Committee Reports > List of Committees > Dáil > 1980 > Committee of Public Accounts > Report - Appropriation Accounts 1978

MIONTUAIRISC NA FINNEACHTA

(Minutes of Evidence)

Déardaoin, 13 Márta, 1980

The Committee met at 11 a.m.

Thursday, 13th March, 1980

DEPUTY O’TOOLE in the chair.

Mr. S. Mac Gearailt (An tArd Reachtaire Cuntas agus Ciste), Mr. B. Kissane and Mr. T. O’Connor (An Roinn Airgeadais), called and examined.

VOTE 16—VALUATION AND ORDNANCE SURVEY

Mr. D. F. Ryan called and examined.

71. Chairman.—On Subhead B.2—Office Machinery and other Office Supplies—you have an explanatory note that the expansion of computer activity did not take place to the extent anticipated. What is in mind there in relation to the expansion of computer activity?

—We made provision when we were making out the Estimates in July 1977 for the extension of computerisation. We had already dealt with the computerisation of the valuation lists and the rate books for Kerry, Kilkenny, Roscommon and County Borough of Cork, but the abolition of domestic rates put a question mark over what we should do with computerisation of the valuation lists and the rate books as a whole. The abolition of domestic rates is one thing and these are dependent on domestic valuations which are of the order of, perhaps, one million domestic items. We want to be quite sure where we are going and how we will deal with these in the future, and, as a result, the expansion of computerisation is more or less at a standstill until I get directions from the top.

72. Have directions come from the top at this stage? Has the position clarified itself?

—I am sure they will come when the time is appropriate, Chairman. I have not got them as yet.

73. Deputy Smith.—Have you got a telephone extension to your new building?

—No, I am sorry to say. I hope the Committee of Public Accounts may put in a good word for us somewhere, and do something about that.

74. Chairman.—We will make representations on your behalf.

—It is vital that we should have communications. It is bad for the public, the public representatives and everybody else if we want to talk to them and they want to talk to us and we cannot do so.

We will make the point to them concerning the facility.

VOTE 17—RATES ON GOVERNMENT PROPERTY

Mr. D. F. Ryan further examined.

75. Chairman.—On subhead B—Contributions towards Rates on Premises occupied by Representatives of External Governments—the explanatory note mentions an amount of refund arising from the abolition of domestic rates. The same position arises there in relation to the drop in expenditure?

—This arose in the same way. There was a 25 per cent reduction or remission on domestic rates in 1977. In 1978 we had the Local Government (Financial Provisions) Act, which was enacted with retrospective effect and which gave 100 per cent remission on domestic properties or hereditaments. As far as the contribution made by diplomats—the representatives of external Governments—is concerned, there are two elements involved, a beneficial and a non-beneficial. As well as that we had no real knowledge as to what the domestic content involved was. The domestic content now is clear and that payment would fall to the Department of the Environment the same as with private houses. As far as the embassies and other buildings are concerned, there are three categories. There are residences which are straightforward, there are mixed properties where there would be offices and residences and we do not know what the content is, and the third category is purely office accommodation. In the figure here the expenditure is mainly related to the non-domestic element. What has happened is that instead of falling within our Vote some of this money is falling within the Vote of the Department of the Environment, who deal with private houses.

76. In the case of the second category, concerning mixed hereditaments, a rule of thumb applied to that category, generally speaking, before domestic rates were separated from business rates. There was a ⅔ and a ⅓ remission. One got a ⅓ remission on the total assessed rate. That rule of thumb applied to buildings the Accounting Officer is talking about where there was a business cum domestic dwelling.

—The rule of thumb was ⅓ of the valuation or £18, whichever was the less, and that, of course, would apply to these as well. That is enshrined in the Local Government (Financial Provisions) Act, 1978. There is also provision for an appeal to me as Commissioner of Valuation if the figure of ⅓ or £ 18, whichever was the less, was not acceptable, so as to arrive at an appropriate figure. Representatives of external Governments have indeed looked to our Office in some cases for such apportionments, and the rule of thumb has been applied there as well.

77. In the case of foreign embassies have you access to them to verify an apportionment?

—We would go through Foreign Affairs before we would dream of going into any embassy. We would have access, but generally speaking we would rely on the information we got. What we are asked for is an apportionment and it is the function and the duty of the local authority as laid down in the 1978 Financial Provisions Act that they should assist and define, as far as possible, the domestic area. We would of course make an inspection where necessary and would do it through the appropriate channels, but we would not dream of walking into any embassy. It would be at variance with protocol.

The witness withdrew.

VOTE 4—CENTRAL STATISTICS OFFICE

Mr. T. P. Linehan called and examined.

78. Chairman.—On subhead B.2—Office Machinery and other Office Supplies—the note mentions expenditure on improved computer equipment not coming up to what was anticipated. The word “improved” intrigues me to some degree. Is the equipment obsolete or is the Accounting Officer talking about expansion?

—It is replacing the existing facility we had with a more modern one which has now been done. It was not installed at the time we had first anticipated so there was a saving in that respect.

79. Deputy Smith.—On subhead D— Collection of Statistics—in compiling the agricultural statistics, is there direct contact made with the Committees of Agriculture or direct investigation?

—It is directly organised by the Central Statistics Office, not through the County Committees.

The County Committees would be supplied with the statistical data when it became available?

—Yes, but they are not involved in the collection process.

The witness withdrew.

VOTE 9—PUBLIC WORKS AND BUILDINGS

Mr. S. S. Mac Cárthaigh called and examined.

80. Chairman.—Paragraph 21 of the Report of the Comptroller and Auditor General reads:

“Subhead E.—New Works, Alterations and Additions

In his minute dated 18 October 1978 the Minister for Finance informed the Committee of Public Accounts that arrangements had been made with the Commissioners of Public Works for the noting in the Appropriation Account of exceptional cases of expenditure incurred on the preparation of plans which are not proceeded with. When extending the limits of the delegated sanctions for expenditure by the Office of Public Works the Department of Finance directed that any case in which planning does not lead on to construction and in which, as a result, constructive losses of over £50,000 are incurred should be noted in the Appropriation Account. The Department of Finance, however, indicated that projects of a novel character or involving new principles would require its specific approval.

In the course of audit it was noted that the architects commissioned by the Office of Public Works to prepare plans etc. in connection with the building of a new headquarters for the Department of Defence were required to submit four sets of sketch schemes, the cost of the project based on the final set, which was accepted, being estimated at £4.3 million. Agreed fees of £49,500 were, however, paid in respect of the third scheme submitted and in the circumstances I have asked that the specific sanction of the Department of Finance be sought for this payment.”

Mr. Mac Gearailt.—The Committee of Public Accounts in their 1974 Report recommended that all cases where substantial sums are paid by the Commissioners of Public Works in respect of projects which are not proceeded with because of policy changes should be brought to the notice of Parliament by means of a suitable note in the Appropriation Account and the Minister for Finance in his Minute dated 18 October 1978 indicated that he agreed that exceptional cases of this nature should be so noted. The Commissioners were informed by the Department of Finance that where planning does not lead to construction and constructive losses of over £50,000 are incurred, these losses should be noted in the Appropriation Account.

