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

MIONTUAIRISC NA FINNEACHTA

(Minutes of Evidence)

Déardaoin, 17 Aibreán, 1980

Thursday, 17th April, 1980

The Committee met at 11 a.m.

DEPUTY O’TOOLE in the chair.

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

MINUTE OF THE MINISTER FOR FINANCE ON THE COMMITTEE’S REPORT (Paragraphs 8, 22, 30, 54 and 56) ON THE APPROPRIATION ACCOUNTS, 1977

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

225. Chairman.—I propose that we deal with the Finance Minute first, the sections which deal with the Department of Finance. What is the present position in relation to paragraph 8 of the Committee’s previous Report.

—The present position is that we have the equipment earmarked and ready to instal. It is a matter of accommodation. This was more or less in the pipeline for the autumn as we said in the Minute. The recent developments with allocation of responsibilities to Ministers and to new Ministers has meant that our demand had to give way to higher and greater demands but we are now booked for accommodation in Earlsfort Terrace. This should be ready about six months later than what we thought would happen. We are training the staff so that it is a matter of getting the accommodation and putting the equipment that we have and the staff into it. The Committee will note that the amounts that gave rise to all of this correspondence and debate have been fully recovered from the banks. We are very pleased to have this matter clinched to show that the banks accepted the responsibility.

226. In paragraph 22 of the Committee’s previous Report there is reference to the matter that we have been discussing before, concerning higher education grants. The last sentence reads:

Investigation by the Department of Finance of the question of accountability referred to by the Committee is continuing.

What is the present position there?

—I said on my last appearance we were looking into this very closely. We took legal opinion and were advised that the Minister was acting in accordance with his statutory powers. So far as the Department of Finance were concerned, that was a satisfactory discharge.

227. The Committee were concerned then about the freedom of an Accounting Officer to discharge his functions.

—This is what gave rise to your remarks on an earlier occasion. As I would see it, if the statute is there and is clear, the Accounting Officer’s responsibilities stop at that point because the Dáil has delimited his powers of question or whatever it may be; he is satisfactorily discharged.

228. The Committee accepted the terms of reference within which the Accounting Officer operates and he did in this case. That is definable and definitive and it can be measured. The conflict arose where the Department of Education were given the impression by the Attorney General that this money was recoupable. While the respective Accounting Officers are acting within the legal limitations of the statute, there is a conflict here in practice that, while one Accounting Officer is being given advice by the Attorney General that this money is recoupable, the Minister for Education was acting within his rights in allowing the payment. There is a conflict here, and how it can be resolved I do not know.

—We share with this Committee a concern that matters which are commented on should be pursued to their conclusion. So far as the responsibility of the Minister and the Department of Finance is concerned, the statute is there. If there is a conflict I think that the particular Accounting Officer would have to pursue that matter himself. So far as the Department of Finance are concerned, the matter is estopped.

229. The Minister’s Minute on paragraph 30 of the Committee’s previous Report concludes as follows:

The Accounting Officer does not exercise detailed control over such matters as the price payable for land or the purchase and re-allocation of individual holdings.

This concerns the Department of Agriculture and the Land Commission specifically. If the Accounting Officer is not responsible, who is responsible?

—In this instance we would have to go back to the governing legislation which, as we indicate in the Minute, is the Land Act of 1950. To some extent this echoes what we were saying in another instance earlier. If the legislation provides an estoppel so far as the Accounting Officer is concerned, he must have regard to that and also, conversely, it is a discharge for him of functions in that area. All I can suggest would be that if the Committee were to think that this was unsatisfactory they would have to consider the legislative aspect of it. But that may be going too far, really.

I appreciate that. As you say, there is a reciprocal aspect to this.

—Yes. It covers the Accounting Officer and gives him a discharge to the Committee here in commenting on the discharge of his functions.

230. Paragraph 54 of the Committee’s previous Report refers to the Post Office bank account. The Committee were given to understand that this matter was being considered by an inter-Departmental group and according to the Minister’s Minute it has not considered the question of any change in the location of the account of the Minister for Posts and Telegraphs. Would you care to comment on that paragraph?

—It is a matter that really has not been covered by the inter-Departmental group. If the Committee would like to leave this with me I would look into it and, perhaps, give you a note* on it or we can come back to it again.

231. Do you think there is any reason why it might not be covered by the inter-Departmental group?

—When you set up an inter-Departmental group like this you give them terms of reference and they discharge the terms of reference. I would be inclined to leave it at that and either give them now a new remit or set up another group, a group that would be directed in its personnel to this particular banking problem. I will look into it for the Committee.

232. The Minister’s Minute on paragraph 56 of the Committee’s previous Report contains the following reference:

Validating legislation arises only in connection with that portion of the payments, which amounted to £996,464.

The initiative must rest with the Department of Finance in relation to validating legislation. The Bank obviously cannot initiate legislation.

—That is correct. This legislation is being drafted at present. It will cover quite a number of other things besides this particular point. Central banking legislation of its nature tends to be rather an arcane business but in this legislation we shall have the validation provisions that the Minister publicly announced that the Government would introduce in the Dáil. I need hardly add that we are pushing ahead with the drafting of the legislation as fast as possible.

GENERAL REPORT

Mr. T. F. Ó Cofaigh further examined.

233. Chairman.—Paragraph 1 of the Report of the Comptroller and Auditor General reads:

“General

Outturn of the year

The audited accounts are summarised on page xlvi. The amount to be surrendered as shown in the summary is £43,815,775, arrived at as follows:—

This represents 2 per cent. of the supply grants, as compared with 1.7 per cent in the previous year.

In no case has the provision made by Dáil Éireann been exceeded and no excess vote is, therefore, necessary.”

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

“Exchequer Extra Receipts

Extra receipts payable to the Exchequer, as recorded in the Appropriation Accounts, amounted to £16,216,736.”

235. Paragraph 3 of the Report of the Comptroller and Auditor General reads:

“Surrender of Balances on 1977 Votes

The balances due to be surrendered out of votes for the public services for the year ended 31 December 1977 amounted to £30,306,025. I hereby certify that these balances have been duly surrendered.”

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

“Stock and Store Accounts

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

Mr. Mac Gearailt.—Paragraphs 1 to 4 give the usual information regarding the outturn for the year, Exchequer Extra Receipts, surrender of balances on the previous year’s votes and the audit of departmental stock and store accounts.

