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

FINAL REPORT

PART 1—GENERAL OBSERVATIONS

MINUTE OF MINISTER FOR FINANCE DATED 14 JUNE 1979

REPORT DATED 28 JUNE 1973

Payments to the Special Regional Development Fund (Grant-in-Aid)

1. The Committee notes that the report submitted by the Interdepartmental Committee on the Organisation of the Functions of Government at Sub-National Levels on the appropriate institutional arrangements for the co-ordination of regional planning and development by the Department of Economic Planning and Development did not make any recommendation in regard to the operation of the Special Regional Development Fund and that it is therefore proposed to continue the Fund in operation pending decisions by the Government on the arrangements for co-ordinating regional planning and development. The Committee also notes that, if it is decided to make changes in the Fund, the matter will be brought to its attention and that the various safeguards which exist to ensure co-ordination between the Special Regional Development Fund and the other grant-giving agencies will continue to operate.

REPORT DATED 30 OCTOBER 1975

Agriculture—Recovery of Loans

2. The Committee welcomes the information that the Minister for Finance is reminding Accounting Officers of their responsibilities in relation to recovery of moneys due to the Exchequer and it trusts that this action will help to prevent any similar situations arising in the future.

REPORT DATED 24 JUNE 1976

Delays in Collection of Monetary Compensatory Amounts

3. The Committee notes the progress which has been made to reduce the total amount outstanding under this heading and that legal proceedings are continuing in a number of cases. It also notes that investigations by the Irish and UK authorities into the carousel trade in pigs and cereals have not yet ended.

The Committee would like to be informed in due course of the outcome of the legal proceedings and of the investigations into the carousel trade.

REPORT DATED 21 APRIL 1977

Primary Education—Scheme of Adaptation and Extension for a National Teacher Training College

4. The Committee notes that, in avoidance of a legal action, an agreement was concluded, in consultation with the Department of Education, between the authorities of the National Teacher Training College and the building contractor in relation to his claim for reimbursement of costs arising from the temporary cessation of work and that outstanding claims by the contractor relating to work actually done were covered by the terms of the agreed settlement involving a total sum of £38,000, of which £25,500 was contributed by the Department of Education and £12,500 by the religious order in charge of the College out of their own community funds.

The Committee would like to be assured that the terms of the agreed settlement had the prior approval of the Minister for Finance.

The Committee also notes that the final cost to the State of the separate kitchen/restaurant contract, which was placed without seeking competitive tenders, was £397,167. It recalls that a contract price of £201,000 was negotiated for this project and it would welcome information as to the reason for the increases in cost of approximately 100%. The Committee notes that the total cost of this contract, including fees, is stated to be £1,097,631 and it would like to be informed if this figure includes the cost of the kitchen/restaurant contract.

The Committee also notes the progress made to have an agreement concluded with the College authorities guaranteeing the exclusive use of the college for the training of national teachers or for other approved educational purposes and it would urge that this matter be brought to completion without further delay.

Secondary Education—Local Contributions towards the Capital Costs of Community Schools

5. The Committee notes that there are still some outstanding points under negotiation in regard to the proposed deed of trust for community schools and that every effort is being made to reach agreement between all the parties concerned as soon as possible. It will welcome information about the outcome of the negotiations when they are completed.

Charging of Expenses Arising out of Market Intervention

6. The Committee notes the progress which has been made to bring the clearance of invoices for market intervention expenses up to date. It is disappointed to learn, however, that, in regard to payments to cold stores, a considerable volume of arrears still remains to be cleared. When the Accounting Officer of the Department of Agriculture was before the Committee in connection with the 1977 Appropriation Account he stated that, in regard to the delay in clearing invoices for intervention expenses, the problems had arisen from the absence of complete returns and records on a chronological basis from the very beginning of intervention in 1973 up to 1977. He agreed with the view expressed by the Committee in its Report dated 26 April 1979 that the situation in which the Department now finds itself is an example of what can happen when there is failure to make adequate preparation for a new and large-scale operation such as intervention buying of agricultural products. The Committee would hope that the need for proper preparation and planning for such operations would be appreciated not only by the Department of Agriculture, but by all Departments.

The Committee also notes that it is expected that computerised stock records up to 1976 will be available before the end of 1979 and it trusts that this expectation will be realised. It wishes to be kept informed of progress in this matter.

FEOGA Accounts

7. The Committee notes that the problems in regard to the preparation of FEOGA accounts relate solely to beef intervention and that all other FEOGA accounts have been furnished up to the end of 1977. It also notes that certain technical difficulties with the computer programmes for the processing of the records relating to intervention beef had been encountered by the Central Data Processing Services of the Department of the Public Service which considered it necessary to revise these programmes in order to provide a more efficient and speedier service to the Department of Agriculture. It further notes that, while this revision is expected to be completed shortly, it is difficult to forecast accurately the likely progress in the completion of intervention beef accounts for 1976 and 1977 until the output from the revised computer programmes has been assessed.

The Committee is concerned at the continuing delay in producing these accounts and it expects that every effort will be made to achieve the promised improvement. It wishes to be kept informed of developments.

REPORT DATED 15 JUNE 1978

(i) Clearance of Cashed Payable Orders by the Paymaster General

(ii) Primary Education—Overpayments of Teachers’ Salaries

8. The Committee notes that £1,927 of the amount of £3,983 outstanding has been recovered from one of the two banks involved in the encashment of payable orders, subsequently found to be fraudulent, and that negotiations with the other bank are still in progress. It wishes to be kept informed in regard to the recovery of the amount outstanding.

The Committee also notes that a time-lag of up to several weeks is at present inherent in the Paymaster General’s computer system for the clearance of payable orders and that the processing of cancelled orders is subject to that time-lag.

The Committee is gravely concerned that such a time-lag should have been allowed to develop in the processing of payable orders by a computer system which, it understands, was intended to speed up such processing. It doubts whether a time-lag of such proportions would have been tolerated under the former system when payable orders were processed manually.

The Committee further notes that work on the installation of a new computer system to deal with the clearance of payable orders has begun and that when this system is fully operational the two-day clearance which applies in the private banking sector will apply to payable orders drawn on the Paymaster General.

The Committee regards the improvement of the Paymaster General’s clearance system to a level of efficiency in keeping with general commercial banking standards in the private sector as a matter of extreme urgency. It recalls that the Comptroller and Auditor General reported in July 1976 that he had been informed that the Central Data Processing Services of the Department of the Public Service had been asked to revise the existing computer system so as to permit compliance by the Paymaster General’s Office with the normal banking clearance requirement. It is at a loss to understand the serious delay in effecting the necessary revision and it wishes to be informed of the reasons for this delay.

Secondary Education—Accounting Procedures relating to Salaries of Secondary, Comprehensive and Community School Teachers

9. The Committee notes that the Minister for Finance has been informed that computerisation of the payrolls for secondary, comprehensive and community school teachers has been completed and is operating satisfactorily and that the necessary reconciliations and the payover of income tax and other deductions are now being made regularly and promptly.

Secondary Education—Deductions from Salaries in respect of Social Welfare Benefits

10. The Committee is concerned to note that the Department of Education was finding it not possible to secure recovery in cases where teachers were paid full salary while in receipt of social welfare benefits in respect of absence on maternity leave in the period from 1 January 1975 to 31 July 1976. The Committee trusts that the Department of Education will pursue this matter vigorously, now that the postal strike has ended, and that there will be no undue delay in recovering all the amounts due. It wishes to be kept informed of developments.

Fisheries

11. The Committee notes that Mayo County Council has not yet agreed its rate of contribution towards the cost of the improvement scheme at Killala Harbour and that discussions are continuing between all the parties involved with a view to finding an acceptable solution to the problem. The Committee wishes to be informed of the outcome.

Roinn na Gaeltachta—Personal Responsibilities of Accounting Officers

12. The Committee notes that the Minister for Finance is reminding Accounting Officers of the prescribed procedure to be followed if an Accounting Officer is required, as a matter of policy or for any other reason, to make payments for which, in his opinion, he does not have authority.

In regard to increases in grants which are subject to statutory limits, the Committee accepts that, having regard to the special arrangements agreed for bringing to the notice of Dáil Éireann any case in which it becomes necessary to pay such increases in anticipation of the necessary legislation, cases covered by these arrangements need not be reported specially to the Comptroller and Auditor General.

Local Government—Audit of Accounts

13. The Committee notes that the staff of the Audit Branch of the Department of the Environment has been increased in recent years, though not to the level considered desirable by that Department, but that recruitment delays and difficulties have aggravated the position. The Committee also notes that proposals have recently been made to the Department of the Public Service for recruitment of additional staff to overtake arrears of work and to cope with the expansion in the audit work load.

The Committee considers that the matter of bringing the audit of the accounts of all local authorities up to date is one of some urgency, especially having regard to the increased funding of local authorities by the Exchequer in recent years. It trusts that this position will be achieved as quickly as possible.