This paragraph draws attention to a particular case in which fees amounting to £49,500 were paid to architects in respect of a set of plans which were subsequently abandoned. While this figure is below the minimum requiring noting, nevertheless, as the project is still proceeding on the basis of a further set of plans prepared by the architects who will be entitled to receive fees on the final cost of the project, estimated at £4.3 million, I asked that the specific sanction of the Minister for Finance be sought and this has now been obtained.

The Accounting Officer has informed me that the third set of plans prepared by the architects met the requirements of the Commissioners, suited the Department of Defence and satisfied the planning authority. Subsequent action by the Dublin Corporation arising out of their intention to widen the road adjoining the proposed site and their refusal to grant an adequate site extension to the Commissioners for this project necessitated a radical redesign of the Commissioners’ building scheme which could not have been foreseen. The Commissioners, therefore, considered that the payment of fees in respect of the third set of plans arose in the normal course.

81. Chairman.—In relation to the Comptroller and Auditor General’s observations on that paragraph, what is the present estimate of the final cost in this case?

—I have not got it with me.

82. You can send the Committee a note* on that. Have you got the fee in respect of that sum?

—No. We can give you a note* on that too.

83. Yes. The Comptroller and Auditor General has stated that subsequent action by Dublin Corporation arising out of the intention to widen the roads adjoining the proposed site led to complications. I presume Dublin Corporation as the planning authority would have had road alignment plans drawn up pretty early on. Was there any liaison with Dublin Corporation initially?

—There was. The original plans were prepared after consultation with the Corporation. The Corporation changed their road plans later.

On road realignment?

—Yes.

84. Deputy F. O’Brien.—Was the road we are talking about a proposal in the draft development plan?

—I am not sure.

85. Normally any major road proposals in the development plan are planned well in advance, that is why I am surprised that when plans were drawn up only then was the problem of the road discovered.

—We always consult the local authority before we prepare such development plans.

86. It surprises me that this was not discovered before the plans were drawn up. In some cases the proposals are ten or 15 years in advance of the plans. Were the plans drawn up and did consultations take place then?

—The very same thing has happened in the Phoenix Park extension. The Corporation have changed their minds about the road proposals there too. Originally when we prepared plans for the Phoenix Park extension we went on the basis of the Corporation’s plans at the time. They have changed them in the meantime.

87. What is the actual road alignment?

—I have not the details of that now.

I accept that the roads are a problem and sometimes the Corporation do not give sufficient information but generally where there are any long-term proposals sufficent information is given.

88. Chairman.—On the question of the fee for the plan which was subsequently abandoned an amount of £49,500 was mentioned. This fee was agreed on. The ceiling beyond which the Dáil would be notified is £50,000. I would like to ask Mr. Kissane of the Department of Finance if he would care to comment. If the £50,000 were all fees, as in this case they are obviously, what would be the value of the work involved?

Mr. Kissane.—We could not answer that. It would depend on what stage the plans had got to. The witness would be in a better position than I am to answer that.

89. Chairman.—The architect probably had to draw up from sketch plans for a project, and there is an agreed sum of £49,500. Had this work been finalised when it was discovered that, because of Dublin Corporation’s change of mind, the whole thing was abandoned?

—Yes.

90. Had that amount of money been spent?

—That would be the cost of the preparation of plans up to that date on a fee basis. It can be calculated by reference to the Institute of Architects’ scale of fees.

91. This was an agreed sum to complete the work?

—Yes, for work up to that date. But the architect continued with the planning of the project.

92. Deputy F. O’Brien.—Did the Accounting Officer negotiate that fee keeping a figure of less than £50,000 in mind to prevent possible noting in the Appropriation Account.

—That fee was negotiated before the Department of Finance sanction came. We often negotiate fees with people on that basis.

93. I take it that the request of the Comptroller and Auditor General to have the sanction sought has now been complied with?

—The sanction has been obtained.

94. Paragraph 22 of the Report of the Comptroller and Auditor General reads as follows:

“In May 1969 the Department of Finance sanctioned the acceptance, under the State Property Act, 1954, of Kilkenny Castle as a gift to the State and the expenditure of £25,000 on the first stage of restoration work on the castle. In August 1973 a contract for work on the castle was placed in the sum of £81,173. The work was completed at a cost of £356,821, exclusive of professional fees and V.A.T., and the final payment was made in June 1978.

In January 1979 I inquired as to the reason for the increase in cost. The Accounting Officer has informed me that the figure of £25,000 was in respect of restoration work on the Picture Gallery and the provision of limited reception and information facilities, while the contract figure of £81,173 included also the construction of a boiler house and a main electrical distribution system suitable to serve the whole castle. The figure of £356,821 represented an excess of £275,648 over the contract sum of £81,173 and comprised:—

Essential additional works arising directly from the contract were due to the age and neglected condition of the building. Moreover, because of the nature of the work, the specification and accepted tender had a large number of prime cost items and included works to be paid for on a time and materials basis, the cost of these being computed as the building was opened up and the work progressed. During the course of the work it also became apparent that wet-rot and dry-rot infestations were far more serious than had been anticipated, thus involving extensive chemical treatment and replacement of much of the timber. Also, while the works provided for in the original contract were in general designed to render the East Wing of the Castle safe and watertight, as the contract progressed it was decided to complete the restoration of two floors under the Picture Gallery in order to bring virtually the entire East Wing into use. This involved further wood-rot treatment, new ceiling and floorover in the entrance hall, plastering, floor finishes, repairs to diningroom, adaptation of ground floor and decoration throughout.

The sanction of the Department of Finance was obtained for expenditure of £310,000 in July 1976 and for the final cost in June 1979.”

Mr. Mac Gearailt.—Expenditure amounting to £356,000 was incurred on restoration work carried out on the East Wing of Kilkenny Castle for which a contract had been placed in the sum of £81,000.

The paragraph contains a breakdown of the excess expenditure of £275,000 and also the Accounting Officer’s explanation of the circumstances in which this excess arose.

95. Chairman.—On the general question of acceptance of gifts by the State, are premises inspected and are there conditions attaching normally to the acceptance? Does the donor normally make any specific request as to how it might be used?

—In this case, the understanding was that the castle would be restored and put into use. It is not in the document transferring it to us, but the understanding was that it should be restored and used.

There were no more specific instructions than that?

—No.

96. The Report of the Comptroller and Auditor General referred to the restoration of the East Wing. Does the work refer to the East Wing only?

—Yes.

97. What is the final estimate for the whole restoration?

—When we went to the Department of Finance for sanction to take this castle over in 1969 the estimate quoted for the restoration was £300,000. By 1976 building costs had more than doubled. Today that would be well over £1 million. The picture gallery is 150 feet long, 27 feet wide and 30 feet high. It has elaborate ceilings and beautiful paintings. We got very good value for the money spent. We had to advertise three times because we could get nobody to take the contract and eventually the contract was on little more than a time and material basis. When the work was opened up the contractor discovered that it had dry-rot and wetrot. It was in very bad condition. The walls had dry-rot and the floors were barely hanging on to the walls. We got a slow but good contractor and we got good value for money. The picture gallery is a magnificent room and the work necessary on it was enormous. As I have stated, the understanding when we took the castle over was that it would be restored and used. We gave the estimate of £300,000 and we mentioned that we would prepare plans for restoration. Our idea was to do it within ten years at the rate of £30,000 a year.