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

“Reconciliation of Outstanding Payable Orders

Each Appropriation Account transmitted to me for audit must be accompanied by a statement reconciling the year-end balances shown in the accounting records with the amount shown on the face of the Appropriation Account under the head “Surplus to be surrendered”. One such balance is entitled “Payable Orders Outstanding” and represents the total of orders drawn on the vote, but not presented to the Paymaster General for encashment by 31 December nor cancelled by that date.

In 1969 a computerised system for the checking and clearance of payable orders issued by Departments was put into operation in the Office of the Paymaster General. Under this system it was intended that the Paymaster General’s Office would furnish to each Department a monthly analysis showing, inter alia, for each Vote accounted for by that Department:

(i) details of orders cashed through the banks and met by the Paymaster General,

(ii) details of orders cancelled at its request or because they are out of date, and

(iii) details of orders outstanding.

While the analysis furnished by the Paymaster General shows the value of orders outstanding, Departments up to now have, in general, established the value of such orders by reference to their own records, using from the Paymaster General’s analysis only the figure for orders cashed. Discrepancies can occur between the figure for outstanding orders as so calculated by a Department and the figure furnished by the Paymaster General because of, for example, delay in processing instructions from a Department to cancel orders. When such discrepancies occur a reconciliation must be effected between the departmental figure and the figure furnished by the Paymaster General so that the correct figure is used in verifying the surplus to be surrendered. I have communicated with the Accounting Officers for the Votes administered by the Department of Justice and the Department of Education regarding failure to effect the necessary reconciliations (see paragraph 26 and paragraph 31).”

Mr. Mac Gearailt.—This paragraph refers to the failure of two Departments to reconcile the figures for outstanding payable orders as calculated from Departmental records with figures furnished by the Office of the Paymaster General through its computerised system. Such reconciliations should be carried out to establish the accuracy of balances to be surrendered on Votes, as shown in the relevant Appropriation Accounts. The specific instances of failure to carry out this reconciliation will be dealt with by the Committee when considering paragraphs 26 and 31. While it is the responsibility of the Accounting Officers for the Votes concerned to see that the necessary reconciliations are effected, the actual process of carrying out the reconciliations involves the Paymaster General’s records. It is for this reason that I have included this general paragraph in this part of my Report.

238. Chairman.—May I ask the Accounting Officer if he has any comment, in so far as it relates to the Paymaster General’s Office, on what the Comptroller and Auditor General has said.

—There are two aspects of this—the computerisation aspect and the question of what was to be done about the unreconciled balances. As regards the computerisation aspect, there is another side to the story. Much of the trouble arose because a vast number of payable orders bore duplicate numbers. This arose because of the limitation of digits available to feed into the computer and, unavoidably, duplicate numbers arose without this necessarily being brought to the attention of the computer staff in the Paymaster General’s Office who therefore found difficulty in carrying out a reconciliation. That matter has been taken up with the Accounting Officers concerned. The necessity of avoiding this happening has been stressed to them. I gather that the position has rectified itself and certainly when we have the computerisation system, which we discussed earlier, in operation it should no longer arise. As regards the question of reconciliation of past amounts, which is referred to by the Comptroller and Auditor General, the question has been submitted to the Department of Finance and, having considered the matter and having regard to the relative smallness of the sums involved, some £14,000 over the whole area, we gave authority to write off these amounts. I hope the matter, therefore, has been settled satisfactorily.

239. Paragraph 6 of the Report of the Comptroller and Auditor General reads:

“Statement of Receipts into the Central Fund in the Year ended 31 December 1978

Statement of Issues from the Central Fund in the Year ended 31 December 1978

Mr. Mac Gearailt.—This paragraph shows the breakdown under various headings of moneys received into and paid out of the Central Fund in the year under review.

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

“Issues from the Central fund

Contribution to E.E.C. Budget

Payments from the Central Fund arising from Ireland’s membership of the European Community fall into two categories:—

(a) payments under Central Fund Services which represent Ireland’s annual contribution to the E.E.C. budget and

(b) payments under the European Communities Acts, 1972 and 1977, which mainly represent (i) repayable advances made to the Irish Intervention Agency for the purchase of agricultural products and (ii) Ireland’s contributions to the capital and reserves of the European Investment Bank.

From 1 January 1978 contributions of Member States to the E.E.C. budget are based on a full application of the “Own Resources” system under which each Member State contributes to the Community Budget an amount equivalent to its revenue from Customs Duties and Agricultural Levies together with an amount based on its proportion of the Community GNP or its proportion of a harmonised Community V.A.T. base. On this basis Ireland’s contribution to the 1978 budget would have amounted to £58.3 million approximately. Under the terms of the Treaty of Accession Ireland’s contribution for 1978 was, however, to be subject to an upper limit based on its contribution for 1977 and was, therefore, estimated at £44.9 million.

In December 1977 the European Council decided that Ireland’s contribution for 1978 based on the full application of the “Own Resources” system (£58.3 million) should be paid over and that the difference between that figure and the estimated upper limit of £44.9 million should be refunded quarterly in arrear. Accordingly, the sum of £44.9 million is shown in the Statement of Issues from the Central Fund as the Contribution to the EEC budget and the sum of £13.4 million is included in the figure of £40.5 million shown in the Statement as Issues under the European Communities Acts, 1972 and 1977. Ireland’s contribution for 1978 was, following adjustments after the year-end, finally determined at £45.9 million thus reducing to £12.4 million the amount to be refunded. Of this sum £8.5 million was received in the year under review and £3.9 million in 1979.

The necessary adjustments arising out of the increase of £1 million in the 1978 contribution will, I understand, be made in the 1979 Central Fund Account.”

Mr. Mac Gearailt.—This paragraph sets out, for information, the basis of calculation of Ireland’s contribution to the EEC Budget for 1978 and the arrangements made by the European Council of Ministers for the payment of that contribution. As indicated, the amount paid temporarily exceeded the contribution payable under the terms of the Treaty and the paragraph explains how this was recovered. The paragraph also refers to the need for an adjustment of £1 million between the figure shown in the Statement of Issues under the heading “Contribution to the Budget” and the figure shown as “Issues under the European Communities Acts”. I understand that this adjustment was made in 1979.

241. Chairman.—On the question of adjustments, does this recur?

—I think it could recur because of the method of identifying the actual adjustment. It is a post factum identification coming from Brussels. It is not a matter of this country only being involved, the other two lateacceding countries are involved as well. I do not think we can eliminate the possibility of it recurring but it is only for a limited period because we go on full own resources anyway as from this year. It only arises again in respect of 1979.

VOTE 1—PRESIDENT’S ESTABLISHMENT

Mr. T. F. Ó Cofaigh further examined.

