MIONTUAIRISC NA FINNEACHTA
(Minutes of Evidence)
Déardaoin, 7 Nollaig, 1978
Thursday, 7th December, 1978
The Committee met at 11 a.m.
DEPUTY O’TOOLE in the chair.
Mr. S. Mac Gearailt (An tArd-Reachtaire Cuntas agus Ciste) and Mr. J. McHale (Roinn na Seirbhise Poiblí) called and examined.
VOTE 43—TRANSPORT AND POWER
Mr. N. McMahon called and examined.
494. Chairman.—On subhead F.3—Development of Supplementary Holiday Accommodation in Western Counties—there is a grant of £100,000 and expenditure of £40,000 and the note states that savings arose because a number of projects, in respect of which grants were payable, were not completed within the financial year. I should like to know if the Accounting Officer has anything to add to that note?
—I do not have much to add except that the full Estimate was committed during the year and it was a question of scheduling the payments which arise on the basis of certification of the work done to certain standards. In this year there was a timelag between the commitment and the construction of the improvement works and the payment of the money. The money was paid in the following year.
495. Deputy Kenneally.—On subhead F.4 —Grants under the Tourist Traffic Acts, 1939 to 1975—I should like to know the significance of the word “traffic” in these Acts?
—All the legislation dealing with the tourism industry is grouped under the same heading, Tourist Traffic Act, the title which was borne by the first Act of 1939. I cannot explain why that expression was chosen but “Tourist Traffic” would have denoted the movement of tourists into the country and the word “traffic” was used in that sense. I am sure that if it was being titled again it would be called “Tourism Industry” or “Tourism Development” Act.
496. Would it have anything to do with the money given to CIE annually, which is referred to under subhead D.1?
—No, subhead D.1 deals entirely with the subsidy to CIE to meet the losses on the operation of internal transport services while all the F subheads are grant-in-aid payments made to Bord Fáilte to develop and promote the tourist industry. They are entirely separate operations.
497. Deputy C. Murphy.—Are these capital developments?
—Subhead F.1 is non-capital and the other three are capital.
498. Deputy N. Andrews.—On subhead D.1—Grants to Córas Iompair Éireann—I should like to know if the Department monitor the expenditure here and the equipment on buses?
—Not in a detailed day-to-day sense. This is an overall grant paid to CIE on the basis of an annual estimate of their revenue, their expenditure and the amounts which they feel they can raise through fares and rates and such increases as can be tolerated. The deficit which we pay them is designed to balance their situation over the year. We issue the money on the basis of vouched certificates from their auditors as to how the deficit is progressing throughout the year. We do not monitor the precise expenditure of each payment. Monitoring is on a broader basis. We maintain liaison, as does the Minister, at board level, about their policies, the progress of efficiency and productivity improvements. From time to time we explore with them the methods by which they can provide a better service for the public and achieve economies in cost. We would not be involved in the detailed expenditure of what is a very widespread and complex national method of transport. We would not have the staff and it is not particularly a departmental function.
499. Chairman.—On subhead D.2—Córas Iompair Éireann Redundancy Compensation —members will have noted the device of “Less Supplementary” under this and many other subheads. There is the supplementary to CIE of £3.9 million. I presume that some of the “Less Supplementary” items have gone into that £3.9 million? If that is so, to what extent is it the case?
—We had a Supplementary Estimate this year to meet extra payments to CIE. We took the opportunity of making adjustments in the other subheads where the full amount might not be required.
500. In other words, it is a transfer?
—In effect, it would be a transfer. In other words, the amount required for the excesses to CIE or other parts of the Vote would be offset by the saving on the other subheads and these are shown as supplementary, less a certain amount.
501. Deputy Kenneally.—On subhead I— Electronic Equipment—how did the saving arise here and what type of equipment was involved?
—The underspending on subhead I arose mainly because electronic equipment for the airport which had been provided for was not acquired during the year mainly because of changes in the structure of the organisation. Some of the services were being reorganised and this caused some delay and disruption in the progress of ordering and installing equipment.
502. Deputy Belton.—On subhead K.1— Wreck and Salvage, Relief of Distressed Seamen, etc.—there is a note which states, “The pattern of expenditure under this subhead is irregular and accurate estimation is not possible”. This is quite understandable because it would be nearly impossible to have an accurate estimation. I could understand the estimate being out by 50 per cent but in this case 90 per cent was not used. Was this an exceptional year? Would you normally have spent more money?
—It varies quite a lot. The variations on this can be quite substantial. For example, if there was a major shipping casualty in one year that called for a public inquiry we might find ourselves involved in an expenditure of thousands of pounds. If we provided for that in advance, obviously our Estimate would be substantially out. We maintain this £500 which is about right on a long-term average but in any particular year it could be substantially out.
503. Deputy N. Andrews.—As a matter of curiosity, what did you spend the £52 on?
—I am not quite sure.
504. Deputy C. Murphy.—Would the Department be responsible for costs involved in the repatriation of foreign seamen shipwrecked off our coast and who land in Ireland? Would it be up to us to meet the costs of their repatriation?
