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

MIONTUAIRISC NA FINNEACHTA

(Minutes of Evidence Taken Before The)

Déardaoin, 20 Márta, 1980

Thursday, 20th March, 1980

The Committee met at 11 a.m.

DEPUTY O’TOOLE in the chair.

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

VOTE 28—CHARITABLE DONATIONS AND BEQUESTS

Miss A. Tormey called and examined.

166. Deputy Leyden.—Miss Tormey is running matters very well indeed. There are savings under every heading. In relation to charitable donations and bequests, who administers the funds? Do you get any actual payment for doing this work? Is a certain percentage taken off?

—I am not sure I understand. We are part of the Department of Justice and we administer our own Vote. We get no extra payment for doing that.

You handle quite a lot of money.

—We are dealing with over £5 million in the charity account. The Commissioners are a voluntary body who give their services free. There is no payment of any kind and there are no charges.

That is what I wanted to know.

167. Chairman.—There is a saving on subhead B—Travelling and Incidental expenses—due to the deferment of the purchase of machinery. What kind of equipment are you referring to?

—It was and still is envisaged, though it has been deferred for the moment, to buy equipment to allow us run a common investment fund. At present we have a rather difficult and arduous method and it was considered that, perhaps, we should have a common investment fund for the charity funds; the charities would be allocated units and dividends would be paid out. It was hoped that we would have a computer to assist the staff in doing this. In the following year, 1979, the money went back to the Exchequer and has come back to us in 1980. The Commissioners are taking it up again. It is a slow process and they are looking into it.

168. Do you hope to complete the purchase this year?

—We would hope so. At present we are still negotiating with the Department of Justice as to the feasibility of getting some people to look once again at our accounting system to see what would be the most suitable way of implementing this. Our difficulty arises as to the best way of managing the fund. At the moment the funds are managed by the Commissioners.

169. Are the charities’ accounts audited by the Department of Local Government?

—That is right.

170. Are you falling into arrears with the auditing or is it up to date? What is the position there? We have had experience of audits falling behind for some reason.

—1978 has been audited. We have got that far.

171. Deputy N. Andrews.—On subhead B—Travelling and Incidental Expenses—there is a note regarding savings due to deferment of the purchase of machinery. What have travelling and incidental expenses to do with machinery?

Chairman.—If you look at page 77 of the Estimate you will find that it is included under incidental expenses rather than travelling expenses.

Deputy N. Andrews.—How much of that was spent on machinery?

—None on major machinery. We would include stationery in that.

172. Chairman.—You do not travel much?

—Hardly anywhere.

Thank you.

The witness withdrew.

VOTE 21—OFFICE OF THE MINISTER FOR ECONOMIC PLANNING AND DEVELOPMENT

Dr. N. Whelan called and examined.

173. Chairman.—On subhead A.2—Consultancy Services—could you give us a brief breakdown of the expenditure incurred amounting to £85,457?

—The consultancy subhead in the Department was designed to ensure that professional studies on various facets of public policy could be undertaken. All expenditure from the subhead met this criterion. The reason for the surplus on this subhead arose from the fact that some projects were not completed within 1978 so they would not be paid for out of the 1978 provision. The types of projects on hand related, in the main, to policy for the development of the various economic sectors in the country—agriculture, industry and the services sector. In all there would have been about 10 to 20 projects on hands.

174. On subhead E—Grants for County Development Work—£119,000 was granted and, to the nearest penny, the same amount was spent. At first sight this would seem to be more appropriate to grant-in-aid funding and seems to have been handled in this way in that you have spent the exact amount that you got. Could you comment on the accuracy of the expenditure as against the grant allocated?

—The estimate of expenditure was sufficient for the year. It matched the amount allocated because the items giving rise to the expenditure were accurately forecast before the year began. Of course, the grants to county development teams for county development team work and the Special Regional Development Fund all constitute one broad area of similar work. The fund aid had its origin in the mid-sixties when it was felt that for mainly small economic and social type projects throughout the West some mechanism was required to meet gaps not covered by the existing grants available from, say, Departments, and agencies like the IDA and so on. The aid, therefore, mostly took the form of grants to small farmers’ co-operatives, small projects etc. This is the origin and the background to the Fund. As to whether the grants for county development work are appropriate or not for grant-in-aid funding, I might explain that this general work area has been under review for some time. For instance, the Department of the Public Service undertook a study in 1973-74 about what Ministry this work area should go to. For example, at that time it had been argued that it would be relevant to the then Minister for Local Government, now the Environment. However, it was decided that the placement of this work area and the way it should be organised was part of the broader question of the organisation of the functions of Government at sub-national levels. Soon after that, the Department of Economic Planning and Development was proposed and then established and all of this area of work was moved over to that Department from the Department of Finance. In the middle of the Department’s life the Government decided that they would review the institutions for regional development. An interim report was produced by an interdepartmental review group on this. The immediate priority was to look at what institutional underpinning should exist for regional development for the Department of Economic Planning and Development. They produced an interim report but the interim report did not address specifically the whole question of these grants and the payments from the Special Regional Development Fund. Things changed obviously with the abolition of the Department of Economic Planning and Development and all of this area is now back again with the Department of Finance.

175. I am grateful to you for giving us the background to this. The reason I mentioned grant-in-aid at all was because of what seemed to me to be the exact expenditure of the amount granted. In other words, it was being treated in somewhat the same way as a grant-in-aid?

—No, this is not quite correct. It resembles a grant-in-aid alright insofar as all the money allocated to the subhead had been issued at the end of the year to meet the team’s expenses. However, it was not treated as a grant-in-aid. There is, of course, potential for this work area to be regarded as a grant-in-aid. But a relevant question is whether, since it is related to the Special Regional Development Fund, the whole work area of the county development teams and the cost of the Special Regional Development Fund should not be organised as a grant-in-aid.