Local Government—Overissues of Housing Subsidy

14. The Committee notes that, with effect from 1 January 1977, the basis of housing subsidy was changed to 100% recoupment of loan charges due to the Office of Public Works, payment being made on account pending verification of local authority claims, and that payments made in 1977 were adjusted to take account of any established overissues that had occurred in preceding years. The Committee also notes that all pre-1977 overissues established up to December 1978 have been recovered in full. It would like to be informed, however, of the number of cases in which the position in regard to pre-1977 subsidy payments has yet to be established and as to when it is expected that this will be done.

In its Report dated 26 April 1979 the Committee of Public Accounts expressed the view that the procedure formerly adopted by the Department of the Environment for the payment of housing subsidy was an undesirable one and urged that it not be adopted in any similar situations which might arise in the future. The Committee would welcome the views of the Minister for Finance on this matter.

Health Contributions

15. The Committee notes the measures which have been taken to improve the collection rate of health contributions and it trusts that these will prove effective.

The Committee is grateful for the memorandum, received subsequent to the Minute of the Minister for Finance, giving detailed information regarding the levels of collection and arrears of health contributions. It notes from this memorandum that the assessment of farmers in regard to liability to pay health contributions under the Health Contributions Acts, 1971 to 1978 and the difficulty of compiling and up-dating a comprehensive register of such farmers has posed many problems for the Health Boards such as determining a suitable base valuation level which, while excluding medical card holders and others entitled to claim exemption from liability to pay contributions, did not, at the same time, exclude others who had a liability to pay contributions. As a result, demands were issued to persons who were subsequently found to be holders of medical cards and to others who were entitled to claim exemption and many farmers were found on investigation to be either not liable or to be already paying health contributions as part of the social insurance stamp. While the Committee agrees that, because of these factors, the real position as regards collection levels should be better than is shown in the tables attached to the memorandum it is unable to accept that they fully explain the extremely low levels of collection of the South Eastern Health Board in 1973 (42.45%) or that of the Western Health Board for 1977 (48.64%). Neither can it accept that they fully explain the considerable divergencies between the levels of collection achieved by the different Health Boards in particular years nor indeed the divergencies between the levels achieved by individual Health Boards in the different years. Furthermore, the Committee cannot understand why information is still not available as to the effect of the corrections to their registers made by the Health Boards, with the result that an assessment cannot be made of the improvement in the collection rate which would be shown if the total value of demands issued were based on the registers as revised for each year. The Committee requests that such information be sought without delay and that it be informed of the true position regarding the levels of collection.

The Committee notes that a Working Party has been established to examine the overall systems relating to the collection of health contributions by Health Boards and that it is expected that, when this examination is completed and revised systems established, the results should be a strengthening of the existing systems and an improved collection rate. The Committee would hope that these very desirable ends will soon be achieved and it wishes to be kept informed of the progress made by the Working Party.

REPORT DATED 26 APRIL 1979

Superannuation and Retired Allowances

16. The Committee will await information regarding the signing by the Ministers concerned of the statutory schemes covering the payment of contributory and ex-gratia pensions to the dependants of certain public servants (other than Civil Servants)

Office of the Revenue Commissioners—Income Tax Outstanding

17. The Committee notes that the Minister for Finance is advised that less than 10 per cent of the tax shown as outstanding because of being under appeal or under inquiry relates to final assessments. It also notes that the principal reason for the increase in the amount of tax shown as “due for collection” at 31 May 1977 over the amounts due at 31 May 1976 was the increase in the total amount of tax in charge and that while the tax due for collection on these dates, expressed in money terms, increased by more than 75%, expressed as a percentage of the tax in charge, it only increased from 1.8 per cent to 2.4 per cent. The Committee further notes that not all of the tax shown as “due for collection” is in fact immediately collectible. It is glad to learn that the Minister is satisfied that there is no undue delay in pursuing collection of tax which is free for collection and that the performance of the enforcement agencies in clearing the arrears reported to them is kept under review, steps considered necessary to maintain a satisfactory rate of clearance being taken as quickly as possible.

The Committee understands that the Revenue Commissioners, following consultation with the Comptroller and Auditor General, have devised a new format for the analysis of tax outstanding which is intended to give a more accurate and informative picture. The Committee will consider this matter further when the Appropriation Accounts for 1978 together with the Report of the Comptroller and Auditor General thereon are referred to it for examination and report.

Wealth Tax—Delay in Submitting Returns

18. The Committee notes that the Minister is advised that the Revenue Commissioners are aware that at 30 April 1979 wealth tax had not yet been formally assessed in some 2,370 cases, comprising 170 cases where completed returns had been received and were in process of being dealt with on that date and 2,200 cases in which returns remained outstanding but in which payments on account of tax amounting to £3,260,000 had been made. The Committee would urge that every effort be made to process these outstanding cases and wishes to be kept informed of progress made in this matter.

Posts and Telegraphs—Cable Television Fees and Television Licence Defaulters

19. The Committee notes that the Minister for Finance has been informed that all practicable steps are being taken by the Department of Posts and Telegraphs to ensure that the provisions of the relevant regulations are complied with by all cable television licensees and that since May 1978 there had been a substantial improvement in the position generally.

It also notes the extent to which the statutory quarterly payments and annual returns were outstanding at 31 December 1978 and it urges that the Department of Posts and Telegraphs should continue to exert all possible pressure, including the institution of legal proceedings where necessary, to ensure the prompt payment of fees and submission of annual returns by licensees.

In regard to the detection of defaulters in the matter of payment of licence fees on television sets the Committee welcomes the assurance that cable television operators are required, as a condition of their licence, to furnish the names and addresses of persons having television sets which are connected to their cable system and that the information supplied by the licensees is used to assist in the detection of unlicensed television sets. Having regard, however, to the fact that some cable television operators fail to comply with their statutory obligations in regard to the payment of quarterly fees and the submission of annual returns of their gross revenue the Committee would welcome particulars regarding the extent to which cable television operators submit information relating to the users of their service as required by the conditions of their licences.

Local Government

20. The Committee is pleased to note that efforts to improve the financial control procedures of local authorities are continuing and that of the eight Finance Officer posts already approved, one has been filled and competitions have been held for five others. It also notes that it is proposed to create posts of Finance Officer in other local authorities as suitable opportunities arise.

Local Government—Housing Subsidy Rent Arrears

21. The Committee notes that, apart from one local authority, arrears of local authority housing rents have been collected except for small amounts which are equivalent to those traditionally written off and therefore properly subsidisable in the period 1973 to 1976. The Committee also notes that in the case of the local authority whose arrears had not yet been collected certain proposals for the recovery of the amount outstanding have been made to the Department of Finance and are being considered.

The Committee wishes to be informed of the outcome of these proposals.

Office of the Minister for Education—Higher Education Grants

22. The Committee notes that the Minister for Finance has been informed by the Department of Education that the position of the Accounting Officer in this matter, as indicated in his evidence to the Committee, is that the decision of the Minister for Education on the action of the local authority concerned was taken in the exercise of his ministerial authority. It also notes that the Minister for Finance considers that, in view of the implications for control of public expenditure referred to by the Committee, further investigation of the matter is warranted. The Committee further notes that the Department of Education has furnished to the Department of Finance, at its request, a list of the names and addresses of grantees approved by the local authority concerned in a typical year between 1970 and 1976 and that it was also suggested to the Department of Education that all local authorities should in future be asked to distinguish between “adjacent” and “non-adjacent” grantees when submitting annual lists of new awards.

When the Accounting Officer of the Department of Finance was before the Committee in connection with the 1977 Appropriation Accounts it took the opportunity of discussing with him the explanation given by the Department of Education for its action in this case, which could be interpreted as removing accountability from the Accounting Officer concerned. The Accounting Officer of the Department of Finance agreed that there could be a very delicate matter of principle involved and that when the matter was fully investigated by his Department he would report back to the Committee if it should be established that a matter of principle was in fact involved. The Committee wishes to be informed of the outcome of this investigation which it trusts will be completed without further delay.

Secondary Education

23. The Committee notes that the Department of Education has informed the Minister for Finance that the shortcomings in the financial administration of some comprehensive and community schools have been corrected and that arrangements have been made for improved control by the Department in future. The Committee is pleased that the Minister for Finance shares its concern in relation to the arrangements for monitoring the expenditure incurred by these schools and that he agrees that these should be strengthened. The Committee also notes that the establishment of an internal audit unit within the Department of Education will be examined in the light of the Report of an inter-departmental committee which is considering the general question of setting up such units in Departments. The Committee wishes to be kept informed of developments in this matter.