—No. The provision made here is for the repatriation of Irish citizens stranded or otherwise in distress abroad, who had been serving on Irish or non-Irish ships. It is to deal with a situation which happened outside Ireland, in relation to Irish seamen. On the question of the £52 which Deputy Andrews raised, I believe it was spent on the conduct of examinations for sea-going personnel. These would be for masters, mates, engineers, and so on.
505. Chairman.—On subhead N.—Rural Electrification—in what context does rural electrification arise? What comes under this heading?
—This payment arises out of the arrangement for subsidising rural electrification. The system works in a rather indirect way in that the ESB incur capital expenditure on extending the electricity network into rural areas which do not provide an economic return. They receive a subsidy from the Central Fund rather than direct from this Vote. Over the years on an annuity basis, payments made by the Central Fund to the ESB are recouped to the Central Fund on an annual basis out of the Transport and Power Vote. It is a rather indirect way of doing it. It was decided in the forties and these payments will continue for quite some years to come because they are a repayment of past expenditure.
506. On Extra Remuneration, we have been requesting Accounting Officers to furnish additional information under this heading. I understand you will be formally notified of the new format.
—We will certainly be happy to do that.
507. Deputy C. Murphy.—May I inquire about the Meteorological Service? How is this service financed and what is its formal relationship with the Department.
—The Meteorological Service is part of the Department. It is an executive arm of the Department and all the Meteorological Service staff are officers of the Department. Their salaries are all paid directly out of the vote under subhead A. The equipment they operate is bought and serviced out of the various subheads, the electronic equipment and the other subhead equipment, stores and maintenance. There is no separate and distinctive grant as such given to the Meteorological Service. Its costs are borne on the appropriate subheads of the departmental Vote.
The Accounting Officer has clarified the position.
—It is much the same as saying that the Marine and Civil Aviation Divisions enjoy a separate status, but from the financial point of view they draw their money in the same way from the Vote.
508. What progress is being made with the new headquarters for the Meteorological Service and where is the expenditure accounted for?
—The cost is borne on the Vote for the Office of Public Works. The work is very well advanced and it will be in operation within the next few months.
509. Deputy Kenneally.—Is anybody seconded from the Department to Euro-Control at the moment?
—A small number in the Euro-Control Organisation is on secondment.
510. Deputy C. Murphy.—The Meteorological Service offer a great deal of specialised information. They provide a more widespread service than most people believe. Is that not so?
—The original rationale of the Meteorological Service was mainly for civil aviation purposes, but as civil aviation became more sophisticated, both in terms of the height of flying and technology, they are becoming less dependent on weather information, although the Meteorological Service still provide that service to aviation. Other developments in the economy—agriculture, electricity generation and off-shore oil exploration—have widened the range of functions of the Meteorological Service so that they are providing a very comprehensive network of services, some of them rather highly advanced, computerised, and they draw some of their information from world network exchange systems.
511. Are they involved in experiments designed to harness power from the wind?
—They would not involve themselves directly in research in that area because the ESB and a number of other institutions carry out such research. The Meteorological Service, I imagine, would be involved in providing information about the strength and reliability of wind forces in various locations throughout the country.
Chairman.—Thank you, Mr. McMahon for your co-operation.
The witness withdrew.
MINUTE OF THE MINISTER FOR FINANCE ON THE COMMITTEE’S REPORT ON THE APPROPRIATION ACCOUNTS, 1975
Mr. J. O’Mahony called and examined.
512. Chairman.—In the Finance Minute on paragraph 4 of the Committee’s previous Report—Agriculture—Recovery of Loans— there is reference to the difficulty encountered in recovery of loans. It reads:
… In commenting on this advice, the Minister for Agriculture took the view that, in addition to legal difficulties, there were practical difficulties and that, after a lapse of over five years during which the meat factories assumed that the moneys, which were interest-free, were of the nature of an operating subsidy, it would be virtually impossible to get agreement from the factories to any voluntary scheme of repayment…
The word “assumed” intrigues me. How could they have “assumed” something when everything in a case like this is either black or white? Obviously they assumed too much. How were they led to believe the loans were interest-free?
—For this one has to go back to the 1972 period when these loans, as they were called, were granted. The meat industry was in serious difficulty at that time and it was decided to grant it certain assistance. In that period there were certain difficulties on the international side which more or less precluded us from giving them straight grants. For that reason, it was decided to give loans which would be repayable at a later stage if the deficiency-type payment or subsidy which was being made on meat exports got to a point where the industry could afford to pay back the money. These were described as loans but to some extent there was an element of intention always to give them the money more or less permanently. While we hoped that there might at some stage be an opportunity of recovering the money the meat factories hoped they would be able to get it as a grant but, as I indicated, there were certain difficulties on the international side which operated to prevent us from giving them a grant at that stage. Five or six years later, without anything having happened in the meantime and as the original condition of a deficiency payments system had disappeared once we entered the Community in 1973, it was reasonable to assume that the meat factories believed they would not have to pay back the money at that stage. In some cases other things happened—one or two factories closed and there had been changes of ownership also.
513. From what you say it would seem that their capacity to repay entered into it. In the latter part of that period meat factories made a great deal of money?