176. Deputy Leyden.—I do not want to go into the policy area, but in relation to repayable advances outstanding on 31 December 1978, is it not possible for some of this money to be given as a grant rather than a loan? I understand that it was decided that one particular item would, in fact, be a grant and that the money would not have to be refunded at all but it is still listed and I see it listed again for repayment. What is the situation in relation to these loans?

—The repayable advances are the loans outstanding at the end of 1978. The position would have changed since then, of course, and the list at the end of 1979 would be different. There are two comments I think may be relevant. First, there is continual pressure from the Department on the various firms or businesses that got repayable loans to repay them on time. So when repayable advances are outstanding there is close monitoring to have them recouped within the various time-limits set. Second, you asked whether or not some of these loans should not be grants. Every application for conversion of a loan to a grant is looked at to see whether it should be converted to a direct grant or remain a loan. Really, it is the circumstances of each individual case, the viability of the firm etc. which determines whether it is a loan or a grant. One cannot give a general judgment as to whether all these should be grants or all of them should be loans. Each individual case is determined on its merits.

177. Which Department administers that fund at the moment?

—The Department of Finance. Responsibility for this work has now returned to the Minister for Finance following the abolition of the Department of Economic Planning and Development.

178. Chairman.—Let us go back again to subheads E and F.I. F.I is a grant-in-aid. What is the difference in practice between payments made under E and under F.I?

—In practice there is no difference, but in accounting terms there is, of course, a difference. A key question is whether one ought not amalgamate E and F.I into one expenditure source.

179. This is what I am coming at. I do not know if it would cause any accounting problems. From what you say it would seem that it would not.

—I am not aware of any direct accounting problems. We must remember that all of this area is, as I said earlier, under review.

180. On subhead H—International Organisations—the note mentions the European Space Agency. Could you tell us what benefits accrued to us from this particular body, where the money was expended?

—The outturn figure for 1978 under subhead H was made up of three elements. First, the European Space Agency, the basic subscription for which in 1978 was £80,000; this was the biggest item of expenditure. Second was what is called the “Ariane” programme which took about £34,000. Third was the European Molecular Biology Conference which cost about £7,500. Of these, the European Space Agency is the biggest. Our contribution, provided for in 1978, was calculated on a GNP basis; the participating countries were each charged a certain amount depending on their GNP.

181. On a percentage basis of GNP?

—No, on the relative sizes of their respective GNP’s. For example, if, say, we had one-fifth the GNP of Germany, we would pay one-fifth the rate. There were various delays by the member countries in establishing the convention to set up the European Space Agency and as a result our full annual quota, as had been agreed on the GNP basis, did not come to be paid in 1978. So a saving accrued under the subhead. There are various benefits which arise from our membership of the European Space Agency. On 8 December 1976 the question of joining the ESA was debated in the Dáil. There are a number of benefits or activities which I would like to mention. First, Ireland receives contracts of a scientific and technical nature since, as a member, we have a right to bid for various contracts. Since we joined the ESA in December 1976 and the end of the acounting year with which you are now dealing, December 1978, a total of about £1.4 million in contracts was awarded to Irish industry as a result of our various activities in the ESA. The contracts were to industries, to State-sponsored bodies and universities.

182. Non-members cannot tender, is that the case?

—Non-members are not directly in the running. So the contracts are a direct benefit to us from our membership. The £1.4 million is made up of various contracts relating to, for instance, developing computer software for various programmes, and technological research work contracted mainly to the universities, some miscellaneous projects supplying various goods and so on. All of these were worth £1.4 million to Ireland. The second main benefit to Ireland from its membership of the European Space Agency derives from Irish scientists having an opportunity to participate in the numerous experiments which are conducted on the scientific satellites. There is a very broad spin-off from this. A third main benefit arises from documentation on the experiments which is given to us. These are the main and direct benefits from the programme.

183. Subheads I and J are connected. Could you explain the position there?

—Yes, the two are connected. The situation is as follows: from 1976 there was draft legislation before the Oireachtas to set up the National Board for Science and Technology, but there was no firm indication as to when the Bill would be passed and made law. So the proposal to create the Board was in cold storage awaiting legislation. At the same time the National Science Council was operating many of the functions that the Board were to do. The National Science Council was an agency of the Department of Finance and was then transferred to the Department of Economic Planning and Development when that Department was set up. The National Science Council was paid out of direct departmental funds and was not a separately funded State agency. In 1978 there was no precise indication as to when the Board would be set up, so the approach adopted was to put in a token provision of £1,000 in the Estimate for the Department of Economic Planning and Development so that the funds required by the National Science Council could be paid direct from the Department of Economic Planning and Development during that period. In the event, the board was set up on 5 April 1978, so the amount there of £304,000 is the amount which the National Science Council spent between 1 January 1978 and 5 April 1978. It had to be paid from the Department because the National Science Council, as I said, was not a separately funded State agency. The provision for the National Board for Science and Technology, which was made separately, was used to meet the difference between the grant of £1,000 for the National Science Council and its eventual expenditure of £304,000. That is the basic reason for the two subheads. Then on 5 April the National Science Council was abolished and the National Board for Science and Technology came into being.

184. In the Special Regional Development Fund there was on 1 January 1978 a balance of £283,000. You expended £220,000, so you are obviously building up a fund there. There was no need for extra funding for that year, but you end up with a fund at the end of the year in excess of £500,000. Could you comment on that?