242. Chairman.—Under the heading “Extra Remuneration” there is reference to seven officers receiving allowances for higher duties and there is no reference to the amounts involved. Could you clarify what is involved there?

—I have no precise information on this but I would think that these would be allowances in the normal course such as to an officer for confidential typing. We have this type of allowance frequently in the public service. I can let you have detailed information later but I think that would be what is involved. It did not warrant a more specific reference therefore.

VOTE 6—OFFICE OF THE MINISTER FOR FINANCE

Mr. T. F. Ó Cofaigh further examined.

243. Deputy Leyden.—On subhead E— National Savings Committee—the expenditure there is £67.131. Could I ask how is that expended? Is the Committee in operation all the time?

—It is in operation all the time. It was set up a considerable time ago—in 1955. It has done very good work in the savings area and we place great store on it. It has a proselytising role as regards the promotion of savings in factories and in schools. The Minister and the Department value its work highly and it is still an active body.

244. Chairman.—On subhead D—Management of Government Stocks—who gets this money?

—The Central Bank are charged with the management of the national loans, land bonds and various stocks. The fee payable to the Central Bank is £300 per £1 million of stock outstanding. As well as that there are management expenses of foreign loans. These would not be of the same order as those of our domestic loans. The management expenses and commission fees would be payable to the banks concerned by negotiation between the Department of Finance and the loan managers.

These would be foreign banks?

—Yes, banks or banking groups or finance houses, to be precise.

245. Deputy N. Andrews.—On subhead C—Post Office Services—the grant was £995,000. Presumably this is for postal services and so on?

—The postal services—telegrams, telephones and small miscellaneous items relevant to the Post Office—would account for less than £100,000. The vast bulk is payment to the Post Office for managing the savings media that they are charged with, like savings certificates. The expenses are recouped to them. They account for £900,000.

246. Is there not an overlap between that figure and the National Savings Committee figure? Why are the Department of Finance and the National Savings Committee doing that?

—There are two things. The Savings Committee are essentially a promotional body and they would engage in advertising and so on, whereas the Post Office charge for a proportion of their staff time—and they could be at headquarters or down the country—for actual transactions in regard to saving certificates. There is a clear distinction between the two functions.

247. You are satisfied that there is a clear distinction and that they could not in any way be integrated?

—There is close co-operation between the Savings Committee and the two Departments. We see a clear distinction between the functions of the committee which bring a local public awareness into the savings campaign, with publicity and promotional work and the actual day-to-day operation of the work. We would lose something if we were to try and run the Savings Committee activities into the Post Office.

248. It has always been a source of confusion to me why one Department should pay another Department money which is public money. In this sense the Department of Finance will pay £100,000 for postal services to another Government Department, thus creating paper work. It seems to be an inefficient and a costly way to operate. Why do we not bring about some arrangement where that payment is not necessary because it is being paid to another Government Department? It seems to be a question of a money go-round or a paper chase within the Department of Finance and the Post Office. Have you any explanation?

—This system of identifying the cost of Post Office services was set up some years ago. There is a note about it in the preface to the Estimates volume, page VI—that is, the current year’s Estimates volume. Briefly, we would share the Committee’s view that it is undesirable to have unnecessary duplication of payments and paper work within the Government services. It is only with reluctance that we would agree to setting up a system of one Department paying another. In the case of the Post Office this was introduced so as to lead to the possibility of the Post Office being given greater freedom in managing their services. It identifies the value of the services and the charges which would arise for them. This decision of some years ago will now serve a useful purpose in an ongoing situation, as we have it now.

249. You are satisfied that this is the most efficient way to handle it?

—I am satisfied that the decision to identify the cost of the services and the payments therefore is now useful in the context of giving the Post Office or the telecommunication service greater autonomy in the exercise of its functions.

250. Chairman.—This Committee deals with accountability more than anything else. Do you consider that this particular system provides for better accountability in the case of all Departments?

—The short answer is “yes” but I would like to expand it somewhat for the sake of the Committee. I would see two aspects of it. As regards accountability, the mere exercise of the Post Office identifying charges for each Department and sending out those charges and the other Department clearing the charges before they make the payment must lead to a greater sense of accountability on both sides and perhaps lead to greater sense of assurance about the validity of the charges and the accounting function. The other aspect is that we are paying for that greater accountability, greater security, by having a certain duplication there, but on balance it is worthwhile.

VOTE 10—STATE LABORATORY

Mr. T. F. Ó Cofaigh further examined.

251. Chairman—On Appropriations in Aid—receipts for various analyses, examinations, tests etc.—on whose behalf do the State Laboratory carry out this kind of operation?

—There are two broad divisions. They carry out the analyses on behalf of Government Departments and also on behalf of the private sector. They mainly carry out analyses on behalf of the Revenue Commissioners and the Department of Agriculture in the public sector. As regards the private sector they carry out analyses that are required usually under statute. If I may quote one instance, the Appropriations in Aid include fees received for testing under the Dairy Produce Act, 1924, items of dairy glassware manufactured by private firms. That is one example. In the public sector, apart from the two Departments I have mentioned, there are also receipts—fees—under the Coroner’s Act of 1962 for toxicological work.

VOTE 11—SECRET SERVICE

Mr. T. F. Ó Cofaigh further examined.

252. Deputy Horgan.—There are a few points which I would like to raise on this. I would like to ask the Accounting Officer whether any other Departments of State are involved in the administration of these funds and, if so, which Departments are involved.

—It is not so much Departments of State as Ministers who are involved. The arrangement is that an application for an advance from this Vote must be made by a Minister to the Minister for Finance. At the end of the year the Minister concerned certifies the expenditure that he has effected out of the moneys and this certificate is accepted under long-standing procedure as a proper discharge both by the Comptroller and Auditor General and by the Dáil.

253. Could the Accounting Officer give us an idea of the Ministers involved in the year under discussion?

—I do not know about that. I think I should leave it to the Committee’s imagination.

Chairman.—I hesitate to interrupt but, perhaps, we should not depart from the traditional consideration of this Vote?

254. Deputy Horgan.—I would not press the Accounting Officer on that but there is one other small aspect which does have a revenue implication which he may or may not wish to answer. In cases where payments are made to individuals, are the Revenue Commissioners informed?

—This is not the kind of question I would normally anticipate but, if I may hazard a guess, I would not think so.

VOTE 14—MISCELLANEOUS EXPENSES

Mr. T. F. Ó Cofaigh further examined.

255. Chairman.—On subhead C—The Racing Board—Grant-in-aid for Capital Purposes—could you outline what they are in this particular case?