—The factories did extremely well, but one has to bear in mind that the original reason for giving loans was to maintain employment. To some extent it was an employment subsidy. If the money were to have been repaid later, the cost of recovering it would not have been borne by the factories but would have been passed on to the farmers who supplied the cattle.
514. The matter has been waived in the proper format by the Minister for Finance, on the recommendation of the Minister for Agriculture, so that the matter is now finally closed.
515. On paragraph 8—Delays in Collection of Monetary Compensatory Amounts— the Finance Minute states that legal proceedings have now been instituted against a total of 71 debtors and there are 32 outstanding cases. I should like to know what the position is with regard to this problem?
—Since the beginning of October, as stated in the Minute, the collection of these charges has been transferred from the Department of Agriculture to the Revenue Commissioners and we are now concerned with recovering any outstanding amounts. From the start of the MCA system up to the end of September, the total amount payable was approximately £132½ million. We have collected more than £131½ million leaving an outstanding balance of £950,000. Some £50,000 of that is recent charges which will be collected in the normal way and we do not envisage any difficulty. Another £50,000 is the subject of Customs investigation and we have withheld sufficient moneys from the person concerned to meet that debt if and when the Customs examination is completed. We have some small amounts, ranging from £50 to £100 and slightly over £1,000, which are in various stages of collection or being disputed—in a few cases there are bankruptcies involved. The major item outstanding relates to cattle and beef and the sum now outstanding there is £830,000. Of that figure we have secured judgments in the courts for £375,000 and we are still following up £455,000. In the case of the judgments which are still outstanding, the £375,000, we are endeavouring to execute the judgments. In some cases that will be difficult because the firms concerned have little money. In other cases we are getting the outstanding amounts on an instalment basis. Generally, we are following these up through the legal channels. Of the cases which have not gone to court yet, some relate to beef and some to cattle. In the case of cattle they relate mainly to two export agencies. One of these has limited financial backing and we are endeavouring to collect from the individual exporters on behalf of whom the agency shipped the cattle. There is approximately £117,000 involved there. Most of the remainder of the cattle debt is the subject of the outstanding legal actions of which there are 71 in the courts at present. The balance of the amount outstanding is in the beef sector where the sum is slightly under £250,000. I should like to add that all of this is included in the £830,000, the global amount outstanding. Most of the beef money relates to continental exporters and we have been having discussions with the EEC Commission in Brussels about this and, as a result of suggestions made in Brussels, we have been following it up with the continental buyers concerned. This is still being pursued. Further arrears are unlikely to arise, except in one case which I should like to mention. However, in that case no problem will arise in relation to the Exchequer or FEOGA. The case concerned deals with certain cross-Border exports which are the subject of investigation by the Customs. It is what became known as a carousel or roundabout trade where pigs and cereals were exported legitimately to Northern Ireland, brought back illegally and re-exported to get more sets of documents properly filled up. The one lot of products kept going around. The amount of MCA charges that could arise is slightly over £1.8 million but we have withheld something over £3 million to offset it and so there is no danger. To sum up, the main problem still arising relates to the cattle and beef where the amount outstanding is now down to £830,000, about half of which has been the subject of court judgments. We will continue to pursue it.
516. You are pursuing the execution of court judgments and that is all you can do in the circumstances and, hopefully, you will manage to collect?
—Yes. I might add that we will probably take the line that we are acting as agents for the EEC Commission in trying to collect this money and at the end of the day all we can do is exhaust all the legal processes open to us.
517. On paragraph 15—Charging of Expenses arising out of Market Intervention— I should like to know the current position with regard to payments due to factories for transport? I understand that two-thirds of the factories have been fully checked.
—At the moment we have cleared 19 of 24 factories. We expect to have one or two more cleared by Christmas. We will probably have three done in the early part of the New Year. We certainly hope to have these completed in a matter of weeks, rather than months.
518. In relation to the store-by-store stock records I should like to know what the present position is? Are you happy that you have clarified that position.
—This is also referred to in the subsequent paragraph 16. The position is that we are still working on the 1975 accounts and we expect to have them finished shortly after Christmas—again I am talking of weeks rather than months. The difficulties we have with these accounts started with the rather chaotic beef market conditions when the beef intervention system was introduced in 1973-74. We decided in 1976 to put the records on computer in view of the huge amount of documentation and transactions involved. This computer system gave rise to endless difficulty in 1977 and up to the middle of the current year. The Department of the Public Service have been faced with serious staff problems on this computer work because it seems that their officers were attracted to more remunerative employment in the private sector as soon as they were expert in the computer business. We found we were having frequent changes of the trained computer personnel that we had on the beef intervention work. However, the Department of the Public Service have made strenuous efforts to get the records in order. They have made available additional staff and also a high level expert as a computer team leader. Unfortunately, the original computer programmes were deficient in some respects and this, coupled with the frequent computer staff changes, hampered the rectification of the deficiencies. The result was the delays we have experienced but I am glad to say that things are now moving much better. The computer recording of the current transactions has been in operation since 1 July last and it seems to be moving satisfactorily. We expect that the 1975 accounts will be finally disposed of early in the New Year. I should say that certain adjustments have had to be made to the 1974 accounts also and these will be finished early in the New Year. Again, we are talking about a matter of weeks. This will enable us to get working on the cold storage payments referred to in paragraph 15 of the Finance Minute. Final clearance of these cold storage payments in some cases will have to wait until the 1976 accounts are dealt with because there will be continuing stocks in some of the stores. We have been able to clear some of those cold storage accounts in cases where the stores were emptied completely in 1975. As mentioned in the Finance Minute, we came across five cases of overpayment which involved a total of a mere £1,800 which has been recovered. There were also some cases of underpayment where we had to make further payments to the cold stores. Here, and also in the payments to the factories for transport and freezing, the general result has been that very minor adjusting payments have had to be made and in most cases they have been payments by us rather than adjustments in our favour. So far as sub-items (a) and (b) in paragraph 15 are concerned, from the first few weeks of the New Year we will be able to regard these as disposed of completely. All payments under these headings since 1 July 1977 are made on a current basis and so we will be up-to-date on these items. The outstanding one will be payments to cold stores. In turn, this is dependent on finalising the stock records as referred to in paragraph 16.