—This fund must be seen not on a year by year basis but on the basis of a group of years. When small businesses around the country produce projects they over-run at the end of the year. The fund must cater for projects that do not conform to the particular accounting year. There is pressure on the fund to keep it at an even balance so that one does not build up a fund of unused resources. The money is returned to the Exchequer at the end of the year. It is only a notional fund that is built up, but the pressure is there to try to get enough money to deal with the projects likely to come about. We did not draw down from subhead F.1 the full amount of the grant, £275,000, because we felt that we would not use it all. The fund must be seen in terms of a group of years since that is the reality for small businesses throughout the country.

I thank Dr. Whelan for his attendance and his co-operation.

The witness withdrew.

VOTE 42—LABOUR

Mr. T. O’Cearbhaill called and examined.

185. On subhead A1—Salaries Wages and Allowances—could you comment on the grant as against the expenditure?

—There was a saving of about £316,000 mainly because the process of recruitment of staff to vacancies authorised during the year for the National Manpower Service was slower than expected. Because the National Manpower Service was very substantially expanded during the year it was necessary for the Civil Service Commission to hold two competitions, one an open competition and one a confined competition involving discussions with staff associations and unions representing staff in the service. This was the main reason why the recruitment was slower than had been planned. In fact, 69 officers were recruited during the year from these two competitions which was a fairly substantial number for a small service like that. There is also a certain turnover of staff in this service. The members of the National Manpower Service come to be known by personnel departments of manufacturing companies, especially foreign companies coming into the country, and are in demand and sometimes they leave to take up personnel posts leaving vacancies with us which take some time to fill. We do not regard this as a bad thing even though it is inconvenient for the service. We regard it as beneficial that people who have such experience are in positions in personnel departments of companies where they themselves are recruiting staff through the National Manpower Service.

The reason I mention it is that it is ironic that the National Manpower Service, people who are involved in placing staff, are short of staff themselves. That is the only reason I asked the question. I appreciate your problem with regard to personnel people moving out.

—As you understand we have to recruit through the Civil Service Commission.

186. Deputy Leyden.—Under subhead S—Trade Union Amalgamations—I see the grant is £40,000 and the expenditure is £2,864. What is the position regarding this under-expenditure?

—When the Estimate is being framed provision is made for operations which we either know are taking place, namely, discussions between unions, or that we expect will be taking place. One of the features of the legislation governing this is that it is necessary for a transfer or an amalgamation to have been completed before we can pay any money out. In the particular year, while we had expected three amalgamations to take place, only one did take place; the other two took place subsequently and this was the real reason for such a substantial saving here. If required, I can tell you the unions involved.

187. I would like to know what unions were involved.

—The Irish Union of Woodworkers and the Irish Society of Woodcutting Machinists were the unions concerned. That amalgamation was completed after the year of the account and the grant was paid in 1979. Another case was the Federation of Rural Workers and the Workers Union of Ireland who also merged since then and a grant for which has been paid. There are also two other unions, the Irish Transport and General Workers Union and the Irish Shoe and Leather Workers Union who merged in 1978 and for whom the grant of £2,864 was paid.

188. Deputy N. Andrews.—On subhead P—Employment Incentive Schemes—there is a considerable saving. Would the Accounting Officer like to comment on the reasons for this saving? £7 million was granted as against an expenditure of £4,319,000.

—When the Estimate was being prepared provision was made for participation in the scheme of approximately 10,000 adults and 8,000 school-leavers making a total of almost 18,000 and in fact the number that materialised during the year was just over 10,000. So the explanation is that the number of participants in the scheme was less than had been provided for.

189. Chairman.—Was it due to lack of advertising or what is the reason?

—Our advertising and travelling subheads have both been exceeded, partly in efforts by the Department to popularise the scheme and promote it.

190. Deputy N. Andrews.—How much was spent under subhead D in relation to advertising the Employment Incentive Schemes?

—£11,875.

191. Was it on newspaper and television advertising?

—Newspaper advertising mainly.

192. Chairman.—On subhead A.2—Consultancy Services—there is a token Estimate which was not taken up. Would you comment on that?

—This subhead was opened on the direction of the Department of Finance arising from the engagement of consultants in a previous year to examine the banks in the context of the strike which took place in 1976. There was an expenditure of about £20,000 and as a result of that the Department of Finance instructed that a subhead for this should be specially opened. Certain provision was expected last year for the computerisation of manpower data. In fact, that expenditure did not materialise and since then the Central Data Processing Services of the Department of the Public Service has itself decided, as a work of centralisation, to do the job for which we had made this provision.

193. Deputy N. Andrews.—On subhead V—Work Experience Programme—there is a supplementary grant of £600,000 and again we have a substantial underexpenditure. Could the Accounting Officer explain subhead V—Work Experience Programme—and what was the expenditure in advertising and publicity in this field, if any?

—The Estimate was framed on the basis of a participation level of 2,000 persons and this figure of 2,000 was not achieved during the year, but it was achieved and, in fact, substantially exceeded in 1979. There was some delay in bringing this programme into operation. It came in during September. Also involved here were discussions with trade unions because the work experience programme could have had implications for workers who were working side by side in factories or offices with people who were recruited on a temporary basis under this programme and it was necessary to assure unions that there was no threat to their position. These discussions took some months, with the result that the scheme did not come into operation until September of that year.

Altogether, subhead P and subhead V contributed to the total surplus to be surrendered being so large. I suppose the new developments were partly responsible for that.

194. Chairman.—On subhead J.2—An Chomhairle Oiliúna—there is a saving. The note says some sites were less expensive than had been expected, which is something new and very welcome.

