Committee Reports > List of Committees > Dáil > 1979 > Committee of Public Accounts > Interim and Final Report - Appropriation Accounts 1977

MIONTUAIRISC NA FINNEACHTA

(Minutes of Evidence)

Déardaoin, 14 Meitheamh, 1979

Thursday, 14th June, 1979

The Committee met at 11.30 a.m.

DEPUTY O’TOOLE in the chair.

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

VOTE 50—HEALTH

Dr. B. Hensey called and examined.

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

“Subheads G.1., G.2. and G.3.—Grants to Health Boards, etc.

As stated in previous reports the accounts of the Health Boards are audited by Local Government auditors whose reports are made available to me. The latest year for which reports in respect of all eight Health Boards are available is 1972-73 and the Accounting Officer has informed me that the position at 28 June, 1978, in regard to the audit of accounts for subsequent years was as follows:—

He stated that the Chief Executive Officers of the Health Boards were continually being pressed to expedite the completion of accounts in all outstanding cases. He also stated that discussions were taking place with a view to expediting the completion of audits in all instances where the accounts were available.”

Mr. Mac Gearailt.—This paragraph draws attention to the position of the audit of the accounts of the health boards and the steps being taken to clear up the arrears.

297. Chairman.—What is the up-to-date position of the accounts and the audits?

—For 1976 all the accounts are available but only one is audited. By the end of 1979, of these eight accounts we expect seven will be audited. In relation to 1977, we will by the end of this year have all the accounts in and seven will have been audited and in relation to 1978 accounts, eight will be in and four should be audited by 31 December next.

298. That represents a vast improvement?

—It represents an improvement. In the last few days we had a meeting with the health boards and are aiming to have all accounts in for audit within six months of the end of the period. The period within which they will be audited depends on the local government auditors.

299. On subhead A.2—Consultancy Services—could you give us a breakdown?

—In 1977 there were consultancy assignments on (a) the development of financial control information and financial recoupment systems for the health services, (b) accounting procedures and internal controls for voluntary hospitals, (c) a personnel census of the total health area, (d) financial systems at St. Laurence’s Hospital, and (e) clerical, filing and scheduling procedures in the radiological department of St. Laurence’s Hospital. There were assignments in the Midland Health Board on internal audit, financial and store systems and a separate assignment on the grading structure for secretary/manager posts in voluntary hospitals.

300. On subhead F.—Developmental, Consultative and Advisory Bodies—I presume there is no overlapping on the consultative end?

—No. It is a different meaning of the word “consultative”. These are bodies which are asked to give advice. They are not professional consultants.

301. On subhead G.1.—Grants to Health Boards in respect of net expenditure (excluding expenditure on cash allowances and cash grants and payments to the General Medical Services (Payments) Board)— another aspect of this area on which I should like to hear your comments is the comparative structure of accounting as between the different Health Boards. In other words, have we a standardised format which applies across the board? If so, I assume we are getting value for money across the board.

—For the past two or three years we had a working party which produced a standard form of accounts. This has been in use for the past two years in one Health Board. It has not been formally prescribed as a standard form of accounts but we are coming towards doing that now having had the experience of operating it, and again this is something which we expect we will do quite soon. This same form of accounts will be required of all Health Boards and will provide a system of comparability which may be better than we have at present. In fact there is an informal system in operation which is the same for all Health Boards now.

302. In the Estimates G.3 covers fees for general practitioners, fees for pharmacists and so on. I recall the Committee raising the matter of payment in respect of drugs, appliances, medicines and so on the last time you appeared before us and it would seem you were paying the Health Boards who, in turn, paid out this money to the recipients. The suggestion was made as to the feasibility of paying it directly to obviate the necessity of this circuitous payment. Is it possible at all to do that?

—It is possible to do it. In fact, it was done at one time. The reason for doing it in this way is to clearly put the responsibility on the Health Board of making these payments. The payments are channelled through the Board so that the Board may be conscious of the fact that this is being spent for their area and being spent for them by the Payments Board and, therefore, the Health Board and its officers are conscious of the need for economy in the service. My preference would be to retain this system even though it is a little bit circuitous in actually getting the cash to the Payments Board.

It is for the purposes of accountability from their point of view.