519. You mentioned the Department of the Public Service providing computerisation. Have they resolved their technical personnel problems in that area?
—They have to a great extent. Of course a number of people have left.
520. The situation is improving in your Department?
521. Perhaps Mr. McHale would like to comment?
Mr. J. McHale.—There is always a demand for well-trained computer people and this is a risk we run. They are offered more and they leave. At the moment the situation is fairly stable. In fact, we have been able to provide a senior officer to assist.
Mr. J. O’Mahony further examined.
522. Chairman.—Paragraph 42 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 was carried out. Departmental records indicate that a total of £65.3 million was collectible in respect of these amounts up to 31 December 1976. Of this total £5 million was uncollected at that date, comprising £4.7 million on exports to other Member States and due to the European Agricultural Guidance and Guarantee Fund (FEOGA) and £350,000 on exports to non-member states and due to the Central Fund as “Own Resources”. The arrears arose mainly on exports of beef and livestock, pigmeat and dairy produce. I sought information from the Accounting Officer on the action taken to recover the amounts outstanding.
He informed me that of the £5 million outstanding at 31 December 1976 £3.4 million had been collected by 31 May 1977. Of the balance uncollected at that date £0.8 million related to live cattle exports and every effort, including the taking of legal action, was being made to recover this amount. A further sum of £0.6 million related to beef exports, largely intervention beef sold out of continental cold stores to non-Irish buyers and the Accounting Officer informed me that there is no community regulation governing the disposal of intervention beef stored on the territory of another Member State but that a proposal by the EEC Commission for such a regulation is under discussion. In the meantime any Member State which had beef stored outside its own territory was in the position of having to make the best arrangements it could to cope with the situation. The Department was making every effort to collect this debt and was in correspondence with the debtors. It was likely that the amount due would be further reduced soon.
The Accounting Officer added that a further £185,000 of the Monetary Compensatory Amounts outstanding at 31 May 1977 related mainly to pigs exported to Northern Ireland. These exports were the subject of Customs investigation, pending the outcome of which no action could be taken in regard to collection of the amounts outstanding but the Department had withheld certain payments due in respect of these exports which more than offset the Monetary Compensatory Amounts due.”
Mr. Mac Gearailt.—This paragraph draws attention to the arrears of Monetary Compensatory Amounts which had accumulated to December 1976. The matter has been dealt with on the Finance Minute and does not call for any further consideration at this stage.
523. Chairman.—Paragraph 43 of the Report of the Comptroller and Auditor General reads:
“Subhead C.2.—Bovine Tuberculosis Eradication
Subhead C.3.—Brucellosis Eradication
Reference was made in previous reports to the Bovine Tuberculosis and Brucellosis Eradication Schemes under which reactor cattle were purchased from herdowners by the Department and sold under contract to meat factories. Under new procedures introduced with effect from 30 August 1976 herdowners are required to make their own arrangements for the disposal of their reactors for slaughter and are paid compensation at the following rates:—
Animals must be delivered to meat plants within four weeks of their identification as reactors, failing which, the grant is reduced by £10 per week until the animal has been delivered to the plant.”
Mr. Mac Gearailt.—This paragraph is for information purposes. It outlines the new procedures which the Minister for Agriculture introduced for compensating herdowners for reactors under the Bovine Tuberculosis and Brucellosis Eradication Schemes.
524. Chairman.—Paragraph 44 of the Report of the Comptroller and Auditor General reads:
“Subhead C.5.—Payment to Bovine Tuberculosis and Brucellosis Eradication Schemes Hardship Fund (Grant-in-Aid)
Provision was made by Supplementary Estimate for the establishment of a fund to assist herdowners who experienced hardship arising out of the operation of the Bovine Tuberculosis and Brucellosis Eradication Schemes because of the high incidence of reactors in their herds. The amount provided, £1 million, was transferred from the subhead to the Fund, an account of which is appended to the Appropriation Account and is audited by me. There was no expenditure from the Fund in the year under review.”