—Of the saving of £800,000, about £500,000 was caused by certain capital work being behind schedule, specifically an extension to Ballyfermot training centre, the new Cork training centre which did not commence until 1979, and development at the Sligo training centre. The total effect of these three was to save £500,000. On site purchases, do you wish me to say where these sites are?

If they are cheaper than expected there might be something in it for the Committee.

—There was a saving of £100,000 in Limerick on a site for a training centre and a saving of £30,000 in Galway. Certain expenditure which had been expected for Dublin and Dundalk in the year did not materialise.

You are to be complimented on your bargaining abilities in getting a site in Galway cheaper than expected.

—It may be that there was an overestimation.

195. Deputy Horgan.—On subhead J.I—An Chomhairle Oiliúna—on the assumption that the larger part of that amount would be for salaries and so on, could the Accounting Officer tell us what mechanisms there are for overseeing the expansion of employment in the AnCO area? I am not talking about the people who come to AnCO for courses, but rather the AnCO staff.

—This is an ongoing exercise but well before the year commences AnCO will submit to the Department of Labour the full programme of their activities and plans for the year and this will include rough estimates of the staff. Most of the staff will already be in their employment but they will give an indication of what additions they are proposing and, if they were setting up a new training centre, the number of instructors required. The figures for personnel would be an integral part of the whole programme and this would be discussed with AnCO by the Department. The Minister has a nominee, who is a senior official of the Department, on the council of AnCO who would be present during the formulation of this programme and its discussion in the council. Subsequently, it is discussed with the Department of Finance and the Department of the Public Service to the extent appropriate. During the year, progress reports are made to the Department. This has to be done without interfering with the management of AnCO. It is a delicate matter because the council have statutory status. This is roughly how it is done and we in the Department are aware all the time of the staff numbers employed and the gradings, especially at senior level.

196. On subhead L—Irish Management Institute—Grant for Training—I notice in the report of the Institute with which we have been presented, together with the Appropriation Accounts, that at the end of the year in question, the Institue had a cash surplus on hand of about £114,000. Is the grant for training related to specific courses or is any account taken of the overall financing of the Irish Management Institute by the Department in deciding how much to allocate?

—Great care is taken to ensure that it is related to training activities and not expended on other activities in which the institute would engage, such as publications. It is not related to particular training programmes, even though the training programmes are made known to the Department beforehand. In the year in question, receipts from the European Social Fund were extraordinarily heavy. Problems have arisen with the European Social Fund which have affected the cash situation of the IMI. One reason for pressure on the Vote by the IMI and by other institutions is because of the delay in money being received from Brussels which, in turn, could involve them in interest payments to the bank. In 1978 money was received from Brussels in respect of operations carried out by the IMI in 1975, 1976 and 1977, as well as the early part of 1978, so that they got a very hefty receipt of money from Brussels, far more than they would have received had the Brussels operation gone normally. I should explain that, as the result of discussions with the Commission in Brussels, certain delays have now been smoothed over and the flow of money to these bodies is expected to be more regular in future.

197. Would any amount of these arrears payments got from Brussels have been refundable to the Department of Labour? Would any of them appear in the Appropriations-in-Aid.

—No. The grant to the IMI is a fixed grant which is sent in advance. It is settled by reference to projections given to the Department and to the Department of Finance before the Estimate is framed.

Chairman.—I wish to thank Mr. O’Cearbhaill for his attendance and cooperation.

The witness withdrew.

VOTE 43—INDUSTRY, COMMERCE AND ENERGY

Mr. J. C. Holloway called and examined.

198. Paragraph 50 of the Report of the Comptroller and Auditor General reads as follows:

“Subhead K.1.—Export Guarantee Arrangements under the Insurance Act, 1953 (as amended)

Subhead Z.—Appropriations in Aid—Export Guarantee Premiums and Fees under the Insurance Act, 1953 (as amended)

Under section 2 of the Insurance Act, 1953 (as amended) the Minister for Industry, Commerce and Energy is empowered to give guarantees in connection with the export, manufacture, treatment or distribution of goods, the rendering of services or other matters conducive to the encouragement of exports. At present the Minister’s functions under the Act consist of the issue, through an insurance company acting as his agent, of policies of export credit insurance. Insurance premiums are collected on the Minister’s behalf by the company which retains an agreed percentage to cover its administrative costs and expenses. The balance is surrendered to the Department and brought to account as appropriations in aid of the vote (Subhead Z.). The cost of claims arising under the policies is met in the first instance by advances from the Central Fund and such advances are later repaid from voted moneys (Subhead K.1.). An annual Account of Receipts and Expenditure relating to the Minister’s functions under the Act is audited and certified by me prior to its presentation to the Houses of the Oireachtas.

In the course of audit of the 1977 account which was presented to me in May 1978 I observed that claims paid during 1977, and which fall to be recouped from the Vote, included an amount of £169,961 in respect of default in instalment payments for equipment supplied by an Irish company to two Government Ministries in The Sudan. I inquired as to the total amount of claims expected to arise in this case and the steps being taken to secure recovery of amounts due. The Accounting Officer has informed me that the Minister’s maximum potential liability could amount to £1,069,007 over the period 1977 to 1980. He added that each successive default in payment is made the subject of legal process in order to secure payment and that certain approaches had been made to the government concerned with a view to expediting payments.”

Mr. Mac Gearailt.—This paragraph outlines the Export Guarantee Scheme operated under the Insurance Act, 1953 and its implications for Exchequer funds. It draws attention, also, to a case under insurance in which two Government ministries in The Sudan have been defaulting in payments due under the scheme to an Irish company.

199. Chairman.—Arising from what the Comptroller and Auditor General has said would you tell us what the nature of these contracts were with the people in Sudan?