98. Were you aware at the time of taking it over that it had dry-rot and wet-rot?

—We were not aware that it was anything like as bad as it was. The stairway looked perfect but it was only hanging on to the walls and the ceiling over the entrance had to be shored up immediately we opened it as it was really dangerous. We knew there were spots of dry-rot in it, but we anticipated nothing like what was revealed when it was opened up. In many old buildings, we come across this problem. One can only estimate for what one sees, one cannot estimate on the basis of what one might find.

99. Deputy F. O’Brien.—In view of the fact that this has happened regularly is it not advisable to build in an additional cost on the basis of what one might find?

—It is dangerous to give estimators a chance to build in costs for works that they do not see. We must insist on their estimating on the basis of what they see and can measure. That principle is used as well in relation to under-water engineering works. It is the only way to have a contract for a work like that. The contractor was doing the work on Kilkenny Castle on a piece basis and that was the basis on which he was paid.

I agree that once one touches these old buildings one finds problems and that in some cases one must nearly rebuild the whole building. I know there is no way in which the Accounting Officer can have any accuracy in cost there.

100. Chairman.—What is the present position in relation to the reconstruction of the castle.

—The work done to date is very satisfactory. The number of visitors in 1976 was 12,000, in 1977 it was 49,000, in 1978 it was 74,000. Last year there was a drop in visitors generally. The number of exhibitions in the castle is growing every year. We use it entirely for art activities and for national purposes and the demand is very great. We have almost made up our minds as to what the central block might be used for. We will only restore it when we have a use in mind. When money is freely available again, we will probably put proposals for the restoration of the central block forward. One of the ideas is to have a design museum there.

You are to be complimented on the work already undertaken. The Committee might take a cultural hike down there and look at the restoration work.

101. Paragraph 23 of the Report of the Comptroller and Auditor General reads as follows:

“Subhead K.—Appropriations in Aid

In October 1973 the Department of Finance sanctioned the granting to the National College of Art and Design of a tenancy from 1 May 1972 of premises at Kildare Street, Dublin subject to the charging of an economic rent plus rates and cost of internal maintenance and services. As the tenancy agreement had not been completed nor rent collected by 31 December 1978 I sought the observations of the Accounting Officer on the delay. I also sought his observations on the adequacy of the controls in operation to ensure that all tenancy agreements are prepared and executed promptly.

He informed me that the delay in this case was due principally to the continuous and severe pressure under which the Property Management Division was working during the period in question. Because of the volume of work large numbers of files built up in the Division forming a block of long standing arrears and some files, including that relating to the National College of Art and Design, became misplaced. The more urgent cases had to receive priority and it was not possible to overtake the arrears in any systematic way. The seriousness of the situation could be judged from the fact that eight additional posts had been added to the complement of staff previously authorised for the Division. The Accounting Officer considers that with adequate staffing normal supervision is adequate to ensure that tenancy agreements are completed promptly.

The Accounting Officer added that the exceptional circumstances in the Division were responsible for the delay in the case of the National College of Art and Design but that steps had been taken to complete the necessary agreement.”

Mr. Mac Gearailt.—This paragraph draws attention to the failure on the part of the Office of Public Works over a period of six years to execute a tenancy agreement and to collect rent in respect of premises let to the National College of Art. The paragraph also contains the explanation of the Accounting Officer as to the cause of the delay.

102. Chairman.—Has the agreement now been signed?

—The agreement was sent to the College of Art in November 1979. They have not yet returned it although we have pressed them for it. There was a suggestion in the meantime that they would not be charged any rent up to February 1980 and the Department of Finance agreed with this. This may be one of the reasons why they have not returned the agreement. The idea now is that they will be charged rent from 1 February 1980.

103. This is fine so far as it is interdepartmental and there is no loss to the Exchequer in the long run, but this kind of thing happening in an outside agency would entail losses.

—Since the last time I was here we got an increase of nine in staff for the Property Division and the arrears have generally been overtaken now. The Chairman can take it that the position is satisfactory.

104. Paragraph 24 of the Report of the Comptroller and Auditor General reads as follows:

“Suspense Accounts

In the course of audit it was noted that £61,234, being balances of income tax and pay-related Social Insurance contributions deducted from the salaries of the staff of the Office of Public Works in the years 1973-74 to 1976-77, had not been paid over to the Revenue Commissioners by 31 December 1978. I have invited the observations of the Accounting Officer.”

Mr. Mac Gearailt.—This paragraph draws attention to the failure of the Office of Public Works to pay over to the Revenue Commissioners income tax and social welfare contributions deducted from the staff salaries. The sums involved totalled £61,234 and related to the period from 1973-74 to 1976-77. The Accounting Officer has informed me that staffing difficulties prevented his Office from establishing that all the sums listed in my query were, in fact, payable to the Revenue Commissioners. He also stated that the Commissioners were reluctant to accept a bulk payment on account in anticipation of the final reconciliation. I understand that some progress has been made in the matter of clearing up this unsatisfactory position.

105. Chairman.—What is the present position on the money owed to the Revenue Commissioners?

—The sum outstanding now is £14,000 on a gross payment of approximately £3.5 million. The arrears arose mainly in 1975-76. Up to then we used to get from the Revenue Commissioners what was called “particulars delivered” relating to each account payable. In the middle of 1975-76 they changed to a system of sending a small slip in connection with each payment and at the end of the year they changed over to the PAYE system. Nearly all the arrears occurred in that period when our staffing numbers were not adequate to cope with two changes in the system in one year. The arrears are being overtaken on overtime at the moment. Of 48 clerical assistants working there on 1 April 1979 only 17 remain at present; 31 have left. Of the 31 replacements nine have left. We have a very abnormal turnover of staff. We have no trained, experienced staff there. Recently we have got an organisation officer and it is intended that he will look at that situation. He has been talking to people about putting some of the work on automatic processing of some sort. We just have not been able to keep staff in the accounts branch. Whether the arrears and overtime are driving the staff away or whether because of turnover of staff we are having the arrears it is very hard to say. The intention is that the organisation officer will deal with it as a priority assignment because something is seriously wrong there. The continuous overtime is self-defeating because it results in more illness and absences and it does not solve it. It is difficult to keep any service going on that basis. There was no loss by the State as this money was in use all the time. We reduced our drawings from our account—we have our own account in the bank—by the amount we had in hand so there was no loss to the State. This is money we have deducted from people’s wages and we must be careful with the deductions we make. We have asked the Revenue Commissioners what is the minimum accountancy arrangement they will accept for the payment. If there is not agreement we will pay over a certain sum anyway. The deductions are unlikely to be challenged now by the people from whom they were deducted.

106. Is the amount outstanding an agreed sum so far?

—It is not an agreed sum, that is the difficulty. We are left with only £14,000 out of £3.5 million.

107. The picture you paint of the problems in this section, to use your own words, is very serious. While you are trying to go on to ADP, what do you see as a solution to the problem?

—We have an organisation officer now who has some years training in organisation and certainly he will become involved in all these troublesome areas. He is doing the Furniture Branch as a first priority and his second priority will be to look at the Accounts Branch. I know he had discussions with the Department of the Public Service last week on the question of automatic data processing for part of the Accounts Branch.

We appreciate your difficulties and we hope you will be able to solve them. The Committee have been critical in the past of different agencies not giving the Revenue Commissioners what they are owed. In particular, we have been critical of private enterprise not paying its share. Regarding public bodies, while there is no loss in the long run from the book-keeping point of view, it is important that we are seen to pay our fair share which is demanded and agreed on. I hope that problem will resolve itself through your new staffing arrangements.