—This dates back to 1969. The Minister for Finance at that time allowed the Racing Board a grant of £1 million payable over ten years for capital expenditure. This is the second last payment to the Racing Board. There is only a small amount outstanding in the following year. The Board does not receive any other State grants. It collects its revenue from levies on course betting and the totalisator. As matters stand now it is managing adequately on that revenue. This grant-in-aid was a capital grant-in-aid for buildings and has practically run its course.

256. There is no involvement by the State in the capital assets?

—The final payment of £25,000 was provided for in 1979.

257. Having been involved in the provision of moneys for capital purposes, is there State involvement in the capital assets thereafter?

—Through the Racing Board, which is a statutory board.

258. Deputy Horgan.—On subhead D—State Entertainment—could the Accounting Officer explain the origin of the allocations for State entertainment? What precisely does this cover? Does it cover entertainment provided solely by the State as the State or does it also extend to cover entertainment provided by Government Departments other than the Department of Finance?

—The provision in the subhead is for formal Government entertainment. It covers lunches, dinners, receptions for distinguished visitors or other persons which would be hosted by a Minister or by a civil servant acting directly on behalf of a Minister.

Of any Minister?

—Yes. The Estimate is framed by the Department of Finance on the basis of requests from various Departments and the amount is allocated among various Departments in response to their needs.

It is a slight oddity in a sense that you might think it would appear as a subhead in each Departmental Vote but it does not.

—It appears only here. The Department of Finance fulfills a portmanteau function here; something like the Board of Works do in regard to accommodation. Individual Votes might reflect an element of entertainment if a Minister were abroad and had to provide official entertainment. That would be met from his own Vote as distinct from domestic State entertainment.

259. Has there been any complaint from Ministers or Secretaries of Departments about this mechanism? Would they prefer to have their own subhead?

—It has not come to my notice.

VOTE 22—AGRICULTURAL GRANTS

Mr. T. F. Ó Cofaigh called.

No question.

The witness withdrew.

MINUTE OF THE MINISTER FOR FINANCE ON THE COMMITTEE’S REPORT (Paragraphs 15, 31 and 32) ON THE APPROPRIATION ACCOUNTS 1977

Dr. B. Hensey called and examined.

260. Chairman.—We are adopting the procedure of going through the Finance Minute where it affects the particular Accounting Officers. The Minister’s Minute on paragraph 15 of the Committee’s previous Report concludes:

The Department of Health will also keep the Committee informed of progress being made by the Working Party established to examine the overall systems relating to the collection of health contributions by Health Boards.

What is the present position there?

—The working party was established about this time last year and at that time the system of health contributions was being changed from the flat rate contributions to the income-related system of contributions. That has operated for the first year now and the working party will be meeting within a few weeks to monitor the operation of the new scheme and the rates of collection achieved within the first year of the operation of the new scheme of pay-related contributions. In the meantime, as requested by the Committee, we have been getting better information from the Health Boards in relation to the scheme in earlier years. That information is not complete at the moment. We have it for four of the Health Boards and for the others we had to go back with supplementary queries but we expect that we will shortly be able to show the rate of collection from the farmers under the scheme which operated until this time last year.

261. But you are making up the backlog under the flat-rate system?

—Yes. From the information we have the Committee will see that the collection has improved very considerably since the last time we reported.

262. Deputy Leyden.—It seems to me that the whole arrangement in relation to the collection of health contributions up to the change in the regulations is very slipshod because many persons’ names were not even obtained. I do not know how you are going to get this money from them. Realistically quite an amount of money is going to be written off as a result of the whole thing. There is going to be major difficulty in collecting money that is now in arrears for many years, back to 1971 or 1972. Are you exerting pressure on the Health Boards?

—As I explained to the Committee on a previous occasion, some of the arrears are not genuine arrears in the sense that they were not due because of the difficulty in identifying whether a person is liable to pay. Some farmers may have already paid because they have other occupations and so on. But what we have been doing now is to try to identify the total amount of the genuine arrears and, when you take that as the base figure, the total amount which is actually due. The figures that are coming out will show that in some Health Board areas up to 90 per cent of what was due in the earlier years will have been collected. There is no doubt that some arrears will have to be written off for various reasons. However, we are relatively satisfied and, in relation to the new scheme, we are waiting to get a report on how it has operated in the first year.

263. Chairman.—The Minister’s Minute on paragraph 31 of the Committee’s previous Report contains the statement that investigations being carried out by the consultants will be furnished by your Department to the Committee. Could you comment on the present position. Has progress been made?

—The consultants were appointed and their report is expected within a few weeks. I do not know what the content of the report is yet. When it comes in we will of course be examining it and the next time round we will be able to report to the Committee on the result of this study.

264. The Minister’s Minute on paragraph 32 of the Committee’s previous Report refers to the appointment of community pharmacists. Have you any further comment on progress in that area?

—We have these pharmacists in four Health Boards and a competition for the other Health Boards was held recently by the Local Appointments Commission. Recommendations arising from that competition will come out shortly and I am confident that there will be extra appointments.

VOTE 51—HEALTH

Dr. B. Hensey further examined.

265. Chairman.—Paragraph 69 of the Report of the Comptroller and Auditor General reads:—

“Subhead K.—Hospitals Trust Fund—Capital Expenditure (Grant-in-Aid)

It was observed that in 1973 the Department of Health agreed to the acceptance of a contract in the sum of £405,081 by the South Eastern Health Board for the provision of Maternity and Geriatric units at the County Hospital. Wexford, to be financed partly by way of grants from the Hospitals Trust Fund and partly by way of loans from the Local Loans Fund. It was also observed that, when agreeing in 1979 to the acceptance of the final account of building costs in the sum of £882,631, the Department indicated that its prior approval should have been obtained for the substantial increases incurred in respect of ‘Variations and P.C. and Provisional Sums’.

I sought the Accounting Officer’s observations on the effectiveness of the controls exercised by his Department over variations on hospital building contracts financed in whole or in part from the Hospitals Trust Fund, especially in view of the extent to which the Fund is subvented from voted moneys (approximately 90 per cent in 1978).