Deputy Woods.—The point Dr. Hensey would make is that it is necessary in a coordinated way. It is a very important point which is not readily seen in the purely mathematical statistics and it is one that perhaps should be considered in many other areas because if people had to collect cash in notes they would realise just how much cash is moving. By making it so convenient one can forget the reality of the volumes of cash one is dealing with in practice.

303. Chairman.—Subhead G.6.—Payments in respect of Disablement caused by Thalidomide—the figure granted is £37,000. How is that figure arrived at? The grant was slightly underspent.

—There was a slight saving. There is a provision in it for special grants for special things done and for special equipment provided and in fact the requests under that part of the subhead did not amount to what we thought they would.

304. In other words they are only aids rather than compensation?

—The main part of the subhead goes in payment of monthly amounts agreed at the time for compensation and these are updated in relation to inflation. All those who are identified as thalidomide children are constantly getting these monthly payments and this is an easily calculated amount. There is a part of the subhead for giving assistance in relation to domiciliary arrangements for thalidomide children and the demands on that turned out to be less than expected.

305. How many cases are there?

—There are 33 children.

306. Deputy N. Andrews.—Have they any other source of income or grants?

—Some of them might have grants from the German company that was responsible. We do not know what other sources of income some of them might have. These grants are paid irrespective of other sources of income.

307. Chairman.—Would they qualify for the disabled person’s maintenance allowance under social welfare?

—Ordinarily they would not. I am not sure whether any of them have reached the age of 16 yet. That allowance is only available to people who are 16 and over. At the time the scheme was introduced none of them was at that stage.

308. Deputy F. O’Brien.—Does that mean that these payments are in addition to the normal social welfare entitlements?

—Yes.

309. Deputy Morley.—On subhead M.— Dissemination of Information on Health and Health Services—I see there is a saving of more than £11,000. I know it is a small sum but I think this is an important area and one would imagine that there is scope for the expenditure of much more than was originally provided, for example, in the area of dissemination of information on health and health services not only by informing the public that the services are available and how they could set about availing themselves of these services but also in educating them in good health habits and so on. It is surprising to see that there is such a big percentage of the money provided left unspent in this area.

—The main reason for the saving was that the printing of a booklet which we had in mind at the time describing the system of health services was deferred because it became obvious that changes in the services were pending. The printing was not carried out until April of this year when the changes took place in the services. That was quite an expensive item. The booklet is now available in large numbers. That is one aspect of it. The dissemination of information or advice on health, as distinct from describing the health services, is now the responsibility of the Health Education Bureau. Since 1977 the budget for the Health Education Bureau has been substantially increased.

310. Chairman.—It is £1 million?

—It was £400,000 in 1977, £1 million in 1978 and £1¼ million is provided for 1979.

311. Deputy Woods.—Under subhead P. —Appropriations in Aid—there is mention of the scheme of health contributions for persons with limited eligibility. I should like to know what is referred to.

—In this year, 1977, they were the contributions collected with the social welfare stamp at a flat rate plus the contributions collected by the Revenue Commissioners, also on a flat rate, from self-employed persons paying income tax and the contributions collected by the Health Boards from farmers.

312. Chairman.—You mentioned the collection from farmers of the health contribution. That as we all know is causing problems. What is the present position regarding arrears there?

—A statement which we sent to the Department of Finance within the past few weeks gives information which was requested by the Committee earlier on the situation for each year up to 1977. To summarise the general situation, for 1977 the collection was 70 per cent of the demands made and the amount of the demands made which was not contributed was £376,000. I explained to the Committee before that the demands made are not necessarily demands that should have been made. In some cases, because of lack of information about the circumstances of the people, demands are made which are subsequently cancelled. I understand that in 1978 the position was much the same. The percentage of collection against the demands made was about 68 per cent. This system, as from April this year, is changing with the others to a pay-related scheme. We have at present a working group with representatives of the Health Boards which is supervising the new scheme which must, of necessity, be more sophisticated because it will be related to the valuation of farms and other incomes of farmers. We are watching how this will operate in the present year in the hope that there will be a better relationship between the demands made and the amount collected.

The witness withdrew.

VOTE 39—AGRICULTURE

Mr. J. O’Mahony called and examined.