108. On subhead F.2.—Furniture, Fittings and Utensils—what is the present position? We have been talking about this before.

—We have failed to get a site to centralise the Stores, but we are negotiating for a building to replace the most difficult storage area, which is Bonham Street. The workforce are refusing to work there because of bad working conditions. We are negotiating at the moment for a building. In relation to staff, we advertised last year for staff and we got nobody. On yesterday’s paper we advertised again. We need two deputy superintendents, one of whom would be responsible entirely for stores and transport.

109. What do you think the problem is? Is it remuneration or is it suitability?

—Primarily remuneration. We are advertising now at a higher scale of pay.

110. Deputy F. O’Brien.—What grade of employment is this?

—It is still not very high. Deputy superintendent is the grade and the pay is about £6,000 per annum.

111. Do you feel that is the problem?

—It could be. That type of person with a knowledge of the different aspects of furniture and furnishings that we require might not be readily available either. We hope that we will be successful in getting somebody.

112. Chairman.—Have you advertised again?

—Yes.

113. Deputy Smith.—On subheads G.1.—Arterial Drainage—Surveys and G.2.—Arterial Drainage-Construction Works—is there any improvement in the recruitment of engineers for surveying?

—That is improving. There has been a significant improvement in the salary scales vis-à-vis the local authorities and semi-State bodies. There is still a restructuring of the engineers’ salaries to be done. If that was accomplished we would probably succeed in getting more engineers. There is an improvement since last year.

114. Why was it so difficult to get people on the Boyne scheme?

—Engineers?

No, it seems to be labourers?

—I do not know. We had the same problem on the Maigue. We just could not get them.

115. Deputy F. O’Brien.—On subhead H—Purchase and Maintenance of Engineering Plant and Machinery and Stores—£369,000 was overspent: it seems to be a very large sum of money in this case?

—That was in anticipation of the commencement of the Corrib-Mask-Robe. Sometimes after we have placed a contract for plant in the middle of a year we become aware that the plant need is going to rise in the next year and the prices are going up and we get in touch with the contractor and agree with him to supply additional plant at the old price, but generally we have to take delivery at once. In such circumstances it pays to take the plant at the previous contract prices.

Does it?

—It does.

116. Deputy Smith.—Are you satisfied with the dredging machinery and other equipment your office has and the work that it does compared to that which you get on hire? Are you satisfied that you have the right balance and proportion?

—Yes, the question of hire against purchase was investigated a number of times, and we are satisfied that purchase is right for us.

117. Chairman.—Is that the Accounting Officer’s thinking with regard to office accommodation?

—We would much prefer to build our own office accommodation. We have a big building programme of office accommodation and we hope to continue it.

118. On subhead F.3.—Rents, Rates, etc.—what is the current rate of rent per square foot? Is there any difference between the Dublin rate and rates in areas other than Dublin city?

—It is very nearly £6 per square foot now in Dublin.

It is generally cheaper in the country?

—Yes, it is generally. Although places like Galway are difficult, too.

It would go by housing?

—Yes. Some of the bigger cities are nearly as bad as Dublin. Often there is no accommodation available. Limerick is also bad.

119. On subhead F.4—Fuel, Light, Water, Cleaning Materials, etc.—the question of native fuel is a very topical question so far as it is possible to use it.

—I have those figures. About 64 per cent of our expenditure represents payments for electricity, 20 per cent represents payments for oil and ten per cent represents payments for turf, so 74 per cent is for native fuel. We get sanction to use oil when we have not the accommodation for turf storage.

120. Deputy F. O’Brien.—What is the 20 per cent expenditure on oil in actual figures?

—It is £500,000.

121. Has the Accounting Officer explored any ways of conservation?

—Yes, we have a committee working on that at the moment and we are introducing various ways of conserving heat and fuel.

122. I have been in one or two places recently where they are building incinerators to burn waste. There is a twofold saving, on waste disposal and on a very expensive imported material. This system is successful. If our economy is to survive we should cut back on oil consumption and the lead should be given by the State agencies.

—We have been dealing with the IIRS and we have used consultants on the question of fuel conservation.

Irish Ropes, for instance, have installed an incinerator and Motor Manufacturers on the Naas Road are in the process of putting one in although they are not a large company. Irish Ropes are at present saving £65,000 between saving on oil and on waste disposal. A few years ago we did not bother about the cost of oil but we must now. We should look outside the country, if necessary, for expertise to see what can be done.

123. Chairman.—On subhead J.1— National Monuments—on the question of security in relation to national monuments and their environs which possibly are as important as the monuments——

—A caretaker today is very costly and to protect a monument from vandalism one would want three caretakers because one caretaker can only work so many hours a day. Unless we get public opinion solidly behind us, there is no answer to vandalism. That is the only way that it will be stopped. It cannot be done by caretakers. I was once called out to a national monument where we had a caretaker about vandalism, and the caretaker there told me that the vandals knew when he came and went and when he was not there, they damaged the monument. The local people knew who the vandals were but they were seeking more caretaking to stop something they knew was happening and they knew who was responsible. The only way to stop it is to get public opinion behind us. We have a quarter of a million national monuments, probably more, and there is no way in which we can employ caretakers or gardaí to protect them all.

The only suggestion I can make is to undertake a sophisticated advertising campaign to get the message across to the public as to how important conservation of these monuments is.

Deputy F. O’Brien.—A national campaign for the conservation of monuments should be started off in the schools.

—I was in touch with the Garda Commissioner some time ago about the question of the protection of monuments in a certain area where there is valuable sculpture, and he advised not to give it any publicity as it would only make people aware of it, and they might start pilfering. An American offered £40,000 for a grave slab in a certain monument and there are hundreds of similar grave slabs throughout the country. We know that some have been taken.

Chairman.—A national failing unfortunately.

I thank the Accounting Officer for the schedule outlining all those details under subhead E*. I also thank him for his cooperation.

The witness withdrew.

VOTE 37—FISHERIES

Mr. A. W. Duggan called and examined.

124. Chairman.—Paragraph 38 of the Report of the Comptroller and Auditor General reads as follows:

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

EEC regulations provide for the payment from FEOGA of grants towards the cost of improvement works at fishery harbours. In 1974 such grants were approved in respect of works at the following harbours:

Twenty-five per cent of the cost of improvement works is normally met by the Local Authorities in whose areas the harbours are situated and seventy-five per cent from the Fisheries Vote. The FEOGA grants are payable to the Local Authorities but, when sanctioning expenditure on these harbours, the Department of Finance stipulated that the grants should be fully utilised to reduce the contribution from the Vote. As the works on these harbours have been completed at a cost of £530,000, approximately, of which £123,000 has been contributed by the three Local Authorities concerned, I have inquired regarding the collection and treatment of the FEOGA grants.”

Mr. Mac Gearailt.—The cost of the improvement works on the three harbours mentioned in this paragraph falls to be met, in accordance with Department of Finance directions, from three sources, the normal 25 per cent contributions from the local authorities concerned, FEOGA grants and the Fisheries Vote which is liable for the balance of the cost.

Although the works were apparently completed in 1974, 1976 and 1977, respectively, there was a delay in submitting claims for the FEOGA grants. I was informed by the Accounting Officer in January last that these claims had then been lodged with the Commission in Brussels but I am not aware whether the grants have yet been paid.