He informed me that the final building cost of the units was £882,631 of which approximately £712,000 represented the approved contract sum together with the costs of additional approved works, increased costs resulting from the operation of the prices variation clause in the contract, adjustments in prime cost and provisional sums and V.A.T. The remainder of the cost i.e. £170,000 arose on additional works which were commenced by the Health Board without prior reference to the Department and represented a large number of relatively minor extras and variations which in themselves were necessary but which individually were not significant in terms of cost. The only major items arising were a stairs block, a link corridor and additional site works. Following detailed examination in the Department all the items were approved as they were considered necessary for the proper completion of the work. The Accounting Officer stated that, having regard to the need to ensure that the procedures for the control of expenditure on hospital building contracts are effective, the Department was concerned that additional work had been carried out on this project without prior approval. The matter was taken up with the Health Board and an assurance obtained that the prescribed procedures would be complied with in the future. With regard to the general question of the effectiveness of the control exercised by the Department over variations the Accounting Officer stated that, when tenders are being approved, Health Boards and other hospital authorities are given clear directions regarding the need to avoid extras and variations and also regarding the need to seek the Minister’s sanction before undertaking unavoidable extras. They are also required to submit to the Department quarterly cost reports indicating the work covered including extras and the expenditure incurred. The Accounting Officer also stated that in the light of the experience in this case, the control measures in operation had been reviewed and it had been decided to institute a system of reminders to Health Boards and other authorities regarding the need to observe the instructions relating to extras and variations and the need for compliance with the Department’s instructions regarding the submission of regular progress reports and quarterly cost reports.”

Mr. Mac Gearailt.—This paragraph refers to the expenditure of substantial sums over and above the original contract price on the provision of additional hospital units by a Health Board. As the cost of such capital works falls to be met in part from the Hospital Trusts Fund, which in turn is funded mainly from voted moneys, I was concerned that effective controls over such capital costs should be exercised by the Department of Health.

The Accounting Officer’s explanation of the circumstances in which the excess expenditure was incurred in this case and his comments on the control systems being operated by the Department are included in the paragraph.

266. Chairman.—In the normal course of events would the Local Government auditors report to you on any instance of over-expenditure that they came across in the course of their audit?

—Yes. The Local Government auditors’ report would in a case such as this indicate that expenditure had occurred which had not been approved but since this incident occurred we have had a general review of control procedures in relation to building projects. We have re-organised the system so that for a contract of this size—in other words, at present-day prices for a contract exceeding £1 million—all the planning and designing and execution of the work is under the control of a group representative of the Health Board and the Department. This group would maintain a continuous supervision on the work in a project of this size rather than wait for post facto action by a Local Government auditor. We have less detailed controls by the Department in relation to smaller projects but in each case we insist on regular reporting so that we can monitor what is going on.

267. On subhead A.2—Consultancy Services—how was expenditure in excess of £223,000 incurred here?

—We had a consultancy service by Messrs Arthur Andersen in the North Western Health Board on the financial management systems in that board’s area. The same firm were involved in improving the administrative systems in Saint Laurence’s Hospital for radiology. They also produced for us a policy document on the function of independent audit and related financial reporting practices and also on catering arrangements at the James Connolly Memorial Hospital. A separate consultancy arrangement was through the ESB management consultancy division which advised on internal audit and financial controls and systems in the Midland Health Board. This was a continuation of an assignment commenced in 1977. Messrs Stokes, Kennedy and Crowley advised on the organisation and management structure of the National Rehabilitation Board. Messrs Inbukcon-AIC Management Consultants advised on the administration of Saint Vincent’s Mental Handicap Home on the Navan Road and Irish Marketing Surveys conducted a marketing survey for us. That is the way in which the money was spent.

268. Do all the subheads, G.1 to G.5, cover on-going direct expenditure by the Health Boards? In the light of your consultancy expenditure and the reports you have got in different areas of activity in the Department are you happy that you are getting value for money overall in relation to this expenditure?

—I think so. In the relations we have with the Health Boards, we try to have a critical attitude towards the expenditure in each Health Board area. In each year’s budget, no matter what size it is, there are priorities, all of which cannot be met. It is largely the responsibility of the Health Boards to advise on how money will be allocated among priorities and how value will be obtained for money. They also have the obligation of cutting out waste. By and large the answer to the question would be “yes”. I feel that value is being obtained for the money but any question going beyond that would be a matter of policy.

269. Deputy Leyden.—I do not see anything about it in this particular year but I understand that there is a legal case pending at the moment with a certain Health Board in relation to accounts and to the actual disclosure of information to the auditors. Has this been resolved or is the High Court case still pending?

—It is still pending.

270. It is a non-disclosure of information to the auditors. Has it a bearing on the accounts to some extent?

—It has a bearing on the completion of audits. A number of audits have been suspended pending this case.

In all the Health Board areas?

—No. not in all the Health Board areas but in three other areas, in addition to the one where the case is pending that is the Western Health Board.

271. Chairman.—Are you happy with the up-to-date position of the audits concerning Health Board accounts?

—Apart from this difficulty the situation has improved but this has held it up for some time. I would be anxious that this obstacle be removed as quickly as possible so that the audits could go ahead.

The witness withdrew.

MINUTE OF THE MINISTER FOR FINANCE ON THE COMMITTEE’S REPORT (Paragraphs 3 and 6) ON THE APPROPRIATION ACCOUNTS 1977

Mr. J. O’Mahony called and examined.

272. Chairman.—The Minister’s Minute in relation to paragraph 3 of the Committee’s previous Report refers to the ongoing court proceedings in relation to the collection of MCAs. What is the up-to-date position?

—At the moment some £670,000 is outstanding, the vast bulk of it relating to cattle and beef. Of that we have received judgments of the court for about £345,000. We are still pursuing the remainder and we have approximately 200 cases with the law officers, mostly in Northern Ireland with a small number here and in Britain. We are pursuing these as far and as quickly as we can. The legal processes are not always as fast as we would wish them to be but we are following up all of them and hope that we will secure judgments in most cases. In every case that we have brought so far we have secured a judgment and in quite a number the debtors paid up the money before the case actually appeared in the court.

273. The Minister’s Minute on paragraph 6 of the Committee’s previous Report relates to charging of expenses arising out of market intervention. Could you comment on the position regarding stock records in this particular case?

—Work on the FEOGA accounts, which is also referred to in the following paragraph, has been going ahead and we have now got the 1976 stock records. As well, we have sent the accounts for that year to the EEC Commission. The availability of these stock records within the past month has enabled us to get moving now on clearing the storage accounts for the 1974-76 period. In these cases payments were on account and the work involved is the checking of the provisional payments made and then the making of any necessary adjustments. We have been held up very much on this until the stock records for the entire period became available and, as I said, these have now become available and the work is being put in train.

VOTE 40—AGRICULTURE

Mr. J. O’Mahony further examined.

274. Chairman.—Paragraph 44 of the Report of the Comptroller and Auditor General reads:

“Collection of Monetary Compensatory Amounts

I have been furnished with details of the amounts collectible and the amounts collected as Monetary Compensatory Amounts in respect of the various agricultural products and a test examination was carried out by my officers with satisfactory results. Since 2 October 1978, these Amounts are being collected by the Office of the Revenue Commissioners either through the provision by exporters of an appropriate security or by payment of the charge at the time of export.”