313. Chairman.—Paragraph 26 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 with generally satisfactory results. I have been furnished with details of the amounts collectible and the amounts collected as Monetary Compensatory Amounts in respect of the various agricultural products. These indicate that a total of £114 million was collectible in respect of these amounts up to 31 December, 1977. Of this total £1.4 million was uncollected at that date, comprising £1.37 million on exports to other Member States and due to the European Agricultural Guidance and Guarantee Fund (FEOGA) and £33,000 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 cereals.”

Mr. Mac Gearailt.—This paragraph draws attention to the position in regard to the collection of Monetary Compensatory Amounts up to 31 December, 1977. The matter of arrears has been dealt with by the Committee in Paragraph 4 of its recent Report on the 1976 Appropriation Accounts.

314. Chairman.—Paragraph 27 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

The charge to Subhead M.6. is made up as follows:—

The amount received from FEOGA 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, 1977, was £80,620,291. The amount recovered from EEC funds was £79,151,797.”

Mr. Mac Gearailt.—This paragraph is for information. It gives details under the main heads of the amounts expended in 1977 from voted moneys 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.

315. Chairman.—Paragraph 28 of the Report of the Comptroller and Auditor General reads:

“Subhead M.6.—Incidental Expenses arising out of Market Intervention

The Minister for Agriculture as the official Intervention Agency of the EEC in Ireland is responsible for the purchase, storage and resale of agricultural products offered through the market intervention system under the Communities’ Common Agricultural Policy and for the keeping of stock records in respect of the products handled.

Transactions involving intervention beef commenced in October, 1973, but the work of compiling the requisite stock records on a manual basis did not commence until some time later. Towards the end of 1976 it was decided that computerisation of the records on a current basis would become operative from 1 January, 1977. It was also decided that the computer would be used to build up stock records in respect of transactions in the pre-1977 period in order to verify the manual records which had not yet been completed.

The computerised system gave rise to difficulties from its inception and has failed to produce current stock records for transactions in 1977 and in the first half of 1978. Moreover, neither the manual record nor the computerised record in respect of pre-1977 transactions has yet been completed. Thus the Agency is without any satisfactory records of the stocks of intervention beef on hands and I asked the Accounting Officer what steps were being taken to produce such records. He informed me that computerisation of these records on a current basis was scheduled to become operative on 1 January, 1977, but that considerable difficulties had been encountered in accurately reproducing the data. Additional computer staff had been assigned to this work in February, 1978, and it was hoped that the production of computerised stock records on a current basis could commence on 1 July, 1978. The Accounting Officer stated that, while stock returns had been received each month from each cold store in which intervention beef was stored, final checked stock data for 1977 and the first half of 1978 would not be available until the up-dating of the stock records for the period prior to 1977 had been completed.

As losses on transactions in intervention beef resulting from the absence of satisfactory stock records may fall to be met from voted moneys, I have deemed it desirable to draw attention to the matter.

Returns furnished to the EEC indicate that the quantity of intervention beef on hands at 31 December, 1977 was 82,000 tonnes valued at £116 million.”

Mr. Mac Gearailt.—Paragraph 28 refers to the difficulties encountered by the Department of Agriculture in its efforts to produce satisfactory stock records for transactions in beef intervention. The Committee, in Paragraph 9 of its recent Report on the 1976 Appropriation Accounts, referred to this question of the absence of satisfactory stock records. The Accounting Officer has informed me recently that the computerisation of the records of beef intervention operations in 1974 and 1975 has been completed and final data on stocks up to December 1975 is now available. He stated that the Central Data Processing Services of the Department of the Public Service were carrying out revisions of the computer programmes and that, if the technical improvements sought by them were achieved, the records for 1976 should be fully computerised before the end of this year and the computerisation of the 1977 records will then be pressed ahead.

316. Chairman.—Paragraph 29 of the Report of the Comptroller and Auditor General reads:

“Arising out of the absence of stock records referred to in the previous paragraph I asked the Accounting Officer for information regarding the departmental checks applied in order to establish the accuracy of the claims submitted by cold stores in respect of storage charges for intervention beef. He informed me that monthly returns are received from cold stores showing stocks of intervention beef at the end of each month and that these are checked against previous returns from the stores. As from 1 January, 1977, payments of handling and storage invoices have been made following verification of the transactions on each invoice against other documentation relating to consignments placed in store. Moreover, since January 1977 the cold stores have furnished separate storage invoices for stock brought forward from 1976 and for beef taken in from the beginning of 1977. The Accounting Officer also stated that it was possible to check some of the particulars on these invoices but he added that, to the extent that they depend on opening balances calculated by the cold stores themselves, payments in respect of the pre-1977 stock must be subject to review in the light of the complete stock records when available.”