Mr. Mac Gearailt.—This paragraph, which is for information purposes, refers to the establishment of a special fund to assist herdowners who experienced financial hardship since 30 August 1976 arising out of the operation of the Bovine Tuberculosis and Brucellosis Eradication Schemes because of the high incidence of reactors in their herds.
525. Chairman.—There was no expenditure from the fund in the year under review. To what was this due? A sum of £1 million was provided and transferred from the subhead to the fund because of non-expenditure in that year under that subhead.
—This money was provided in the Supplementary Estimate only at the end of the year. Accordingly, payments were made in the following year. We had to get more later in the year to meet the demands on the hardship fund.
526. Paragraph 45 of the Report of the Comptroller and Auditor General reads:
“Subhead M.6.—Incidental Expenses arising out of Market Intervention
Subhead N.—Appropriations in Aid
I referred in paragraph 49 of my 1974 report to the method of financing incidental expenses arising out of market intervention. The charge to Subhead M.6. is made up as follows:—
The amount received from F.E.O.G.A. funds in the year under review and credited to Subhead N is made up as follows:—
While the charge to Subhead M.6 consists of actual payments made, recoveries are effected, with the approval of the EEC Commission, on the basis of projected expenditure. The necessary adjustments are made when the expenditure is accepted by the EEC as a charge in the FEOGA accounts. The total amount paid in respect of incidental expenses arising out of market intervention from the date of Ireland’s accession to the EEC up to 31 December 1976 was £62,344,821. The amount recovered from EEC funds was £57,823,893.”
Mr. Mac Gearailt.—This paragraph is for information. It gives details under the main heads of the amounts expended in 1976 from voted monies in respect of the incidental expenses arising from market intervention, and of the amounts recovered from FEOGA in respect of such expenditure. The capital cost of intervention is not reflected in these figures.
527. Chairman.—What amounts are outstanding and by whom? Do you owe money or are you owed it?
—If one comes up to the end of 1977 from the start of the intervention in 1973, we have spent £80.6 million and we have got in recoupment from FEOGA some £79.9 million. We think the gap of £0.7 million would probably have been increased by £1 million or £1,500,000 in 1978, but this is a relatively small cost to the Exchequer for operating the beef intervention and skim powder intervention system which is of such benefit to the country and the agricultural industry. I should like to make two other points. First, these figures to some extent are provisional figures because the recoupments are on a provisional basis until the actual FEOGA accounts are formally cleared by the auditors and accepted by the Commission as a charge. The second point I should like to make is that the gap which has arisen on this arises mainly in relation to interest. The amount we are recouped in interest by FEOGA to meet the interest costs of borrowing the capital for the beef and skim powder is far below what it costs us to borrow money. We get a flat rate of 8 per cent which applies throughout the Community whereas our borrowing rate in 1976 varied from 10¼ per cent to 13½ per cent. At the moment it is 13¼ per cent but at the beginning of 1978 we were fortunate in having it down as low as 7¾ per cent and we were making a slight profit. As I think was mentioned in the Committee’s Report on the 1974 accounts, these items—interest, storing, freezing and handling charges, etc., —are to some extent dealt with as a package and one gains on some and loses on others. There is a certain evening out. In Brussels we have contested strongly the rate of interest which we are allowed but without success, the attitude being that if they were to raise the general standard rate some other countries who are able to operate very comfortably on 8 per cent would make an extra profit.
528. On subhead A.2.—Consultancy Services—there is a token estimate. What was the position in 1976 on that subhead?
—This subhead has been there for some time to cover the possible employment of outside consultants, as distinct from a number of advisory committees of various sorts which are covered under subhead A.6. This would be more for professional consultants rather than the many advisory committees, mainly composed of producer or trade representatives, which we get to advise us and with whom we wish to have discussions on various aspects of the agricultural industry. As regards this one for professional consultants, we did not employ any in that year.
529. On subhead B.1.—University Colleges —and subhead B.2.—Veterinary College—it strikes me that they might come under the Higher Education Vote, in the sense that both headings would seem to be more appropriate under Higher Education than where they are now. Would you care to comment on that?
—At that stage the administration and general running of the Veterinary College were being handled by the Department of Agriculture. In the middle of 1977 the College itself and the non-administrative staff were taken over by University College, Dublin, for the unified faculty of veterinary medicine. The previous faculty provided by Trinity College was also taken over. These provisions are now included in our Vote in subhead B.1. In the long run the transfer of these to the Higher Education Authority, as you suggested, will probably be the eventual outcome. I think that would be the appropriate line on which it should move. However, as of now we still handle the faculty of general agriculture in University College, Dublin, and the faculty of dairy and food science in University College, Cork, as well as the veterinary faculty in UCD. I think the eventual development will be that these matters will have to go to the Higher Education Authority.
I raised the matter for information purposes. I am not making any suggestion that it might be transferred.
530. On subhead B. 7—Research and Testing—it strikes me that research and testing might normally be expected to come under subhead B.5—An Foras Talúntais. What is the difference? You have two different subheads there. I am not suggesting it is wrong but I should like information for the Committee?