Residential Homes and Special Schools

24. The Committee notes that a proposal from the Department of Education seeking the covering sanction of the Minister for Finance to pass unvouched expenditure of £647 as a charge against the Vote for Residential Homes and Special Schools is being considered. It also notes that its view that all officers responsible for examining financial records and accounts should be made fully aware of the scope and purpose of the checks to be carried out by them and should be fully informed generally in regard to their duties and responsibilities will be brought to the notice of all Accounting Officers.

Higher Education

25. The Committee notes that the Department of Education has indicated that the question of the defective external wall finish at the National College of Physical Education, Limerick is being pursued in accordance with counsel’s advice and that it is hoped to have this matter finalised before the end of 1979.

It also notes that the question of pursuing a claim in relation to the squash courts is being considered.

The Committee wishes to be informed of the outcome of these two claims and it also looks forward to receiving as soon as possible the information which it sought regarding the cost of variations on the building contract.

Roinn na Gaeltachta

26. The Committee welcomes the information that all Accounting Officers are being informed that the general principle of awarding public works’ contracts on the basis of competitive tendering should, as far as practicable, be adhered to, not only for projects which are fully funded by the Exchequer, but also for projects which are partially funded by the Exchequer. The Committee has had occasion to comment a number of times in recent years on the need for competitive tendering and it trusts that it will not have to refer to this matter again.

Public Works and Buildings

27. The Committee is pleased to note that the Minister for Finance shares its view that the resolution of stock control problems in the Furniture Division of the Office of Public Works lies primarily in the provision of adequate storage space and the recruitment of adequate staff. It also notes the steps being taken to secure the necessary accommodation and staff. While accepting that it may be difficult to resolve the problem in the short term because of other pressing accommodation needs the Committee hopes that the solution of the problems will not be unduly delayed.

28. In the circumstances outlined in the Minute of the Minister for Finance the Committee agrees that the production of separate accounts in respect of the Bourne Vincent Memorial Park, Killarney may be discontinued. It expects, of course, that the usual records such as livestock registers, inventories of equipment and machinery, stock records and records of farm produce produced, sold and consumed will continue to be maintained for control and audit purposes.

Defence

29. The Committee accepts that, as stated in the Minute of the Minister for Finance, the decision to purchase armoured personnel carriers from a native source of supply had obvious advantages and indeed it has already expressed itself as in favour of projects which aim at developing products and, in particular, capital products which can be substituted for imported products. While the Committee, of course, accepts that the cost of armoured personnel carriers falls within the ambit of the Vote for Defence it still has reservations about the use of moneys from this Vote to subsidise a research and development project. These reservations are strengthened by the narrations included in the relevant subhead i.e., Subhead H-Defensive Equipment which makes specific provision for ”equipment on order” and “equipment to be ordered”. The Committee is not aware that moneys from the subhead had previously been used to fund research and development projects or, indeed, whether specific provision for such a project was made in this subhead when the estimate was being approved. It would welcome information on this matter.

The Committee considers that if, as a matter of policy, it was considered desirable to make provision for a research and development project in the Vote for Defence, such provision should have been made in a separate subhead, if necessary by way of supplementary estimate. The matter would thus be brought to the specific attention of Dáil Éireann which would then be in a position to judge whether such a provision properly came within the ambit of the Vote for Defence.

The Committee notes from the Minute of the Minister for Finance that “the Accounting Officer is satisfied the matter was within the ambit of the Vote for Defence”. It would, however, welcome the view of the Minister for Finance on the matter especially in the light of its further comments.

The Committee is pleased to note that the Minister for Finance agrees generally with its view that in cases such as this it is desirable that all matters affecting the Exchequer should be appropriately provided for by formal contract arrangements and that due regard will be paid to the Committee’s views which are being brought to the specific attention of all Accounting Officers. The Committee accepts that the question of financial return to the Exchequer would be for consideration by reference to the detailed circumstances of each particular case and also the general State policy in regard to research and development. It must, however, record its dissatisfaction that this aspect does not appear to have been considered at all in the present case.

Lands

30. The Committee notes that the Minister for Finance has been assured by the Department of Agriculture that there is no question of the Farmers’ Retirement Scheme being misused as a means of getting a higher price for land than would be available if the holdings were acquired under the Land Purchase Acts. It fails to understand the assertion in the Minute of the Minister that it does not follow that if land was acquired compulsorily instead of under the Retirement Scheme the price obtainable would be lower. In the case of land acquired compulsorily the Land Commission must pay only the full market price whereas if it is acquired under the Farmers’ Retirement Scheme, in addition to this market price the Land Commission must pay a cash premium of 10 per cent and a life annuity, only a proportion of which is recoverable from the European Agricultural Guidance and Guarantee Fund, and then only in certain cases.

The Committee accepts that the main problem arising on the Farmers’ Retirement Scheme is the reallocation of holdings to development farmers and that there are difficulties in matching acquisitions and resales. It is clear that development farmers to whom Farmers’ Retirement Scheme lands can be allotted are not always available locally. It was indeed this very problem of the difficulty of reallocation which prompted the Committee to suggest that serious consideration should be given to refusing offers of land under the Farmers’ Retirement Scheme if the land being offered is not required for development farmers. The Committee indicated that it would welcome further comments from the Accounting Officer on the feasibility of this suggestion and it wishes to be informed whether it can expect such further comments.

The Committee would point out that it did not suggest that there is no departmental control over expenditure by the Land Commission on the purchase of land. It accepts that the Lay Commissioners, who are an integral part of the Department, must, in so far as their programme as a whole is concerned, operate within normal budgetary constraints. It also accepts that the amount available for cash purchases depends on the annual estimated allocation for this purpose in the Vote for Lands and that if payment is made through the medium of Land Bonds the bonds are created by Order of the Minister for Finance. What concerns the Committee is the position of the Accounting Officer who although accountable to Dáil Eireann for the moneys voted for land purchase, does not exercise control over the expenditure of such moneys in certain areas falling within the functions of the Commissioners. The Committee would welcome the views of the Department of Finance on this aspect of the Accounting Officer’s accountability.

Health

31. The Committee notes that, while the Department of Health holds the view that the question of adjusting the rebate on General Medical Services’ prescriptions could not be dealt with in isolation and that the retention of the existing arrangements as a whole gives, on balance, a financial advantage to the Exchequer, nevertheless, in deference to the views expressed by the Committee, it is arranging to obtain the advice of outside consultants in the matter generally but with particular reference to the level of rebates and discounts provided for under the existing arrangments for the supply of drugs and medicines for the Health Services.

The Committee wishes to express its satisfaction at this decision and it looks forward to receiving, in due course, information on the results following completion by the consultants of their assignment.

32. The Committee is glad to learn that the Minister for Finance shares its concern at the lack of monitoring of the arrangements under which doctors, in certain circumstances, are entitled to dispense drugs and medicines under the General Medical Services’ Scheme and that the Department of Health accepts that there is an urgent need for all Health Boards to have full-time pharmacists on their staffs to supervise these arrangements. The Committee appreciates the difficulties which the Health Boards are experiencing in recruiting full-time pharmacists, but it hopes that they will be appointed to all Health Boards with the minimum of delay. It would like to be kept informed of the progress being made in this matter.

Social Welfare

33. The Committee notes that the security arrangements which were brought into operation after the theft of the social welfare benefit cheques in 1976 have since been fully and constantly in operation. It trusts that they will prove effective.

34. The Committee welcomes the information that the cross-checking procedures which had fallen into disuse have been re-introduced and that the Minister for Finance agrees that the prescribed control procedures should be observed in all areas of the Department. The Committee will await information on the results of the overall survey of the Department’s control procedures which is being carried out at its suggestion.

35. The Committee welcomes the information that during the past two years the Department of Social Welfare has introduced a number of important security improvements relating to the handling of children’s allowance books and notes that these improvements have involved more regular checking and recording of books at all stages of operation between removal from stock and issue to beneficiaries. It also notes that additional precautions have been taken in relation to the destruction of discarded orders.

The Committee further notes that, in regard to its request that the controls over the processing of allowance orders should be such as are exercised over the handling of cash, the Minister understands from the Department of Social Welfare that the losses, which have come to light in the Department arising from the fraudulent encashment of children’s allowance orders, amount to only £6,000 whereas full implementation of the Committee’s request could involve significant extra staff and other costs. The Committee has difficulty in admitting the merit of this argument which appears to suggest that the level of control in any situation should be related to the actual losses coming to light rather than to the possibility of such losses being incurred having regard to the volume and value of transactions and the potential for fraud under the existing procedures.

While the Committee would hesitate to suggest that, in addition to the £6,000 losses which came to light, there may have been other losses which were not discovered because of deficiencies in control procedures it considers this to be a distinct possibility, one which would tend to point to a basic weakness in the Department’s line of argument. The Committee urges that the possibility of loss of public funds in this area, as in every other area, should be reduced to a minimum, if not entirely eliminated, and it must continue to express its concern until it is satisfied that this position has been reached.