Mr. Mac Gearailt.—This paragraph is for information. It draws attention to a change in the method of collecting monetary compensatory amounts. These were formerly collected by the Department of Agriculture after the products concerned had been exported.

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

“Subhead M.6.—Market Intervention—Incidental Expenses

Subhead N.—Appropriations in Aid

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

The amount received from F.E.O.G.A. funds in the year under review and credited to Subhead N. is made up as follows:—

While the charge to Subhead M.6. consists of actual payments made, recoveries are effected, with the approval of the EEC Commission, on the basis of projected expenditure, the necessary adjustments being made when the expenditure is accepted by the EEC as a charge in the FEOGA accounts. The amount unrecouped from FEOGA at 31 December 1978 was £1,662,745 compared with £1,468,494 at 31 December 1977.”

Mr. Mac Gearailt.—This paragraph is for information. It gives details of the amounts expended in 1978 from voted moneys and the amounts recovered from the EEC in respect of the incidental expenses arising from market intervention. The capital cost of intervention is not reflected in these figures.

276. Chairman.—Paragraph 46 of the Report of the Comptroller and Auditor General reads:

“Subhead M.6.—Market Intervention—Incidental Expenses

The sum of £9,872,623 stated in the previous paragraph to have been expended from this subhead for handling, freezing and storage charges in the year ended 31 December, 1978, included £8.7 million in respect of such charges for intervention beef, the quantity of beef taken into cold stores in the year being 66,000 tonnes approximately. Formal contracts are not entered into with the cold stores and the rates paid to them are not determined as a result of competitive tenders but are agreed from time to time between the Department and the Association representing the cold stores. I inquired why formal contracts are not entered into as I was concerned that the Department’s position should be protected in the event of losses arising through pilferage, deterioration, etc. I was concerned also that, in the absence of competitive tendering, other steps should be taken to ensure that the rates charged are reasonable and I therefore inquired as to the basis on which they are decided and whether the approval of the Department of Finance had been obtained for them.

The Accounting Officer has informed me that, while no single document embodying all the terms of the contract is signed by both parties, the contract entered into in each case is evidenced by the issue of documents and instructions to the stores and that, while there is nothing in the arrangements under which stores accept liability for losses due to theft, deterioration, etc., in practice they have adopted the attitude of meeting such losses.

The Accounting Officer also stated that the feasibility of utilising a standard contract document incorporating a reference to the cold stores liability for losses is being examined but that the number of cold stores involved and the number of jurisdictions in which they are situated makes this difficult to attain.

In regard to storage rates the Accounting Officer informed me that, for Irish cold stores, central negotiations take place with their representative body, the factors taken into account being the national trends in labour costs, electricity charges, general overheads and, insofar as the Department has access to them, the rates currently being charged to commercial users. For foreign cold stores negotiations are conducted on a company by company basis and regard is had both to the rates paid by intervention agencies in those Member States and to the general level of rates being charged in each country. The Accounting Officer added that it had not been the practice to get formal Department of Finance sanction for rates negotiated, but that Department had been kept informed of the broad lines of the arrangements entered into and had reviewed the expenditure involved, particularly when the annual estimates were being framed.”

Mr. Mac Gearailt.—This paragraph draws attention to the absence of competitive tendering and formal contracts covering the storage of intervention beef. As the figures indicate, this beef attracted some 90 per cent of the total expenditure incurred in handling, freezing and storage in the year under review.

The observations of the Accounting Officer are included in the paragraph.

277. Chairman.—In this connection, the feasibility of utilising a standard contract document incorporating a reference to cold storage liability for losses is being examined. Could you give the Committee any idea as to what the present position is in relation to this?

—We have been examining this question and, in fact, had a meeting about it with the representative organisation of the cold stores within the past few weeks. They indicated that they would probably have to raise their charges if we insisted on including a formal liability clause. In practice they have accepted liability for any deterioration or any disappearance that could be attributed to them and this is the basis on which we have been operating up to now. The question is whether we put in a formal liability clause and have to pay for it or continue as we have been operating, where we save this extra cost and rely on the cold stores to meet any claims. As I have said, they have met claims up to now including one where a fairly large quantity of meat was stolen, because it is, I think, only a matter of normal business that when you entrust goods to them they return those goods to you. We are extremely good customers of these cold stores and withdrawal of our business would be a serious matter for any such store. However, as I have said we are still examining the matter and we intend to have further discussions with the cold stores to see whether we could, in fact, arrive at some formal contract that would give us better protection than we have at the moment. I should say that we gather that in at least one of the other of the Member States which has a type of standard contract it does not include any liability clause. I might add also that within the past month we have sought tenders from a number of consultants for the carrying out of a study of our entire beef intervention system, that is, the physical, documentary and accounting control over the whole lot. This question of a standard contract would in any event come up in deciding what action we should take on the results of such a study.

278. Chairman.—Paragraph 47 of the Report of the Comptroller and Auditor General reads:

“The sum of £2,178,180, stated in paragraph 45 to have been expended on transport costs in the year ended 31 December 1978, included £2,169,543 in respect of the transport costs of intervention beef. It was noted in the course of a test examination of these costs that formal contracts are not entered into with the individual factories or haulage firms which provide the transport but that standard rates for the transport of intervention beef to cold stores in Great Britain and the mainland of Europe are agreed from time to time with the Irish Fresh Meat Exporters Society and that, in the case of transport within Ireland, varying rates are paid to the individual factories or haulage firms concerned. I asked the Accounting Officer whether, in view of the quantity of intervention beef being moved to cold stores, consideration had been given to setting up a formal competitive contract procedure.

He has informed me that a substantial amount of the beef placed in cold stores in Ireland and abroad is moved directly from the meat factories and that the most effective way of providing haulage for such movements is to allow the factories to engage the hauliers and for the Department to make recoupment to the factories. He also stated that the Department had arranged the hiring of transport for movements of bone-in-beef from certain public cold stores in Ireland to cold stores abroad and that consideration was being given to the direct engagement of hauliers on the basis of on-going contracts for all such movements in the 1979/80 winter season but that there were many practical difficulties to be overcome including the capacity of hauliers to provide facilities for the movement of large quantities of beef at short notice.”

Mr. Mac Gearailt.—This paragraph, like the previous one, draws attention to the absence of formal contracts, in this case in respect of the transport of intervention beef to cold stores in Ireland or abroad. The comments of the Accounting Officer in the matter are included in the paragraph.