—Some of the activities here have a connection with An Foras Talúntais. For instance, there is provision for veterinary research some of which will be transferred to An Foras Talúntais under the legislation at present before the Dáil. Provision was also included in this subhead for a meat research unit which, in fact, is the meat research unit of An Foras Talúntais. We have been making a contribution to it out of this subhead to supplement support being provided by the meat export industry. Some of the other activities under this subhead would be more concerned with operating services rather than research. There are services where there is a certain marginal overlapping with research but we have been considering whether some of the work involved, the more specific research aspects, could be detached and transferred to An Foras Talúntais.
531. On subhead B.8.—County Committees of Agriculture—as a matter of information, has there been any change in the basis of financing committees with the abolition of rates on private dwellings? What is the present position? County councils were transferring funds. Now there are cases where county councils are still transferring Exchequer funds directly. This is a kind of round about way of financing them?
—I do not think it has had any effect as rates would still be struck for this purpose. I do not think it has made any difference to us. The whole system of the expenditure on the county committees will, of course, be altered by the legislation at present before the Dáil. The staff, in particular, will become the staff of the new Authority, and the bulk of the expenditure will come in a different way.
—The bulk of the finance will come in a different way. It will be going direct to the Authority. Under the Bill, there will also be some coming from the county committees which will continue to have certain functions, of course, in regard to local schemes and matters of that sort.
532. Deputy Kenneally.—On subhead B.15.—Errigal Co-operative Society Limited —Grant for General Expenses—was the £4,000 granted, did they not take it up or was it paid at a later stage?
—We discussed this matter when I was last before the Committee. Certain experiments were carried out in County Donegal to see how far it might be possible to establish viable farming systems under conditions of poor mountain land for very small farmers in the Glencolmcille area. The Errigal Co-operative took a major part in the experiment and purchased materials, such as fencing and fertilisers, required by the farmers concerned, and organised sales of wool and lambs. The ACC advanced a loan to finance these activities. We provided a special grant of £10,000 which was to be spread over a number of years, but they used only between £5,000 and £6,000 of that money and this £4,000 represents the balance. The scheme was not very successful and we still have to clear up some of its financial effects. We made no further payments of the grant but we have still a liability which arises under subhead F.1, inasmuch as we are guarantors of the ACC loan. We paid some money to the ACC on foot of this loan and there will be a further liability in due course to clear it, which will come under subhead F.I.
533. Chairman.—On subhead C.3.—Brucellosis Eradication—I presume the saving in expenditure under this subhead was due to the veterinary difficulties that year?
—Yes. At that stage there was a dispute with the veterinary practitioners with the result that the amount of testing carried out was greatly reduced. In fact, it was more or less confined to the testing of reactor herds by the Department’s own staff.
534. Deputy Kenneally.—On subhead C.5. Payment to Bovine Tuberculosis and Brucellosis Eradication Schemes Hardship Fund (Grant-in-Aid)—is this the £1 million we spoke of earlier on paragraph 44 of the Report of the Comptroller and Auditor General?
—Yes, the same.
535. There was no expenditure in the year under review?
Mr. Mac Gearailt.—It goes out of the vote into a special fund which the Department keep and any payments the Department make will be made out of that fund which is on-going.
536. Chairman.—On subhead D.12.— Cattle Feed Vouchers—Advance to Supplement Meat Industry Fund to Subsidise Cattle Feed Vouchers—I presume this has been finalised or am I presuming too much?
—I am afraid you are presuming too much. The situation here has not been changed for many months.
537. Payments have been made by your Department to people to whom money was owed?
—The recent payments where merchants who made claims in proper form and in good time were made by the Irish Fresh Meat Exporters Society and were out of the Society’s own resources. They did not involve public funds. We still have an action in the High Court seeking to have various matters decided by the court. Our argument is that responsibility for the payment of moneys against what we would regard as fraudulent claims was not a matter which should involve any loss for the Exchequer and we are seeking a declaration by the court which would make our position clear and would set out our obligations and those of the Irish Fresh Meat Exporters Society in the matter. This action, however, has been quite a while in the courts and has not made the progress we would have wished. We would like to see the end of this action but unfortunately there are criminal proceedings in connection with the matter and the criminal trial has not yet taken place.
538. On subhead M.5.—Vocational Training for Farmers—what training is involved there? There is another subhead for training of apprentices and I should like to know what is involved in vocational training of farmers.
—This scheme, and the preceding one under subhead M.4., arise from the EEC farm modernisation Directives. We are required in this case to provide a special scheme of vocational training to persons engaged in agriculture, either as farmers or as family helpers or paid employees. The idea is to help the farmers to learn new techniques. The training is provided through the county committees at local centres. The apprenticeship scheme mentioned by the Chairman is operated by the Farm Apprenticeship Board to which we make an annual grant.
539. On subhead M.9.—Grant under EEC Individual Projects Scheme—a figure of £8,000 was granted but no payments made?
—Most of these FEOGA schemes require that there should be a measure of national financial involvement and nearly all the individual projects such as new factories or improvements to meat factories or dairy plants will obtain the national element through an IDA grant, but occasionally we come across individual projects which would qualify under the FEOGA scheme but would not qualify for an IDA grant. For example, aerial top dressing in County Wicklow was a project of this type which was put up to us. We felt that it was useful but it is not the kind of thing that would qualify for an IDA grant and so, in order to enable FEOGA assistance to be provided, we included a provision that covered a certain amount of aid from our Vote thus enabling the project as a whole to qualify for further aid from FEOGA. The position is that these projects have not yet been completed and no payments came up in 1976. I am not sure if they have been completed as of now.