The Committee welcomes the information that a full examination of the implications of its request is to be carried out and it will await the results of the examination.

The Committee also notes that the Minister for Finance is assured by the Department of Social Welfare that strict security measures are being taken in the other Branches of that Department involved in the issue of pension or allowance orders and that every opportunity is taken to improve security.

Overtime

36. The Committee commends the on-going efforts by the Department of the Public Service, as outlined in the Minute of the Minister for Finance, to curtail excessive expenditure by Departments on overtime in the non-industrial Civil Service and to substitute, where feasible, new posts for overtime. It welcomes the information that the Department of the Public Service will continue to press ahead with these efforts. The Committee accepts that the reasons for overtime working are often complex and that a simple solution to the problem of high expenditure on overtime is not always possible.

General

37. The Committee notes the position in regard to the difficulties experienced in filling vacancies in the Office of the Chief State Solicitor and in the Valuation Office. It also notes that the additional posts required to cope with work in the Department of Social Welfare and the Office of the Revenue Commissioners have already been sanctioned. It welcomes the information that, generally as regards staffing since mid-1977, the need for new posts has been examined in each Department and Office and that the Department of the Public Service is satisfied that the additional staff required by Departments, including staff to operate their financial systems, has now been provided. It also welcomes the information that that Department will ensure that any staff which may be needed to meet future developments in financial administration will be provided.

The Committee will await the further information promised on the amendment of the computer system in order to overcome difficulties in the reporting and recording of overpayments in the Department of Social Welfare and also on the examination by the Office of Public Works of the accommodation problems referred to by the Committee.

Possible Overlapping of some Activities between Departments and other State Agencies.

38. The Committee notes the comments of the Department of Foreign Affairs, Roinn na Gaeltachta and the Department of Agriculture in regard to its suggestion that there might be wasteful expenditure because of overlapping of activities between these Departments and certain State agencies or that there might be a danger of an organisation getting Exchequer funds from different agencies for the same work. It accepts the assurance that close liaison is exercised in such cases and that the risk of overlapping is therefore minimal. Nevertheless, the Committee feels that this is a matter on which constant vigilance is essential throughout the public sector and it therefore welcomes the information that the Minister is arranging to bring its views to the attention of all Accounting Officers with a view to taking appropriate action where necessary.

PART II—PARTICULAR ACCOUNTS

DEFENCE

Surplus Stores and Equipment

39. Stores and equipment which are considered surplus to Army requirements are disposed of on the recommendations of Boards of Survey i.e., boards set up by the Quartermaster-General and consisting of officers drawn from units and corps other than the ones in which the stores accumulated. Before recommending that stores or equipment be disposed of a Board of Survey must be quite certain that there is no other area of the Defence Forces in which they would have a transfer value. When the Comptroller and Auditor General drew attention to the fact that a number of items of equipment and stores held at the Corps of Engineers Stores, Curragh Command, which Boards of Survey had recommended for sale in the years from 1970 to 1973, were still in stock in September 1977, he was informed by the Accounting Officer that the delay in disposing of these items was due to the lack of a properly defined procedure for follow-up action on the reports of the Boards of Survey but that appropriate action had been taken to ensure that such delays would not arise in the future. In evidence before the Committee the Accounting Officer stated that, even though the decisions of the Boards of Survey had been obtained in these cases, no further action was taken and the stores had been allowed to accumulate.

The Committee assumes that the disposal of stores and equipment no longer required has been going on down the years. It therefore finds it difficult to understand why, in 1977, there should still have been a lack of a properly defined procedure for follow-up action on the reports of the Boards of Survey. It welcomes the information that this omission has since been corrected and it trusts that there will not be any further delay in taking such follow up action.

Helicopter Hiring Charges

40. The hiring charge for Army helicopters comprises an inclusive charge for flying time and a charge for non-flying time in respect of the crew. When the Comptroller and Auditor General drew attention to the delay in reviewing these charges which had last been fixed in 1969 and 1971, respectively, despite the increase in pay and allowances and in the cost of fuel which had taken place in the meantime, he was informed by the Accounting Officer that the matter was being examined by the Department’s professional accountant. He was subsequently informed in March 1979 that the charges had been increased. In evidence the Accounting Officer told the Committee that the charge in 1971 was £80 per hour and that it had now been increased to £165 per hour. He pointed out that Army helicopters are used for two purposes viz., air ambulance missions of which there are about 100 each year on average and commercial hireage where there is only an average of one each year. Since the hireage charge for the air ambulance service which is paid by the local health authority is recovered almost entirely from the Vote for Health the transaction is basically an inter-departmental one and the Department of Defence had suggested that it be covered by notes in the relevant Appropriation Accounts without any recoupment of charge.

The Committee would have no objection to this procedure if it can be adopted and if it would lessen the administrative work involved. It notes that the matter is being considered by the Departments of Defence, Finance and Health and it wishes to be informed of the outcome of this consideration. However, the Committee feels that the figure for the service rendered on behalf of the Department of Health and the charge for the occasional commercial hireage should be realistic and it recommends therefore that the Department of Defence should in future review the hiring charges at more regular intervals.

LABOUR

Employment Incentive Scheme

41. The Employment Incentive Scheme is intended to encourage employers to take on additional workers over and above the numbers employed by them at a base date. In order to qualify for the grants payable under the Scheme an employer must establish that the workers in respect of whom he applies are genuinely additional to his work force. A note to the Appropriation Account indicated that the take-up under the Scheme was less than provided for and the Accounting Officer told the Committee in evidence that, even though the Scheme was widely publicised, the response of employers was not as great as had been provided for. The Accounting Officer also explained that when the Scheme was introduced it was confined to the manufacturing industry because the view was taken at the time that it would be sufficient, as far as the expenditure of public money was concerned, to try to stimulate an increase in manufacturing industry and that other employment such as services should automatically follow. The view now is that employment can be generated in other occupations independent of industry, such as services, and many small firms were benefiting from the Scheme.

The Committee wonders, however, whether small firms which might be entitled to benefit from the Scheme lack the administrative resources to deal competently with the technicalities of the Scheme and process claims properly. The Accounting Officer stated that assistance required by claimants in the preparation of their claims is already given by officers of the Department. Nevertheless, he undertook to ascertain whether smaller firms lack advice on the matter. The Committee will await information on the outcome of this examination.

Grants-in-aid to AnCO

42. The estimate for the Department of Labour for 1977 included provisions totalling £11.65 million for grants-in-aid to AnCo. The total amount provided was issued during the year and the Committee considered whether there was any means by which it could get further information regarding the expenditure of the moneys provided. The Accounting Officer stated in evidence that the Department of Labour is always exploring opportunities of improving supervision over the expenditure of voted moneys of this kind and he pointed out that the accounts of AnCO are audited by the Comptroller and Auditor General. It must be borne in mind, however, that a body such as AnCO, set up under statute and having a statutory council, is fully conscious of and sometimes extremely jealous of its autonomy and that there is a very fine distinction between ensuring that funds are spent as intended by the Oireachtas and avoiding interference with the Council in its operations.

While accepting that statutory bodies such as AnCO must have a considerable degree of autonomy if they are to exercise their functions efficiently, the Committee is fully conscious of its own responsibility to satisfy itself that moneys voted by Parliament are expended in accordance with the intentions of Parliament. The Committee is aware that the accounts of certain State-sponsored bodies engaged in trading or commercial activities are now being examined by a Joint Oireachtas Committee, and it wonders whether any consideration has been given to the question of whether the accounts of non-trading State-sponsored bodies such as AnCO should be subjected to a similar type of scrutiny.

OFFICE OF THE REVENUE COMMISSIONERS

Computer File Records

43. The Comptroller and Auditor General drew attention to the failure to include in the computer file record maintained by the Revenue Commissioners up-to-date information on the tax collection status of some tax-payers. Failure to up-date the computer file record of a tax-payer could result in the non-pursuit of tax payable. The documentation necessary to amend or up-date a tax-payer’s file record must be prepared by the inspector and sent to the Collector General’s Office but it appeared that, in the cases brought to attention by the Comptroller and Auditor General, there was no record of such documentation having been received in that Office. Arising out of the Comptroller and Auditor General’s query the inspector was being requested to review the cases concerned. In evidence before the Committee the Accounting Officer explained that the problem had arisen because of a change in procedure which had been made in the interests of economy, but with which all inspectors had not been familiar. This position had, however, now been rectified and the Accounting Officer was satisfied that there would not be a recurrence of the problem to which the Comptroller and Auditor General had drawn attention.

While the Committee welcomes the Accounting Officer’s assurance in this matter it suggests that this case serves to indicate the importance of ensuring that, when control procedures are being altered, the officers responsible for the implementation of the new procedures fully understand how they should be operated. This is a matter that might well be brought to the notice of all Accounting Officers.