Mr. Mac Gearailt.—The Department of Agriculture, as Intervention Agency, is responsible for making payments to the cold stores in respect of the storage of intervention beef. Satisfactory Departmental stock records would enable the Department to satisfy itself as to the accuracy of the stock figures in claims submitted by the cold stores. As indicated in the previous paragraph, such records did not exist in the year under review and I, therefore, sought information from the Accounting Officer regarding the checks carried out to establish the accuracy of the claims. His reply is summarised in the paragraph.

317. Chairman.—On paragraphs 28 and 29 the problem seems to be that you have a regular system of checking but you are going back to a stage where checks had not been made. You reach a stage where you are, to put it mildly, basing figures on what was initially something nebulous and it is to be hoped this matter will resolve itself?

—That is correct. The position as regards payments is that payments to factories for freezing and transport and to cold stores for handling, freezing and storage are being made on a current basis since January 1977. Similarly, all payments, stock records and so on since July 1978 are on a current basis and are on the computer. The problems have arisen from the absence of complete returns and records on a chronological basis from the very beginning of intervention in 1973 to those dates. As the Comptroller and Auditor General has indicated, we have now disposed of 1974 and 1975. In regard to 1976 the Central Data Processing Services of the Department of the Public Service consider in view of the difficulties that we have had with computer programmes over the years that, before doing 1976 finally, they should review the whole series of programmes on the computer. That is in progress at the moment and they expect to have it completed by the end of the current month. They would then expect to be in a position to give a more efficient and speedier service to us in regard to the computer processing of 1976 and 1977. If their expectations are realised we would aim to have 1976 disposed of by the end of the current year. At the same time we and they are moving back the computerisation of current transactions from 1 July, 1978, to the beginning of 1978, in other words computerising the first half of 1978. In this way we are tackling the arrears from both ends. Finalisation of the incidental payments, including those to the cold stores, has to be based on the computer records. What we paid in earlier years were payments on account and have to be checked against the computer records as they become available. Hence the whole set of activities, both the payments for the meat and records of the stocks as well as the payments for such matters as storage and so forth, are all inter-linked and are dependent on the computerisation of the entire system. As I explained when I was last before this Committee, the Department of the Public Service had grave difficulty in retaining their trained staff on computer work because these officers, as soon as they became expert, obtained employment readily outside the public service. This meant that the computer time-table got into arrears and led to the considerable difficulties we have had. The Department of the Public Service, however, have put extra staff on this work relating to FEOGA and to beef intervention and they have been making every effort to provide a satisfactory service to us. The position has improved very considerably and I hope that by the end of this year we will show a significant improvement on what is outstanding.

318. Have current checks that you have made revealed any problems?

—Not really. On the whole the records that we ourselves had have matched those of the cold stores. Also where we have carried out what I would call a physical examination or assessment of stocks, as we have done in some stores, we have been satisfied with what we found. I do not say that it is a physical check because, given the conditions under which, say, frozen beef quarters are piled to the roof in a public cold store, it is not a very easy matter—in fact it is not possible—to go around and count them and say what exactly is there. It is possible to form an idea of the stocks of boneless beef which are in standard sized boxes, as for those one can make a calculation of the likely contents of any room in a cold store. In so far as we have done physical assessments at seven or eight of the bigger Irish stores the results of the checks that we have done there have been reasonably good.

319. Are we to understand that the arrears of work are due to computer staffing rather than staffing in the public service?