The Accounting Officer has recently informed me that in August 1979 a number of major refrigerated hauliers in Ireland were invited to quote for the transport of intervention bone-in-beef from Irish public or commercial could stores to continental cold stores. The movements of beef commenced in September 1979 and continued up to March last.

In the event, the quantity of beef to be moved proved at times to be beyond the available capacity of all the Irish based hauliers who had quoted and it became necessary to engage some foreign-based hauliers also. The cost per consignment ranged from £1,000 to £1,475 with a weighted average of £1,129. In the same period consignments of intervention bone-in-beef transported from Irish factories to continental stores by hauliers engaged by the factories themselves were paid for at a flat rate of £1,075 per consignment—somewhat less than the weighted average. This is a rate agreed with the factories at the commencement of the season.

279. Chairman.—On the figures given there is a lower figure in operation for meat being moved direct from the factories to cold stores. Why is there a difference?

—It was intended to be on tender but in the event we had to use all the Irish firms that quoted to us and also had to engage some foreign hauliers. The trouble here is the amount of haulage capacity available and, in fact, the same applies to the question of storage rates under the preceding paragraph. We use everything available in Ireland and in that situation the possibility of competition is reduced somewhat because you have got to take everything available. In regard to the transport, we negotiated the flat rate with the factories at the beginning of the season and, in the event, this negotiated rate proved to be somewhat cheaper than what we ourselves had to pay in moving beef from cold stores in Ireland. Roughly the same quantity was moved by the factories under the flat rate as we ourselves moved under the competitive system. The main conclusion one could draw from it was that whichever system of transport was used the cost was much the same. In fact, the factories have been pressing us to raise the negotiated rate and so we expect when it comes to the peak season next autumn we will probably have to pay more under both headings.

280. Deputy Pattison.—Are CIE involved in the haulage of intervention stocks to continental cold stores?

—Offhand I could not give a firm answer on that but I would venture to say no. These would be private long-distance haulage firms, people who would have their own insulated containers, the juggernaut type of vehicle which they would use to move the beef to the continental cold stores. CIE do a certain amount of haulage of meat within this country, for example, meat going on the ordinary commercial traffic to the UK. They are not very much involved in the continental trade.

281. Chairman.—Paragraph 48 of the Report of the Comptroller and Auditor General reads:

“In the course of a test examination of payments of the storage charges referred to in paragraph 45 it was noted that, in the case of payments to commercial cold stores, value-added tax was allowed as part of the claim whereas, in the case of cold stores attached to meat factories, the value-added tax claimed was not allowed. I asked the Accounting Officer the reason for the difference in treatment and whether a ruling had been given by the Office of the Revenue Commissioners on the matter. He informed me that the public (commercial) cold stores which provide most of the refrigerated services used by the Intervention Agency in Ireland have always charged VAT on their services and the tax has been paid by the Agency. Since 1974, thirteen meat factories provided refrigeration services and nine of these had not sought to charge VAT In the other four cases the Agency refused to pay VAT pointing out the position taken by the majority of factories. He further informed me that the Agency had now communicated with the Revenue Commissioners about this matter.”

Mr. Mac Gearailt.—This paragraph draws attention to an apparent anomaly in the treatment for value-added tax purposes of payments made by the Department of Agriculture as intervention agency in respect of handling, freezing and storage services. VAT charges were allowed in respect of services provided by the public (commercial) cold stores but not in respect of such services provided by meat factories.

Since the date of my report the Accounting Officer has informed me that the Revenue Commissioners have confirmed that the Agency was correct in paying VAT charges to the public cold stores and that it was understood that the Commissioners were in communication with the meat factories indicating that their charges for handling, freezing, storage, etc, were also liable to VAT.

The Accounting Officer added that the agency would, therefore, pay VAT on accounts from meat factories in respect of storage etc. charges and would review its earlier decision to refuse VAT on such accounts.

282. Chairman.—According to the statement of the Comptroller and Auditor General, there will obviously be a retrospective payment here in the light of this new liability for VAT from factories?

—Yes. The Revenue ruling has meant that money is due to the factories. However, we understand that some discussions are taking place between the factories and the Revenue Commissioners about liability in this matter. We are in the position that we accept the Revenue ruling and will make the payment. At the moment we are awaiting final determination by Revenue, who have indicated to us that they will send us the full ruling when they have considered whatever representations have been made by the factories. As matters stand, the liability seems to arise and we would have to pay the money but we are awaiting a final determination by Revenue, who are considering representations from the factories on some aspects.

283. Paragraph 49 of the Report of the Comptroller and Auditor General reads:

“Suspense Account—Travelling Expenses

In the course of audit it was noted that the clearance of outstanding balances amounting to £78,000, approximately, on a number of imprest accounts for travelling and subsistence expenses was in arrear. Included in these balances were imprests totalling £3,850 held by three officers who had resigned from the Department.

I sought information as to why the outstanding imprests had not been cleared and as to the action being taken to clear them. I also inquired as to the controls in operation to ensure that balances due from officers resigning from the Department are recovered. The Accounting Officer stated that the delay in the clearance of advances was caused mainly by protracted negotiations involving his Department, the Department of the Public Service and the Institute of Professional Civil Servants about the adequacy of subsistence rates allowed to officers assigned to intervention beef duties at cold stores abroad. He also stated that the postal dispute had hindered efforts to clear these advances. Of the amount of £78,000 outstanding, claims to the value of £44,630 had been received and were being processed. Immediate submission of the other outstanding claims was being sought and officers were being notified that advances for journeys abroad must be cleared immediately on return and that no further advance would be made unless claims were submitted promptly.

The Accounting Officer also informed me that efforts were being made to contact the three officers who had resigned without clearing their imprest accounts and that in order to prevent any recurrence of this type of situation a system had been introduced to ensure that, in the case of retirements and resignations, final salary payments would not be made until outstanding advances had been cleared.”

Mr. Mac Gearailt.—This paragraph draws attention to departmental delays in clearing some outstanding imprest accounts, including three held by officers who had resigned from the Department. The Accounting Officer’s observations on the matter are included. I understand that all these outstanding balances have since been cleared.

284. Deputy Pattison.—On the final paragraph, is that practice quite legal, the stopping of final salary payments until outstanding advances are cleared?