PAYE Income Tax Outstanding

44. Tax deducted under the PAYE system from the remuneration of employees is payable by employers to the Revenue Commissioners in the month following deduction and overdue tax is subject to a statutory interest charge. Statistics furnished to the Comptroller and Auditor General suggested that considerable sums of such tax and interest were outstanding. The Accounting Officer had informed the Comptroller and Auditor General that the outstanding balances of tax and interest consisted of actual and estimated underpayments, actual underpayments arising where the year-end documentation indicated that the tax remitted by an employer was less than the amount that should have been remitted and estimated underpayments arising where the year-end documentation had not been received or where the inspector considered that PAYE had not been properly operated by an employer. The Accounting Officer had pointed out that, while the raising of estimates was an essential and very effective method of forcing registered employers to submit the prescribed returns, it did not necessarily mean that there was a liability and often when the returns were eventually received they showed that, in fact, no liability existed.

The Comptroller and Auditor General informed the Committee that tables furnished by the Accounting Officer indicated that the total amount of PAYE income tax for the years 1960/61 to 1977/78 outstanding at 7 June 1978 was £51.4 million in some 55,000 cases and that the interest for those years outstanding at that date was £6.5 million in some 33,000 cases. Of the £51.4 million PAYE tax shown as outstanding, £40.6 million consisted of estimates, leaving £10.8 million actual underpayments which related to some 8,600 cases. The Committee can only assume that, in addition to the sum of £10.8 million actual underpayments established, a fairly large sum of the £40.6 million estimated underpayments will eventually be established as also due. It is seriously concerned at the extent to which employers, while deducting PAYE tax from the remuneration of their employees, are failing to pay over promptly the amounts so deducted to the Revenue Commissioners. It, therefore, urges that all possible steps be taken to ensure that defaulting employers comply with their statutory obligations in this matter.

The Comptroller and Auditor General also told the Committee that the arrears of PAYE are not included in the figures for outstanding income tax furnished annually to him by the Revenue Commissioners and included in his Report for the information of the Committee. They are omitted apparently because the Revenue Commissioners consider that PAYE arrears are not relevant in this connection consisting as they do mainly of estimates which, unlike income tax and corporation tax estimates, are only made where there is a default in remittances and/or returns at the end of the year. In evidence before the Committee the Accounting Officer agreed that information regarding actual PAYE tax underpayments should be furnished to the Committee and that the form in which this might be done could be decided in consultation with the Comptroller and Auditor General. The Committee therefore looks forward to receiving this additional information in future years.

Interest on Late Payment of PAYE Income Tax

45. The Comptroller and Auditor General’s Report also referred to the non-collection of statutory interest from employers who, although they had paid over to the Revenue Commissioners the PAYE income tax deducted by them, had not done so by the prescribed statutory dates. The interest which had not been collected related to the years from 1969/70 onwards and the Accounting Officer had informed the Comptroller and Auditor General that, as a general rule, enforcement action is not taken to recover interest alone, mainly because the referral of such cases to the enforcement agencies would cause serious overloading in those agencies and so interfere with their capability to deal with the more important cases involving arrears of tax and interest. The Accounting Officer had, however, indicated that in selected cases as, for example, cases where the tax involved is significant, outstanding interest is associated with the collection of tax which may be slipping into arrears and the threat to include all outstanding interest in legal proceedings has become a very successful deterrent against default in the payment of current tax.

In regard to the statutory provisions which impose interest on late payments of tax, the Accounting Officer stated in evidence before the Committee that, while the Revenue Commissioners have no precise statutory discretion to remit such interest, they regard themselves as having general discretion under the “Care and Management” provisions and they feel that the Oireachtas would not wish them to pursue payments where the cost of doing so would be greater than the amount recovered.

The Accounting Officer also stated in evidence that the Revenue Commissioners took the view that, in the case of Government Agencies which are dependent for their income on grants from other Government Departments, the collection of interest on late payment of PAYE would in effect be only a recycling of public moneys. The Comptroller and Auditor General informed the Committee, however, that included in the State-sponsored bodies which were not paying over PAYE deductions promptly were some which do not receive annual grants from public funds to meet their expenses but which are expected to generate their own revenue. Any concession granted by the Revenue Commissioners regarding PAYE interest could, therefore, be regarded as a form of hidden subsidy to such bodies. He was concerned to see the annual accounts of some State-sponsored bodies repeatedly showing PAYE due to the Revenue Commissioners among their creditors’ balances, indicating that they were using PAYE deductions to augment their cash flow. The Committee shares the Comptroller and Auditor General’s concern in this matter and requests that all State-sponsored bodies be reminded of their obligations to pay over PAYE income tax deductions promptly to the Revenue Commissioners.

The Committee has difficulty in accepting unreservedly the Accounting Officer’s view that the “Care and Management” provisions allow the Revenue Commissioners discretion not to pursue the collection of statutory interest on overdue PAYE. It feels that there must be some limits as to what these provisions can comprehend and it therefore wonders whether the general discretion which the Revenue Commissioners claim under these provisions would permit them to ignore the requirements of any tax legislation if they should feel justified in doing so on administrative grounds even though such legislation as, for instance, that relating to PAYE income tax, does not give them any general discretion.

The Committee would therefore welcome some clarification as to the extent of the powers of the Revenue Commissioners under the “Care and Management” provisions.

Interest on Overdue VAT

46. The Value-Added Tax Act, 1972 provides that tax collected by accountable persons which is not paid over to the Collector General of Revenue within the prescribed period is subject to an interest charge. In the course of audit the Comptroller and Auditor General noted that the collection of such interest was not being pursued in all cases and he sought the observations of the Accounting Officer. He informed the Comptroller and Auditor General that the standard procedures which are applied in relation to non-pursuit of interest on late payments of income tax and PAYE tax are also applied to interest on late payments of VAT. He stated that there could be considerable difficulties if the interest provisions were rigidly applied in every instance and that the goodwill of employers, on which the collection of these taxes so much depends, would be put at risk by such action. He further stated that it was considered that the interest provisions should be regarded as a means to achieving the prompt payment of the tax itself by utilising them to ensure that the larger employers do not become unpunctual in payment of tax and by adopting an approach whereby applications to have interest charges dropped are dealt with on their merits. The Accounting Officer added that the Revenue Commissioners, accordingly, were of the opinion that, in the exercise of their powers under the “Care and Management ” provisions, they were justified in not pursuing interest charges in cases where the circumstances outlined apply.

The Committee’s comments on the discretion claimed by the Commissioners under their “Care and Management” provisions in relation to the non-pursuit of interest on overdue PAYE income tax (see paragraph 45 of this Report) apply equally to the discretion claimed by them in relation to the non-pursuit of interest on overdue VAT and it, accordingly, awaits the clarification of the Revenue Commissioners powers under the “Care and Management” provisions.

Pay-Related Social Insurance Contributions

47. The Collector General of Revenue is responsible for the collection of pay-related social insurance contributions and of the statutory interest leviable on overdue contributions. The Accounting Officer informed the Comptroller and Auditor General that at 18 January 1978 contributions amounting to £6.6 million and interest amounting to £0.67 million were outstanding. He stated that these figures comprise actual and estimated amounts and that, as the figure for contributions outstanding included estimated amounts of £5 million, the actual contribution arrears were probably substantially below £6.6 million.

The Accounting Officer in evidence informed the Committee that in the interests of economic administration the aim had been to integrate the pay-related social welfare insurance collection completely with the PAYE income tax collection and that what had been said in regard to estimated assessments in relation to PAYE tax (see paragraph 44 of this Report) would apply equally to pay-related social insurance contributions. The Accounting Officer added that figures in respect of contributions and interest arrears would increase significantly in the future.

The Committee is concerned at the large amount of pay-related social insurance contributions already outstanding and at the prospect that this amount will increase considerably in the near future. While it accepts that a considerable part of this amount may represent an estimated figure it must assume that there is, nevertheless, a sizeable balance remaining, representing actual social insurance contributions which have been deducted from PAYE income tax-payers but which have not been paid over to the Collector General of Revenue for transmission to the Department of Social Welfare. The Committee can only describe as reprehensible the action of employers who, having deducted social insurance contributions from the wages of their employees, fail to pay over these contributions for crediting to the Social Insurance Fund. Not only is it concerned that such failure on the part of employers results in an increased shortfall in the Fund, which must be met from voted moneys, but it is also very seriously concerned lest such failure might jeopardise the right of employees to their entitlements under the Social Welfare Acts. The Committee wishes to be informed of the legal position of such employees.

The Committee appreciates the problem which the pursuit of arrears of pay-related social insurance contributions of the magnitude suggested by the Accounting Officer will create for the Revenue Commissioners and especially for their enforcement agencies which are already deeply involved in the pursuit of tax arrears. However, it must insist that all possible steps be taken to recover these contribution arrears and it would welcome information about the Commissioners intentions in this matter.