—Now and for some time past this has been the problem of the computer programmes. In so far as we have been providing what I might call the more mechanical aspects of the records and of punching cards and so forth, it is not a staff problem with us, it is a matter of the programmes themselves. The programmes as originally devised had the inevitable teething troubles and the staff working on the programme at the time were affected by movements out to private enterprise. A considerable amount of the information was carried in the heads of the staff rather than on paper at that stage. Everything seemed satisfactory while that staff were there but when the staff left the public service the weaknesses then became apparent. This held up the computerisation and rectification of the accounts. The Committee in their report on the 1976 accounts say that this is an example of what can happen if proper preparation has not been made. That is fair comment. When the beef intervention got going in 1974, it seems now that the Department of Agriculture did not appreciate the extent of the operation that they were getting into. The size and complexity of the intervention arrangements were not anticipated. This country was not alone in that because the position changed extremely rapidly in Europe from one of scarcity of beef to a surplus of beef and there had never been any large-scale previous experience of intervention within the Community in the beef sector. All countries were caught somewhat by the suddenness of this huge new activity and the arrangements made for it both here and elsewhere were not really adequate. Then this was followed by our difficulties with computerisation. There is no alternative to having this kind of work on a computer because the number of operations is so great. For example, the quantities of beef purchased annually were running at 100,000 tons or more and the amount of paper work and transactions in regard to that volume of activity can be handled only on a computer. The 19741975 periods represent in total half of all the beef that we have bought into intervention since the very start and so we have dealt with half of the total quantity.

320. Deputy Woods.—In relation to paragraphs 26 and 27 of the Report of the Comptroller and Auditor General, I take it that most of this money, except for £1.4 million, has been recouped from the EEC and that the amounts received from FEOGA funds for the year under review are at present under subhead N. In other words, has virtually all this money been recouped from the EEC in charges for intervention?

—Yes. The total figure of £18.275 million was charged to subhead M.6. The total received from FEOGA was £21.3 million. These were the amounts paid out and received during the year but they do not necessarily relate to the same quantities.

321. You covered that by saying since Ireland’s accession to the EEC up to 31 December, 1977, the total amount paid in respect of incidental expenses arising out of market intervention was £80.6 million and that the amount recovered from the EEC funds was £79.15 million. Does this mean that approximately the full amount was recovered? The Comptroller and Auditor General mentioned briefly in passing that this did not include capital charges. Could you explain how the capital charges are dealt with? In other words, I presume the Department pay out money and wait to recoup it from the EEC funds and that there is a period in between?

—Yes, that is correct. We buy beef and skim milk powder and this country provides the necessary funds.

322. The necessary capital to cover that interim period?

—Yes. We get part of it from the Exchequer and part from the intervention bills which are discounted with the commercial banks. We get £96 million from the commercial banks on foot of these bills and any extra amount is raised from the Exchequer. We have to pay the current rate of interest on those bills and also on what we get from the Department of Finance. The current interest rate is about 13¼ per cent. For some considerable time past the Commission have been allowing us from FEOGA only 8 per cent. Therefore, there is a certain loss on interest. The interest we get from FEOGA would be credited to subhead N. The amount given in the table in the Comptroller and Auditor General’s Report was £6.8 million in interest and the amount paid out during 1977 was £7.7 million. The 8 per cent rate is the standard rate that applies to all EEC countries. For some countries it works out very satisfactorily if the market rate is below 8 per cent but in our case it worked to our detriment. In 1978 we were making a slight profit because our current rate of interest then was 7¾ per cent. There are two points which the Commission make about these losses. First, the other charges could involve some profit for us. We make some profit on the deboning allowance, and therefore all these expenses and receipts have to be looked at as a package deal. We gain on some and lose on others. Second, while we may lose a little on the interest on capital for intervention, we make a very considerable profit on the current advances from the Commission each month to finance export refunds, monetary compensatory amounts and so on. We invariably have a fairly substantial credit balance which is available to the Exchequer free of interest.

323. Deputy F. O’Brien.—Approximately how much money is involved here?

—The average balance each month would be probably about £30 or £35 million.

324. This more than compensates for losses sustained on account of higher interest charges?

—Yes. We calculated that over the years if one takes the position up to the end of 1978—Deputy Woods mentioned the £1.4 million gap, the actual figure was £.5 million because we closed the gap a little—the value of the advances to the Exchequer at the current rate of interest means a profit of about £7.5 million. We still think we are about £7 million to the good.

325. Deputy Woods.—Does the responsibility for the capital charges basically rest with the EEC through these balances rather than with the producers?

—The responsibility for financing them rests with the EEC and the responsibility for providing the actual capital rests with the Government, but so far as beef and skim milk powder are concerned, none of it falls on the producer, as would happen in the case of horticultural withdrawals.