—The best thing to say is that it is in the nature of this business that one will occasionally have cases where there is a default in payment, or a delay in payment which is how we would be inclined to regard this case. We certainly do not regard these amounts as having been written off. There has been no indication to us from Sudan that these amounts will not be repaid. In fact, we are involved in discussions with them at the moment for the rescheduling of these amounts that are outstanding. We enter into a considerable volume of business every year and of its very nature, when one considers the purpose of the scheme, a very substantial part of this business is high risk and, therefore, it is not surprising that occasionally things will go wrong. If we were to stay away from all of these things that had a risk in them then, obviously, exports would suffer very considerably. I think that, from the point of view of the public accounts, the most important thing that can be said about all this is that what we endure in outgoings we recover in our income. If we find that payments out to meet claims of this kind go up we adjust the premiums accordingly and they are taken into account as Appropriations-in-Aid so that there is no net loss to public funds. Again let me say that in this particular case we do not regard these amounts as having been lost and we would expect to recover a significant part of them.

200. Having established that the sums mentioned are recoverable to the best of your knowledge what kind of pressures can you bring, presumably through Foreign Affairs, on these people in The Sudan?

—We have had quite a lot of contact through our Embassy in London with their Embassy in London. But it also has an international dimension because Sudan is a country that has got into considerable trouble with foreign payments and all of the countries which are involved in export credits to it have been negotiating together with Sudan with a view to rescheduling its obligations. We have not decided to go along precisely with what the other exporting countries seem to be prepared to accept. We are engaged in our own negotiations. We do not necessarily have to be as liberal as the other countries but obviously there is a certain pace that will be set by them.

There is a long queue for The Sudan at the moment.

—There is and if certain countries show generosity towards them one has to take account of that.

201. Paragraph 51 of the Report of the Comptroller and Auditor General reads as follows:

“As indicated in the previous paragraph, the insurance company which collects insurance premiums arising from the Minister’s functions under the provisions of the Insurance Act of 1953, as amended, retains an agreed percentage of the premium income to meet its administrative costs and expenses and surrenders the balance to the Department. It was noted that before surrendering the nett income for 1977 the insurance company deducted a sum of £25,289 which it paid to a concern which had taken over the business of an insured exporter in receivership. This sum represented a payment made in connection with guarantee obligations relating to equipment sold under export credit arrangements. As the payment by the insurance company did not appear to relate to a default in payment by a foreign purchaser I sought the observations of the Accounting Officer and, having regard to the unusual circumstances of this transaction, I inquired whether the specific sanction of the Department of Finance was sought for it. He has informed me that the costs involved were met out of premium income, with his Department’s approval, under the terms of the agreement with the insurance company whereby the Minister can settle with the company the amount which it can retain towards administrative costs and expenses. The amount involved was mainly a negotiated figure calculated on the basis of the estimated cost of servicing machines carrying a service guarantee, and an important factor in the negotiations was that any default in the provision of service could have put at risk the balance of £222,000 of insured loss and thus jeopardised the Minister’s position as the ultimate insurer. The Accounting Officer also stated that the deduction of management expenses was regarded as normal under the terms of the scheme and there was no basis on which the action in this particular instance could be regarded as a departure from the normal practice which would require specific Department of Finance sanction.”

Mr. Mac Gearailt.—This paragraph also is concerned with a specific case insured under the Export Guarantee Scheme which, as stated, is managed by an insurance company on behalf of the Minister. In this case the insurance company retained a sum of £25,289 from the premium income over and above the agreed percentage retainable by it to meet its costs and expenses under the scheme. The paragraph gives the Accounting Officer’s observations regarding the circumstances in which this sum was retained by the insurance company.

202. Chairman.—There was an extra cost for servicing equipment. Is it not normal to have the cost of servicing this kind of equipment included in the initial cost?

—In this particular case the trouble was that the company that had made the machines went into liquidation. Any rights the purchasers would have had against them would obviously have ceased on liquidation. The company which took over the business, without necessarily taking over the liabilities, such as liabilities on servicing guarantees and so on, would have been free to decide that they would not become involved in the servicing of these machines. If that had happened, the people who owed us money in payment for the machines probably would not have discharged their obligations. As far as we are concerned it was a rather simple calculation. If we agreed to the payment of £25,000 to have the servicing of these machines attended to, we would then have been able to recover, or we would have expected to recover, the outstanding balance of £222,000. It so happens that, since our exchanges with the Comptroller and Auditor General occurred, we have recovered the £222,000. As far as we are concerned it was a very good deal for the public funds.

203. Were the conditions of agreement made with the insurance company agreed initially by the Department of Finance?

—My understanding is that this is the case. The details of the scheme were settled with the Department of Finance and I also understand that the arrangement we came to with the Insurance Corporation of Ireland is such that we are fully entitled to agree with them on this payment. It is indeed a normal feature of insurance business that you authorise the insurance company to do whatever is necessary to minimise the liabilities or to maximise recoveries. My understanding is that under the agreement we have with the ICI this is provided for. That is our interpretation.

204. Perhaps Mr. Nolan from the Department of Finance would care to comment on his position in respect of this particular case.

Mr. Nolan.—Apart from what is contained in paragraph 51 of the Report of the Comptroller and Auditor General, my Department are not aware and have not any information with regard to the matter and hence it is not possible for me to offer an opinion. You will appreciate that the Department of Finance were not approached in this matter. If it were to be pursued, we would like to get some details about it. We have not been furnished with any details relating to that matter.

205. Your agreement was not sought initially in this. Is that what you are saying?

Mr. Nolan.—The scheme under which the insurance provisions operate was, in fact, agreed, as the Accounting Officer said, many years ago. It goes back to 1970 when the scheme was expanded under which an insurance company operates a scheme on behalf of the Minister for Industry and Commerce and under which it recovers its administrative expenses out of premium income and surrenders the balance to the Minister for Industry and Commerce. That is the generality of the scheme as it operates.