ENVIRONMENT

£1,000 Housing Grants

48. The Comptroller and Auditor General drew attention to the fact that legislation to validate the payment of grants of £1,000 to first-time owner occupiers of certain dwellings had not been enacted at the date of his Report. The Committee is aware that the Housing (Miscellaneous Provisions) Act, 1979, enacted in August 1979, empowers the Minister for the Environment to pay such grants, subject to such regulations as may be made by him. The Committee would welcome information regarding the making of the necessary regulations.

One of the conditions attaching to these grants is that an applicant must not have previously owned a house in this country or elsewhere. In evidence before the Committee the Accounting Officer agreed that there was difficulty in verifying that grant applicants fulfil this condition. For the purpose of such verification the Department maintains an index of people who had been paid grants for the purchase or reconstruction of houses and an applicant is required to make a statutory declaration that he did not own a house already. In the case of a person from abroad the Department is totally dependent on the statutory declaration and, in the last analysis, it relies on the integrity of the applicant. To go beyond that would involve the Department in costs disproportionate to the advantage to be gained. Even the maintenance of the central index is an expensive and rather delaying mechanism and may have to be dispensed with because it impedes the flow of work.

In its Report dated 21 April 1977 the Committee of Public Accounts referred to the need, when legislation is being prepared, to consider the administrative implications involved and it was assured that its views were being drawn to the attention of all Departments. The Committee considers that the difficulty which the Department of the Environment is experiencing in its efforts to satisfy itself that applicants for the £1,000 grants are first-time owner occupiers suggests that the administrative implications of this grant scheme were not sufficiently assessed before it was introduced. Failure to identify the genuine first-time owner occupiers among applicants could lead to the payment of grants to persons who are not eligible to receive them. The Committee would be glad to learn whether there are any other steps which the Department can take to prevent this happening and, if not, whether consideration has been given to the amendment of the conditions of the grant scheme.

SOCIAL WELFARE

Disability Benefit Payments

49. Payment of disability benefit is made by the Department of Social Welfare by means of a computerised payments system and the Comptroller and Auditor General reported that his staff had discovered a number of deficiencies in the control procedures in operation. As a result of these deficiencies it seemed that fictitious records might be created through the introduction of unauthorised data into the system and that, if such records were created, they might remain undetected. He also reported that the validity of cases passed for payment was not always properly established and that the checking of error reports produced by the computer had fallen into disuse. The Comptroller and Auditor General told the Committee that the Accounting Officer had informed him that steps had since been taken to re-introduce controls in certain areas where they had been allowed to lapse and to introduce a further control by recording all disability payments on computer files. The Accounting Officer had stated that, following these improvements, he was satisfied that adequate organisational and supervisory arrangements existed to ensure the necessary degree of control. The Comptroller and Auditor General informed the Committee, however, that he had sought further clarification from the Accounting Officer on a number of matters and that the information furnished was being considered by him.

In evidence before the Committee the Accounting Officer stated that there was always a security problem even in pre-computer days. In regard to the video-terminals part of their difficulty was that staff in the benefits section must have unrestricted access to the videos to key in information. However, all possible precautions are taken, including the separation of duties, the rotation of staff and the insistence that a person keying in data was not checking that data. They had examined the question of restricting access to the computer terminals but found that this was not feasible due to pressure to meet payment deadlines. He stated that he was satisfied that there is now no way in which fictitious payments could be made because of control defects.

The Committee is concerned that in this instance, as indeed appears to be the case in other Departments, computerisation seems to have caused serious probems in the area of financial control and it wonders whether the Department of the Public Service, which it understands has overall responsibility for computerisation throughout the public service, has any comment to offer. The Committee notes that a number of matters relating to the conrol procedures in operation in the disability benefit payment system are being further considered by the Comptroller and Auditor General. No doubt when he has completed this examination he will report on any other matters arising which he considers should be brought to the attention of Dáil Éireann.

GARDA SÍOCHÁNA

Traffic Offence Notices

50. A notice issued to a motorist under section 103 of the Road Traffic Act, 1961 in respect of an alleged traffic offence represents an option offered to him either to pay a prescribed amount, in which case he will not be prosecuted for the alleged offence or, if he fails to make the payment, to remain liable to prosecution. The Comptroller and Auditor General reported that in a number of cases in which the prescribed amounts had not been paid the relevant notices had not been duly processed before the time limit for the issue of a summons had elapsed and, as a result, no further action could be taken. According to information given him by the Accounting Officer the estimated number of Section 103 notices not followed up in the previous three years were 1974—3,000, 1975—11,250, 1976—79,750. The Accounting Officer stated that, in some of these cases, the Garda Síochána and/or the local authority staff involved were unable, because of pressure of other work, to get to the stage of sending requests to the registration authority for the names of the registered owners of the vehicles before the six-months’ time limit for the issue of summonses had elapsed. In other cases they sent such requests but the registration authorities concerned did not furnish the required information quickly enough to enable the matter to be pursued further. Delays were caused in other cases by changes in car ownership. The delays involving Garda officers were due to the need to give priority to work relating to public security and to the prevention and detection of serious crime. The delay involving local authority staff arose from the refusal of certain staff of Dublin Corporation to work in the accommodation provided in Store Street Garda Station. The Accounting Officer added that all possible steps had been taken to improve the position and that, in the longer term, proposals for computerisation were being examined.

In evidence the Accounting Officer informed the Committee that for all practical purposes all such cases were now being followed up. There had been a change in the position recently when Dublin Corporation and Cork Corporation had decided to end their involvement in this work. He agreed that if failure to process Section 103 notices occurred in the case of a substantial proportion of those issued and extended over a period there might be a danger that the regulations would be brought into disrepute. If such failure existed on a scale when motorists began to ignore notices, knowing that there was a good chance that they would not be followed up, the situation would be unsatisfactory but, in fact, this had been brought under control.

The Committee must express serious concern at the situation which was allowed to develop in relation to Section 103 notices. It agrees with the view expressed by the Comptroller and Auditor General that the expenditure of public moneys on the issue of notices, which subsequently are not duly processed, could be regarded as nugatory. In regard to the view expressed by the Accounting Officer that the regulations might be brought into disrepute if the failure to process related to a significant number of notices and extended over a period, the Committee feels obliged to indicate its concern that such a situation may, in fact, have already been reached, having regard to the very substantial numbers of notices remaining unprocessed in the years 1974, 1975 and 1976. The Committee notes the statement of the Accounting Officer that the situation has been brought under control. It would welcome information regarding the estimated number of Section 103 notices not followed up in 1977 and 1978.

COURTS

District Court Offices

51. The Comptroller and Auditor General drew attention to long delays which had arisen in District Court Offices in issuing warrants in respect of unpaid fines. He stated that the Accounting Officer had informed him that it had been estimated from returns received from the District Court clerks that the total number of fine warrants due for issue at 31 December 1977 was 57,000 and that, on the basis of average fines imposed, this would represent unpaid fines in the region of £430,000. The Accounting Officer had also informed the Comptroller and Auditor General that the delay in the issue of warrants was, with other arrears of work in the District Court Offices, due to insufficient staff to cope with the very large increase in work-load in recent years. He had stated, however, that sanction for additional posts had been obtained between May 1977 and February 1978 and that it was expected that all of these posts would be filled by the end of 1978, thus enabling the problem of delays to be solved within a reasonable time.

In evidence before the Committee the Accounting Officer stated that the situation had improved considerably but had not been totally resolved. By the end of 1978 the figure of 57,000 for unissued warrants had been halved and a further substantial reduction had been achieved in 1979, but the position was still not satisfactory.

The Committee is concerned at the delay which arose in District Court Offices in the issuing of warrants in respect of unpaid fines. It notes the efforts which have been made to clear those arrears and it wishes to be kept informed of progress in this matter.

PUBLIC WORKS AND BUILDINGS

Income Tax Deducted from Rent Payments

52. Income tax is deducted by the Office of Public Works from rent payments made to persons whose usual place of abode is outside the State. Income tax so deducted is payable to the Revenue Commissioners and the Comptroller and Auditor General drew attention to delays in paying over deductions totalling £71,494 made between 1973 and 1977. The Accounting Officer, who agreed that the position was unsatisfactory, had informed the Comptroller and Auditor General that the assembling of the requisite data in relation to these deductions and the subsequent reconciliation of accounts as between the Office of Public Works and the Revenue Commissioners is a complicated and time-consuming process. Staffing difficulties in recent years had caused this work to fall into arrears which, notwithstanding extensive overtime working, it had not been possible to overtake. The Accounting Officer in evidence informed the Committee that the tax for the years from 1976-77 onwards had been paid over and that the arrears were being overtaken gradually.

