Parliament to consider this question. I would only add, that in presenting the plea to the Dáil to grant money to CIE, the Regulations are specified in the Estimate. The Dáil can advert to these and query them if they so wish.

160. I raised the two points because I wished to clear that letter I referred to and also just to mention this question. Would you agree that the general principle is, as the Committee said: where urgency means excess of the legislation, or where the circumstances are such that it should have been specifically brought before the Dáil, requiring payment, the face of the Estimate should show it clearly. If there is legislation involved it should be contingent on the enactment of the legislation which would be done within the year.

—We accept that in the Minute.

That is where we are.

VOTE 1—PRESIDENT’S ESTABLISHMENT.

Mr. T. F. Ó Cofaigh called.

No question.

VOTE 6—OFFICE OF THE MINISTER FOR FINANCE.

Mr. T. F. Ó Cofaigh further examined.

161. Chairman.—On subhead A—Salaries, Wages and Allowances—there is a saving, albeit a small one. I should like to ask how the saving arose?

—It was a very small saving, not large enough to warrant a note. It would be regarded as a casual variation. The Supplementary Estimate was introduced to cover the fourth phase of the 15th National Wage Agreement and the first and second phases of the 16th agreement. I should imagine that in working out the sums, having regard to vacancies and promotions and variations like that, the saving was a casual one.

Deputy Woods.—I find it extraordinary that the figures balance out so often. You mentioned casual variations. I would expect that you should have a casual variation of the sum estimated in almost any instance. It almost suggests that there is an amount of money there and that money is to be evened out and spent towards the end of the year. One would expect to see more casual variations of this type.

—The accounts do show that there are casual variations on both sides. It is of the order of things that you would expect to find a variation of, say, up to 3 per cent, which is normal and we would not even think about it.

Chairman.—A variation of up to 3 per cent. could be considered normal?

—Yes, 3 per cent. Also it is to be observed that if there is a Supplementary Estimate towards the end of the year one can be more precise about what is required. Therefore, variations can be even more casual.

162. On subhead E—Economic and Social Research Institute—this is a grant-in-aid, as mentioned. I presume, Mr. Ó Cofaigh, you are not accountable for the details. Your accountability is limited to seeing the issues are applied for the purpose for which they were voted. Is that the position with regard to your accountability?

—That is correct. The Committee have noted that the Department of Finance have issued instructions in recent years entitled “An Outline of Irish Financial Procedures”. Your predecessor commented very favourably on this issue which deals with matters like this for the benefit of Accounting Officers.

Members of the Committee have a copy of that document, which is very helpful. I should like to comment that on a total Vote of the order of £3 million, there is a surplus to be surrendered of £10,000, 0.3 per cent, which reflects very accurate estimating and I should like to compliment the people involved on their accuracy.

VOTE 10—STATE LABORATORY.

Mr. T. F. Ó Cofaigh further examined.

163. Deputy Brady.—On subhead B—Travelling and Incidental Expenses—the supplementary is in excess of the original. Is there any reason for this?

—The Supplementary Estimate provided for £3,000 extra. It is a reflection of travelling by officials who attend EEC meetings in Brussels. I might add that the travelling expenses of experts are refunded.

Chairman.—They are refunded by Brussels?

—Yes. They come back as Appropriations-in-Aid if there is an Appropriations-in-Aid subhead in the vote.

Under Subhead E?

—They are not necessarily pari passu. There could be a delay in bringing them into account. They will appear then or later.

164. Subhead E, to which we have already referred, concerns Appropriations-in-Aid which are repayments from the EEC?

—Partly. Perhaps for the benefit of the Committee we should say there are other fees which are payable for work done, say, under the Coroners Act for toxicological work. Matters like that would come under that subhead also.

VOTE 14—SECRET SERVICE.

Mr. T. F. Ó Cofaigh called.

No question.

VOTE 15—AGRICULTURAL GRANTS.

Mr. T. F. Ó Cofaigh called

No question.

VOTE 17—MISCELLANEOUS EXPENSES.

Mr. T. F. Ó Cofaigh further examined.

165. Chairman.—On subhead A—Aid to the Theatre—I should like to ask, for my own information, what theatres are involved here?

—The £640,000 went as follows: £355,000 to the National Theatre or Abbey Theatre; £85,000 to the Gate Theatre; £100,000 to the Irish Theatre Company; £30,000 to the Dublin Theatre Festival and £70,000 to the Irish Ballet Company, making the total sum of £640,000. I might add for the information of the Committee that these aids are now dealt with by An Chomhairle Ealaíon. They may have a keener artistic appreciation than the officials of the Department of Finance.

Or, they may not.

166. On subhead C—Centenarians’ Bounty —expenditure was less than granted; presumably, less than anticipated?

—Yes.

167. Deputy Belton.—On subhead E—State Entertainment—there is a surplus; we do not seem to be using it very much?

—It was not all used. I am sure the Deputy is glad to see that we are not going overboard on State entertainment.

168. Chairman.—The estimate generally was pretty close. The provision for centenarians’ bounty is, in the nature of things, conjectural to a degree.

—That is a highly conjectural item. The amount of the cheque now is £50 and it is presented with the President’s compliments.

169. Before we adjourn there is one matter I should like to mention, that is the staffing of the Committee. I appreciate that this is a matter which more properly falls within the domain of the Accounting Officer of the Department of the Public Service, but he has already been examined by the previous Committee on the 1975 accounts and, consequently, will not be coming before us for some time. In so far as you have overall responsibility for Accounting Officers in the public service, you may be able to assist us here. The present position is that we do not have the full-time services of our clerk because he is also responsible for the Questions Office. An important Committee such as this, which is charged with the onerous task of overseeing public expenditure, should have the wholetime services of the clerk. We can leave the matter at that for the moment and hope you will be able to mention this in quarters where action might be taken.

—I will bring it to the notice of the Secretary of the Department of the Public Service.

In saying this I am expressing the views of the Committee. This concludes the Finance group of Votes and our business for today.

Thank you Mr. Ó Cofaigh.

Before we adjourn I would like to thank Members for their attendance and to wish you all a happy Christmas.

The witness withdrew.

The Committee adjourned.