540. On subhead M.11.—Aids to Horticultural Producer Groups—I notice that the money was not taken up there. Was it that there was no eligible applicant or did you have any applicants?
—At that stage we did not have any organisation qualified but subsequently two producer groups were approved for the purposes of the relevant EEC regulation and qualified for aid. We have made payments of £19,000 in 1977 and £15,000 in 1978. They get assistance in their initial stages, in the first three years, which is intended to help them with organisation, administration and so on. There are certain limits on the amounts which we can provide. So far we have two bodies and we made payments to them in 1977 and 1978.
541. On the question of Extra Remuneration, I should like to state that we have been requesting Accounting Officers to furnish additional information under this heading. I understand that you will be formally informed of what we are looking for; it is a small change in the format. I hope you will be able to see your way to providing us with that when the time comes.
Mr. J. O’Mahony further examined.
542. Chairman.—Paragraph 39 of the Report of the Comptroller and Auditor General reads:
“Subhead G.1.—Payment to Grant-in-Aid Fund for Land Purchases under Farmers’ Retirement Scheme (Grant-in-Aid)
Subhead G.3.—Life Annuities and Premiums—EEC Directive No. 72/160
Subhead L.—Appropriations in Aid
The Farmers’ Retirement Scheme provides for the purchase of land by the Land Commission in accordance with EEC Directive 72/160. The Directive provides that such lands are to be allotted
(a)by way of priority to farmers who are classified as potential development farmers under the Farm Modernisation Scheme administered by the Department of Agriculture in accordance with EEC Directive 72/159, or
(b)for afforestation, recreational activities, public health or other public purpose
and that lands not required for any of these purposes may be allotted to other farmers.
The Retirement Scheme provides for payment to an eligible applicant of the agreed market price of his land together with a cash premium of 10 per cent. of that price (subject to a maximum premium of £1,500) and a life annuity which in 1976 was at the rate of £800 per annum for a married person whose spouse was alive or £530 per annum for a single person, widow or widower. Provided that land so purchased is used for allotment as at (a) or (b) above a proportion of the cost of the life annuity in the case of an applicant who is between the ages of 55 and 65 at the date of allotment is recoverable from the European Agricultural Guidance and Guarantee Fund (FEOGA) as from that date.
Land acquired by the Land Commission under the Land Purchase Acts for ordinary allotment purposes is paid for at market price only. In the course of a test examination it was noted that some of the lands purchased under the Retirement Scheme in 1975 had not been allotted as apparently there were no development farmers in the areas concerned who required additional land under the Farm Modernisation Scheme. I sought the observations of the Accounting Officer on the need to incur extra expenditure by using the Farmers’ Retirement Scheme to purchase land for purposes for which less expensive processes of acquisition are available. In his reply he pointed out that the purchase of the lands of applicants adjudged eligible under the Retirement Scheme and the disposal of that land are reserved functions of the Lay Commissioners. He stated that close working arrangements had been established between the Land Commission inspectorate and the agricultural advisory staff engaged on the Farm Modernisation Scheme to ensure, to the maximum possible extent, that lands purchased under the Retirement Scheme are disposed of to development farmers needing additional lands and that the aim is that Retirement Scheme lands should not be allotted for normal structural purposes unless it is confirmed that there are not and are not likely to be suitable development farmers in the locality. The Accounting Officer also stated that, of the 15 holdings listed in my query which were bought under the Retirement Scheme, one had been allotted to development farmers and for two other such holdings the applications of development farmers were being processed. In the remaining 12 cases allotment had not taken place but discussions were continuing between the agricultural advisory staff and the Land Commission inspectorate with a view to identifying suitable development farmers. In 11 of the 15 cases the applicants are over 65 years of age and the expenditure does not qualify for subvention from EEC funds.
In the light of the information given by the Accounting Officer I have inquired whether the Land Commission has any proposals to limit the length of time that holdings purchased under the Farmers’ Retirement Scheme are retained with a view to their allotment to suitable development farmers. I also sought information as to the total acreage of land purchased under the Farmers’ Retirement Scheme up to 31 December 1976, and the acreage of such land on hands at that date.”
Mr. Mac Gearailt.—This paragraph refers to the acquisition and disposal of land by the Land Commission under the Farmers’ Retirement Scheme and under the Land Commission’s normal acquisition procedures and raises the question of whether lands were being acquired in the most economical way. The Accounting Officer’s observation on this aspect are included in the paragraph. Since the date of my report the Accounting Officer has informed me that every effort is made to dispose of the lands as rapidly as possible, the general objective being that no lands should be retained on hands for longer than two years. He has also informed me that, of 10,000 acres, approximately, acquired since the introduction of the scheme in May 1974, 9,000 acres, approximately, remained on hands at 31 December 1976 and that of the lands acquired only 5,000 acres, approximately, ranked—at the time of acquisition—for subvention from EEC funds.