It seems to the Committee that the deduction and paying over of income tax should be relatively simple and straight-forward and should be done as a routine matter. It fails to understand how it could involve a complicated and time-consuming process if it had been dealt with promptly. It wishes to be informed when the arrears have been cleared.

STAFFING DIFFICULTIES IN DEPARTMENTS AND OFFICES

53. In its Report dated 26 April 1979 the Public Accounts Committee referred to the staffing difficulties of a number of Departments and Offices which appeared to be giving rise to administrative difficulties and to shortcomings in financial administration. The Committee has since been informed that the Department of the Public Service was satisfied that the staff requirements of Departments had now been provided (see paragraph 37 of this Report). In the course of the Committee’s examination of the 1977 accounts the matter of inadequate staffing was again referred to by some Accounting Officers and the Committee was also told about the difficulties and delays experienced in filling vacancies in a number of Departments. The Accounting Officer of the Vote for the Civil Service Commission in evidence listed some of the difficulties which cause delays in recruiting staff e.g., the withdrawal at a late stage of a candidate who had been selected for a post thus necessitating a repetition of the selection process, the absence of any suitable candidate or the difficulty in setting up interview boards. He told the Committee that there had been repeated investigations, both by the Civil Service Commission itself and by officers of the Department of the Public Service, to determine whether procedures could be improved, but it appeared that there was very little further which could be done.

The Committee must express its concern at the delays being experienced by many Departments in recruiting staff, especially in the light of the serious problems which such delays give rise to in certain cases. As an example of this, the Committee recalls that when the Accounting Officer for the Vote for Public Works and Buildings was being examined by it he stated that he was seriously concerned that his Office did not have sufficient numbers of technically skilled staff to prepare the extensive drainage schemes for which EEC moneys amounting to several millions were available and that there was a danger that, because of shortage of staff, it might not be possible to derive the benefits to which the country was entitled as a member of the Community.

He indicated that, despite the fact that engineers on the staff were being diverted from surveying and other work to the preparation of these schemes, he was seriously concerned that they would have a hiatus in the preparation of schemes in the 1980’s unless they succeeded in recruiting additional staff.

This case, involving as it does the possible loss to the State of the benefits of such a large amount of EEC money, is a most disturbing example of the problems which can be created by difficulties in recruiting staff.

The Committee realises that these difficulties may not be easily overcome, but it would be most reluctant to accept that nothing more can be done or that all possibilities have been explored. It urges therefore that further consideration be given to this matter and it wishes to be informed of the outcome.

POSTS AND TELEGRAPHS

Bank Account

54. In accordance with Section 49 of the Central Bank Act, 1971 the account of the Exchequer was transferred to the Central Bank on 1 January 1972. The Comptroller and Auditor General drew attention to the fact that, while the accounts of various Government Departments were also transferred to the Central Bank subsequent to that date, the account of the Minister for Posts and Telegraphs is still maintained at a commercial bank as a current account and that the daily balances on this account throughout 1977 ranged between £3 million and £20 milion. The Accounting Officer had informed the Comptroller and Auditor General that, in relation to the turnover of the Department, the bank balances were not considered excessive and that the question of transferring the account to the Central Bank had been considered in consultation with the Department of Finance and the Bank in 1972 and 1973. It was found at that time, however, that the Central Bank would have encountered difficulties in servicing all Post Offices but the matter was again being considered in the context of a more general study of banking services. The Accounting Officer had also stated that the question of whether interest should be sought from the commercial bank concerned would be taken up if this study did not result in a transfer of the account to the Central Bank.

In evidence the Accounting Officer explained that the balances arise mainly in connection with Social Welfare payments which the Department of Posts and Telegraphs makes on an agency basis for the Department of Social Welfare. They occur mainly at weekends when very large sums, of the order of £5 million, are received for old age pensions etc. In addition, about £4 million is received for children’s allowances for payment on the first Tuesday of each month. The Department of Posts and Telegraphs lodges all these moneys with the commercial bank which, in turn, channels the funds to the various local Post Offices.

In this way the bank concerned provides the Department with a useful service in various areas where it is a major problem to keep local Post Offices in funds for Social Welfare payments of various kinds. These large balances have been a fairly recent occurrence because Social Welfare payments have risen steeply in recent years and the demands being made by his Department on the commercial bank have risen correspondingly. Consequently, if interest were to be sought by the Department from the bank there would, in the Accounting Officer’s opinion, be some counterbalancing claim to be made by the bank in respect of the services given by it at no charge. The Accounting Officer also informed the Committee that discussions with the Department of Finance on the possibility of transferring the funds to the Central Bank indicated that that Bank was not in a position to serve local post offices throughout the country, but that an inter-departmental study of the position had been undertaken and the Department of Posts and Telegraphs was awaiting the outcome of this study which was expected to be available shortly.

The Committee appreciates how essential it is that the Department of Posts and Telegraphs has the necessary financial services available to its various Post Offices. On the other hand, it is aware that the loss to the Exchequer of interest on the very sizeable daily balances held by the Department could be significant. It would hope, however, that the interest of the Exchequer could be met without interfering unduly with the Department’s local requirements and it will await the result of the inter-departmental study of the position.

SECONDARY EDUCATION

Community and Comprehensive Schools—Registration of Minister’s Title

55. The Comptroller and Auditor General drew attention to delays in the registration of the title of the Minister for Education to the sites acquired for a number of comprehensive and community schools.

It appeared that, out of a total of forty-six sites acquired, registration of the Minister’s title could not be verified in twenty-three cases. In five of these cases the sales had been closed for more than two years and in nine other cases the Comptroller and Auditor General was unable to establish whether the sales had been closed or not. The Comptroller and Auditor General also drew attention to the absence of a permanent record of comprehensive and community school properties in which the Minister for Education has an interest and he had been assured by the Accounting Officer that arrangements were being made to set up and maintain a departmental property register.

The Comptroller and Auditor General told the Committee that since the date of his Report some progress had been made in the registration of the Minister’s title to these sites but that there were still thirteen cases in which title remained unregistered and two cases in which the sales had not been closed. The Accounting Officer in evidence stated that legal formalities were causing the delays and that the Department of Education had to depend on the Attorney General’s and the Chief State Solicitor’s Offices to complete these formalities.

The Committee accepts that the Department of Education, as stated by the Accounting Officer, regards the buiding of these schools as a priority which must go ahead even though all the legal formalities may not have been completed. Nevertheless, it must express its concern at the delays which have arisen and it urges that all possible steps be taken to expedite the registration of title in the outstanding cases. It wishes to be kept informed of progress in this matter.

MISCELLANEOUS EXPENSES

Irish Trust Bank Limited

56. The Committee discussed with the Accounting Officer for this Vote the recoupment made to the Central Bank of Ireland of the payments made by it to the Liquidator of the Irish Trust Bank Limited to enable him to repay to certain depositors the amounts of their deposits with the Irish Trust Bank Limited on 19 February 1976. The Accounting Officer informed the Committee that the Central Bank had made all the payments to the liquidator on behalf of the Minister. It was envisaged that the Bank itself would finally bear £996,000 of the charge and the balance of £1.8 million was expected to be a final charge on voted moneys. The Committee understands that legislation to validate the payments made by the Central Bank to the liquidator has not yet been enacted. It therefore wonders whether, in these circumstances, recoupment can validly be made from voted moneys of payments which were themselves made without due statutory authority and it would welcome the views of the Minister for Finance on this aspect of the matter.

INTERNATIONAL CO-OPERATION

Aid for Developing Countries

57. This Account includes expenditure under two subheads relating to aid to developing countries viz. Subhead E—Payment to Grant-in-Aid Fund for Bilateral and Other Aid Contributions for Developing Countries and Subhead F—Payments for the Benefit of Developing Countries arising from Membership of the EEC, and the Committee suggested to the Accounting Officer when he came before it for examination that some details might be given as to how these moneys were spent.

The Accounting Officer explained in evidence that the expenditure under Subhead F arises from demands which Ireland is obliged to meet under its EEC obligations, whereas under Subhead E we are free to determine for ourselves how the money provided should be expended. The Department has been building up a national bilateral aid effort over recent years and has a Division engaged on this work as well as having an officer abroad in a priority area in order to examine the proposals made to the Department and to establish projects which the Department could be sure of dealing with properly. It was intended that, in the future, officers would be located in a few key areas so that first-hand information would be available as to what projects were desirable and on the carrying through of projects. The Accounting Officer also informed the Committee that the 1977 programme of bilateral aid was concentrated in four priority countries viz., Lesotho, The Sudan, Tanzania and Zambia, and the Department was continuing to concentrate on these areas. At the Committee’s request, however, the Accounting Officer undertook to produce annually a listing giving information as to the projects on which expenditure was incurred from these subheads and on their location. The Committee is satisfied with this arrangement.