206. On subhead A.I—Salaries, Wages and Allowances—there is mention in the explanatory note of technical assistance and casual labour. Could you comment?

—They are always difficult to forecast with precision. In that particular year we had allowed a considerable amount of money for these special projects for the GSO. This involved the employment of people at the universities studying geology for summer jobs. The expenditure on that was considerably less. So far as the technical assistance and casual labour are concerned, that is to cover payments to examiners in the Patents Office who spend a lot of time outside their normal hours of duty on the examination of patent specifications. We had a considerable provision for them which was not ultimately needed. We also had some unfilled vacancies in the Geological Survey Office. Between them they gave rise to a saving of about £400,000.

207. In the Estimates you had about £60,000 in both cases for technical assistance and casual labour and for training casual labour in special projects in the Geological Survey Office. Of the two sums of £60,000 you had an expenditure in one case of £40,000 and in the other case of £20,000. The grant would seem to outstrip by far the expenditure in both cases.

—My interpretation of that would be that I would not want to see something like that happen too often. One would tend to make sure that the amount provided in next year’s budget was reduced accordingly, unless there was an explanation which indicated quite clearly that there were some very special circumstances during the year. If there were not such special circumstances then one would reduce it.

208. On subhead A.2—Consultancy Services—could you give us any idea of what was involved in the expenditure of £248,000?

—We had a saving there of £11,700 and the main heading was the National Prices Commission for which provision of £145,000 had been made and expenditure was about £126,000. We have had a feeling for some time past that perhaps the expenditures by the National Prices Commission on consultancies were rather greater than was really necessary for the discharge of their functions. We have not tried to throw any spanners into their work but we have intimated to them that if they could save some money under that heading it would be gratefully acknowledged.

209. Deputy Horgan.—Is it in order for me to ask questions about the ESB?

Chairman.—There is no charge in the vote.

Deputy Horgan.—In relation to subhead V—Rural Electrification—I wonder if I could ask the Accounting Officer what the projection for this fund is. Is it likely to continue at its present level or to run down? Specifically in relation to the fund, does it exclude islands? Are islands separately provided for?

—That is true and there are some special discussions going on at the moment about the situation of the islands. To answer your first question, from the beginning of the rural electrification scheme it has always been organised on the basis of being a finite thing designed to achieve particular objects in terms of geography and intensity, in terms of time and in terms of the amount of money which it would cost the State. The most recent elaboration of the main rural electrification scheme was to cost £10 million and that £10 million has now been expended. If we were to go back over the country picking out those pockets that have been missed or pockets where people decided themselves in the past that they were not going to apply, we would have to devise a new scheme and draw up the parameters within which it is to be operated by the ESB. The main trouble with rural electrification schemes in the past has been that when the ESB were operating in a particular area they did not always get the kind of response they would have expected from all of the residents. Some people just did not bother. Then in subsequent years they began to complain that they did not have electricity and when the volume of complaint became unbearable some new scheme was introduced in order to look after them, but even then there were people not availing of the facilities, especially if there were substantial capital charges involved. There is always that unfulfilled residue. There is also trouble with cases where houses were built after a particular area had been electrified. Then there is trouble with second homes or cottages placed on very attractive but very expensive locations so far as the ESB is concerned. I do not think that it is conceivable to design a rural electrification scheme which meets every possible need. If we did that we could never pay for it. So it has to be done in finite terms and I think we are coming to the end of the last bite at that particular cherry.

210. In relation to subhead U—Energy Conservation—could the Accounting Officer give us some indication of why there was a substantial saving here, even after the Supplementary reduction, and what this money is expended on in general? It would seem that this is an area in which underspending might be false economy?

—That would be universally accepted now, but in 1978 it probably was not given the kind of recognition that it ought to have had. We did provide £264,000 for it and we certainly did not expend anything like that for it. Basically what we were doing at the time was continuing things that had been in existence for a long time before, like grants for fuel efficiency surveys, boiler tests and publicity measures. But since then the recognition of the importance of energy conservation has been well established and the total amount in the current year’s Estimates is near £1 million. It is no longer a Cinderella which it may well have been in 1978.

211. On subhead W, could the Accounting Officer give a little detail about the grants for bottled gas installations? It is a very small provision; it is only £1,500 of which there was under-expenditure of 40 per cent. Is this an area of expansion or is it a declining area?

—It is declining very much.

212. Where are the installations? Are they for industrial purposes?

—These are for householders living in remote areas and indeed islands. The idea was that if it was not physically possible to have these people connected with electricity they could get in bottled gas and they would get a small grant, the maximum grant is £35 for an initial installation. But there has not been that much demand for it.

213. In relation to subhead T.I—Grant to National Film Studios of Ireland Limited—in the report of the directors that we have been furnished with, the directors state that they continue to be concerned with the difficulty in arranging a satisfactory financial structure in order that the operations of the company may continue on a commercial basis. Would the Accounting Officer like to comment on that?

—It has certainly been one of the main problems of that company from the beginning. It came into being without having a proper legislative framework. For that reason we were not able to provide it with share capital. That meant that its funding had to be done exclusively on the basis of money borrowed from the banks. The interest on capital has been a very heavy burden for them to bear. We recognise that. Unfortunately, the preparation of the legislation relating to the NFSI and also that relating to the film board has been an extremely complicated exercise because there are so many contending interests involved in that particular industry, each with very decided views as to how the business should run, so that the consultation procedures with all those interests took a long time. But the legislation was introduced last December, that is, the Bill relating to the NFSI, and a separate Bill setting up the film board whose function will be to finance films here in Ireland and in that way to increase the throughput of business at the Ardmore studios. One of the problems with Ardmore, apart from the problems arising from its financing arrangements, has been that it has not been able to get enough business to remunerate the capital investment. They calculated that they would need a throughput every year of £1.75 million to £2 million in order to make ends meet and, hopefully with the institution of the film board, more films will be produced in Ireland that will give a greater throughput for the studios.