125. Chairman.—When were the claims for FEOGA grants submitted in this instance?

—The forms were completed and submitted in December last and we have not as yet any word of payment. We have confirmation from the EEC that our applications have been received and, so far as we are aware, they are all in order and we anticipate payment during the year.

126. The Comptroller and Auditor General mentioned the works as having been completed in one case as far back as 1974. Can you comment on the delay in submitting the claims in this case and in the subsequent cases of 1976 and 1977?

—This arose largely through the difficulty of agreeing and finalising figures with the OPW who carried out the work on our behalf. We did not get that completed until the latter half of 1979. The application was made as soon as final figures became available from the Board of Works. The details demanded by the Commission are tremendous. Even the forms are horrifying in their complexity. Nevertheless, it is always possible to satisfy the Commission if you have the right figures and this was the difficulty in having the matter finally discharged.

127. The danger that I see, having some little knowledge about what goes on in Brussels and elsewhere within the EEC machinery, is that a delay of that nature could result in some change in the grant assistance from FEOGA or its abolition and you could find yourself left out in the cold as a result of the delay in submitting claims.

—You could indeed and that is a danger that we were very conscious of. We were anxious about it and we are fortunate in that there is no change and we got our scheme in. There is a fourth harbour which is also covered by FEOGA grant but that work has not gone ahead yet.

128. Paragraph 39 of the Report of the Comptroller and Auditor General reads as follows:

“Subhead E.—Inland Fisheries Development

Subhead I.—Expenditure in connection with acquisition of Fisheries

Subhead J.—Appropriations in Aid

The charge to Subhead I represents the cost of acquisition by the Department of the privately owned fishery known as the Galway Fishery. The fishery was acquired, with the approval of the Department of Finance, with a view to its utilisation for the better management of the salmon fisheries of the Corrib river and for the conduct of scientific investigations into salmon stocks. It is also envisaged that the fishery will continue to be used commercially. As stated in the note to the Appropriation Account a surplus of £44,768 was realised on the operation of the fishery from 1 February 1978 to 31 December 1978, running expenses of £16,287 being charged to Subhead E and receipts of £61,055 credited to Subhead J.”

Mr. Mac Gearailt.—This paragraph, which deals with the acquisition by the State of a privately owned fishery, is for information.

129. Chairman.—On subhead A.2— Consultancy Services—it seems that at present you might find yourself involved in the examination of different areas in regard to pollution. Has that now become the responsibility of the Department of the Environment, or what is the position there? What liaison is there between your Department and the Department of the Environment on this issue?

—There is close co-operation but there is a certain amount of overlap between the effect of the Water Pollution Act and some of the fisheries legislation. By agreement with the Department of the Environment, we have kept in force the fisheries powers that enable us to take prosecutions against polluters. This is an arrangement which works quite well through very close co-operation with the Department of the Environment. There are areas in which there is very real anxiety about pollution, particularly of valuable fisheries, but here again we are seeking solutions with the local authorities and with the Department of the Environment.

130. Where boats are required in connection with pollution investigation and the enforcement of the Water Pollution Act to take samples, it appears that private boats are being hired in many cases while at the same time you have boats owned by harbour boards and agencies like that lying idle and being paid for out of public funds. It is only a small thing, but this matter could be looked into to ensure that, where possible, a boat paid for out of public funds lying idle would be used by a local authority in relation to pollution investigation as against hiring a private craft.

—I do not know, but I will take note of the Chairman’s comment and I will bring it to the attention of the people involved on my side. Certainly we will take steps to avoid hiring boats in cases where there would be available boats which are provided out of public funds. I agree that this should be avoided.

131. Deputy Smith.—On subhead D.3—Repayment of Advances—the amount written off was considerably less than expected. Does that mean that for all previous years there was a write off of the order anticipated?

—This figure is difficult to estimate and we make the best shot we can. We are liable to be very far out. BIM resume possession in a certain number of cases where the arrears position is serious and we seek Department of Finance sanction for the loss involved. We may have a pretty big write off in a particular year. In other years with fishing going well the write-off is usually of lesser extent.

132. On foot of repayments, what percentage of the total investment would they represent?

—I have not got the figures at the moment but a question which was answered recently in the Dáil bore on this. I could look it up and send the Committee a note.* This might be a better way of dealing with it. I have not got the material here with me.

133. Chairman.—On subhead C.3— Main Fishery Harbour Works, including payments to the Fishery Harbour Centres Fund —an explanatory note says saving arose because works planned for Howth, Killybegs, Caherciveen, Greencastle, Skerries and Bere Island were not undertaken in 1978. There was a grant of £1.3 million and only a little over half of this was spent. Why was the work not undertaken in that year?

—I hate to blame another Department but we are in the hands of the Marine Division of the Board of Works. While there are plans and agreement for work to be undertaken, there are a lot of steps yet to be covered. There are many pitfalls before one gets results in the form of completed work and payments can be made from our Vote. The Board of Works have experienced quite a lot of difficulty in their marine works, particularly in recruitment of engineers and retaining their staff. In relation to the anticipated work at Howth and Killybegs, where big sums of money are to be expended, it was really only in 1979 that we got a major advance with Howth harbour. In Killybegs we have been bedevilled by the difficulty of getting contractors to carry out major engineering works, including the auction hall there. These are the kind of things that result in failure to spend the sums allocated.

While the Accounting Officer is quite within his rights to point the finger at the Office of Public Works I can appreciate the difficulties that they may have to face.

134. Where estimates are being prepared by the Accounting Officer’s Department and by the Office of Public Works for a particular scheme, I presume there is liaison maintained?

—Yes. They say what volume of work they expect to carry out in a particular year.

135. In this case, obviously they carried out only about half of what the Department had planned. It does not seem to be very good planning, at a time when there are economic stringencies, if money is voted and not spent. I accept that there are unforeseen difficulties that arise on the part of the Office of Public Works but greater liaison might obviate the necessity to be that far out in the Estimate?

—A contributory factor here is the fact that we have to prepare our Estimates a good deal further in advance now than used be the requirement. There is very genuine consultation with the Board of Works and the Department of Finance before the final Estimate is prepared. While there certainly is not any endeavour to pad out the provision, we find ourselves in a genuine difficulty in estimating for these expenditures so far in advance of the work being undertaken. There are several examples of this in relation to the harbours mentioned here and in relation to other smaller ones. The liaison with the Office of Public Works is quite strong and the staffs attempt to get down to hard estimation with the engineers. But we were very badly out in that year and in other years, as the Committee know. We will do our best to improve our methods of estimation but it is hard to see this as an area in which we can definitely get the result desired.

I appreciate that difficulties and unforeseen problems arise from year to year for the Office of Public Works trying to meet your requirements.

136. On subhead H—Grants under EEC Individual Projects Scheme—there were no projects obviously for FEOGA grant funding in that year?

—This is really a contingency provision which is put in against the possibility that private schemes will be undertaken and approved by the EEC for FEOGA funds.

VOTE 38—FORESTRY

Mr. A. W. Duggan further examined.