543. Chairman.—On that point you stated that the disposal of land purchased from applicants adjudged eligible under the retirement scheme is the reserved function of the Lay Commissioners. I appreciate the position you find yourself in with regard to the Lay Commissioners, but you are responsible for finance under this heading and I should like to know if it is a fact that if the Lay Commissioners take a certain line with regard to the disposal of land in their possession your Department would be at a loss under this heading? Is it true that you have no control over the Commissioners in the decision they might come to in regard to the reallocation of land?
—That is correct and it is a fair comment to make on the activities of the Land Commission generally and not merely to the retirement scheme lands but to all land. That is the situation as set out in the legislation passed by the Oireachtas. It could be regarded as a situation in which liability can arise for the Exchequer through decisions made by the Commissioners. On the other hand, one would have to bear in mind that the Commissioners would be expected to act in a reasonable manner on this. But it is a situation that exists. While we try to get rid of these lands within two years, this aim is not always realised in practice and, in fact, it takes longer. The position in regard to land under the Farm Retirement Scheme, however, is no worse or no better than land under normal traditional land acquisition activities. Indeed there could arise a situation in which we would have an incentive to hold on to land under the retirement scheme for slightly longer. If we had land available for distribution and if there was no potential development farmer in the locality but if there was some prospect of one emerging in the following year or so, it would be in our interest to hold on because there could then arise an entitlement to FEOGA recoupment of some of the cost of the annuity we pay to the farmers. One could say that this system of buying land could, at first sight, be regarded as the more expensive way of getting land than the normal traditional way but there are other factors in that we are dealing with old people and it would be rather harsh to use compulsory acquisition powers against them and force them off the land if they did not wish to go.
544. There is the social element?
—Yes. It would be difficult to justify compulsory acquisition on the grounds of inadequate production or inadequate employment. It would be hard to prove those and to have decisions to operate on those grounds upheld if the case were appealed, as would be likely.
545. There is a general idea abroad that the Land Commission make money out of holding on to land. At the moment, at public auctions what could be regarded as exorbitant sums are paid for grazing. Is it true that you are losing money, generally speaking, despite the so-called exorbitant sums paid for grazing facilities?
—Much would depend on the price at which the land is finally allocated. In general the tendency of the Commissioners who decide the allocation price seems to be to operate on what it cost to acquire originally as much as on the current market value of the land. While this was not of great significance some years ago, it is quite important now because land that was acquired four or five years ago would have increased enormously in market value. We would prefer if current costs and values were taken into account to a greater extent and this is being done to some extent by the Commissioners. We make some money on rent because demand is good and this is brought to account in the Vote but overall there is a loss on the Vote. The amounts we make on the Rent and Interest Accounts do not go anywhere near the losses we incur on halving annuities. There is still a deficit on land activities and in the next few years this deficit could become even greater because as time goes on we will be coming more into the high-priced land and will feel the effect of the higher interest rates that we have to pay on land bonds. Therefore, the cost of halving the annuities will become greater to the Exchequer.
546. What acreage have you on hands under the Farmers’ Retirement Scheme and what proportion of that acreage have you succeeded in allotting?
—Up to the end of September we had acquired just under 17,000 acres, of which we had distributed 3,000 acres. We have nearly 14,000 acres of land on hand under the farmers’ retirement scheme. Progress is being made in many of these cases and schemes are in course of preparation for its distribution. We would expect to run down this quantity fairly rapidly, the reason being that the intake under the scheme has dropped greatly because the attractiveness of the scheme has disappeared to a great extent. This is due largely to the improved position of agriculture and the escalation in the price of land which, coupled with inflation, has tended to encourage farmers to hold on to the land. With the rapid price increase in the past year it is attractive for farmers to hold on to land. This is also affecting our compulsory acquisition proceedings, as in most cases the owner of the land will continue to appeal and fight the case because every few months that pass will mean a further rise in the value of the land. The whole emphasis is on delaying proceedings.
As a Deputy I can endorse every word you say on that and I am sure Deputy Kenneally is in the same position.
547. At the bottom of page 90 there is a note: “Work to the value of £12,129 was performed free of charge on the Land Commission computer for other Government Departments.” On page 40 I note a reference to value of computer work done for other Departments and for Vote 36—Lands —there is a figure of £12,142. There seems to be a suggestion of robbing Peter to pay Paul or robbing Peter to pay Peter?
—There is a certain coincidence in as much as the amounts seem very close, £12,129 and £12,142. The amount under Vote 18 on page 40 is for work done by the Central Data Processing Services of the Department of the Public Service for the Land Commission. It is coincidental that it is practically the same as the figure for the work we did on the Land Commission computer for certain other Government Departments. It is a rather amazing coincidence that the two amounts should be within £13 of each other.
That completes Vote 36. I should like to thank Mr. O’Mahony and his colleagues for a very informative session.
—Thank you, Chairman.
I wish you a Happy Christmas even though it is a few weeks away.
—Thank you, and the same to you.
Thank you very much gentlemen.
The witness withdrew.
The Committee adjourned.