214. On subhead H.2—Kilkenny Design Workshops Limited—I should be interested to know what degree of supervision or oversight the Department bring to bear on this operation in the light of four particular figures that almost at random I have taken out of the income and expenditure accounts and balance sheets for this enterprise. It seems that, although the overall income and expenditure position is improving, there are certainly a couple of question marks. First of all, there is the very poor position on net current assets which has a deficit of £131,000. There is a very high ratio between cost of sales of almost half-a-million pounds and income from sales of under £800,000. There was an increase of the order of 30 per cent in salaries and wages in 1978 over 1977, and the fairly large sum of about £60,000 allocated for promotion. I appreciate that the Accounting Officer might not have oversight of such detail. In general I would ask what his approach is to these problems?

—I regret that I could not answer those questions offhand but if the Deputy would like me to send him some supplementary written information I would be quite happy to do it. In general terms we would not seek to control the activities of a company of this kind in great detail. We would obviously keep an eye on how things were going and ensure that we got value for money. For instance, in setting up the shop in Dublin some years ago they had to come to us for approval and we gave it a very detailed finecombing. Happily, that particular project is turning out quite well. Recently, we had an approach from them to carry out another similar exercise in Cork. We gave that one an even closer scrutiny and we have not yet given them approval to go ahead because we thought it was perhaps a little too grand. So far as activities in general are concerned, we would not expect this body to be a profit earner.

I accept that.

—It was designed to fill a gap which was commented upon in the most strident language by the international consultants who carried out the design study and we always expected that there would be a net outgoing of public funds which would be handsomely rewarded in terms of exports by people who would take on these designs. But it may well be that there is some validity in your point that we should have a conversation with these people and see if they can generate more income in the fees they charge for their designs and perhaps balance their books a little bit more. We have in recent years put pressure on the agencies associated with the Department to maximise their incomes. It is difficult to do that in all cases because obviously we do not want to choke off business. For example, in the case of the Institute for Industrial Research and Standards, because of pressure from us they have now increased their income to a figure which represents something like 34 per cent of their outgoings. Maybe we should do something like this with Kilkenny Design. It is not a very large account, but it is something we could look at as part of our general exercise in maximising income and minimising outgoings.

215. Chairman.—The Committee appreciate your position in relation to grants-in-aid. Your involvement thereafter is pretty limited in the area of detailed expenditure, and how the recipient operates business after that is a matter in which you have not that kind of input because of our financial set up.

—That is true in terms of responsibility for the actual expenditure of the funds, but it would not prevent us having discussions with them on their policies for the future.

Deputy Horgan.—Nothing I say should be taken to indicate that in any way I would attempt to stifle the activities of the Design Workshops which, I would fully agree with the Accounting Officer, was set up to meet a specific need, and much less to threaten employment in that part of the country. I would express the hope that, as part of their general oversight, the Department would be interested in reasonable productivity in such areas. I suspect that industry is getting a very good service from this particular development and I wonder whether industry is paying all it might be expected to pay for such a service.

—It is a good point and we will look into it.

216. Deputy Leyden.—On subhead B.B—Petroleum Licences—Funds for Training, etc.—would the Accounting Officer care to comment on this grant?

—The origin of that was that when we were negotiating with the petroleum companies in 1975 and 1976, a number of them made offers to provide funds for training purposes and for paying for studies and so on. We generally call those the scholarship funds. The amounts of money due under those agreements were to be paid over a period of five years and in each year we provide what we estimate to be the amount required to meet demands from people who wish to avail of those scholarship funds. The accounting arrangement which we have adopted here was agreed with the Department of Finance. We estimated in 1978 that there would be demand for about £300,000 for eligible activities, but in fact the demand was a good deal less because on a number of the things that were put up to us on final consideration we came to the conclusion that they would not be eligible for assistance from the fund and we ended up by spending only half of it. My recollection is that the amounts for the year after that would probably have increased quite a good deal. Ultimately what would happen to these funds is that any unexpended balances at the end of the five years which have not been spent for these purposes will be paid into the Exchequer. There was a total of about £1.7 million in all and it would be anybody’s guess what we will have left over. We look very carefully at the cases that are presented to us. We are not trying to spend the money simply because it is there and it may well be that we will end up with a substantial amount that is unexpended and which will be paid into the Exchequer.

217. Is this spent through the universities or the regional colleges or who actually administers the fund?

—It is administered in the Department. Indeed, the costs of administering it are charged to the fund itself. There is a tremendous array of projects put forward for consideration under this heading and we have adopted a variety of ad hoc arrangements for having them vetted by competent people. There have been things coming up from the universities, things from the Geological Survey Office, things from the private business world, especially from the petroleum services people and also there have been people in the public service who felt that they could, with profit to the public service, avail of some post-graduate work abroad on various petroleum skills. We have also sent people from the Institute of Industrial Research and Standards for training to a special petroleum institute in France. Generally speaking, it is a mix of a whole lot of things which we felt would enable the public and the private sector in Ireland to contend with this entirely new world of petroleum activities.

I would like you to go into more detail but I might be pursuing that matter later on.

—We would be very glad to supply you with the information that we have available.