137. Chairman.—Paragraph 40 of the report of the Comptroller and Auditor General reads as follows:

“Subhead C.4.—Provision for Assistance to Irish Board Mills Limited (In Receivership)

At the request of the Department of Finance and pending the passing of a supplementary estimate, the Industrial Credit Company Ltd. agreed to make available to the Department of Fisheries and Forestry short-term finance to enable it to assist Irish Board Mills Ltd. (in Receivership) by maintaining the company as a going concern for the period 29 September to 31 December 1978 and, accordingly, funds totalling £350,000 were paid by the Industrial Credit Company Ltd. to the Receiver on foot of Bills of Exchange drawn on and accepted by the Department of Fisheries and Forestry. Following the passing of the supplementary estimate the sum of £350,000 together with interest thereon of £17,172 was repaid to the Industrial Credit Company Ltd. in December 1978 out of the Vote for Forestry and a further sum of £200,000 was also paid from the Vote to the Receiver.

I have inquired whether the provision of assistance to Irish Board Mills Ltd. comes within the ambit of the Vote for Forestry. I have also asked under what authority the Department of Fisheries and Forestry exercises borrowing powers and the circumstances in which such borrowing was carried out by the acceptance of Bills of Exchange. I have further sought information as to why the sums so borrowed were not paid into the Exchequer.”

Mr. Mac Gearailt.—This paragraph deals with the temporary funding from voted moneys of a private company in receivership. The decision to make these temporary funds available, which was taken by the Government, is a matter of policy which does not concern me. Certain aspects of the manner in which the funds were made available do, however, cause me some concern. For example, does the funding of this private company come within the ambit of the Vote for Forestry which was passed by Dáil Éireann “for salaries and expenses in connection with Forestry and for payment of certain grants-in-aid”. The Accounting Officer has informed me that section 9 of the Forestry Act, 1946, empowers the Minister to “establish and carry on or aid in the establishment and carrying on of woodland industries”. If it is agreed that activities of Irish Board Mills Limited can be regarded as “woodland industry” then its funding would appear to fall within the ambit of this Vote. If not, then a separate vote should have been taken.

The second and more serious aspect of this funding which concerns me is the borrowing of money by the Department of Fisheries and Forestry. The Accounting Officer accepts that his Department has no specific authority to borrow. Borrowing for Exchequer purposes has always been reserved to the Minister for Finance and even he must have the authority of Dáil Éireann to do so. The granting of borrowing powers to the Executive has long been regarded as the prerogative of Parliament. If individual Departments are permitted to borrow for their own purposes without statutory authority the control of the public finances by Dáil Éireann would be seriously undermined.

138. Chairman.—We are talking about borrowing without parliamentary authority. Firstly, why was there a need for borrowing at all in this case?

—This particular firm had got very much into difficulty. The Government were perturbed at the strong possibility that the firm would cease operations and a big number of men would be disemployed in Athy. The Government decided that, pending examination of the position in the industry, the plant should be kept going, if possible. They decided to advance a sum of £200,000 to ensure the continuance of that industry until a report would be furnished. The owners of the firm were, however, unwilling to accept certain conditions on which the money would be made available and, in the event, a receiver, was appointed and it was decided by the Government to fund him. At this stage the amount required to keep the company in operation had risen very substantially and a guarantee of up to £680,000 was required. We were in consultation with the Department of Industry, Commerce and Energy and the Department of Finance and we were seeking means of making funds available and the 1946 Forestry Act offered a way out. Section 9 to which the Comptroller and Auditor General has now referred provides that, subject to the consent, either general or particular, of the Minister for Finance, the Minister may do all or any of the following things, and subsection (h) of that section is “to establish and carry on or aid in carrying on of woodland industries”. This section was put to the Attorney General and he gave complete clearance on the propriety and legality of making funds available under it.

139. It came within the definition of woodland industry? Was that the Attorney General’s opinion?

—Yes. We then had to seek ways and means of making funds available. We had the power to provide the funds but had no provision in our Vote. Therefore, if the Government decision was to be implemented and if we were to follow their direction, there was need to make money available in advance of the Vote by the Dáil and the means which was there and which we used with the consent of the Department of Finance was via the Industrial Credit Company. We signed bills to the Industrial Credit Company for the various amounts required. It was a matter of expediency. We did not have any other means of getting funds; they had to be borrowed pending clearance by the Oireachtas. Following consultations with our partners, the other Government agencies involved, that was what we decided on.

140. So your borrowing was facilitated by means of the acceptance of the Bills of Exchange in the State. I accept the advice sought from the Attorney General’s Office on the definition of “woodland industry”. May I ask Mr. O’Connor from the Department of Finance was there any doubt in the mind of the Department of Finance at the time as to the approval given of the borrowing in this form prior to the Supplementary Estimate and approval by the Dáil. An agency tailor-made for this kind of thing is Fóir Teoranta, which would be the normal channel through which this kind of funding might go. Could Mr. O’Connor comment on the Department’s position on this?

Mr. O’Connor.—I do not think we were zealous about this particular device but, as the Accounting Officer says, we had to deal with the difficult situation of this firm, and the Government were very anxious that some medium should be used in order to provide funds at very short notice. We were in a difficulty in that the Department of Fisheries and Forestry, the Department who might help out in this area, had authority under the 1946 Act but had no money. So it was a question of trying in those difficult circumstances to devise some means to tide us over the period until such time as parliamentary approval was obtained. I do not regard this as ideal by any means. It is all a question of trying to deal with a difficult situation until such time as parliamentary approval is obtained.

141. Chairman.—Why did not Fóir Teoranta take up the issue and provide money at this stage?

Mr. O’Connor.—They were approached but they reckoned that they had gone to the limit of funding in accordance with their statutory authority and their board were not prepared to make further funds available to this firm.

142. On the basis of the whole project being non-viable?

Mr. O’Connor.—On the basis of their information on the possibility of the firm being made viable. We find ourselves in that sort of dilemma occasionally where Fóir are the natural agency to help out and sometimes they will feel that a case is just outside their terms of reference, their terms of reference being that they must have reasonable expectations that, if they put the money in, the firm will come round. Occasionally, we find a situation where Fóir say that, even though the case is difficult and employment is involved, they still feel they have either put in too much already or are not prepared to put in any more. In that type of situation the Government have their backs to the wall and are left in the dilemma where Fóir are there to help and are not prepared to help. Either that is the end of it, or they might feel that perhaps in this case the Government should go a little bit further. In that sort of situation the Government could intervene and use an agency other than Fóir because of special circumstances. In other words, there are some situations where Fóir feel that there is not sufficient justification to invest their funds and it then becomes a Government decision as to whether to leave it go to the wall or not. This does not happen very often. I am just trying to explain that there are cases when Fóir are not the last resort.

143. I am not questioning Fóir’s attitude. They act very responsibly in all those cases. They go to the ultimate and they have a duty in the area of accountability for expenditure. I am not questioning the decision of Government to intervene either. The net issue is the formula adopted to provide for the issuing of public money to this company. The Government are completely within their right to decide as they decided in this case. What is at issue is the way in which the thing was done without parliamentary approval. It raises serious questions as to the form this particular loan took. It was arranged without parliamentary approval. At what stage was the Supplementary Estimate sought for this amount of money?

—The first opportunity we had to bring it to the Dáil was 12 December 1978.

When was the money given?

—The first bill was signed on 9 October 1978.

But the Dáil would have been sitting by mid-October or a little later. I appreciate the difficulties in ordering the business of the House but the form adopted in giving this money at the time seems to be rather inappropriate. As Mr. O’Connor says, this does not happen very often.