326. Is it unusual in the sense that the capital is not provided by the producer? Or is it unusual the other way?

—By and large it would be more unusual the other way. The producer loses out on the horticultural side because there is not the same rigid and effective system of intervention by a State agency as there is in the case of the bigger products.

327. Chairman.—While I do not want to sound pessimistic, have you given any thought to a cold store folding up? Is there any possibility that might happen? If so, what would be the position?

—We have not had any cold store folding up. We had some problems with meat being stolen from a cold store and we are in negotiation with the cold store in regard to that. The broad position is that the cold stores have indicated that they accept that these goods were entrusted to them for storage and that they are liable for any disappearance while the goods were in their possession.

328. Deputy Morley.—Could they be held liable for the deterioration of the goods while in storage?

—Most of these stores have fairly standard sets of conditions under which they accept goods. However, the deterioration could arise from failure of power and so on, but that has not provided any trouble for us even though we had electricity breakdowns. In these places where there is a huge mass of products at a very low temperature, even a temporary cut-off of power will not cause any serious difficulty. Also, I expect they have reserve generators to provide for such a contingency. It is of the essence of cold stores that they take goods and look after them for their clients. Their raison d’être would disappear if they took goods and were not liable to return them to you in a satisfactory condition. So far we have not had any difficulty in that respect. When I say that we have had no difficulty I mean that no meat deteriorated or something happened to meat because of negligence of a cold store and that they failed to meet the loss for anything that occurred in the store.

329. Would that be sufficiently covered by insurance?

—We do not insure. The State carries its own insurance.

I am referring to the cold storage people.

—They would be covered by insurance. Where a certain amount of meat is stolen, as I mentioned earlier, they are covered against that, but inevitably when one is negotiating with them they have to be very careful. If possible, they have to get their insurer to cover the liability.

330. Deputy Woods.—On subhead A.2. Consultancy Services—I am disappointed that the nominal amount for consultancy has not been taken up and that even the £10 provided was returned. What exactly does this indicate? Does it indicate that you thought there would be some additional studies that might be required but that all that were required were provided through An Foras Talúntais where there is an internal pay back arrangement with them and that it does not come under this consultancy service heading? Are they particularly administration services?

—There is an increasing tendency to provide in most votes a subhead for consultancy services. It is put in automatically in quite a lot of votes. I am not sure if it applies right across the board. It is seen everywhere as an automatic provision. We did not use this standard provision in 1977. It is intended to cover expert outside consultants. We have a lot of advisory committees of various sorts comprising producers and trade representatives and so on and they are covered in subhead A.7. This would be to cover what one might call professional, commercial or industrial consultants.

331. I can only say that I would certainly rather see a situation in which some of that hard line professional consultancy was engaged. I am sure it would be beneficial. I have been on some of these committees and councils and I think people give of their best with the kind of time they have for them but it is a different thing and a complementary thing to have the other professional type of consultancy which could be quite beneficial to the administration generally. I would not like to say more than that on it.

—I would not say that we in the Department of Agriculture have any prejudice or anything of that sort against consultants. If the idea of using a consultant in a particular capacity came up we would not hesitate to do so.

332. I find it extraordinary that under subhead B.1—University Colleges—the colleges actually returned money at the end of the period. I have had some complaints made to me directly that it was no longer possible to take on students for short terms in the university in agricultural and horticultural areas. I would certainly like to think that administrative and financial efficiency or expediency did not outweigh some of the very fine customs which have existed in the past through which the Department would perhaps assist the university professors in giving some experience and some guidance and assistance to young undergraduates or students. Perhaps a great deal of that is still going on. I mention it because it was raised with me at some stage that it was a diminishing area and I thought it was a pity having experienced that many years ago myself.

—The provisions here are rather exceptional in as much as most State assistance to the universities goes through the Higher Education Authority whereas the agricultural and dairy science faculties, and now the veterinary faculty, are financed through the Department of Agriculture. In the present case the savings on subhead B.1 related almost entirely to the building operations of both UCD and UCC. Both the faculty of agriculture in UCD and the dairy science faculty in Cork have been engaged in very substantial building projects. The cost in Dublin is £6¼ million and in Cork over £5 million and this work has been going on for quite a number of years. It is now tending to tail off especially after this year when these projects will be largely completed. The reason why we had the saving was that the work did not go ahead as rapidly as hoped. As is inevitable, people will provide an estimate to cover all eventualities and then if the work is not completed or does not go ahead rapidly there is a saving. That is what occurred in both of these cases. Of the total £296,000 at least £240,000 or £250,000 certainly relates to buildings. So it was purely on the buildings that the saving was achieved and not on the more general grants to the university faculties concerned.