218. In relation to subhead X—Grants for the Improvement of Roads to Generating Stations—is this money given to the ESB for work internally within the station or could it be given to a county council for improvements of a road to a power station?

—This is a relic of the past. The origin of it was the small generating stations set up in 1956-1958 in the remote areas of Kerry, Clare, Galway, Mayo and Donegal for the burning of hand-won turf. The case was made that people would not be able to get into the bogs to cut the turf and to remove it unless something was done about the roads. So, since that time, there has been a small annual provision to ensure that there will not be bottlenecks of that kind. The programmes are submitted by the county councils and the funds are paid to them to defray the costs of having the repairs and maintenance carried out.

219. Does the fund still exist?

—It does, but it is of practically no significance now. One hears that there is no great shortage or roads in those areas.

The Chairman would say there is.

Chairman.—I did not say that, but I feel like saying it.

220. Deputy Pattison.—Continuing on subhead X and expanding it to subheads U, L, S and E I have a general question on this point of conservation, I would like to know what element in each of those subheads, if any, is devoted to encouraging people who are presently engaged in developing old coal mine shafts? Is there any money in those subheads for that purpose?

—I did not get the numbers of those subheads.

Subhead U—Energy Conservation, subhead L—Technical Assistance, subhead S—Mianraí Teoranta, and subhead E— Minerals Development.

—Under subhead L it has been established for quite a number of years past that people are free to submit to us schemes in connection with the reexamination of old mine shafts, old workings for coal and other minerals or, indeed, studies relating to deposits that have not in the past been worked. We have not had a great deal of demand for those funds but the scheme was there and was availed of to some extent. The resuscitation of some of the coal deposits followed on the studies carried out with assistance that was provided under this heading. But it really is only assistance for the studies. It is not assistance for the actual development investment that would be required to bring the production into being.

221. On subhead Y—An Bord Fuinnimh Núicléigh—this is a query arising from widespread concern in certain areas about prospecting for uranium deposits. I would like to know what provision there is in this subhead or in the Vote to monitor the situation. It would appear that local authorities have practically no function in the matter because planning permission is not required. It would also appear that the Health Boards have no power in the matter except if it can be established that there is a positive danger to public health. Again, there appears to be some lack of information or knowledge that might be covered under subhead C.2. Where this prospecting is taking place and boring is taking place the residents become very alarmed and it has been alleged that the bore holes have been left unplugged afterwards. Is there any provision in this Vote to advise and inform people in the area and, secondly, to ensure, where licences are granted for this purpose, that they are properly monitored? Neither local authorities nor Health Boards have the staff to do it. It must come from your Department.

—Yes. The functions of the Nuclear Energy Board are so broad and they are endowed with such a wide range of powers and responsibilities in this area that one does not generally have to look beyond them. We would regard the Nuclear Energy Board as being the central authority in the public domain in relation to nuclear energy and radiation matters. In fact, they have a radiation monitoring service which they are in the process of taking over from St. Luke’s hospital. Arrangements were recently made for them to monitor the exploration activities which are taking place in Donegal, Galway and Carlow. That decision was taken in response to the apprehensions being expressed by the local people, to do whatever was necessary to reassure them. Up to that point, the accepted view would have been that the mere operation of a prospecting licence would not give rise to any radiation risks because there is not a great deal of disturbance caused to the sub-surface. Some might argue that when exploration goes beyond a particular stage the holder of the licence is entitled to carry out trenching and that consequently we could conceivably have situations where there is a disturbance of, let us say, a small concentration of uranium deposits which might have accumulated over the years by the operation of a stream. I have heard discussions on that kind of possibility. However, the important thing is that the Nuclear Energy Board have extended a monitoring exercise to those exploration activities with a view to ensuring that there is nothing going on that could give rise to uneasiness in the minds of the local people.

222. Deputy Horgan.—On subhead J.5—Shannon Free Airport Development Company Limited—Grant to Compensate for Losses on Sale of Houses—could the Accounting Officer give us some indication of how this scheme operates, who precisely is compensated and under what sort of circumstances?

—This is something which is dying out. It was intended to cover the shortfall between the net selling price of the SFADCo houses and their cost, including the cost of repaying the repayable advances. The net selling price was the gross selling price less the discounts and rebates allowed to the tenant under the tenant purchase scheme. We allocated £40,000 for that but only £20,000 was required and there was no provision for 1979 because the company said that they would not suffer any loss on the sale of houses. We only had a token of £10. They did not seek any money for 1980. It is a thing of the past.

223. On Subhead O.1—Shipbuilding Subsidy—could the Accounting Officer give some indication of the state of play on this particular subhead? The subhead was originally £200,000 and was almost totally wiped out by the Supplementary savings of £199,990 which effectively only left a sum of £10 in the account to keep the subhead alive in some form.

—Yes. It was just a mistiming. The sum of £200,000 was included for a subsidy in respect of the building of a bulk carrier ordered from Denmark. It had been built in 1977 at a time when we expected that a subsidy would be required. As it so happened, no subsidy was required when the final accounts were done. There was no loss on the building of the vessel. We were saved the £200,000.

The vessel was built in Denmark?

—No, for a Danish company.

224. Chairman.—Finally, the Committee propose to visit Kilkenny Castle some time later this year, when the weather improves. It might afford us an opportunity of visiting the Kilkenny Design workshops which is in close proximity to the castle. We would very much appreciate the opportunity to do so.

—We would be delighted to receive you. Did you intend to make your own arrangements direct with them or do you want them to be made by the Department?

Any assistance that would be forthcoming from your Department would be appreciated.

—If the Clerk to the Committee could establish contact with me we could work things out between us.

Thank you.

The witness withdrew.

The Committee adjourned.