144. Deputy F. O’Brien.—It is a reprehensible practice to give out money without any authority from the House, and when the House is asked to rubber stamp it on a particular date. This kind of thing does tend to undermine Parliament. The Committee should make their views felt strongly on this so that it will not happen again under any circumstances. The Supplementary Estimates should not take long to go through the House in cases of emergency. There is aways a facility whereby a Supplementary Estimate can be processed. That it was a question of jobs is not a good enough reason for this, although I know it is used as a good reason. But, given the flexibility allowed in circumstances like this where employment is concerned, there would certainly be no hold up of the Supplementary Estimate going through the House.

Mr. Mac Gearailt.—I am concerned with the borrowing in this case. While it is very undesirable, and something that the Committee do not like to happen, that moneys would be paid out of a Vote in anticipation of the Supplementary Estimate, it has happened before. It is a bigger sin that a Department should borrow without the authority of Parliament and, in borrowing, obviously pledge the credit of the Central Fund, because the only way the borrowing can be repaid is from the Central Fund. Furthermore, the Constitution says that all revenue of the State from whatever source must be paid into the Central Fund. This £350,000 borrowed from the Industrial Credit Corporation in this case went directly to the receiver. My main concern here is the question of control of borrowing and of the Exchequer Funds. The Committee’s view is that money should not be paid out in anticipation of the Supplementary Estimate except in very exceptional cases. There has, however, been a tradition in my Office that once the position was put right within the financial year we would pass it. In other words, if the money was paid out in anticipation of the Supplementary Estimate, because of extenuating circumstances, and my officers were satisfied that there were extenuating circumstances, we, as distinct from this Committee, would not raise it as an issue. What we certainly would raise as an issue in every case is borrowing by a Department without the authority of Parliament and for failure to pay the proceeds of borrowing into the Exchequer. Such action undermines all financial control by Parliament.

Chairman.—I thank the Comptroller and Auditor General for his comment. It is very helpful and I am sure note will be taken of it.

145. Paragraph 41 of the Report of the Comptroller and Auditor General reads as follows:

“As stated in the previous paragraph a total of £550,000 was provided from voted moneys to enable the Receiver of Irish Board Mills Ltd. to maintain the company as a going concern in the period 29 September to 31 December 1978. This arrangement was made with the Receiver on the understanding that receipts from sales of products manufactured during the receivership period would be used in recoupment or part recoupment of the advances made.

I inquired in April 1979 whether a Statement of Affairs of the company as at 28 September 1978 and Receivership Accounts to 31 December 1978 had yet been presented and I sought information as to the amount expected to be recouped to State funds.

I was informed, in June 1979, that no Statement of Affairs or Accounts were available. The State advances were made to enable the business of the company to be carried on between the date of the receivership and 31 December 1978. It was a condition of the advances that the surplus on trading in goods manufactured with the use of the funds should go to the repayment of those funds and the payment of interest thereon at 11 per cent, should the proceeds be in excess of the funds expended. I was also informed that the amount expected to be recouped to State funds will be of the order of £350,000.

In the light of the reply furnished by the Accounting Officer I have requested that information be sought from the Receiver as to when the Statement and Accounts will be available. I have also inquired whether the condition relating to repayment ensures that the State’s claim ranks in priority over any other claims which may be made against the proceeds of the sale of goods manufactured with the use of State funds and whether legal advice has been obtained in this matter. With regard to the expected recoupment of £350,000 I have inquired as to the steps taken to secure the repayment of the balance of the State advances remaining unpaid in the event of the company being wound up.”

Mr. Mac Gearailt.—This paragraph deals with the financial outcome of the State funding of Irish Board Mills Limited mentioned in paragraph 40.

As stated, advances totalling £550,000 were made to the Receiver to enable him to maintain the company up to 31 December 1978 on condition that the surplus on trading in goods produced with these advances should be used to repay the State funds together with interest at 11 per cent if the surplus was large enough.

Moneys refunded so far by the receiver amount to £251,000. These were repaid on the understanding that all or part of them might be reclaimable by the Receiver until such time as the final account had been determined and agreed. This sum of £251,000 represents the balance remaining of the State funds after the deficiency on trading had been met and provision made for other expenses of the Receiver. I understand that there is little likelihood of any further moneys being refunded by the Receiver.

I do not know whether the final account is yet available.

146. Chairman.—Is the final account available or what is the likelihood of getting any more money from that source?

—The final account is not yet available from the Receiver. We have been in touch with him constantly, of course, but we understand that we will get an account shortly. The final figure of £350,000 which he put tentatively now looks as if it will be considerably less and the total realised will hardly exceed £300,000. This is mainly for board which was manufactured during the period covered by our advances. His estimate of £350,000 was based on selling that on the home market. The home market went pretty sour and, in fact, he had to sell on foreign market at a far lower price. The board has been disposed of. He is making up the final accounts and, subject to clarification of the figure charged for his own work in the matter, we expect shortly to have a final account prepared but the net figure realised is not likely to exceed £300,000.

147. Do you expect much more from that source?

—No.

148. Paragraph 42 of the Report of the Comptroller and Auditor General reads as follows:

“Subhead J.—Appropriations in Aid. Sales of Timber

Up to the end of 1974 sales of timber from State forests were made on a cash basis, payment being made for material before it was removed from the forest. In view of the financial difficulties being experienced by firms in the timber trade the Minister for Finance agreed in February 1975 to the granting of two months’ credit on sales to creditworthy customers.

In the course of audit it was noted that at 1 February 1979 approximately £186,000 was due from three companies, in respect of timber purchased by them in 1977 and 1978 and I inquired regarding the steps being taken to recover these debts. I was informed that two of the companies are in receivership, one being the company referred to in the previous paragraph, and that the amounts owing in each case rank equally with the claims of all other unsecured creditors and must await the realisation by the Receivers of the assets of the companies and any distribution of funds arising therefrom. I was also informed that in the case of the third company the indebtedness is being kept under review with the verbal concurrence of the Department of Finance, pending the possible acquisition of the company by a new owner.”

Mr. Mac Gearailt.—Following a decision to change timber sales from a cash basis to credit sales in the case of certain companies, three companies at 1 February 1979 were in debt to the extent of £186,000 for timber purchased in 1977 and 1978. Two of the three companies are in receivership, one being Irish Board Mills Ltd. referred to in the previous paragraphs.

149. Chairman.—While the debt in respect of Irish Board Mills appears to be irrecoverable, what is the position in respect of the other companies in relation to the outstanding sum?

—There are two other firms involved. Chipboard Limited of Scarriff are still trading and we are dealing with them as a customer. Under a recent agreement in relation to our providing them with more timber, we have an arrangement to reduce their indebtedness at the rate of £1,000 a week. We anticipate that we will be able to get clear with Chipboard Limited.

150. Are they up to date in their repayments?

—They are generally dependable. Munster Chipboard are also in Receiver hands and the Receiver’s affairs have not been finalised. I could not even conjecture as to what the outcome there is going to be. The other firm involved is Kilrush Timber Products. We do not anticipate that we will get anything out of the realisation there. This is the present expectation.

151. So the position in respect of paragraph 42 is that nothing will be recoverable from Irish Board Mills and the Scarriff operation is satisfactory.

—They are still trading.