INDUSTRY, COMMERCE AND ENERGY

National Film Studios of Ireland Limited

58. In the years 1975 to 1977 a total of £613,000 was paid from voted moneys towards the administration and general expenses of the National Film Studios of Ireland Limited, a private company which was set up in 1975 to take over the management of Ardmore Studios and which continued to experience financial difficulties during those years. The Comptroller and Auditor General told the Committee that the accounts of the company for 1977 showed a net loss of £343,000. The Accounting Officer, in evidence, stated that the losses arose because the Company depends very much upon the amount of business it can procure for the studios by enticing film makers to use them. The extent to which this can be achieved is subject to wide fluctuations. While in the early stages the company had some success it has found it increasingly difficult to get a sufficient volume of business into the studios, mainly because of competition from other countries which are able to offer facilities which are equally good if not better than ours. Arising out of studies carried out by a consultant further plans were being considered inter-departmentally with a view to producing additional business for the studios but, while the setting up of the studios and the provision of equipment and fittings was a relatively straight-forward exercise, enticing film makers from abroad to use these facilities was a difficult task, because the film business is a very competitive one and most countries seem to be happy to lose, for prestige reasons, very considerable amounts of money on the provision of facilities for film makers. While losses had been incurred practically every year so far and were likely to be incurred repeatedly in the future, the Accounting Officer expressed the hope that profits might be made in some years. The Accounting Officer also pointed out that, had the proposed legislation been enacted as soon as the company was set up, moneys could have been provided by way of share capital but difficulties had arisen in connection with the legislation mainly because of disagreement among the interested parties as to what the content of the legislation should be. He also explained to the Committee that the number of people employed by the studios varied considerably, depending on the volume of business. The Department was seriously concerned about the losses in this enterprise, about which there had been a considerable amount of inter-departmental debate and agonising.

The Committee recognises that the business of film making is a rather volatile one but it must express its serious concern at the continuing losses suffered by the National Film Studios of Ireland Limited. It appears to the Committee that public moneys are being spent on keeping alive a business which simply would not survive in the private commercial field. Furthermore, since it is commonly known that studios of this kind throughout the world are closing down, what is being done in this case could possibly be regarded as more in the nature of a public relations operation than the creation of a viable industry. The question which, therefore, concerns the Committee in this case is the extent to which public moneys should continue to be spent on prestige and status and it feels therefore that, because of the grave doubts as to the viability of the National Film Studios of Ireland Limited, a speedy decision must be made as to the future involvement of the State in this enterprise. The Committee wishes to be kept informed on this matter.

Offshore Exploration Licences for Oil and Gas

59. Section 8 of the Petroleum and Other Minerals Development Act, 1960 confers on the Minister for Industry, Commerce and Energy power to grant petroleum exploration licences and provides that, on the granting of a licence, the licensee shall pay to the Minister such consideraton therefor as the Minister, with the concurrence of the Minister for Finance, may determine. Section 58 of the Act provides that all moneys received by the Minister as consideration for any licence granted by him shall, as and when received, be paid into or disposed of for the benefit of the Exchequer in such manner as the Minister for Finance shall direct.

In 1975 terms and conditions applicable to the grant of exclusive offshore exploration licences for oil and gas were approved by the Government and published by the Minister. These provide for the payment of an application fee in respect of each licence applied for and for the payment of an annual rental during the life of each licence granted. The terms and conditions also provide that, in addition, an applicant may offer, inter alia,

(a)a commitment to establish industrial development projects,

(b)an agreement to State participation in excess of the maximum level set out in the licensing terms, and

(c)a signature bonus.

Offers made by licensees and accepted by the Minister under licensing agreements concluded in 1976 included,

(a)two to establish industrial undertakings within specified periods,

(b)one to undertake, at no cost to the State, a study regarding the establishment of an iron oxide manufacturing plant, and

(c)one to make an unsecured and interest-free loan to an existing mining company.

In regard to compliance with the provisions of Section 8 of the Petroleum and Other Minerals Development Act, 1960 in relation to these offers, the Accounting Officer had informed the Comptroller and Auditor General that they did not constitute consideration for the grant of the relevant licences and were therefore outside the scope of the provisions of that Section. Informal legal advice had been obtained to this effect from an officer of the Attorney General’s Office who had been advising the Department on the legal aspects of the licensing agreements and the Accounting Officer was therefore satisfied that these additional offers did not fall to be accounted for in accordance with Section 8 of the Act.

In evidence the Accounting Officer informed the Committee that all of the commitments entered into by the licensees were honoured in so far as the time for discharging these obligations had actually passed and that all of the accounting arrangements that they had adopted for the funds which were paid by the licensees were the subject of discussion with the Department of Finance and the Department of the Public Service. As to what is meant by the “consideration” to be determined under Section 8 of the 1960 Act, the Accounting Officer took the view that what was set out in the licensing terms, basically items like rental fees and area fees, they would regard as the consideration for the grant of licences. Those fees were determined in advance and were approved not only by the Department of Finance but by the Government and, so far as the Department was concerned, that satisfied the requirements of Section 8 of the Act. The licensing terms went on to provide that applicants for licences could make offers over and above those specified and although the Department did set out certain indicative headings under which these extra offers might be made, it was clear that the offers were not to be regarded as being limited to those headings. The Department would be prepared to consider any offer that would be made and the Accounting Officer considered that it would be most unfortunate if it were now to be decided that, because of some difficulties in accounting for offers of that kind, they should be rejected. There is a considerable amount of negotiation involved in the grant of licences and in the process of negotiation decisions have to be made as to whether offers ought to be accepted or not. The Department was trying to extract the best possible deal for the State but if it were obliged to consult the Department of Finance about every detail during the course of the negotiations it would, in the Accounting Officer’s opinion, be impossible to do business. The Department’s interpretation was that the legislature, in passing the Act of 1960, entrusted this business to the Minster for Industry, Commerce and Energy and it not only gave him the function of granting licences but vested in him the actual ownership of the petroleum. It also provided that the consideration for the grant of licences would be determined by the Minister with the concurrence of the Minister for Finance. There was no great problem for his Department in having inter-departmental consultations and getting agreement when it could be done in advance but there would be a problem with this procedure if, during the course of the negotiations, applicants were making offers over and above the predetermined consideration. The Accounting Officer was very strongly of the opinion that the more administrative restrictions imposed upon his Department in seeking inter-departmental approval the less efficiently it would be able to do this work because this was an area in which negotiations have to be carried on in a business-like way. Nevertheless, he stressed that his Department would be willing to comply with any accounting requirements which the Committee might specify.

The Comptroller and Auditor General explained to the Committee that, if these offers were to be regarded as something other than consideration for the grant of the licences, he was only concerned with the method by which they were to be accounted for. If Departments, not necessarily the Department of Industry, Commerce and Energy, were at liberty to make arrangements involving the transfer of money or money’s worth outside the normal procedures of Government financial control he could see difficulties arising from the point of view of public accountability.

The Committee recognises that the negotiations with the applicants for exclusive offshore exploration licences must be conducted in a business-like way and it has no wish to tie the hands of the Department of Industry, Commerce and Energy, which is responsible for conducting these negotiations by placing undue restrictions on the Department’s negotiators. Neither does it suggest in any way that extra offers over and above the application fees, the rental fees and the area fees should not be considered and accepted if they represent the best deal which the State can make. Indeed, the Committee would be adamant that the best possible deal should be made and it trusts public servants to negotiate deals which are favourable and to the benefit of the country as a whole. Nevertheless, it must point out that, when the property or rights of the State are disposed of for money or money’s worth, considerations of public accountability arise and these cannot be ignored. In regard to cash transactions which arise through the payment of the application fees, the annual rentals or the signature bonuses it appears that the requirements of public accountability are being fully met by accounting for all such amounts as appropriations-in-aid of the Vote. The problem arises with the other offers which do not represent the payment of cash to the Department and in respect of which, apparently, no formula has yet been devised to bring them to the notice of Parliament. Indeed, it could be that the Act of 1960 is deficient in that it does not appear to have envisaged anything other than cash being received from applicants for licences. However, the Committee does not consider that there should be any insurmountable difficulty in devising such a formula. The representative of the Department of Finance told the Committee that the question of accountability in relation to these offers has been under consideration by his Department but that its examination of the matter has not yet been completed. He stated that the Committee would be informed of the outcome in due course.

The Committee will await with interest further information on this matter which it regards as being of the utmost importance. The Committee considers that, since these offers were made and accepted in 1976, there has been more than ample time to examine all the issues involved and to reach a decision on them. It urges, therefore, that there be no further delay in this matter.

The Committee also suggests that consideration should be given to the question of whether the existing legislation needs to be amended in order to cope with the present practice whereby offers not involving cash transactions are accepted from licensees.

PADDY O’TOOLE,

Chairman

29th November, 1979