333. I am aware of the fact that buildings have been delayed but that the projects are currently coming to a conclusion.

—They are now coming to a conclusion. The current year is regarded as the most expensive year in Dublin and last year was the most expensive year for the Cork project. From now on the expenditure will tend to tail off.

334. Deputy F. O’Brien.—Under subhead B.10—Farm Apprenticeship Board—Grant for General Expenses—there is a figure of £37,500 provided for general expenses. It seems a rather low figure for any kind of training and for any type of development along the lines of apprenticeships. I am just wondering if apprenticeships are not now as popular as they were.

Chairman.—We cannot go into the area of the amounts granted. That is a policy consideration and, accordingly, outside the scope of our terms of reference.

Deputy F. O’Brien.—I can pursue this matter elsewhere.

Chairman.—Obviously every penny that was granted was spent.

—The amount of the basic provision to the Farm Apprenticeship Board has tended to go up fairly steadily. It was £25,000 in 1975 and 1976 with an extra £15,800 in 1976. It was £37,500 in 1977 and £42,500 in 1978. It has gone up slightly again this year. In a recent announcement of some additional grants, they have been given another £20,000. There has been a steady upward movement.

335. Deputy Woods.—On subheads C.2—Bovine Tuberculosis Eradication and C.3— Brucellosis Eradication—instead of being plus supplementaries they are less supplementaries. Was this due to the strike? Supplementaries change the estimate substantially.

—The original estimate would have been prepared in 1976 when the difficulties with the veterinary profession still existed.

VOTE 36—LANDS

Mr. J. O’Mahony further examined.

336. Chairman.—On subhead G.1—Payment to Grant-in-Aid Fund for Land Purchases under Farmers’ Retirement Scheme (Grant-in-Aid)—the scheme did not prove too popular with farmers. What is the current position?

—Interest in the Retirement Scheme has declined very substantially. We have had only eight new applications since the beginning of this year. One can attribute it to a number of factors. The rapid increase in the value of land has tended to encourage people to hold on to their land as much as possible. Given the way in which the price has escalated in recent years, the attractions of the premium and annuity which they would get from participation in this Scheme have not been as great as they were when the Scheme was introduced some years ago. The Community have realised that this Scheme is not really working in the way in which it was intended to work and certain proposals for amending it are at present being considered by the Council of Ministers in Brussels. We would envisage that when the Council have taken a decision on the enabling Directive we would come up with a revised scheme which we hope will be more attractive to farmers. One of the considerations we must bear in mind is the necessity not to introduce discrimination as between people who retire from farming and people who retire from other activities. It is often represented that the loss of social welfare or other benefits is a major factor in influencing farmers who might think of retiring and selling their land under the Retirement Scheme. On the other hand, one has to bear in mind that, if a farmer sells his land for say £40,000 or £50,000, the income he can get from that, plus the retirement annuity from us, would leave him in a reasonably favourable position vis-à-vis some other person who has considerably less income, even with social welfare benefits, than the retiring farmer. It is a matter of trying to achieve a balance. At the same time we appreciate that, where a person is living on the land and has certain benefits, it is very hard to expect him to surrender those and lose them. This is a factor which discourages him from availing himself of the Retirement Scheme. As against that we must bear in mind the advantage to the country of getting land out of the hands of elderly farmers who for one reason or another do not utilise its potential as much as possible and getting it into the hands of younger and more progressive people.

337. On the question of land acquisition, rightly or wrongly, it has been brought to my notice that there seems to be a shortage of staff in the inspectorate which may be causing delays in the disposal of land on hand. There is a general idea, wrongly I think, that you make money out of the rentals accruing to the Department from letting of lands held by you. What is the position with staffing and can you speed up the disposal of land on hand?