152. Paragraph 43 of the Report of the Comptroller and Auditor General’s reads:

“In the course of audit it was noted that a sum of £29,247 due from a company in respect of timber purchases included £16,377 in respect of an unauthorised issue of timber from a State forest in November 1977. As this unauthorised issue did not come to light until February 1978, by which time further authorised issues had been made on a short-term credit basis to the company concerned, I inquired as to the adequacy of the procedures in operation for the control of credit sales of timber. The Accounting Officer stated that, arising from the recession in trade in recent years together with the problem of large stocks of windblown timber as a result of storms in 1974/75, the normal procedures had been stretched to extremes to cope with the necessity to allow greater numbers of instalment payments on lots sold by tender and also to allow longer or extended periods in which to make payments. Furthermore additional problems were created by the increasing volume of timber becoming available from State forests, by the introduction of limited credit sales and by staffing difficulties arising from a strict embargo on the creation of new posts in the public service. The Accounting Officer also stated that since this case of unauthorised issue of timber came to light, control procedures had been adjusted with a view to the avoidance or at least the earlier detection of irregularities but that the position could not however be regarded as watertight until the staff situation had been remedied. He added that proposals on staffing are in course of formulation. I understand that the company concerned is also in receivership.”

Mr. Mac Gearailt.—This paragraph draws attention to a case in which a company received unauthorised issues of timber valued at £16,377 from a State forest. The observations of the Accounting Officer are included in the paragraph.

153. Chairman.—What is the position in respect of the unauthorised issues of timber? I presume lots were to be taken by customers over a period.

—It was released by an officer of the local forest centre without authority from headquarters and without knowledge of the people who were dealing with the account. The firm, by design or inadvertently, actually moved very quickly to shift timber from this lot once the forester had released the first part of it. We must admit the error of our staff here and this is something which we have yet to finalise and take up with the Department of Finance. The actual release of the timber was completely without authority given to the local officer.

154. How much money was involved here?

—On that sale the amount was £16,377.

And the prospects of recovery are nil?

—There is no prospect of getting anything.

155. Deputy Smith.—Where did it take place?

—In Clare.

156. May I ask a general question in relation to sales of timber from State forests? Assuming I purchase timber from a State forest, is there any obligation on me to remove that timber within a specific time? I have had reports, and I do not know whether they are accurate, that in some cases the timber has been allowed to develop for even a number of years before it is subsequently removed. If that is the pattern—I am not saying that it is—certainly it would have to be corrected?

—Of course, it is a pattern which we would not like to see adopted or practised at all. If you were a purchaser of timber you would be under contract to remove it over a specified period and if you were a customer with whom we were dealing for a number of years, you might well be paying on instalments according as you would remove it. If you broke your contract and fell behind either in removal or payment then action would be taken under the contract. Nevertheless, in a difficult period with the timber industry, particularly in regard to small dimension wood, we have had cases where, because trade was weak for the variety of timber, we had to give concessions in the way of deferring payments and allowing for extensions of periods of removal. It is regrettable but it is commonly practised. On the other hand we get some stuff which moves far quicker than set out in the terms of the contract. We are quite happy with this so long as we keep to the terms of the payments and we bring forward the payment dates also.

157. Chairman.—Was this a new customer in Clare?

—No. They were trading with us for some years.

158. There was no reason to believe that any problem might arise?

—No.

159. The Accounting Officer is satisfied that this customer was in good standing when the Department entered into a contract for delivery of timber?

—This is so. When we were dealing with them the firm seemed to be worthy of trust.

160. On subhead A.2—Consultancy Services—there was no expenditure?

—We had payments from a corresponding subhead in previous years. We put in a £10 contingency figure but we did not then have any expenditure.

161. On page 104—Grant-in-Aid Fund for the Acquisition of Land—

—Could I go back to subhead A.2? The figure in the original Estimate for consultancy services is actually £20,000. That figure was in because we anticipated having a joint survey done with the IDA.

162. This was designed to bear your costs?

—In the event that survey was carried out entirely from IDA funds and we did not have to contribute. That is the reason why in our Supplementary Estimate we took out the provision and just put in a £10 figure.

163. I was inquiring about the grant-in-aid in respect of the acquisition of land. There is expenditure of £776,120. What is the present position with acquisition? What kind of money is involved per acre? Are the Department finding the present land price a problem?

—We are meeting with difficulty in keeping up our acquisition and planting targets. The price of land is one of our difficulties but the main thing is that people do not want to sell land at the moment. We have, with the agreement of the Department of Finance, chased the market to a reasonable extent in increasing our price scale, but we have been less than successful over the past 12 months. It seems to be getting more difficult all the time. The kind of land we are buying was never of interest to normal agriculture but at the same time reclamation is always possible even though it is bad land. Where hill land can be improved there is every inducement to retain that land and not sell to us. We are meeting great difficulty and we have had to drop our planting programme to some extent.

164. A very general question, possibly bordering on policy, in relation to the energy situation at the moment. Are the Department becoming involved in this area of products for bio-mass production?

—We are involved there on a couple of fronts. We are subcontractors to research being carried out by An Foras Talúntais and we are involved also with Bord na Móna on north Mayo bogs. The experiments are at an early stage and we would not like to guess at this stage what the outcome will be, but we are quite active in this field. A particular firm in County Wicklow is bringing forward a project to manufacture fire blocks from chips and shavings. This would help a lot. There is a keen demand for firewood in our forests such as we have, but the trouble is that the old hardwood stands which were our main source of strength have been largely removed, in fact during the last war, so that the possibility of producing any big quantity of conventional firewood blocks does not exist any longer.

165. Deputy Smith.—Sometimes one hears of contracts for timber from the southern part of the country to companies in the north of the country and vice versa. Has much thinking been put into the question of trying to rationalise this to see in what way we can cut out some of the excessive transport costs in that area? On the question of being involved in having saw log equipment, has any thought been given to the question of the Forestry themselves being directly involved in areas like this?

—In answer to the Deputy’s first question, we have been devoting a lot of attention in recent times to consultation with the trade interests involved, particularly the Homegrown Timber Merchants’ Association, to rationalise our sales. The present system is based primarily on selling all our material by public tender. A committee with membership from the homegrown trade are sitting to work out a system. One of the objectives is the improvement and the rationalisation of timber sales in relation to the location of the material. We are aiming to give some guarantees to these firms for a proportion of their requirements based on previous performance and also to give greater information as to what material is coming up for sale and where it will be sold. The trade, in general, have complete forecasts of the actual amounts that will be coming from afforestation up to the year 2000. To break that down and to give actual forecasts as to where the individual lots are going to be is our concern at the moment. The second part of the Deputy’s question, the possibility of expanding on our involvement in sawmilling, is something that I would be slow to move on. We find quite a deal of difficulty in dealing with the trade, who are naturally very jealous of direct activity by the Department. We have two sawmills but their throughput of material is pretty limited, and in accordance with undertakings which we have given to the trade in the past we are not too anxious to increase their uptake of timber. It is like somebody trying to run a retail and wholesale business together. One gets a lot of ill feeling from the trade. It would not be advisable to try to extend the Department’s activities in sawmilling. It is an industry which is going very well, in contrast to the other side of our business which deals with timber of small dimensions. There is no shortage of capital for development and enterprise in the sawmill business and in those circumstances the Department would be slow to get involved.

The witness withdrew.

The Committee adjourned.

*See Appendix 6.

*See Appendix 7.

*See Appendix 8.