—I suggest that if there is a situation where an officer has received public moneys before retiring for which he has not accounted, he has a liability to return those moneys immediately on leaving the Department. An Accounting Officer would feel under some obligation to take some action to ensure that these moneys were returned, if necessary by going as far as not clearing the final salary payment to the officer. I should say that in the case of the three officers here who resigned from the Department, while they had received advances from the Department there were claims by them which were responsible for the delay. The claims were in dispute. At the end of the day in each of the three cases we had to make small net payments to the officer concerned. Their claims for expenses not alone covered the advances which had been made but did in fact involve some small payments to them. I appreciate the points that were made about the strict legality of withholding some of the man’s salary.

285. Chairman.—Is this practice of withholding salary in the event of an officer leaving the service normal procedure? From a strictly legal point of view, is this particular approach to recoup moneys widespread?

—I could not say that, but it seems to me that every effort should be made to ensure that, when an officer is retiring or resigning, all outstanding accounts in relation not only to his salary but in regard to expenses or allowances to which he is entitled should be dealt with at the same time in order that on the day he is going a final clearance can be made involving a payment to him or receiving a payment from him and so that the matter would not continue beyond that date. The difficulty here was that practically all of this money related to advances made to officers who were engaged on beef intervention duties abroad where there was a dispute about the amount of expenses that should be allowed to them in respect of their subsistence on the Continent. The negotiations with the staff association were very protracted. As a result these outstanding balances remained uncleared for a very long time, as was pointed out by the Comptroller and Auditor General. In the normal course for an officer retiring there would be very little adjustment to be made at the time of his retirement or resignation. One would not expect any difficulty to arise about settling it. The difficulty here arose because the point at issue was one which affected quite a lot of officers and was the subject of Department of the Public Service and staff negotiations.

286. On subhead B.1—University Colleges—I recall reference by you on a previous occasion to the Higher Education Authority’s liability in this area and that there were some negotiations going on as to who was going to be liable for what in relation to university grants and so on?

—At the moment we deal in the Vote for Agriculture with the financing of the Faculty of Agriculture and the Faculty of Veterinary Medicine in University College, Dublin, and with the Faculty of Dairy and Food Science in University College, Cork. So far as I know, these are probably the only faculties not dealt with by the Higher Education Authority. The logical course would seem to be that they should also be transferred. The matter has been referred to at various times in the past but no final decision has been taken on it. At some stage a transfer will have to take place. At the moment it is not imminent and I do not see anything happening on it in the immediate future. However, I would accept it is something that should take place at some time.

287. On subhead C.1—Improvement of Livestock—and subhead C.2—Bovine Tuberculosis Eradication—are you happy that you are getting value for money here? As you know there has been some public comment on this. It is an area where this Committee and indeed yourself might, by implication, come under unfair comment from people who do not know the whole story concerning the situation. Could you comment on the present position?

—I think that the State is now getting value for money on these eradication schemes. The position for quite a long number of years was that progress was not very visible. I think there may have been a tendency to seek to eradicate disease without causing too much upset to producers, traders and others. Within the past couple of years we have altered our approach somewhat to concentrate more on eradication irrespective of the fact that it might hurt some people. The effects of the intensified campaign—the inclusion of such matters as a 30-day pre-movement test and the intensified measures generally—have brought about more rapid withdrawal of reactors and a reduction in the incidence. Last year’s round of testing is now finishing and we will be starting a new round of testing shortly. We are hopeful that it will show good progress this year. We took out a lot of reactors, especially brucellosis reactors, in the final months of 1979 and in the first few months of 1980. We hope that this, coupled with the use of a new type of tuberculin, will be more effective in detecting TB reactors and that all these factors will bring about a significant reduction in the disease incidence in the current year.

288. On subhead M.1—Farm Modernisation Scheme—there is a reference to £1,703,413 realised. On the overall expenditure figure that seems to be small. What percentage is recouped under this scheme normally? Is there a set percentage?

—Yes. We recoup from FEOGA 25 per cent of the eligible expenditure but this means the expenditure on investments by development farmers only, together with some minor items as well. The number of development farmers is roughly 18 per cent of the total and we get 25 per cent of the grants to that 18 per cent. This means we are getting back only about 5 per cent of our overall expenditure in respect of the Farm Modernisation Scheme. There is also the factor that the procedure for recoupment operates to our disadvantage in as much as the recoupment comes about a year later, so that the recoupment in any year usually relates to the preceding year. Also in this subhead, as well as the Farm Modernisation Scheme provision, there is the special drainage scheme in the West of Ireland where we get a recoupment of 50 per cent of the cost. This is more attractive.

That 50 per cent applies overall?

—To the disadvantaged areas in the West. It will add to our recoupment under the farm modernisation measures in future years because from now on we will be starting to reap the benefits of the additional recoupment percentage.

VOTE 41—LANDS

Mr. J. O’Mahony further examined.

289. Chairman.—We find that there is a saving as a result of a decline in interest in the Farmers’ Retirement Scheme. Is there any improvement in the volume of acceptance of the scheme at the moment or is it still declining?

—There has been a slight revival of interest in the first few months of this year but the figures are still very insignificant. We got 31 applications in the first quarter of 1980 as compared with 45 in the entire year 1979 but I would doubt very much that this is an indication of any long-term revival in this scheme. The Council of Ministers in Brussels have before them proposals by the EEC Commission for modifying all the structural directives which would include both the Farm Modernisation and the Farmers’ Retirement Directives. When these are dealt with by the Council it will be necessary for us to change the scheme considerably. Hopefully it will become a more attractive scheme from the point of view of farmers who would be encouraged by more generous aid to retire and to surrender their land. We would hope also that these changes would enable us to allocate the land to a wider category of farmers and still receive FEOGA recoupment for part of the cost. The proposals being considered by the Council of Ministers, and for which we have been pressing for a decision in the current price package, will have a number of attractions for us in that the recoupment would extend to a wider category of farmers and to both the premium and the annuity. We would, therefore, hope to see those adopted this year if at all possible.

290. Deputy Leyden.—On subhead E—Statutory Contributions to Land Bond Fund, Local Loans Fund and Church Temporalities Fund—what is the Church Temporalities Fund?

—The Church Temporalities Fund is an old fund that has existed since some time in 1869 or thereabouts when the Church was disestablished in this country. There are remaining here some investments which earn interest that has to be distributed to bodies such as the Department of Agriculture and the Department of Education with the balance going to the Land Commission. There may well be something to be said for winding it up completely and realising the investments, but we have not got around to doing that as yet.

291. Where are these assets?

—I do not know the precise history of it but the assets arose back on the occasion of the disestablishment of the Church and the disposal of lands which the Church then owned. I think that a capital sum was paid to the Church at that time and that the tithes and rents were gradually eliminated.

The witness withdrew.

The Committee adjourned.