—We have some shortages of staff on the inspectorate side and at present we are in the process of recruiting additional staff. The emphasis is on disposing of lands on hands rather than acquiring more. The reason is that, as has already been announced, it is the intention to introduce a new land policy and it has been indicated that proposals in regard to this will be put by the Minister to the Government during the year. Given that some new policy will be introduced, it is desirable to clear the decks as much as possible by getting rid of the lands on hand. There is no desire to hold on to land for longer than is absolutely necessary. We feel that we have the land on our hands for too long and we have no intention or aim to hold on to it in order to obtain the rentals. While we do make certain profit on renting land—it is brought into account under Appropriations in Aid, Surplus Income of Rent and Interest Accounts—the amount realised is £300,000, which is very small in our total Vote. Certainly the profit on the rents is not a major consideration with us.

338. It is just land that you are holding on to?

—We would prefer to get rid of the land quickly if we could but the disposal of land cannot be speeded up overnight. Elaborate schemes have to be prepared and it frequently happens in some cases that, if the Land Commission could acquire another small piece of land in the area, they could prepare a much more satisfactory scheme for the area as a whole. This situation arises and tends to delay allocations.

339. Deputy Woods.—Under subhead L— Appropriations in Aid—the interest on bank deposits and sundries was up considerably from £45,000 to over £70,000. The footnote on this says that the revenue balances available for short-term investment in bank deposits were greater than expected and the increased deposit interest earned offset a drop in bank interest rates during the year. Was that the period of the bank dispute?

—No, the bank dispute was in 1976. This was 1977. We have certain balances depending on the speed at which the annuities come in and the dates on which we have to make the payments to the Department of Finance to service the land bonds. We have these balances on hand and it is the practice to invest them in bank deposits immediately we get them so as to earn interest.

340. On some terms?

—On the best terms obtainable.

341. No, I am asking about the length of term that you are likely to have the money.

—We get the money in throughout the half-year and we make the payments to the Department of Finance roughly every six months to service the land bonds. If we have any spare money we invest it in bank deposits and draw as little of it as possible before we hand it over to the Department of Finance. We get the benefit of the interest for Appropriations in Aid.

Which is just good investment.

342. Under the Grant-in-Aid Fund for General Land Purchases, the expenditure in 1977 was £44,060. Was that the total expenditure in 1977 on that?

—This grant-in-aid fund would be utilised where we use cash rather than land bonds for buying land. Coming into 1977, we had an unexpended balance of about £294,000. We got another £200,000 but we spent only £44,000 because that was the extent to which it was decided to pay cash for land. In most cases the land will be paid for by bonds but in some cases there will be legal difficulties or there may be some other reason why it would be convenient to pay cash rather than bonds. It may help to sweeten a deal for the lands or something like that, and it is useful to have a certain minimum amount available to pay cash where it would be convenient to do so and would facilitate a deal.

343. Deputy Belton.—The matter of when to use bonds rather than money for the purchase of land is a vexed question. Have you any discretion as to when to use money and when to use bonds? Most people would be anxious that you would use money rather than bonds.

—This boils down very much to the availability of money. When one pays in cash one must provide the cash in the Vote out of current Exchequer funds and this means that there is an immediate draw on the Exchequer. In the case of bonds, the payment is made in the bonds and, while views may differ as to the equity or inequity of that, it facilitates the purchase of much more land than would be purchased if all of it had to be paid for in cash. While one may criticise the payment in bonds, especially where—as has happened with some other State securities—bonds were issued at very low interest rates and as a result over the years have lost their capital value greatly, there have also been issues of bonds at extremely high rates of interest and the owners of those bonds are now in a very satisfactory position in as much as the bonds are worth considerably more than their nominal value. I have in mind those instances where the Land Commission issued bonds at rates of interest of 14¾, 15 and 16 per cent. The capital values of those on the Stock Exchange at the moment would be above par.

344. How do you determine who will get cash and who will get these bonds at a high interest rate?

—In practice everything is to be paid for in bonds except in an exceptional case where the Commissioners, given the availability of cash, would decide that in that case they could pay cash.

345. Deputy Woods.—That £44,060 is the expenditure in cash in 1977. Approximately what proportion of the total expenditure would that be in that year?

—I would put the figure for total land bond purchases in round figures at £10 million.

It is an extremely small proportion.

—I have pitched it a little high. The actual payment in land bonds in 1977 was £6.67 million. It was £9.3 million in 1978.

The witness withdrew.

The Committee adjourned.